Customer Retention Strategy For Marketing Success
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With the help of this study, emphasis is incorporated in gaining ideas about various impacts that customers retention strategies possess over the marketing success. In present business milieu there is nothing like ‘monopoly’. One can find many players operating in all kind of business. In such situation, it becomes indispensable for the companies to retain their existing and loyal customers as it guarantees in the success of any business. Cost of acquiring a new customer is much higher in comparison to cost of retaining a customer, which again reflects that organizations can significantly benefit from customer retention. Since, company utilizes different sort of strategies for retaining their customers such as marketing orientation, customer orientation, tailoring of products according to consumer’s need, valuing customers, etc. Therefore, it becomes essential for the company to evaluate its effectiveness as it involve high amount of cost. This cost certainly reduces the probability of the firm and therefore with this research, analysis of different strategy has been entailed.
For conducting this research, inductive approach is being implemented. Further, descriptive type of research is being employed in current research in order to gain exact idea about the impact that customer retention strategy possess in attaining marketing success. Under primary source, interview and survey method is entailed. Interview is being organized for top level officials of Dominos with the help of semi structured questions so that rational view in this regard can be attained. Further, survey is done with the help of structured questionnaire methods in order to collect data from customers of Dominos. Sample size for managers is decided as 5 whereas 30 for customer of UK region. Moreover, qualitative analysis is involved in this research study.
With the conducting of this study, it is being cleared that customer retention strategies certainly plays a crucial role in attaining marketing success and also it supports in boosting the number of responses from target audiences. It can also be state that companies have to entail different sort of strategies and practice in this regard so that they can able to retain more of customers on their side. With retaining customers, they can able to boost their sale which substantially leads into boosting of their market share and profit margin. It is being found that acquiring new customer from the target audiences involves huge cost and expenses to company and therefore, retaining existing customers is much better option from which regular boosting of profit margin can also be attained in a significant manner.
Chapter 1: Introduction and background
Organizations are growingly paying attention towards the creation of long term relations with consumers, hence augmenting their chances of success by providing consumers higher levels of satisfaction, enhancing customer loyalty and eventually retaining them. The traditional approach to marketing promotes the marketing mix principles and the chase for market supremacy by means of mass marketing methods and an emphasis on new consumer acquisition. The managers have long been guided and directed by this approach in planning and executing their marketing strategies (Ang and Buttle, 2006). Nonetheless, various authors have shifted attention to the insufficiencies of this conventional marketing approach which resulted in the emergence of relationship marketing. This strategy supports customer-supplier interaction and maintenance of long-term relations with key focus on retention of customers. However, in the conventional marketing approach, customer retention is viewed as the “end’ instead of the “means” for garnering long run profitability to companies. When company put effort in meeting out with the actual need and wants of the existing customers by entailing different sort of differentiation and updating in product feature with a prime motive to gain massive repeated purchase, then it is termed as customer retention (Customer Retention, 2012).
There persist high amount of competition in the market due to increase in the options of substitute products. This scenario essentially leads into loss of market share by companies and also making an impact over their profitability ratio. In this regard, companies have to entail different sort of strategies and practice so that they can able to retain more of customers of on their side. With retaining customers, they can able to boost their sale which substantially leads into boosting of their market share and profit margin. It is being found that acquiring new customer from the target audiences involves huge cost and expenses to company and therefore, retaining existing customers is much better option from which regular boosting of profit margin can also be attained in a significant manner (Shanker, 2012).
It was Dawkins and Reichheld (1990) who brought the tangible benefits of retaining consumers into prominence. On the basis of their consulting experiences, they asserted that a five percent boost in rate of retention resulted in an increase in the NPV of consumers between 25-85% in a broad spectrum of sectors, from fast food companies to insurance brokerage and from office building management to motor services. In spite of its potential advantages, customer retention failed to garner much attention in marketing and strategic planning processes. For instance, Grant’s (1995) categorization of resources, overlooked customers as a crucial resource or asset and therefore, his proposed strategic planning process failed to take into account the associations with existing consumers. A forecast based on earnings which used expected income streams from prevailing consumers is known to have been successfully used in valuing an organization and its ultimate takeover. Argument that validate the strategy of customer retention as against the acquisition of new ones are supported by micro-economic theory and to be precise the notion of customer LTV (Ferrell and Hartline, 2010). The main presumption is that in an association, the company aims to maximize their profits and minimize their costs. Retention of customers influences both the components of profitability situation. Thus, it assists in increasing revenues by augmentation in sales volume and mitigating the expenditures of generating those revenues. A rise in retention rate has been said to have led to subsequent increase in revenues (Ang and Buttle, 2006).
