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“Factors influencing the relationship marketing strategy towards fashion retailers in UK: A case study of Marks and Spencer” Name: A Dissertation submitted for the qualification on Masters of Business Administration (MBA) University of Wales Institute, Cardiff (UWIC) Date of Submission: September 24 th 2010

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“Factors influencing the relationship marketing strategy towards fashion

retailers in UK: A case study of Marks and Spencer”

Name:

A Dissertation submitted for the qualification on Masters of Business Administration

(MBA)

University of Wales Institute, Cardiff (UWIC)

Date of Submission: September 24th 2010

SIGNED STATEMENT

“I declare that this dissertation has not already been accepted in substance for any degree

and is not concurrently submitted in candidature for any degree. It is the result of my own

independent research except where otherwise stated”.

Name:

Signature:

ABSTRACT

In the $40 billion customer relationship management (CRM) and services market, more than

half of all customer relationship programs fail. The problem with relationship marketing is not a

lack of understanding about customer retention benefits, but rather the problem may lie in

misunderstanding and disregarding the nature of relationship development. The aim of this

study is to “map” a customer relationship factors through its developmental stages of M&S.

This research, therefore, focuses on the aspect of relationship marketing between a customer

and M&S, from the customer's point of view. The researcher proposes that customers do not

experience brand relationships completely separately from store relations; nor do customers

experience seller or store relationships completely separately from salesperson relations.

Rather, this study seeks the realistic, holistic experience of stages from the customer's point of

view. This study's objective is to understand how a customer relationship unfolds. It is proposed

that one developmental stage leads to the next in an awareness-exploration-growth-commitment

model. Furthermore, key factors such as emotions, trust, satisfaction, and amount of purchases

may fluctuate according to stage. For this particular study, a detailed literature review was done

on ‘relationship marketing development strategy’ and therefore a deductive approach was used

in this research. Both the quantitative and qualitative approaches were used for this specific

study in order to reach the most comprehensive conclusions. To create the sampling population

100 customers were randomly selected to assist comparison and to avoid any unintentional

tampering of the sampling population. Two CRM managers were also selected from M&S in

order to focus group discussion. The implications of this study are that relationship marketers meet

customers "where they are" in the relationship stages. If relationship marketers match customer

communication in depth and breadth considering the customer's stage and level of trust, relationship

marketers may earn a functional, long-term, committed customer relationship. Recommendations include

not only planning for stages (particularly the exploration stage), but also an inter-disciplinary

consideration of sustainability, well-being, and the application of interpersonal relationship

maxims.

ACKNOWLEDGEMENT

First of all I would like to thank all the faculty of London School of Commerce, London

involved in Masters of Business Administration. In particular I am grateful to my supervisor

(supervisor name) for his endless guidance and incentive give throughout the dissertation.

I would also like to thank all the management/ employees of Marks & Spencer who have given

their time and information to complete the thesis.

Finally, my deepest gratitude goes to my parents, my husband for supporting me throughout.

Table of Contents

Title Page

Declaration

Abstract

Acknowledgement

1.1 Company Overview “Marks and Spencer”……………………………………..

1.2 Theoretical Background…………………………………………………………

1.3 Research Problem………………………………………………………………..

1.4 Research Questions………………………………………………………………

1.5 Research Aim and Objectives…………………………………………………...

1.6 Significance of the Study………………………………………………………..

1.7 Research Framework……………………………………………………………

2.1 Customer Relationship…………………………………………………………..

2.2 Relationship Marketing………………………………………………………….

2.3 Elements of Relationship Marketing Strategy………………………………….

2.3.1 Storing Database……………………………………………………………….

2.3.2 Analysing Purchase behavior…………………………………………………

2.3.3 Enhance buyer-seller transaction…………………………………………….

2.3.4 CRM system………………………………………………………………………..

Chapter 1 Introduction

Chapter 2 Literature Review

2.4 Reasons why firms pursue Relationship Marketing Strategy……………………..

2.4.2 Identify potential customers……………………………………………………

2.4.3 Cost effective marketing channel………………………………………………

2.4.4 2.4.3 Customer Retention……………………………………………………….

2.4.5 Better understanding of customer’s feedback………………………………...

2.4.5 Relationship marketing leads to reference marketing…………………………

2.5 Relationship marketing stages……………………………………………………...

2.5.1 Awareness Leads to Exploration…………………………………………………

2.5.2 Exploration Leads to Growth…………………………………………………….

2.5.3 Growth Leads to Commitment……………………………………………………

2.5.4 Factors Influencing the Long-Term Relationship Marketing Strategy……….

2.5.4.1 Emotion…………………………………………………………………………...

2.5.4.2 Awareness…………………………………………………………………………

2.5.5 Exploration and Individualistic Emotion………………………………………...

2.5.6 Growth Prosocial, and Reptilian Emotion……………………………………….

2.5.7 Commitment, Prosocial, and Reptilian Emotion………………………………..

2.5.8 Growth and Trust………………………………………………………………….

2.5.9 Trust and Commitment…………………………………………………………...

2.5.10 Growth, Satisfaction, and Commitment………………………………………..

2.5.11 Customer Commitment and Purchases…………………………………………

2.6 Conclusion……………………………………………………………………………

Chapter 3 Research Methodology

3.1 Research Approaches…………………………………………………………………

3.1.1 Deductive Approach…………………………………………………………..........

3.1.2 Inductive Approach………………………………………………………………...

3.2. Qualitative Approach………………………………………………………………..

3.3 Quantitative Approach……………………………………………………………….

3.4 Research Strategies……………………………………………………………………

3.4.1 Survey………………………………………………………………………………..

3.4.2 Case Study…………………………………………………………………………...

3.5 Purpose of the Research………………………………………………………………

3.5.1 Exploratory Research……………………………………………………………….

3.5.2 Descriptive Research………………………………………………………………...

3.5.3 Explanatory Research………………………………………………………………

3.6 Data Collection Instrument…………………………………………………………...

3.6.1 Primary Data………………………………………………………………………...

3.6.2 Secondary Data………………………………………………………………………

3.7 Research Sampling……………………………………………………………………..

3.7.1 Research Population………………………………………………………………….

3.7.2 Sampling Frame………………………………………………………………………

3.8 Samples for Research…………………………………………………………………...

3.9 Selecting the Sampling Technique…………………………………………………….

3.9.1 Probability Sampling………………………………………………………………..

3.9.2 Non-Probability Sampling…………………………………………………………...

3.10 Data Collection Methods & Instruments…………………………………………….

3.10.1 Survey………………………………………………………………………………...

3.10.2 Focus group Interview……………………………………………………………….

3.11 Presentation of Data Analysis…………………………………………………………

3.11.1 Reliability and Validity………………………………………………………………

3.12 Limitations of this Research…………………………………………………………...

3.13 Ethical Issues……………………………………………………………………………

4.1 Customer Survey………………………………………………………………………..

4.1.1 Positive Customer Experience……………………………………………………….

4.1.2 Satisfaction with M&S Store…………………………………………………………

4.1.3 Satisfaction with ongoing Relationship………………………………………………..

4.1.4 Satisfaction towards M&S Employees……………………………………………….

4.1.5 Customer Loyalty………………………………………………………………………

4.1.6 Quality of M&S Products……………………………………………………………..

4.1.7 M&S Fashionable……………………………………………………………………...

4.1.8 Expectation of M&S Fashion-wares………………………………………………….

4.1.9 Importance of Relationship with M&S………………………………………………

4.1.10 Awareness…………………………………………………………………………….

4.1.11 Emotional Attachment……………………………………………………………….

4.1.12 Trust with M&S Product…………………………………………………………….

4.2 Focus Group Discussion………………………………………………………………….

Chapter 4 Presentation of Findings

5.1 Justification of the Research Questions…………………………………………………

5.2 Validation of the Research Objectives…………………………………………………..

5.3 Recommendations………………………………………………………………………...

5.3.1 Planning and practicing for stages……………………………………………………

5.3.2 Internal relationship marketing to employees……………………………………….

5.4 Limitation & Future Research………………………………………………………….

5.5 Concluding Thoughts……………………………………………………………………

Figure 1.1……………………………………………………………………………………….

Figure 1.2………………………………………………………………………………………

Figure 2.1………………………………………………………………………………………

Figure 2.2………………………………………………………………………………………

Figure 2.3………………………………………………………………………………………

Figure 2.4………………………………………………………………………………………

Figure 2.5……………………………………………………………………………………...

Figure 2.6……………………………………………………………………………………….

Figure 2.7………………………………………………………………………………………

Figure 2.8……………………………………………………………………………………….

Figure 2.9………………………………………………………………………………………

Figure 3.1………………………………………………………………………………………

Chapter 5 Conclusions & Recommendations

List of Figures

Figure 3.2………………………………………………………………………………………

Figure 3.3………………………………………………………………………………………

Figure 4.1……………………………………………………………………………………….

Figure 4.1……………………………………………………………………………………….

Figure 4.2……………………………………………………………………………………….

Figure 4.3……………………………………………………………………………………….

Figure 4.4……………………………………………………………………………………….

Figure 4.5……………………………………………………………………………………….

Figure 4.6……………………………………………………………………………………….

Figure 4.7………………………………………………………………………………………

Figure 4.8………………………………………………………………………………………

Figure 4.9………………………………………………………………………………………

Figure 4.10……………………………………………………………………...........................

Figure 4.11……………………………………………………………………...........................

Figure 5.1…………………………………………………………………….............................

References…………………………………………………………….......................................

Bibliography...............................................................................................................................

Appendixes………………………………………………………………….............................

Chapter 1: INTRODUCTION

This chapter starts up with the background of the study, its significance and the problem

statement of the proposed topic. It also outlines the aims and objectives of carrying out this

study along with the research questions.

1.1 Company Overview “Marks and Spencer”

Marks and Spencer, more popularly known as M&S created a

name in the 20th century for their policy to sale only British-made

goods. It initially functioned under the name of ‘St Michael’ in

honor of its co-founder and only sold clothes and food. Another

notable policy that this company maintained was that they gave full cash return for any unwanted

merchandise regardless of when it was bought. Although this policy has been refined to 90 days

now, it created an impact among customers. As the information on the website dictate, Marks &

Spencer Group plc is a British retailer with an empire comprising of 843 stores and spreading

over 30 countries around the world. It has proclaimed its place as the largest retailer in the UK

and the 43rd in the world. Although it initially began as a food and clothing retailer and still

maintains that function in most of its domestic branches, it has recently stepped into a more

demanding field of home-wares and furniture (M&S, 2010).

M&S financially boomed in 1998 when it became the first British retailer to coop a pre-tax profit

of over one billion pounds. However right after the blooming year, it plummeted to a financial

crisis and suffered from that initial fall for several years. This turned around again in the last 2 or

3 decades when it began to enjoy significant growth in its financial area. Despite all this, it has

suffered from the world financial crisis like any other company and experienced its share prices

drop to almost 50% its value in less than 6 months.

The origin of this retailer that has emblazoned its name in customers’ minds all over the world is

quite modest. It started as a single market stall in Leeds in 1884 opened by a simple immigrant

from Minsk, Michael Marks. Later in 1894, the business was joined by Thomas Spencer and was

coined ‘Marks and Spencer’. The first stall is marked with a green and gold clock to

commemorate its first operational store. One of the original stores remains open today and is the

smallest functioning Marks and Spencer stores in the entire world (M&S, 2010).

1.2 Theoretical Background

According to Shajahan (2006), the world of business is going through rapid change. Every

business wants to be ahead of the competition by building a strong phase of customers and

achieving a strong competitive position in the market. In order to do this, a firm develops an

attractive strategy for its target audience as well as develops a sense of direction. But the main

aim is to be consistent at this position and retain their customers by knowing them over the years.

Ferrel (2007) as the time passes by in the field of business; firms have realized that they would

be able to reach their financial goals if they develop long term relationships with their customers.

This means that they need to develop a relationship marketing approach rather than just selling

the customer but not necessarily focusing on their needs and wants which is referred to as

transactional marketing approach. In the former approach, a firms needs to understand that if

they sell anything to the customer of certain value, in his eyes the product which he is buying

should have the same value or an increasing one since this could help the firm to retain the

customer and in this way a long term relationship can be developed between the firm and the

buyer. In the future, if the value of the product which the customer brought increases, the

relationship tree between both of them also grows bringing trust and confidence in the firm

which can now fulfill this customer needs more efficiently.

Chaffey & Mayer (2006) For example: Dell computers in the personal computers industry uses

relationship marketing strategy by manufacturing as well as distributing computers to consumers

as per their specific needs thus in the future these customers are retained by Dell just because

they are satisfied with what they have got from the buyer and in this way a trust is formed

between the buyer and the seller.

According to Gummeson (2007), the field of marketing is grappling with a dramatic

transformation, if the key to business truly is personal relationships, the relationship-marketing

paradigm answers marketing's call for change: "On marketing's backburner for so many years,

relationship marketing now sits on the front burner" (Berry, 2005, p. 237).

According to Morgan & Hunt (2004), relationship marketing is the process of establishing,

maintaining, and enhancing relationships with customers and stakeholders for mutual benefit .

Already implied by the definition, this approach is vastly different from its mass marketing

ancestor because of relationship marketing's long-term, customer-oriented view. Relationship

marketing theory may in part be a conceptual descendent of social change in a postindustrial

society. Whereas mass marketing assumes a win-lose economic paradigm, relationship

marketing pledges win-win success.

Instead of bringing as many customers as one can to the products, relationship marketers start

with their customers and bring products suited to them. Marketing becomes less a battle for

market share and more an effort for greater share of the entire customer's business or "share-of-

customer" for life (Peppers & Rogers, 2009, p.18).

Even the important factors in relationship marketing may be very different from the traditional

marketing factors of cost, product function, accessibility, promotions, etc. Earlier research

(Carson, 1998, IABC) uncovered the "top ten" list of important relationship marketing factors by

asking customers, "What is important in order to keep you as a customer?" The ten most

important factors are reported:

Figure 1.1: Top ten list of important relationship marketing factors (Adapted from Carson,

1998)

These results indicate that relationship marketers need to juggle more sophisticated customer

concerns than traditional marketing would suggest. These introductory paragraphs discuss the

issues driving marketing's calamity and ensuing renovation. The issues of overspending and

unaccountability are leading to a shift toward retention and long-term customer relationships. In

addition, this introduction includes the statement of the problem, the purpose, the significance of

the study, and the research question and objectives (Carson, 1998, IABC).

From an economic point of view marketing has overspent and under delivered (Sheth & Sisodia,

2005, p. 9). Sheth and Sisodia assert that marketing is "feeling the heat" from accountability and

productivity problems (p. 9). Fashion retailers are creating a dizzying array of more products, but

with more competitors. Marketers are spending more money on more media channels to reach

fewer customers with poorer results. While US companies now spend nearly $10,000 per year

per family of four on advertising and promotion, a recent study found that television advertising

returned only 32 cents for every dollar invested (Does Marketing Need Reform, 2004). With

over 3,000 marketing messages bombarding customers each day, the reason for poor return on

investment may be information overload (McKenna, 2001, p. 74),

Relationship marketing answers marketing's accountability problem through a focus on the long-

term profitability of keeping customers for life. Still, although a reorientation toward retention

and long-term customer relationships may theoretically diminish traditional marketing problems,

there are many hurdles to be faced when applying relationship marketing. Many companies have

jumped on the relationship marketing bandwagon in hopes of quick profits, only to conclude that

relationships as a sustainable competitive advantage (SCA) is merely an illusion. Relationship

marketing, as implemented to date, has not proven to be a panacea (Fournier et.al, 2008)

Much like teenagers in love, fashion retailers are trying out relationships have acted in a naive

fashion and have rushed through the relationship's natural stages. Fournier et.al (2008, p. 42)

criticize marketers who are "perverting" the relationship marketing concept by not understanding

customer trust and intimacy. The problem with relationship marketing practice is not the lack of

understanding about retention benefits, but rather the misunderstanding about the fundamental

nature of human relationship development. Fournier et al, recommend that marketers "think

about, and act on, what being a partner in a relationship really means" (p. 49). Now is the time to

learn what it means to be a partner in a relationship.

1.3 Research Problem

Relationship marketing efforts and research have not fully considered the developmental nature

of customer relationships. In this discussion of the problem, the researcher demonstrates the

difficulties encountered by neglecting relationship development. The problem to be addressed in

this study is to understand how the stages in a customer relationship progress by considering the

factors in terms of UK fashion retailers.

Price, Arnould, and Tierney (1995, p. 83) claim that companies recognize the importance of

developing good relationships, yet "it is not always clear how to create and sustain good

relationships." Interest and investment in relationships do not automatically produce healthy,

long-term, customer relationships. Fashion retailers are spending on CRM (customer relationship

management) but are failing in the eyes of their customers. Gartner Group and Meta Group have

documented the problem of spending on CRM technology while failing to embrace the true

values behind relationship marketing. According to the Gartner and Meta Groups, 55% to 75%

of all customer relationship projects fail to meet their objectives and through the year 2006, more

than 50% of all CRM projects will be viewed as failures from a customer's point of view

(Johnson, J., 2004).

Marketing researcher Fournier and colleagues' prognosis is ominous: "Corporate performance

will suffer unless relationship marketing becomes what it is supposed to be: the epitome of

customer orientation…..Relationship marketing is powerful in theory but troubled in practice"

(Fournier et.al, 2008, p. 42).

Not only have relationship marketing efforts failed to engage meaningful, developmentally

appropriate relationships, research on relationship marketing has also neglected the

developmental nature of human relationships. The research has not yet focused on the

developmental stages theoretical perspective and the empirical support for this line of inquiry:

"We have less empirical knowledge about the process of relationship development (than

knowledge of success factors)" (Wilson, D., 1995, p. 335). An investigation of the stages in

customer relationships as variables (awareness, exploration, growth, and commitment) may

reveal a process of relationship development. A study of the developmental stages in relationship

marketing is the next logical step for the field.

1.4 Research Questions

What are the steps followed by firms in order to develop relationship marketing

strategy aiming to make it effective?

What are the factors need to be considered in relationship marketing development

strategy?

What are key challenges faced by firms following relationship marketing strategy in

this global Market?

1.5 Research Aim and Objectives

The aim of this study is to “map” a customer relationship factors through its developmental

stages of M&S. This research, therefore, focuses on the aspect of relationship marketing between

a customer and M&S, from the customer's point of view. Although later studies may concentrate

on a particular customer relationship parsed out with the salesperson, with the store, or with the

brand, this study seeks to capture the general customer experience over the course of the buying

process. Therefore, the salesperson, the store, and the brand will all factor in to the customer

experience of the relationship. This study does not explore brand relationships, for example,

parsed from store relations.

