International Research Journal of Applied and Basic Sciences © 2013 Available online at www.irjabs.com ISSN 2251-838X / Vol, 5 (2): 214-220 Science Explorer Publications

A study of the relationship between relationship marketing tactics and conflict management with

customer loyalty in the Private Banks in Kermanshah province.

Saadi GHasemi1, Reza Hashemi1, Babakjamshidi Navid1

Department Of Commercial Management, Kermanshah Branch, Islamic Azad University, Kermanshah, Iran.

Corresponding Author email: saadighasemi@gmail.com

ABSTRACT: Intense competition in the markets and understand the importance of customer retention for banks, especially private banks, led inclined them to take steps to establish and maintain long-term relationships with customers. According to the researchers, relationship marketing tactics and managing conflict is one of the best options for achieving this purpose. Thus, the aim of this study is to investigate the effect of customer relationship marketing tactics and conflict management in private banks in province of Kermanshah. Eleven hypotheses were proposed for this purpose, the research method is descriptive – co relational and typically is based on structural equation model (AMOS) and the goal is practical. The society is clients of private banks and cluster sampling was used, the number of samples is 246. Observations related to questionnaire and variables of each question in hypothesis were presented with a scale of 1 to 20. The results showed that the impact of relationship marketing tactics by intermediary variables of satisfaction and trust ultimately has a positive and significant effect on customer loyalty and conflict management has a significant and positive effect on loyalty directly too. Key words:Relationship Marketing Tactics, Conflict Management, Trust, Satisfaction, Customer Loyalty

INTRODUCTION

As the competitive environment becomes more turbulent, the most important Issue is no longer to provide excellent or good quality products or services, but also to keep loyal customers who will contribute long-term profit to organizations (Tseng, 2007). Therefore, relationship marketing has become an alternative means for organizations to build strong, ongoing associations with their customers. As a part of marketing strategy, relationship marketing seek to acquire and retain customers by providing good quality customer services, and therefore has become one of the keys to success in acquiring strong competitiveness in the present markets (Andaleeb, 1996). Relationship marketing has received much attention in both academy and practice areas in the last few decades. It was during the last decade of the 20th century that relationship marketing began to dominate the marketing field (Egan, 2001). During this period relationship marketing became a major trend in marketing and management business Relationship marketing is concerned about building customer loyalty by providing value to all the sections involved in the relational exchanges (Peng and Wang, 2006), In order to create a personal and business relationship with customers we should attract and keep them satisfy. Customers interested in relationship marketing programsenhancethe flow of information between bank and customer and Positive sense of customers to bank. So the important issue is a good understanding of target customers and establishing good relations with them. Today, the challenge for providers of banking services is attracting more customers, focusing on building good relationships with them, Creating satisfaction and trust, and building loyalty with them through marketing tactics and conflict management. Iranian banks should gradually come to understand the need of the customer and move in order to provide understanding and satisfying customer wants and needs and more than ever follow the satisfaction process. One goal of the banks is implementing strategies to increase customer loyalty and necessary

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to accomplish this goal is to create an appropriate relationship marketing strategy with customers and managing conflict. Literature Service Quality Service is different from physical products. Compared with physical products, Service isthought to be intangible, heterogeneous, produced and consumed simultaneously, unable to bekept in stock, etc. A widely accepted definition of service is proposed by Grönroos in 1990 as:“A service is a process consisting of a series of more or less intangible activities that normally,but not necessarily always, take place in interactions between the customer and serviceemployees and/or physical resources or goods and/or systems of the service provider, whichare provided as solutions to customer problems” (Grönroos, 2000). Price Price is the monetary cost for a customer to buy products or services. It is the critical determinant that influences customer buying decision. Customers usually select their service providers strongly relying on perceived price. How much consumers are willing to pay differs due to their different needs and wants. Thus, the price perceptions to the same service products may differ among individuals. Higher pricing perceived by consumers might negatively influence their purchase probabilities (Peng and Wang, 2006). Brand Image Brand concept has been frequently discussed in marketing literatures. Brand building is not only an important driving force for marketing physical products, it is also a vital issue for service firms. Brand image was defined by Keller (1993) as the “perceptions about a brand as reflected by the brand associations held in consumers’ memory.” It is thought as the perception or mental picture of a brand formed and held in customers’ mind, through customers’ response, whether rational or emotional (Dobni and Zinkhan, 1990). Value Offers Customers will judge the value of consumption after contrasting benefits gained from products and services with their costs (Zeithaml, 1988). Service firms provide superior value through enhanced offers can improve customer satisfaction by increasing the customer’s perceived benefits and reducing the loss so that customer retention is improved (Ravald and Grönroos, 1996). Trust Trust is one of the most widely subjects across multi disciplines, including management, economics, philosophy and psychology. Geyskens and Steenkamp (1995) summarized trust as the extent to which a firm believes that its exchange partner is benevolent and honest. Doney and Cannon (1997) emphasized that trust is the perceived credibility and benevolence. Based on above definitions, it is clear that trust is a human characteristic that is based on assessment of one another’s personality traits, motives and behaviors (Chu, 2009). Satisfaction Customer’s satisfaction has been paid much attention among theoretical literatures and practical researches. It is also an expected outcome of implementing marketing activities, as providing satisfying products or services to customers relates to success achieved in today’s tensely competitive world of business. Fornell (1992) defined satisfaction as an overall evaluation dependent on the total purchase and consumption experience of the target product or service performance compared with repurchase expectations over time (Fornell, 1992). Loyalty Customers are the driving force for profitable growth and customer’s loyalty can lead to profitability (Hayes, 1998). For a customer, loyalty is a positive attitude and behavior related to the level of re-purchasing commitment to a brand in the future (Chu, 2009). Loyal customers are less likely to switch to a competitor solely because of price, and they even make more purchases than non-loyal customers (Bowen and Shoemaker, 2003). Conflict Management

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Conflict management, is identifying and managing conflicts in a reasonable, fairly and efficient manner. Conflict can be managed with skills like effective communication, problem solving and negotiation. Our ability to manage conflict management can affect the results. To manage conflict before anything else, it must be identified and analyzed and examined the causes of the conflict. After identifying the conflict and its causes, the key point in conflict management is choosing the right style (Robbins 1997). Background research Berry was the first one who used the term of relationship marketing in 1983, it will be indicated that early attempts to formulate a general theory of marketing already included a relationship perspective. However, this perspective did not have the importance it has gained today, because the environmental factors were not as strong as today (Toivo, 1996). Parasuraman,and others (1988˒ 1991) and Grönroos (1984), defined service quality as the difference between Customer expectations of service received and his perceptions of the service that truly has received (wang 2003, 72-83). Price is the monetary cost for a customer to buy products or services (Peng and Wang , 2006). It is the critical determinant that influences customer buying decision. Cheng et al. (2008) proposed that price perception can be measured by two dimensions: one is reasonableness of prices, which reflects the way that price is perceived by customers comparing to that of competitors. Another is value for money, which implies the relative status of the service provider in terms of price (Chitty, 2007). Value is customer’s option criteria and a comparison that customers do between payments and received benefits. In today's competitive world, successful companies are those that create more value for their customers and according to "Sergio Zeymen» offers more reasons to customers that would encourage them to purchase and build long-term relationships with company(Daragi, Parviz, 2006. Conflict is a process in which an person findsthat another person has affected negatively on what he follows or is a process that a person deliberately tries to obstacle the success of others (Rezaeian, 2001). Cutler (2001) defined Customer satisfaction as a degree that actual performance of a company to meet customer expectations. Satisfaction is Customer ‘evaluation after purchasing a service that has been made from the result ofconsuming experience (Divandari&Delkhah, 2005). Customer satisfaction can be considered as the ultimate basis in the modern marketing. Customer satisfaction can lead to some behaviors such as loyalty and positive word of mouth advertising (Abdul-Mauhmin, 2002). Sin and colleagues (2002), defines trust as a belief in a relationship to reliable statements and other commitments. Loyalty is a strong commitment to purchase a product or service in the future, so the brand or product is purchased despite the impact of marketing efforts and potential competitors (Sin and others, 2002). Hypotheses Service quality has a significant positive effect on trust in private banks. Service quality has a significant positive effect on satisfaction in private banks. Price has a significant positive effect on trust in private banks. Price quality has a significant positive effect on satisfaction in private banks. Brand image has a significant positive effect on trust in private banks. Brand image has a significant positive effect on satisfaction in private banks. Value Offers has a significant positive effect on trust in private banks. Value Offers has a significant positive effect on satisfaction in private banks. Trust has a significant positive effect on loyalty in private banks.

Satisfaction has a significant positive effect on loyalty in private banks. Conflict Management has a significant positive effect on loyalty in private banks.

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Expression of variables in a model

Figure 1.Conceptual model Research Methodology This study is descriptive - correlational survey which is among the practical research. Information needed for the research literature has been gathered from books, Persian and Latin magazines and extracted articles from the Internet. The questionnaire of effect of relationship marketing tactics on customer loyalty (Xuan Zhang&YuanyuanFeng) for data is used. Validity of questionnaire was approved by a group of university professors and for the reliability of the questionnaire, Cranach’s alpha was 0.970. To investigate the relationship between the independent and dependent variables and research hypothesis˒ Spearman test is used by using SPSS software. For causal relationships between marketing tactics and conflict management and to review the components by using AMOS software (Structural Equation Modeling) of relationships between variables are modeled. The population of this study is customers of private banks in Kermanshah which they were selected based on the number of cluster are 246. Analysis of data Test Kolmogorov- Smirnov First, we examine the assumptions and then check the normality of variables. For this purpose, nonparametric Kolmogorov- Smirnovtest is used. This test will examine the following hypothesis: H0: The normal distribution of the variable H1: The abnormal distribution of variable The following table shows the result of the test from SPSS output:

Table 1. SPSS output of Kolmogorov- Smirnov test

Variable symbol

Variable p-value (sig) Confirmed hypothesis Conclusion

Y1 Service quality 0.05 H0 Normal Y2 Price 0.01 H1 Abnormal Y3 Brand image 0.01 H0 Abnormal Y4 Value offers 0.27 H0 Normal Y5 trust 0.09 H0 Normal Y6 satisfaction 0.07 H0 Normal Y7 loyalty 0.05 H0 Normal Y8 Conflict management 0.00 H1 Abnormal

Service Quality

Price

Brand

Value Offers

Conflict Management

Loyalty

Trust

Satisfaction

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Review of assumptions Based on the Spearman correlation:

Table 2.the Spearman correlation of assumptions

Hypotheses Research hypotheses text Sig The correlation coefficient

Results

Hypothesis 1 There is a significantly positive relationship between service quality within trust in private banks.

0.000 0.689

Confirmed

Hypothesis 2 There is a significantly positive relationship between service quality within satisfaction in private banks.

0.000 0.75

Confirmed

Hypothesis 3 There is a significantly positive relationship between price within trust in private banks.

0.000 0.703 Confirmed

Hypothesis 4 There is a significantly positive relationship between price within satisfaction in private banks.

0.000 0.583

Confirmed

Hypothesis 5 There is a significantly positive relationship between brand image within trust in private banks.

0.000 0.656

Confirmed

Hypothesis 6 There is a significantly positive relationship between brand image within satisfaction in private banks.

0.000 0.650

Confirmed

Hypothesis 7 There is a significantly positive relationship between value offers within trust in private banks.

0.000 0.673

Confirmed

Hypothesis 8 There is a significantly positive relationship between value offers within satisfaction in private banks.

0.000 0.613

Confirmed

Hypothesis 9 There is a significantly positive relationship between trust within loyalty in private banks.

0.000 0.810

Confirmed

Hypothesis 10 There is a significantly positive relationship between satisfaction within loyalty in private banks.

0.000 0.777

Confirmed

Hypothesis 11 There is a significantly positive relationship between conflict management within loyalty in private banks.

0.000 0.802

Confirmed

The path analysis for model is as follows 4.42 1.48

0.24 1.64 0.48 0.47 8.34 0.23 1.66 0.08 0.34 2.94 0.27 0.29 0.29 8.90 0.13 5.84 0.07

Figure 2.General model

Service

Quality

Price

Satisfaction

Trust

Brand

Image

Value

Offers

Conflict

Manageme

Loyalty

e 1

e 2

e 3

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As can be seen in the model, regression coefficients of variables (independent variables), and (dependent variables) are given in the figure. Then, the AMOS output related to the model is described. The following table shows the regression coefficients estimated by AMOS.

Table3: Regression coefficients table In the second column of the table the estimated regression coefficients are shown.The biggest factor is for the impact of service quality on customer satisfaction and trust on customer loyalty.The third column is the error in the estimated regression coefficientsand the fourth column shows the coefficient estimate divided on the estimate of the error that this divide obtains weighted regression. The highest estimate for weighted regression is for the effect of service quality on satisfaction equal to 7.39 and the lowest value is for the effect of value offer on satisfaction equal to 1.17. In the last column the level of significance for the estimated coefficients has been shown and as it can be seen the coefficients related to two factors are not significant at α=0.05 because the P-value obtained is 0.05. For this model, the statistic for K2is equal to 311.34 and with 17 degrees of freedom and significance level is 0.000. Because of this significance level, we conclude that the regression model was fitted between the dependent variables, independent variables were significant. AMOS output at the occasion of the model is as follows:

Table 4.output at the occasion of the model

AIC RMSEA CFI IFI RFI NFI GFI AGFI RMR 49.34 0.064 0.901 0.909 0.768 0.895 0.865 0.834 0.095

In the table variables RFI, AGFI, GFI NFI, IFI are large numbers that confirms the model and because the RMSEA statistic is less than 0.08, then the model is an acceptable model. The recommendations and conclusion

CONCLUSION According to findings, the main hypothesis of this study are based on the relationship between relationship marketing tactics and conflict management on customer loyalty in private banks, with the correlation coefficient of 0.689 and a significance level of 0.000 between Service quality and Trust, significant correlation coefficient of 0.75 in 0.000 between service quality and satisfaction, correlation coefficient of 0.703 significant at the level of 0.000 between price and trust, the correlation coefficient of 0.583 with a significance level of 0.000 between price and satisfaction, correlation

variables regression relationship Estimated regression coefficient

Estimated error

estimated coefficient ÷ estimated error

p-value

Trust <--- Price 0.227 0.045 5.062 *** Satisfaction <--- Brand image 0.286 0.080 3.578 *** Satisfaction <--- Value offers 0.067 0.057 1.172 0.241 Trust <--- Brand image 0.275 0.076 3.629 *** Trust <--- Service

quality 0.238 0.062 3.864 ***

Satisfaction <--- Service quality

0.482 0.065 7.391 ***

Satisfaction <--- Price 0.077 0.048 1.613 0.107 Trust <--- Value offers 0.127 0.54 2.363 0.018

Loyalty <--- Satisfaction 0.339 0.084 4.039 *** Loyalty <--- Conflict

management 0.292 0.046 6.375 ***

Loyalty <--- Trust 0.469 0.092 5.82 ***

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coefficient of 0.656 at a significance level of 0.000 between brand image and trust, correlation coefficient of 0.650 at a significance level of 0/000 brand image and satisfaction, Correlation coefficient of 0.673 at a significance level of 0.000 between the value offers and trust, correlation coefficient of 0.613 at a significance level of 0.000 between value offers and satisfaction, correlation coefficient of 0.810 at a significance level of 0/000 between trust and loyalty, correlation coefficient of 0.777 at a significance level of 0.000 between satisfaction and loyalty, correlation coefficient of 0.802 at a significance level of 0.000 between conflict management and loyalty was approved. According to the regression coefficients between relationships marketing tactics have a significant effect on satisfaction and trust. Satisfaction, trust and loyalty influences on conflict management means that as the independent variable increases, the promoted customer loyalty of private banks will follow. The correlation between the variables is linear this means that they increase or decrease together, correlation between the variables is extremely high, Thus, the main hypothesis of the study are approved, the results of this study corresponds with Ranjbarian B., M. Barari (2009), Juan Zhang, Yuan Yuan, Feng (2009). The results indicate that in private banks the intermediary variables of trust and satisfaction, respectively influence on loyalty with 0.47 and 0.34 and conflict management has affected 0.29 on customer loyalty, thus the conscious vision to influence of each of relationship marketing tactics used makes resources to be used optimal and if there is a less effective tactic using conscious the tactics could be strengthened.

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