The ultimate objective of every company’s marketing activities operating in the profit sector, notwithstanding the manner in which sales are made, whether by relationships or transactional encounters, is to make profit. From the perspective of relationship marketing, successful companies are those which are capable of turning their customers into long term clients and from prospects to partners. In addition to this, successful companies are those too which own their consumers and practice enduring values for them. It was emphasized by O'Connell (2008) that marketing resources might be spent in a better way on retaining existing consumers than acquiring new ones. This was done on the basis of an assumption that existing consumers are more profitable and they are less costly to keep than to substitute. Companies therefore need to be conscious of the profitability of not only their goods but also their consumers. The overpowering row over customer retention is that it is economical to preserve than to attain new consumers. Racela, Chaikittisilpa and Thoumrungroje (2007) revealed that an extra £5.5mn boost in expenditure, when directed towards augmenting the number of highly content existing consumers, could lead to an £18mn escalation in profitability. They measured that the extra expenditure will boost the number of highly content consumers by 6 percent. This growth would in eventually lead to a corresponding augmentation of 4.8% in customer retention.
Clearly, retention of customers demands due attention and focus and must form a component of a company’s strategic marketing goals instead of merely being viewed as the final outcome of “good” marketing management. Nonetheless, organizations trying to align customer retention strategies and goals into their strategic planning process ought to take into account certain practical issues (Zhang, 2008).
Dominos is one of the most popular brands in the field of fast food sector. The company has a global presence and is known for its delicious pizzas. They possess operations in more than 70 countries and own around 10,000 corporate and franchised outlets. Further, sales of company rises by around 12% in a year which aids them in capturing significant amount of market share. Being global player, it not has to compete with the local players of the respective countries, but also has to look out for other international brand. Thus, it is very important for the organization to adopt certain customer retention strategies so that it does not have to invest much on acquiring new customers again and again. For this purpose, it has adopted several strategies for holding its customers; investment in the digital and mobile technology is the. While majority of the big pizza chains are dabbling in mobile offers and campaigns, Domino’s has been leading the road in obtaining customer loyalty by focusing on giving easier and faster means for customers to order pizza through mobile. It is not merely the improved ingredients in its pizza which has boosted the organization. However, the main ingredient of its success has been its investments in mobile and digital through which it intends to make it easier and quicker for people to place and track their orders. This has enormously helped the firm in crushing its competitors. On the other hand, Pizza hut, which is one of the biggest competitors of Dominos, has been driving customers through the diversification of their products. Moreover, they create strong relations with their consumers through offering the best pizza and by the creation of customer delight through Partnership Relationship Management and Customer Relationship Management.
Pragmatic research which explores the association between customer retention strategies/practices and profitability is also insufficient. The studies which have been undertaken so far have been restricted to efforts to model the dynamics of customer retention in respect of their plausible cause and effect of customer retention to organizations. All these authors recognized the fact that retention of customers has instigated substantial monetary benefits to companies and potential, new and existing consumers must be given differential treatment. Nonetheless, there are a very small number of corporations that have computed the economic worth of their customer retention strategies and practices. Thus, the present research has been prepared in order to shed more light on the usefulness of customer retention strategies for market success and that they must not be seen as an end. In fact, regular employment of these strategies can help organizations in obtaining the loyalty of their customers and in turn higher sales. Personal motivation was also really high for conducting the present research because there is an intention of working as a customer relationship manager in a good company. Secondly, there is academic motivation because this is a rather appealing topic and Dominos is an interesting company to collect information about.
Aim of the Research
The research aim is to investigate various impact of customer retention strategy on marketing success: A case study of Dominos.
To achieve the above aim, the below mentioned objectives were accomplished first.
The scope of this dissertation is confined to Dominos and can be generalized for other fast food organizations as well. The current study has both practical and academic significance. Firstly, the prevailing theories and premises on impact of customer retention on market success were deployed and tested taking Dominos as the organizational setting. Although customer retention as a strategy has been studied earlier, yet it is only considered as the end product of marketing efforts and the conceptual framework for the same is missing. Moreover, there are not many empirical studies relating to how strategies of customer retention increase profitability. Hence, the current study will immensely contribute to the existing body of literature. This will be highly beneficial to other researchers and writers with their write ups.
The present research also holds considerable importance for practicable intentions. In present times also still a very few organizations are paying due attention to customer retention as a means to obtaining market success. This highly limits their success quotient. Therefore, the present study aims to contribute to the prevailing knowledge pedestal for the marketing division and various other practitioners in being able to develop improved relations with their customers. The present research will be more useful for Dominos in particular as it is the organizational backdrop in the current case.
This research will essentially support in gaining better ideas about the strategy that are being entailed by Dominos with regard to attain customer retention so that it can be improved further. Moreover, outcome of this research will also support other companies in better boosting the effectiveness of their customer retention strategy. In this regard this research will be conducted with an aim of analyzing the effectiveness of customer retention strategy in attaining the market success.
Dawkins and Reichheld (1990) highlighted the benefits of customer retention and shed significant light on this aspect. On the basis of their consulting experiences, they asserted that a five percent boost in rate of retention resulted in an increase in the NPV of consumers between 25-85% in a broad spectrum of sectors, from fast food companies to insurance brokerage and from office building management to motor services. In spite of its potential advantages, customer retention failed to garner much attention in marketing and strategic planning processes. Retention of customers influences both the components of profitability situation. Thus, it assists in increasing revenues by augmentation in sales volume and mitigating the expenditures of generating those revenues. A rise in retention rate has been said to have led to subsequent increase in revenues (Petzer and Steyn, 2006).
The present literature review probes the topic of “customer retention” and how its integration with strategic marketing planning of companies help in gaining a constant flow of customers. This review begins with a discussion of the major differentiating facets of relationship and traditional marketing approaches and the correspondence of their ultimate goal i.e. profit for companies. Subsequent to that, importance of customer retention is highlighted. The potential strategies which can be used for retaining consumers have also been discussed.
The approach of traditional marketing which is also known as classical or conventional marketing approach, mentions that companies must identify the needs and wants of the customers. Consumers must be organized into market segments for which the company must develop products. Corporations must then arrange their functional activities for the purpose of satisfying the targeted audiences. Marketing managers presume that they are in a position to exert unilateral influence over their consumers by timely manipulation of the 4Ps or other marketing mix elements, especially with the usage of monetary rewards like promotions, gifts and price discounts (Mostert, Meyer and Rensburg, 2009). The conventional approach takes into account customer attachment or loyalty to a brand as the main result of the marketing activities.
The ultimate objective of every company’s marketing activities in the profit industry, notwithstanding the manner in which sales are done, whether by making relationships or transactional affairs, is to make profit. From the perspective of relationship marketing, firms that are successful when they are able to convert their consumers into clients. It was emphasized by Gee, Coates and Nicholson (2008) that marketing resources might be spent in a better way on retaining the existing consumers rather than acquiring new. The main assumption behind this is that existing consumers are profitable and they are less costly to keep than to substitute. Companies hence need to be aware of the profitability of not merely their own products but also their consumers. The overpowering contention for customer retention is that it is reasonable to retain than to acquire novel consumers.
Racela, Chaikittisilpa and Thoumrungroje (2007) revealed that an extra £5.5mn boost in expenditure, when directed towards augmenting the number of highly content existing consumers, could lead to an £18mn escalation in profitability. They measured that the extra expenditure will boost the number of highly content consumers by 6 percent. This growth would in eventually lead to a corresponding augmentation of 4.8% in customer retention. Evidently, customer retention calls for some attention and must form a component of the strategic marketing objectives of the company rather than merely being viewed as the eventual result of ‘good’ marketing management. Nonetheless, companies trying to integrate consumer retention strategies and goals into their strategic planning process ought to take into account practical issues.
Consumer retention can be viewed as a reflection of customer defection, whereby a high rate of retention has the same importance as a low rate. Management of consumer retention can turn out to be problematic if it not precisely defined in a manner suitable to the company’s business. For an organization selling standardized services or products which have a uniform and predictable pattern of consumption or usage and a huge number of users, a retrospective approach to segmentation might be a relevant method (Gummenson, 1999). Under this method, consumers can be divided into cohorts who share same predictable switching behavior, customer profiles and spending levels. This similar way of measuring is not suitable for a company selling services or products customized to the needs of its consumers, such as insurance or financial services companies which sell products that have a limited number of users. Defining customer retention in context of percentage share of consuming borrowing, savings, purchasing or spending might be more helpful rather than in context of absolute number of consumers (Lemon, White and Winer, 2002). A customer of bank might have various accounts in the same bank and might decide to replace or cancel a policy with other. An insurance firm tends to regard an insurance policy as a consumer and therefore, when a policy gets cancelled for late renewal or non-payment, the new policy is taken to imply a novel consumer. It would be confusing to regard either case as a defection (Newell, 2000). On the other hand, a consumer might still keep an account however transfer a considerable sum of money to an account in some other bank or purchase extra insurance coverage from other organization. Therefore, an issue pertaining to the definition of consumer retention is hence measurement of consumer retention. Dawkins and Reichheld’s paper on consumer retention stated that a comparatively smaller percent rise in the rate of retention can result in an augmentation in the NPV of customers. This implies that consumer retention can be measured in context of absolute number of those retained as a percent of the actual number over a certain time period of time. This is known as the crude rate.
The discussion of advantages of customer retention takes both quantitative and qualitative forms, or, more particularly, it takes into account both non-economic and economic benefits. Arguments that validate the strategy of retaining consumers as against the acquisition of novel consumers are strengthened by micro-economic theory and specifically, the notion of consumer LTV (Fruchter and Zhang, 2004). The underlying presumption is that, in any association, a seller aims to maximize revenues and minimize the costs. Therefore, consumer retention influences both the components of profitability equation i.e.
Profit = Revenue – Cost or expenses
Retention of customers is highly useful in increasing revenue through augmentation in sales volume or/and premium prices plus mitigating costs or expenses of producing those profits. An augmentation in the rate of retention has been contended to have resulted in a corresponding hike in profits (Swift, 2001). Six main economic benefits have been identified of retaining consumers. First is the savings on customers’ replacement or acquisition costs. Second is the assurance of continued profits as current consumers are likely to have a minimum expenditure per period. Third is the growth in revenue per customers, over a particular period of time, current consumers are more likely to earn higher and have wide variety of wants and needs. Next is there is a reduction in comparative operating costs as the companies can spread the cost over range of customers and over a greater period of time (Swift, 2001). Another benefit is free of cost referrals from old customers of new customers which will otherwise be expensive in context of introductory or commissions fees. Last but not the least, price premiums as old consumers do not normally wait for price reduction or promotions before settling upon a purchase, especially with new versions or models of existing products (Swift, 2001).
The argument that retention has non-monetary advantages is supported by psychological or behavioral arguments. It was argued by Antón, Camarero and Carrero (2007) that in a network that comprises of partnerships with external parties i.e. governments, rivals, suppliers, buyers and with internal parties such as business units, departments and employees, trust and commitment in relationships engender acquiescence, cooperation, an alleviated tendency to leave the network, mitigating uncertainty and the assumption that conflict is going to be functional. Old customers can not just give feedback about the services and products, but also work together with the suppliers to contribute more value to a specific product by augmenting its functional characteristics or by altering the work processes or manufacturing which use the product.
Strategies for customer retention have been identified in three ways i.e. conceptual strategies on the basis of extant theories, pragmatic strategies as seen in organizations and best practices strategies as mentioned by specialists. As far as extant theories are concerned, lessons from business-to-business marketing, industrial marketing and services marketing perspectives were taken into account (Han, Back and Barrett, 2009). From the perspective of service marketing, retention of customers has been conceptualized as an implication of consumer perceived service quality and consumer satisfaction. A service provider, based on such cause and effect framework, can hence, concentrate on mending the gaps between experiences and expectations of customers regarding service quality (Zineldin, 2000).
From the perspective of industrial marketing, core products are frequently of very less importance to potential purchasers. Augmented goods like long term costs and technical advice of operation and maintenance tend to be more crucial than functional aspects and selling price. It was argued by Jones and et al. (2007) contended that companies must safeguard their profitable consumer relationships through not merely social nut also structural bonds. According to the authors, social bonds are the positive and favorable interpersonal associations between employees in the seller and buyer corporations. Though an explicit definition of structural bonds was not provided by them, but they entailed in their illustrations that structural bonds are developed on their joint investments that are not possible to be retrieved when the association comes to an end. Therefore, structural bonds help in the creation of value for consumers by saving the costs of making novel investments with a novel supplier or that of retraining (Mostert, Meyer and Rensburg, 2009).
A number of methods are available that are commonly used to develop structural bonds besides the provision of technical support. For instance, HDoX made investments in an electronic and telemetry data exchange system which allowed it to monitor the extent of inventory directly at the storage tank of its buyers. The organization instinctively sends new orders when the volume in the tanks drops below a certain level. A beginning point for the development of associations, and therefore, bonding is to develop interdependencies between customer and suppliers (Gee, Coates and Nicholson, 2008). Such interdependencies are developed upon the resources that possessed by the companies, the operations performed by them or the people who represent them. Resources can be in the form of financial, physical, intellectual capital or network position etc. Activities are those which are jointly done like R&D. While perspective of industrial marketing recognizes the nature of the product to be a crucial determinant of the process of purchasing, the B2B marketing viewpoint acknowledges the nature of consumers i.e. that companies have many interconnected associations (Cook, 2000). The main argument of this viewpoint is that marketing to business entails management of interrelated associations between sellers, buyers, rivals and third parties and therefore is open to the chances of interrelated multi-interdependencies. The industrial products marketing and B2B marketing are same on certain level: they both lay focus on relationships, interdependencies and bonding (Zhang, 2008).
Latent strategies which reflect best practices in the sector were primarily drawn from consulting experience. As per Fill, (2005) firms that are successful retain their customers not merely by focusing on consumer retention, but also through investor and employee retention. He suggested a three-pronged approach to manage consumer retention which entails identifying and obtaining the correct investors, employees and customers. His idea is underpinned by the concept that employees who are disloyal are possibly not capable of building an inventory of committed customers and disloyal investors do not support long standing associations. He stressed on the need to maintain a team of investors, employees and customers who share similar vision of a long standing relationship (White, Lemon and Hogan, 2007). In obtaining novel consumers, he reminded companies to have awareness of distinct loyalty coefficients. As per Bergman and Klefsjö, (2003), a loyalty coefficient refers to the financial costs or economic forces of switching or moving consumers from one vendor to other. While certain consumers will defect for even a 2 percent off in the price, others will not switch for even a 20 percent off. The author stated that one of the methods of knowing the coefficients of consumers is by evaluating the past behaviors of customers. For instance, it was discovered by Northern Insurance that distinct sections of consumers displayed average retention rates in the gamut 72-94 percent. Talking about consumer behavior, the most convenient to win is probably the one who will be fastest to defect. In the author’s words, “the customers who come into company’s arms for a very little price discount are the same consumers who dance away with somebody else at the minutest enticement.
Though not every consumer prefers long standing relations, there are even those who want steady enduring relations, inherently they have much more expenditure, are more prompt to pay and need fewer services. Employees who serve for long produce many economic advantages: not merely are they good in identifying and hiring the most profitable consumers, but they retain consumers by generating much better goods and value and they also act as the source of consumer referrals (Mostert, Meyer and Rensburg, 2009). The core to this approach was that the need for companies to consistently and continuously identify for initiatives which provide a better value proposition than their rivals. Latent strategies to manage customer retention have also surfaced from observations of management practice. Terblanche and Boshoff (2010) provided strategies which measure the retention in respect of both weighted and crude rates. This entails interviewing old customers, evaluating complaint and service information and determination of the switching behavior. With the usage of computers, companies must have little difficulty in computing and reporting both weighted and crude rates. Nonetheless, they ought to be aware that a high volume of sales does not essentially convert into correspondingly huge sum of profit as it is not odd for large purchasers to acquire considerable discounts in prices or demand high levels of services. Apart from measuring retention, companies must take into account interviewing old consumers for the purpose of learning their reasons for switching. Consumer defections might have been caused not by the company itself, but by aspects beyond its control.
Baron, Conway and Warnaby (2010) discovered six main types of defections. The first one is price i.e. consumers switch for lower prices. Next is product i.e. they prefer buying a high quality product. Third is for augmented level of service. The next one is for a distinct market i.e. for instance a transport company which has shifted out of road haulage and hence no longer purchases trailers. Fifth one is technological i.e. a consumer who has changed from using one technology to another, for instance from word processors to multipurpose PCs. The last type is organizational i.e. switches that are made because of political pressure. Nonetheless, companies could find difficulty in persuading their old customers to consent to interviews. Furthermore, a long lapse of time between the interview and defecting can make it tough for old consumers to remember their reasons for defecting.
Consumers defect and stay for a number of reasons. Clark and Baker, (2007) discovered eight main causes of switching attitude in service sector: core service failures, inconvenience, price, ethical problems, competitive issues, involuntary factors, service encounter failures and unsuccessful employee responses to service failures. The author discovered that out of these eight behaviors, six are controllable by the provider of the service. These findings present an opportunity for companies to create barriers in order to prevent consumers from switching. It is possibly unrealistic to expect all consumers to stay with the company for an indefinite time. Not only do consumers purchase on a portfolio basis, but companies need to accept that a certain percentage of consumers will leave time and again for a range of reasons (Foss and Stone, 2001). A strategy which will allow companies to cope with this condition is customer portfolio management. It entails an evaluation of the company’s consumer portfolio with a view of creating a specific balance of consumer groups prior to reorganizing the company for consumer retention. A consumer portfolio can consist of various groups of consumers each with distinct purchase behaviors, like the first time purchasers, last time buyers, switched-away-then-return buyers and repeat buyers (Clark and Baker, 2007). Three aspects should be taken into account when companies seek the right balance in their portfolio. First is how quickly can customers see the differences in products. When products are chosen based on “objective” superiority, like in case of luxury cars, retaining consumers is comparatively easy than if they are chosen on a subjective criteria, like in case of cosmetics. The companies then use a consumer-retaining marketing mix and reorganize themselves for consumer retention. Some of the retention strategies are providing product extras, giving post-purchase communication, giving specialized distribution, giving sales force connection etc. Reorganization for consumer retention entails establishing a realistic target for consumer turnover, setting executive accountability for retaining consumers and enhancing internal coordination by targeting promotional strategies towards repeated usage (Butscher, 2002).
Effectual and successful marketing begins with a well-informed and considered marketing strategy. An effective marketing strategy assists the company in defining the vision, mission and business objectives. Marketing success can be attained in its true sense when the marketers are able to successfully distinguish company’s products and services from that of its competitors. The key success factors that make up marketing success are achievement of marketing objectives within the stipulated time line and resources, increase in the company’s goodwill and brand image, capturing the entire target market through the promotional initiatives and taking the sales to a high level. If all these parameters are met then the company is said to have attained marketing success (Terblanche and Boshoff, 2010).
Consumer retention must be a significant business objective. Nonetheless, the selection of relevant strategies might be affected by the nature of product, buying behavior of customers and the phase of the product in its life cycle. In healthcare services, it is not feasible to focus on offering services to the most profitable section as this may lead to neglect of other areas of illness management. In the case of corporate banking, the short term profit needs of shareholders and management and the credit driven culture has led to a dearth of actual commitment to long standing relations (Gee, Coates and Nicholson, 2008). This is driving banks to espouse short term opportunistic attitudes. There may be arguments that it is not essential to extremely concerned with consumer retention if the goods being sold produce dependency such as in the case of medicine. Consumers are bound to repurchase them irrespective of any retention initiatives (Zhang, 2008).
When a company penetrates a new market, it finds relevance in acquisition of new consumers. Sellers might also perceive it as futile to try to retain some organizational consumers because of their purchase behaviors. Public departments, for instance, follow mandatory competitive tendering as their means of taking the buying decisions, wherein the main consideration is price. Government purchase of military aircrafts, warships and other defense equipment also tend to have a highly stretched purchase interval. Buying decisions are normally headed by a phase of extensive negotiations that involves many parties. Under such situations, sellers are more inclined towards winning tenders and increasing revenues from a specific contract or sale (Ferrell and Hartline, 2010).
Latest advancements in information technology have allowed a novel form of relationship development which is way beyond the fundamental exchange of physical products and services and above the structural, social and financial facets of buyer-seller relationships. Prospective consumers, for instance, might be drawn into a gateway or portal which in return presents hyperlinks to different suppliers of products or providers of services. Hence, consumers are persuaded to continue purchasing from the same suppliers due to the information links (Fill, 2005).
Nothing is more crucial to the failure or success of a fast food chain than what the consumers say or think about its services and food. These eating outlets experience regular influx of traffic and are busy almost all the year round. As a thumb rule, the fast food joints that comprehend and appreciate the importance of consumer loyalty are the ones having the highest likelihood of thriving. On the other hand, those which do not understand it, normally experience challenges which can seep into different aspects of operations, entailing overall sales and acquisition as well as retention of loyal consumers and employees (Customer Retention, 2012). Eating outlets which provide a consumer experience which drives engagement and produces powerful referrals on all levels are bound to receive higher returns. The experience of customers has a direct impact on renewals, repurchase, reputation and referrals. Present day’s competitive marketplace, coupled with word of mouth publicity increases the effect customer loyalty has on the marketing success and financial performance at the eating outlets, and this is especially so with restaurants that are part of a larger system or chain such as Dominos, Pizza Hut etc (Shanker, 2012).
Thus, from the entire literature review it can be concluded that effective management of customer retention carries the potential of presenting considerable advantages to companies in respect of long run profitability. The monetary benefits are conveniently substantiated in terms of augmenting LTV. Organizations also enjoy non-monetary advantages from amplified cooperation, commitment and consumer trust. However, there are some issues which corporations must take into account before starting on a strategy of retaining the existing consumers. Firstly, they need to define consumer retention as suitable for their business so that they able to gain high amount of benefits from it. Secondly, they must choose relevant measures of consumer retention so that appropriate result can be attained through it. Thirdly, companies must formulate and incorporate strategies which are suitable to their business context.
Consumer retention strategies and management are not likely to provide companies considerable advantages if they are merely viewed as an end result of marketing initiatives which chase market share leadership. Nonetheless, it can provide organizations, competitive edge if it were perceived as a long standing tactic of managing prevailing consumers; it is potentially a strong strategy for marketing management.
Moreover, factors that affecting marketing success can be state as knowing the audience so that better product and services can be offered to them, measurable and clear objectives and goals so that strategies can be engaged in this context and also selecting the optimal communication strategies in order to cater the attention of large set of audiences on their side.
Chapter 3: Research Methodology
Research can be understood as a practice of investigating and enquiring about particular facts so that issues or problems that prevailing in any sphere can be best addressed. In present research, main problem is to evaluate the impact of customer retention strategy over the marketing success so that better approach in this context can be practiced by different organizations. However, research methodology is a framework that aids in progressing with research in a preferred manner from which different aspects of research can be addressed in best possible manner and hence on the basis of it, inferences can be drawn with it. This section is involving the discussion upon the methodology that is being incorporate while conducting this research so that better and appropriate results can be obtained from it. Under this, discussion is being incorporated on research philosophy, approach, data collections methods, sampling, data analysis tools, etc (Punch, 2009). This research methodology is highly influenced and structured on the basis of Saunders onion model with a motive to gain most fruitful and sound results. It is a generic model that supports in determining research procedure and also aids in depicting issues that are underpinning while selection of data, analyzing it and other research methods. This particular model involves 5 stages constituting philosophies, approaches, strategies, research choices and research techniques.
This can be understood as framework that helps in conducting research and also supports in addressing research question in a particular manner. It is one of the crucial tasks it aids in collecting, analyzing and evaluating data in a manner from which most desirable results can be attained. In this regard, there are two type of parch that are available to researcher; these are inductive and deductive. Inductive approach can be termed as bottom up approach because it initiates with collection of data over specific subject matter and gradually ends with the development of theory by reaching through different phases such identifying pattern, analysis of information in accordance with research aim etc (Denscombe, 2002). On the other hand, deductive research involves review of existing theories for the purpose of formulating hypothesis out of it in. further, data are then collected so that testing of formulated hypothesis can be done in order to conclude whether those theories applies in real context or not. Due to this nature, deductive can be also be termed as top bottom approach (Scruggs And Masotropieri, 2006).
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Considering the nature of following research, inductive approach is being implemented as data is collected and evaluated first in order to attain sound results over the research aim of analyzing the impact of customer retention strategy for marketing success. This essentially helped in gaining inferences based upon the premises by addressing every research objectives in most effective manner.
Research philosophy can be articulate as sphere that aids in gaining deep insight of the research topic so that different sort of relevant data can be collected in order to draw actual and desired conclusion out of it. For any of the research, it is must required to consider any of the research philosophy so as to meet out with set objectives in an authentic manner. However, interpretivism and realism are two major set of philosophy that helps enquirer to accomplish their task of research study. Interpretivism philosophy is of view that not every set of scenario or research issue can be addressed or sorts out with the help of facts and figures. In this concern, it is required that researcher must incorporate critical thinking against the data that are collected so that inferences can be attained from it (Collis and Hussey, 2003). Beside this, realism philosophy advocates that every set of research issue can be addressed by collecting and analyzing appropriate data. It is being viewed that realism philosophy states that things proved in one scenario is applicable in another situation also (Flowers, 2009).
In this respect, realism is followed entailed so that better analysis and most appropriate results can be obtained by involving different aspects of the subject matter. It can be understand as a philosophy which deals to things that are perceived or known and it is independent upon the schemes, perceptions, beliefs, etc. This assisted in gaining actual impact of customer retention strategy over the marketing success.
This can be understood as a practice that aids in determining the nature of research from which sound steps are being entailed upon collection of data, analysis of the same and gaining inferences out of it. This act as an element which aids in taking appropriate steps so that accurate findings can be obtained along with meaningful inferences. However, there are various types of research type such as exploratory, descriptive, case study, causal, experimental and few others. Exploratory design inclined towards finding problem for which research is being conduct so that desired steps can be taken in order to get rid of it (Lewis, Pun and Lalla, 2004). Further, descriptive research type aids in offering in depth detail about the research issue by gaining idea from different variable of research study. Under case study, a scenario or excerpt is focused majorly so that conclusion can be drawn by evaluating the same. Cause and effect relationship is being considered into causal design (Franz, 2007). Considering all these, descriptive type of research is being employed in current research in order to gain exact idea about the impact that customer retention strategy possess in attaining marketing success. For this, Dominos is being focused and hence variable related to this organization is discussed and evaluated so that extent of impact can be gained. This design is also being incorporated so that steps can be incorporated for boosting the rate of marketing success for Dominos.
This acts as an approach or sphere that aids in conducting enquiry in appropriate way so that every set of objectives can be addressed. Also it is a base from which desired research question and objectives are developed. Further, type of research supports researcher in collecting data of particular sort so that better analysis tools can be employed in order to draw conclusion from it. However, different research types are qualitative, quantitative and mixed methods. Qualitative research type involve descriptive sort of data in research so that research aim can be addressed desirably (Neville, 2007). Contrary, quantify sort of data are being incorporated in quantitative research types and hence various statistical and mathematical tools are employed over it for attaining results out it. Beside this, both qualitative and quantitative types of data are being engaged in mixed methods so that a balanced approach can be developed for the purpose of conducting with research (Saunders, Lewis and Thornhill, 2003).
However, preset research is focusing over analyzing of impact that customer retention strategies possess over marketing success; therefore, qualitative set of research type is essentially justifying in this regard. With the help of it, theoretical description is entailed so that actual impact and its extent are being attained that act as a base for framing findings from it.
For any research, it is required to collect data of different sort because it is a key elements that helps in identifying pattern and also helped in addressing research question effectively. Data act as a base for the outcome because it offers evidence to researcher about particular situations. In this context, there are two types of data collection methods, i.e. primary and secondary. Primary data is a firsthand data which is being collected by enquirer as per their needs and wants. This can be collected with different modes such as interview, survey, focus group and observations of respondents (Lodico, Spaulding and Voegtle, 2010). On the other hand, data that are already being existed in any form is termed as secondary data and hence it is reviewed for the purpose of gaining deep insight of the subject matter and hence ultimately assists in progressing with researcher in a desired manner (Kothari, 2004). This set of data can be collected from modes like journals, magazines, books, internet articles, blog post, newspaper, scholarly content, etc.
In present research both data collection source is being addressed with a motive to gain sound inferences from this research and also to progress with this in a desired manner. Under primary source, interview and survey method is entailed. Interview is being organized for top level officials of Dominos with the help of semi structured questions so that rational view in this regard can be attained. Further, survey is done with the help of structured questionnaire methods in order to collect data from customers of Dominos. Under this, structured questionnaire is utilized that possess close ended questions and it is being circulated through e-mails that were obtained from feedback form of Dominos. Additionally, secondary form of data is collected from sources like journals, magazines, books, internet articles, blog post, newspaper, scholarly content, etc.
For any research, it is required to collect data from set population so that research aim can be addressed in desired manner and also actual results can be gained. However, it is not possible to address every member of population and therefore it requires certain criteria from which set population can be bifurcated into small samples. Among these samples best suited one can be choose so that various information of population can be obtained from one sample group only (Gregory, 2003). This assists in saving time and also helps in confining research information in order to analyze those in most effective manner. However, this can be done either with probabilistic method, in which every set of population possess an equal opportunities of getting select into sample, or can be done with non probabilistic sampling, that includes irregularity in selecting respondents from populations (Tsiotsou and Ratten, 2010).
In present study, probabilistic sampling is being taken into account for selecting two set of respondents. In this context, systematic sampling techniques is being utilized for selecting top level managers of Dominos in order to gain different sort of data from their side. Further, simple random sampling is also being employed in current study for the purpose of selecting customers of Dominos from UK region in order to gain information about their view regarding customer retention strategies that are being employed by Dominos. Sample size for managers is decided as 5 so that information with different viewpoint can be gained with the help of interview. This assisted in gaining sound inferences by considering different aspects. Moreover, 30 customer of UK region is decided in order to gain handful amount of data from their side.
Besides collecting data, it is also required to analyze the same in order to draw inference from it based upon findings. In this context, there are two different sorts of data analysis techniques namely qualitative and quantitative data analysis tools. Qualitative analysis involves theoretical discussion over subject matter for the purpose of gaining findings from it. Further, quantitative analysis involves implementation of statistical and mathematical tools over data in order to analyze data so that results from it can be attained by interpreting it (Collis and Hussey, 2003). Considering this, mixed method of data analysis method is being utilized that involved both qualitative and quantitative methods of analysis. Under qualitative method, thematic technique is being taken into account in which analysis is done by formulating different themes considering questions of survey and interview. Moreover, graphical representation is also being used for quantitative analyses in which bar graphs, pie charts, etc. is being incorporated. This certainly assisted in gaining appropriate results from the data that are being collected from different modes.
With the conducting of this study, it is being cleared that customer retention strategies certainly plays a crucial role in attaining marketing success and also it supports in boosting the number of responses from target audiences. It can also be state that companies have to entail different sort of strategies and practice in this regard so that they can able to retain more of customers on their side. As discussed in literature review section, with retaining customers, they can able to boost their sale which substantially leads into boosting of their market share and profit margin. It can be state with this that acquiring new customer from the target audiences involves huge cost and expenses to company and therefore, retaining existing customers is much better option from which regular boosting of profit margin can also be attained in a significant manner. Further, latest advancements in information technology have allowed a novel form of development of relationship which is a way beyond the fundamental exchange of physical products and services and above the structural, social and financial facets of buyer-seller relationships. Customer retention calls for some attention and must form a component of the strategic marketing objectives of the company rather than merely being viewed as the eventual result of ‘good’ marketing management. Nonetheless, companies trying to integrate consumer retention strategies and goals into their strategic planning process ought to take into account practical issues.
Additionally, it can be concluded that majorly quality and value for money are the elements that are being focused by organization with a purpose to boost the level of retention in their operations. Also, it helps in acquiring more of customers on their side which is turn reflects the situation of marketing success. However, there are various other practice also through which an organization can perform the practice of retaining customers but in case of fast food industry, cited elements plays a key role and therefore same are being implemented by Dominos so that they able to cater the attention from large set of audiences. This can also be concluded with this that customer retention practice essentially assists in achieving the goals of the organization. Also, it helps Dominos in attaining an edge over their rivals by gaining regular purchase from their customers. This also boosts the rate of customer loyalty over a period of time. Another set of practices that are being implemented by majority of organizations for boosting the retention level in an organization is offering of products and services as per the needs and wants of customers so that effectual results can be attained with it.
In addition to it, it is also being found that marketing success can be affected with various factors such as customer orientation and selection of optimal communication strategies. Dominos being a multinational brand perform sound market research before implementing any marketing practices as stated by one of the top officials of Dominos. This supports them in getting rid of the situation of deviation in their marketing success and also aids in boosting their efficiency in much effective manner. Further, it is also being found with this study that Dominos able to gain benefits of regular purchase from their customer retention strategy and this situation gets further strengthen with marketing practice that are being employed by them and same is being replicated from reviewed literature. Company is able to attract more of customers through their marketing that certainly leads to success of their promotion activity. In addition to it, high brand awareness is another impact that is being enjoyed by Dominos from their retention tactics. It can also be conclude with the collected responses of managers that their customer retention strategies certainly supports in boosting the efficiency of the firm as it helps in attaining loyalty from their customers. This gradually leads to marketing success for Dominos because loyal customer acts as a medium of reaching marketing communication to ultimate audiences in far effective manner. Further, it aids in gaining high amount of responses that gradually leads to attainment of marketing success. It is also being observed that organization able to boost their competency with this practices and they able to attain an edge over their rivals in a considerable amount of time frame. Dominos with the help of customer retention strategies that involve quality and value for money able to enhance their customer base and also this aids in boosting number of loyal customers in an effectual manner. Overall, this is being cleared that Dominos are able to attain marketing success with the help of their different retention strategies and it causing a positive impact over the firm's operations.
Type: Case Study I
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