The researcher proposes that customers do not experience brand relationships completely

separately from store relations; nor do customers experience seller or store relationships

completely separately from salesperson relations. Rather, this study seeks the realistic, holistic

experience of stages from the customer's point of view. This study's objective is to understand

how a customer relationship unfolds. It is proposed that one developmental stage leads to the

next in an awareness-exploration-growth-commitment model. Furthermore, key factors such as

emotions, trust, satisfaction, and amount of purchases may fluctuate according to stage. Gaining

insight into the customer experience based on stage may help relationship marketers understand

and meet customers' needs, generate satisfaction, and increase the success of customer

relationship programs. In summary the objectives of the study can be described in the following

way:

To explore the long term relationship development stages of M&S

To understand the importance of customer’s habits, taste, fashion and changing trends

towards M&S

To identify the factors need to be considered in order to maintain long term

relationship marketing

To recommend how consumer loyalty plays an important role in trust based marketing

1.6 Significance of the Study

This study is important because it may contribute to improvements in relationships between

fashion retailers and customers. Relationship marketers could use the findings to manage key

success factors at each critical stage in the relationship and incorporate study results into

strategic planning. Finally, the outcome of the study will benefit marketing theory so the field

can build upon prior knowledge: This study contributes a developmental stages perspective to a

relationship marketing context.

1.7 Research Framework

Figure 1.2: Structure of the Study

Chapter 2: LITERATURE REVIEW

Different theories and models are discussed regarding the topic in this particular chapter

including some of the most relevant researches concerning the matter. The researcher

especially concentrated on the relationship marketing development strategy and identifies the

factors of relationship marketing strategy and also examines the relationship between the

factors from different author’s point of view.

2.1 Customer Relationship

The relationship development perspective gives researchers a framework to investigate patterned

relationship changes. Relationship development or evolution has its roots in earlier ideas of

social and Cultural Revolution, biological life-cycles, and attachment theory in child

development. Developmental stages in relationships may be a universal phenomenon, implying

either a shared global human experience or a biologically evolutionary origin.

Several researchers from various backgrounds have discovered patterned, directional stages or

phases in relationships under investigation. This section reviews the development perspective,

from Altman and Taylor (2003), to Duck (2005) and VanLear and Trujillo (2006). An

understanding of developmental stages informs the question of whether customer relationships

move through stages. Researchers Altman and Taylor (2003) proposed the “theory of social

penetration” as an extension of Thibault and Kelley's (1959) social exchange theory. Altman and

Taylor studied many different types of relationship partners; from prison inmates to college

roommates to marital partners in order to understand communication patterns and intimacy

levels. Altman and Taylor uncovered four stages of relationship development during their

examination of communication exchanges and disclosures leading to deeper intimacy. These

stages are called 1) orientation, 2) exploratory affective exchange, 3) affective exchange, and 4)

stable exchange.

Figure 2.1: Relationship development during the examination of communication exchanges

and disclosures leading to deeper intimacy (Adapted from Altman and Taylor, 2003).

The social penetration view theorizes that interpersonal relationships progress systematically.

Communication and disclosures gradually shift from superficial topics to increasingly personal

exchanges. Following Altman and Taylor's work on communication in stages, Scanzoni (2006)

in "Social Exchange and Behavioral Interdependence" also sought to expand Thibault and

Kelley's (1959) social exchange theory and included comparisons at different phases in a

relationship. Scanzoni offered the five phases and five sub processes that Dwyer, Schurr, and Oh

(2007) used in their seminal (relationship-marketing-is-like-a-marriage) article, Scanzoni

proposed the five stages 1) awareness, 2) exploration, 3) expansion, 4) commitment, and 5)

dissolution. The five sub processes in the exploration phase are attraction, communication and

bargaining, development and exercise of power, norm development, and expectation

development.

Figure 2.2: Scanzoni’s five stages relationship development model (Adapted from Scanzoni,

2006)

Startlingly analogous to various interpersonal development progressions are the models from the

small group development perspective. Tubbs (1995), Fisher (1970), and Tuckman (1965) cited in

(Duck, 2005) uncovered progressive stages while studying small group formation and

communication. Tubbs' stages are orientation, conflict, consensus, and closure. Fisher's stages

(orientation, conflict, emergence, and reinforcement) are very similar to Tubbs' findings.

Tuckman's theory posits a forming, storming, norming, performing, and adjourning process.

Figure 2.3: Similar relationship stages model of Tubb, Fisher and Tuckman

Poole (2003), however, added to this small group development perspective by introducing a

three-track, not usually linear, model. While Poole's theory allows for the above-mentioned

developmental stages to unfold, Poole emphasizes that a group's procession is more functional

and unified when the group is satisfied with the three communication tracks: the task track, the

topic track, and the relation track. The task track of communication centers on the process by

which the group accomplishes its goals. The topic track deals with the specific task at hand. The

relation track is characterized by the interpersonal relationships between members. Interestingly,

Poole found that group communication jumps around and back and forth on the three tracks

(indicating non-linear patterns).

Knapp (2008) continued in the relationship development research paradigm and expanded on the

idea that the relationship stages perspective could be applied to many different types of

relationships, including marriage, business partners, and friendships. Knapp also pioneered

research on relationship disintegration. Through his research program, Knapp hypothesized five

coming-together stages (initiation, experimentation, intensifying, integrating, and bonding) and

five coming-apart stages (differentiating, circumscribing, stagnating, avoiding, and terminating)

in his relational stages model.

Figure 2.4: Relational stages model (Adapted from Knapp, 2008)

Whereas Altaian and Taylor (2003), Knapp (2008), and to some extent Scanzoni (2006), seemed

to focus on the categories and qualities in relationship stages, Duck (2005) turned his attention

toward cues and cognitive judgments made throughout relationship development. Humans make

and use judgments as they move through relationship stages. Duck's relationship filtering model

progresses from sociological/incidental cues, to preinteraction cues, interaction cues, and

culminates with cognitive cues. Each cue level acts as a filter to help us achieve the level of

relationship we want with others.

By merging the theoretical perspectives of Duck's (2005) focus on judgments and Altaian and

Taylor's (2003) emphasis on deepening stages, VanLear and Trujillo (2006) tracked acquaintance

relationships over a number of weeks, therefore capturing the relationship experience of stages in

each measurement. VanLear and Trujillo used a repeated measures design to research social

judgments during uncertainty, exploratory affect, interpersonal growth, and interpersonal

stability stages. The variables that were tracked are termed uncertainty, affective reactions, trust,

and social attraction. Many findings were obtained from this five-week investigation; most

notably, the covariate-by-time interactions showed that the relationships between the key

variables changed over time, supporting Duck's hypothesis of developmental stages in

acquainting.

2.2 Relationship Marketing

Kurtz (2009) stated that relationships is the core factor which influences marketing in terms of

consumers and all the other business procedures involved aiming at satisfying the consumer’s

needs. In this globalised market, firms understand the meaning of building relationships because

it is more expensive to get new customers rather than focusing on the loyalty of the existing

ones. Relationship marketing strategy focuses on building and maintaining relationships with

customers, distributors, suppliers, retailers as well as everyone involved in the business

procedures for the sole purpose of gaining benefits over time. Shajahan (2006) stated that this

relationship between the customer and the business firm is categorized in terms of strength, the

time through which it continues and the various other dimensions involved in it. For example:

Mobile phone service firms like O2 knows the customer’s name, his location as well as his date

of birth which serves as a unique identifier are mostly pursuing relationship marketing strategy.

According to Christopher (2008), firms realize that relationship marketing focuses on developing

stronger relationship with existing customers and selling them more products suiting their needs

and expectations instead of making a single sale and then moving to another customer. This

strategy is based on a number of promises like lower prices, better quality, faster delivery and

better customer service as compared to their competitors. Thus, Bateson (2005) states that

relationship marketing is the combination of superior service, enhanced quality and marketing. It

also focuses on retaining the customer, building a long term bond with the customer thus gaining

trust, as well as increasing the level of commitment for that specific customer which helps the

firm to create a good impression on the customer and keeping him longer with the firm. Firms

who were pursuing relationship marketing strategy had an aim to transform new customers into

regular buyers which in turn would help them to boost up their sales and then transform these

same customers in providing strong support for their firms and well as their products.

Gummesson (2009) argued that transactional marketing approach was just a way of gaining

customers by making hard core sales of the products which not necessarily will satisfy the

customer needs whereas the relationship marketing strategy approach helps the firms to satisfy

customer needs as well as make them loyal to the business. Today, firms do not see their profits

first; instead they explore their base of customers, their wants and needs which helps them to sell

more products to their existing customers rather than searching for new ones. Lovelock (1999)

there is a situation where a customer changes from one supplier to another thus the loyalty is also

changed; this scenario is referred to as Defection. Mostly, firms who are involved in relationship

marketing strategy try their best to achieve zero defection which is by serving every customer

and retaining him for long term instead of losing him.

2.3 Elements of Relationship Marketing Strategy

Kurtz (2009) stated that relationship marketing strategy main target is to build relationships with

customers so that they stay with the firm and never change their loyalty. In order to achieve these

long term relationships, firms need to use these four basic elements which not only help them to

achieve customer satisfaction and retention but also guide them as a sense of making the

relationship stronger.

2.3.1 Storing Database

Once a customer buys a product from a firm, they collect the necessary information and store

them in a database. This database helps the firm in the future to differentiate between new and

existing customers with their dynamic buying needs as per their characteristics in their changing

lifestyles.

Figure 2.5: Elements of relationship marketing strategy (Adapted from Kurtz, 2009)

2.3.2 Analysing Purchase behavior

This data is being analysed by the firms to get a clear picture of what the customer preferences

are which in turn are added to modify their mixture of how to market this specific customer in

the future and retain him as per his needs as well as develop new combination of products suited

well according to this customer’s satisfaction.

2.3.3 Enhance buyer-seller transaction

By pursuing this type of marketing, firms can keep an eye on the communication between them

and the customer. They can also check whether the customer is satisfied or not. This not only

helps the firms to satisfy the customer but they can also calculate the cost if they got a new

customer on board and if they follow this strategy on his case, how much profit they will

generate during his term with the firm. This information helps the firm to find ways of increasing

the value in the new buyer seller transaction.

2.3.4 CRM system

Firms use software referred to as customer relationship management software which includes all

the methods of interaction a firm has with the customer during this long term relationship

ranging from sales to service related tasks. Thus, firms use this software to collect information

regarding customers since it has a complete knowledge of the customer profiles in order to be a

unique provider from the rest of the firms in terms of service, quality and marketing. Thus the

relationship between the customer and the firm grows much stronger and all this now is much

easier due to evolving technology.

2.4 Reasons why firms pursue Relationship Marketing Strategy

According to Fournier et.al (2008), relationship marketing strategy is a type of strategy which

doesn’t focus at all on selling in fact it has its main focus on building relationships with trust

between the firms, their customers, distributors, employees, suppliers and everyone who is

involved in the business.

According to Fournier et.al (2008), there are a number of reasons why firms use this strategy:

Figure 2.6: Factors influencing firms Relationship Marketing Strategy (Adapted from

Fournier et.al, 2008)

2.4.1 Identify potential customers

If a firm which the customer is attached to currently tries to sell him something and he gets the

same product offered by a firm at a lower price which he doesn’t know, the result would be

customer would be ready to pay a higher price with the existing firm he knows because of the

trust and a long term strong relationship build during his term with the firm. This holds true in

terms of other objections as well.

2.4.2 Cost effective marketing channel

It doesn’t cost anything for a firm to have a conversation with an existing customer. This is the

cost of relationship marketing strategy. If a firm builds up a strong relationship with the existing

customer then it can get more referral sources too.

2.4.3 Customer Retention

As per many research conducted, it is expensive to get a new customer on board than keeping an

existing customer happy. If a firm keeps an existing customer happy then its opening its gates to

get more referrals from that customer keeping its marketing budget down.

2.4.4 Better understanding of customer’s feedback

A customer’s feedback is the best way of improving the products which the firms are currently

offering. Sometimes the feedback maybe bad but instead of criticizing on it, a firm should

improve on it and offer something unique to customers in order to achieve more.

2.4.5 Relationship marketing leads to reference marketing

If a firm possesses 100 customers then it can achieve more 100 via referrals because every

customer is connected to someone or the other who might also be looking for good firm so if the

existing customer is happy, the firm’s network automatically expands.

2.5 Relationship marketing stages

The researcher hypothesizes that relationship stages are universal for wherever humans

experience relationships: all types and kinds of relationships (whether they are interpersonal,

intrapersonal, in groups, or with a marketer) show some kind of patterned, directional change.

Relationship marketing researchers, Dwyer et.al (2007) Wilson (2005); Jap and Ganesan (2000);

and Fournier et.al (2008), are pioneering research into customer relationship stages.

Dwyer et.al (2007) originated the first relationship development work in marketing. The authors

declare that they are “hard pressed to identify anything more central to marketing (than the

marital metaphor)” (p.25). As evidenced by subsequent articles on the subject, Dwyer et.al's five-

stage model in “Social Exchange and Behavioral Interdependence” is particularly influential.

The authors drew heavily from Scanzoni's (2006) work and applied the relationship development

process to the buyer-seller context in their conceptual model. The stages in their model include

awareness, exploration, expansion, commitment, and dissolution.

From the mid-80's to the present, there has been considerable scholarly research on the general

topic of relationship marketing, particularly on success factors, when to use relationship

marketing, continuums of relationship marketing, outcomes, and use in different contexts.

However, Wilson (2005) was the first marketing researcher following Dwyer et.al (2007) article

to publish work on relationship marketing stages. Wilson noted that relationship marketing

research has uncovered key variables that influence relationship success and that there is a notion

of the relationship development process, yet no model has integrated the "success" models with

the development perspective. Wilson's conceptual article "An Integrated Model of Buyer-Seller

Relationships" proposes that there are five stages in marketing relationship development: partner

selection, defining purpose, setting relationship boundaries, creating relationship value, and

relationship maintenance.

Figure 2.7: Relationship marketing development model (Adapted from Wilson, 2005)

Researchers Jap and Ganesan (2000) and Fournier et.al (2008) are aware of developmental stages

in relationship marketing and are integrating the development perspective into their own

particular research interests. Jap and Ganesan, in their study entitled "Control Mechanisms and

the Relationship Life Cycle," explored the retailer's ability to control the relationship with the

(more powerful) supplier. In this context, the authors study retailer's control mechanisms by

observing commitment in each stage in the relationship life cycle. The stages are exploration,

buildup, maturity, and decline. These stages reflect Scanzoni's (2006) research.

With a research focus on branding, researchers Fournier and colleagues extend knowledge on

brand loyalty and strategic planning in "Contracting for Loyalty" (Fournier et.al 2008). The

authors recommend implementing a timeline of relationship development interventions

throughout these phases: exploration, expansion, commitment, and disengagement. It is proposed

that different implicit and explicit contracts be employed at different phases. The phases/stages

are also based on Scanzoni's (2006) work. Although empirical results on the development of

customer-marketer relationships are scant, Dwyer et.al (2007), Wilson (2005), Jap and Ganesan

(2000), and Fournier et.al (2008) have initiated the theoretical underpinnings for progressive

stages in customer relationships.

After the literature review, researcher identified that most relationship development models

follow a general pattern of awareness, exploration, growth, and commitment, in which these

stages lead partners toward coming together and growing closer. This study uses the following

model understanding of relationship development applied to the customer relationship context.

Figure 2.8: Customer relationship development stages model for this research (Adapted by

researcher)

There is considerable substantiation for developmental stages in human relationships. The

following paragraphs give an overview of the research interests of this study of customer

relationship stages.

2.5.1 Awareness Leads to Exploration

Dwyer et.al (2007) used Scanzoni's (2006) model of relationship development to define the

awareness stage. Awareness means that the customer recognizes the exchange partner. Spatial

proximity plays a role in aiding awareness. One or both of the potential relationship partners may

strive to increase his or her own attractiveness in this stage. However, there is no interaction.

According to Dwyer et.al (2007) interaction is reserved for the exploration stage and the other

later stages. The awareness stage would presumably be rather short before exploration and

interaction would occur. Yet awareness is a critical stage. If the awareness stage does not occur

in a favorable way, the customer will not continue to the exploration stage of relationship

development.

Altman and Taylor's (2003) work supports an awareness exploration link, although the terms

used are orientation and exploratory affective exchange. Scanzoni (2006) provided the terms

awareness and exploration for the first an second phases in a relationship. Small group

researchers (Fisher, 1970; Tubbs, 1995) termed the first two stages of relationships orientation

and conflict. This understanding corroborates the characteristics of this study's conception of

beginning stages. Knapp (2008), Duck (2005), and VanLear and Trujillo (2006) further evidence

the pattern that awareness leads to exploration. These researchers show that interacting, testing,

and emotional reactions stem from initial awareness of the other.

Marketing researchers Anderson and Narus (1990) found evidence for the model

communication-> cooperation -> trust and functional conflict. These findings suggest that initial

communication may lead toward exploring feelings and solving problems. In addition, Williams

(2008) found that customer-oriented salespeople led to the development of customer

relationships. Furthermore, Doherty and Alexander (2004), in a case study of fashion retailers,

observed a recognition - search - evaluation set of stages. Last, trust researchers Boon and

Holmes (2001) propose that three relationship phases (romantic, evaluative, and accommodative)

are prodded by reciprocal disclosures leading to trust. These researchers' work supports the

hypothesis that customer awareness leads to exploration.

2.5.2 Exploration Leads to Growth

In the exploration stage, the customer is concerned with evaluating potential players. This stage

is analogous to casual dating. Customers may try products and services. However, the

relationship is tenuous because termination is easy with minimal investment. This stage has been

termed the experimentation, uncertainty, or conflict stage from the developmental paradigm.

When questions are satisfactorily addressed, relationship concerns are assuaged, and the

relationship may proceed to growth.

According to Knapp's (2008) relationship escalation model, partners in this stage ask questions

seeking to gain information about whether to continue the relationship. Many relationships do

not progress pass this point. Customers judge by their own experiences how trustworthy a

marketer is (Dwyer et.al 2007). Customers in this stage will almost certainly have feelings, likes,

and dislikes about the marketer and potential relationship.

In the exploration stage, partners test each other. Baxter and Wilmot (2004) argue that partners in

the early stages of interpersonal relationships test each other about the state of the relationship,

often trying to reassure themselves of the other's love or concern. Lyndon et.al (2007) explain

that in the exploration stage there is considerable uncertainty and ambiguity between partners.

Partners are unsure not only of the other party's intentions, but also about advancing the

relationship.

Altaian and Taylor (2003) proposed that exploratory affective exchange leads to affective

exchange, indicating a deepening of emotional bonding and trust. Scanzoni (2006) hypothesized

the same link; however, the terms exploration and expansion are used to signify increasing

relationship benefits. VanLear and Trujillo's conception of the second and third stages are

exploratory affect and interpersonal growth, emphasizing an emergent, positive, interpersonal

relationship. In addition, Knapp's (2008) work relates the stage “experimenting” to the

“intensifying” stage, where partners' feelings are positive and strong.

A number of marketing researchers have found related empirical support for the exploration -

growth link. Moorman et.al (2003) found when investigating the use of market research that

integrity, tact, and sincerity result in trust. Similarly, Bitner et.al (2004) found that interaction led

to satisfaction. Doney and Cannon (2007) and Nicholson et.al (2001) discovered that liking

affects trust. These findings lend credence to the hypothesis that there is a relationship between

exploration and growth.

2.5.3 Growth Leads to Commitment

In the growth stage, partners will not find termination of the relationship to be easy; resources

are invested in the relationship. Partners seek more satisfaction from within the relationship

rather than from outside it with other potential partners. Relationship development researchers

have used different terms for the same underlying processes regarding growth and commitment

in interpersonal relationships. Altman and Taylor (2003) call the third and fourth stages of

relationship development affective exchange and stable exchange, respectively. Scanzoni (2006)

terms these phases expansion and commitment. VanLear and Trujillo (2006) understand these

stages as interpersonal growth and interpersonal stability. These labels all suggest that the third

stage is characterized by deepening emotions, trust, and relationship benefits and that the fourth

stage is typified by stability, commitment, and maintenance. Marketing researchers have

examined variables related to growth and commitment stages and have found some precursors to

commitment. Anderson and Weitz (2002) found that relationship investments lead to

commitment. Morgan and Hunt (2004) and Chenet et.al (2000) found significant relationships

between trust and commitment. In addition, Fullerton (2005) found that affective commitment to

the brand was positively related to repurchase intentions as well as to acting as an advocate for

the brand. Last, Hennig-Thurau et.al (2002) showed that successful relationship marketing has

many beneficial outcomes such as satisfaction, commitment, and increases in confidence and

social benefits. This research supports the growth -commitment link.

2.5.4 Factors Influencing the Long-Term Relationship Marketing Strategy

2.5.4.1 Emotion

Bagozzi et.al (1999) writes, “We are only beginning to understand the role of emotions in

marketing” (p.202). According to the 2002 Nobel Prize winner for Economics, Daniel

Kahnemann, the concept of affect heuristics is the most important advancement in understanding

decision-making Kahnemann explains the role of intuitive affect: There is compelling evidence

for the proposition that every stimulus evokes an affective evaluation, which is not always

conscious (Bagozzi, 1992). Most behavior is intuitive, skilled, unproblematic and successful

(Klein, 1998). In some fraction of cases, a need to correct the intuitive judgments and

preferences will be acknowledged, but the intuitive impression will be the anchor for the

judgment. These findings referenced by Kahnemann suggest an important and central role for

emotion in marketing. In light of this emotion research, emotion may be the most overlooked and

undervalued variable in marketing.

Emotion should certainly play a role in customer relationships. Berry (2000) noted that some

Starbucks customers develop strong emotional bonds with the brand. Edell and Burke (1987)

found that automobile shoppers' decisions can be based largely on an emotional response.

Emotion is thought to work in marketing by creating positive ad and brand attitudes (Mitchell &

Olson, 2001). Emotion researcher Buck (2005) describes affect and reason on a continuum (the

A-R continuum), where on one end, affect has total influence over social situations, infants,

simple creatures, and reptilian or “older” brain structures (p. 10). On the other end of the

continuum, reason has increasingly grown to govern situations largely ruled by cognitive

evaluations, adulthood, complex creatures, and "newer" brain structures. However, because

affect is always present, emotion's influence never falls to zero. Emotion or affective

communication is readout of our internal, physiological state. Customers may experience

different emotions at different relationship stages. Buck et.al (2005) found three emotion factors

during development of the CASC (Communication via Syncretic and Analytic Cognition) scale

in response to five television and five magazine advertisements: a prosocial factor (friendly,

proud, confident), an individualistic factor (sad, angry, disgusted), and a reptilian factor

(powerful, sexy, energetic).

Figure 2.9: Emotion factors during development of the CASC scale (Adapted from Buck

et.al, 2005)

Smith and Ellsworth (2005) reflect a locus-of-causality idea in their study of the attribution of

emotion factors and found that anger, disgust, and contempt were other-oriented and shame and

guilt were self-oriented. Buck, however, developed his typology of biologic affects based on a

developmental-interactionist theory of motivation, emotion, and cognition. Emotion factors -

reptilian, individualistic, and prosocial - are based in biology, reflective of certain corresponding

areas of the primary motivation system in the brain.

In Buck et.al (2005) perspective, the emotion factors are more than mere positive or negative

responses. The emotion factors are reflections of primary affects hardwired into the brain

through development over the course of evolution as humans interacted in social groups.

Emotion systems in the brain have evolved, for example, to incorporate the evolutionary benefits

of social bonding. Therefore, the prosocial/reptilian/individualistic set is more descriptive than

simple positive/negative evaluations. Simply put, as humans evolved into social creatures,

prosocial emotions supported the efforts of the group. Reptilian emotions reflect the primal urges

of the "old" brain including the fight or flight response, breathing, heart rate, and mating.

Individualistic emotions developed as a need to adapt to new environments despite group

behavior or need and reflect the individual's own perspective. Humans express these emotions

across myriad contexts. The research on emotion indicates its importance and centrality in

human behavior, including in the customer role.

2.5.4.2 Awareness

It is hypothesized that awareness will be related to prosocial (confident, friendly, proud) and

reptilian (powerful, sexy, energetic) emotion. The awareness stage is characterized by noting

potential candidates for a customer relationship. Customers may be concerned with learning

about the various prospects and may feel anticipation of future benefits. Emotions in this stage

may be centered on an interest in knowing what prospects have to offer and enjoying the

courtship. Izard (2007) believed positive affect is comprised of interest and joy. Perhaps the

heightened state of interest, arousal, and attention in the awareness stage creates positive

feelings. In light of the literature, there may be a link between awareness, prosocial (confident,

friendly, proud) and reptilian (powerful, sexy energetic) emotion.

2.5.5 Exploration and Individualistic Emotion

It is assumed that exploration and individualistic emotion are related. Individualistic emotions

such as disgust, anger, and sadness may play a role in exploration. VanLear and Trujillo (2006)

in their over-time study of acquaintance relationships found that early communication patterns

were categorized by uncertainty, which did decrease over the course of the relationship. The

banter, interaction, and testing so prevalent in the exploration stage of relationships is an attempt

by participants to decrease uncertainty. In marketing, Tan (2003) found that consumers of a new

product in particular seek out pre-purchase information to reduce risk Bagozzi (2002) has created

the perspective that consumers are often goal-directed, with emotion driving and resulting from

the goal~attainment process; emotions directly initiate action. Customers may experience anxiety

or psychological discomfort from anticipated post-purchase regret from purchasing and/or using

the product (Perugini & Bagozzi, 2006). These individualistic emotions (sad, angry, disgusted)

may come into play during exploration.

In the tenuous exploration stage, if a customer is angry, he or she might express negative

emotions fully, without other relationship norms or benefits to balance the negatives. Folkes et.al

(2007) showed how a failure due to the marketer resulted in customer anger. Derbaix and Pham

(2001) found that negative experiences are more intense than other experiences and can be

expressed with greater variety.

Exploration is the stage where customers test and consider the benefits and costs of an exchange

(Holmes, 1991). Uncertainty reduction is the central goal in this stage (Jap, S., 2001). Jap found

that the fragile nature of the exploration stage and the lack of opportunity to know that

salesperson left the customer lacking in trust in this stage. Specifically, Jap found that trust in the

salesperson did not have an effect on satisfaction in the exploration stage. It may be that there

was not enough time to get to know the salesperson.

Nevertheless, managing the interaction appropriately in the exploration phase may improve the

chances for relationship success. Moorman et.al (2003) studied the factors that enhance trust

between market research users and providers and how trust affects interactions between these

partners. The authors' results show important factors for building trust are the integrity of the

researcher, confidentiality, sincerity, tactfulness, timeliness, expertise, and the reduction of

uncertainty. The emotions in the exploration stage may be expressed as uncertainty and possibly

anger if the salesperson does not manage the interactions with integrity. Simpson and Mayo

(2007) called for fewer influence attempts of any kind in marketing, due to their erosive effect on

satisfaction and commitment. This finding supports Hovland, et al's (2003) earlier work on

having an intention to persuade lowering attitude change. It appears that norms render even non-

coercive persuasive attempts pushy and inappropriate. The testing nature of the exploration stage

would indicate that customers' emotions are based on a concern for self in this exchange and that

customers may experience uncertainty, irritation, and power struggles. A customer in the

exploration stage may be primarily concerned with being taken advantage of. It is hypothesized

that there is a relationship between the exploration stage and individualistic emotions (sad,

angry, and disgusted).

2.5.6 Growth Prosocial, and Reptilian Emotion

Westbrook (2007) found a direct, positive relationship between satisfaction and positive affect.

This finding supports the notion that the growth stage, characterized by satisfaction, would be

related to positive emotion.

Marketing satisfaction researcher Oliver (1997) has begun to include emotion in the satisfaction

theoretical models and scales. Oliver theorizes that attractive information from a firm leads to the

"affective" (emotional) stage of loyalty. Although marketing has learned more about evaluations

than affect, emotion is beginning to receive more attention in marketing research. In support of a

relationship between growth and prosocial emotion, Price, Arnould, and Tierney (2005) found

evidence for the model: service performance -> affect -> satisfaction. These feelings in the

growth stage would enable partners to better work together (prosocial emotion) and enjoy the

benefits (reptilian emotion) of being a team.

2.5.7 Commitment, Prosocial, and Reptilian Emotion

Fournier et.al (2008) finds that consumers feel as if they are in a relationship with their brand.

Stout and Leckenby (2003) found that purchase intentions increase when related to emotions.

Continuing to purchase and intending to remain a customer characterize the commitment stage.

These purchase intentions may further contribute to warm emotions. The commitment stage is

akin to the stable exchange stage of Altman and Taylor (2003), where an implicit or explicit

pledge to continue the relationship is affirmed. Weitz and Jap (2001) found that commonality of

purpose, mutual learning processes, multiple levels of personal and emotional relationships, and

psychological contracts instead of formal legal ones are all clearly evident in the commitment

phase. Commitment has been defined as the desire to maintain the relationship indefinitely and

committed partners are willing to "work on" maintaining the relationship (Morgan & Hunt, 1994,

p. 23).

There is some evidence for a relationship between commitment and prosocial emotion. Rusbult

and Buunk (1993) found a relationship between commitment and prosocial behavior. Later, et.al

(1999) found a commitment - prorelationship behavior link. In the commitment stage, partners

are concerned with maintaining their relationship. Partners may also continue enjoying the power

of the team.

2.5.8 Growth and Trust

It is hypothesized that growth is related to trust. During the growth stage, sharing and giving

characterize the relationship. The benefits are mutually enjoyed. Trust is defined as the customer

feels trust for the salesperson, that he or she will be honest and reliable (Moorman et.al, 2003).

Trust is based on repeated, reliable interactions (Altaian and Taylor, 2003) and following

through on expected behaviors. Jap (2001) found that trust in the salesperson does have an

impact on satisfaction in the growth stage. In addition, Oliver (2007) found a direct link between

emotion and satisfaction. Therefore, growth may be associated with trust in this study.

2.5.9 Trust and Commitment

It is hypothesized that there is a positive relationship between trust and commitment. This

assertion is supported by relationship marketing literature (Morgan & Hunt, 2004). Trust has also

been related to the formation of relational norms and collaboration (Smith & Barclay, 2007).

The commitment stage, marked by its pledge to continue the relationship, has been seen as the

long-term orientation where "points" do not need to be "scored" so often in the relationship

(Mills & Clark, 1992). Partners give to the relationship and expect these investments to "even

out" over the course of the relationship. Jap (2001) found that trust in the salesperson did have an

effect on satisfaction in this stage. Due to the empirical evidence cited in the literature, this study

may find a relationship between trust and commitment.

2.5.10 Growth, