Customer Loyalty Essay

4050 words - 17 pages

Research Project Applied Business Methods (BAB-08) 2007/2008

Customer Loyalty


Section 1: Introduction 1
Section 2: Background Customer Loyalty 2
Section 3: The research question 3
Section 4: Student tasks 3
Section 5: Description of the data 4
Section 6: Layout and content of the research report 6
Section 7: Procedural issues 8
Some references 10

Section 1: Introduction

This document describes the background, objectives and procedures of the research project of Applied Business Methods (BAB08), 2007/2008. The theme for this year is to investigate customer loyalty. Customer loyalty is viewed as the strength of the relationship between an ...view middle of the document...

They cost less to serve, they are usually willing to pay more than other customers, and they often act as word-of-mouth marketers for your company. Corporate expenditures on loyalty initiatives are booming. The top 16 retailers in Europe, for example, collectively spend more than 1$ billion in 2000. For the last decades, the gospel of customer loyalty has been repeated so often and so loudly that it seems almost crazy to challenge it.

Jacoby and Chestnut (1978) carried out a meta-analysis on loyalty. Based on their extensive study, they proposed to define brand loyalty as the biased (i.e. non random) behavioral response (i.e. purchase) expressed over time by some decision-making units with respect to one or more alternative brands out of a set of such brands and is a function of psychological (decision making, evaluative) processes. They stated very clearly that loyalty can only be attained by having both an attitudinal and a behavioral component. Oliver (1997) defined customer loyalty as a deeply held commitment to rebuy of repatronize a preferred product/service consistently in the future, thereby causing repetitive same-brand or same-brand set purchasing, despite situational influences and marketing efforts having the potential to cause switching behavior.

Satisfaction is essential for loyalty, but satisfaction alone is not enough to build loyalty. Even though a lot of attention has been paid to loyalty, both from a research perspective and from a managerial, practice perspective, there are still unsolved issues. What determines customers to be loyal? What category specific factors influence customer satisfaction? And so on.

Section 3: The research question

The goal of this research project is to investigate what the determinants are of customer loyalty within a specific service industry, namely customer loyalty towards an insurance company. The company wants you to find out what variables influence customer loyalty.

Following the background sketch, the research question for this project may be formulated as:

Section 4: Student tasks

Your task in this project is to analyze the research question by means of a thorough statistical analysis and to present your findings in a readable and well-documented report. This has several implications.
(1) You have to develop some understanding of the subject by yourself. Search the Internet or consult the library (EUR library databases; particularly, the ABI/Inform Global via Internet-link and Jstor may be useful) to find more information on this topic. Focus on marketing literature, what does prior research conclude about customer loyalty and its determinants. What does prior research conclude for the service industry in general and the insurance industry specifically? It is definitely not required to become a specialist in this area, a basic understanding will do. Please limit your time investment in this respect.
(2) You have to develop a causal relations...

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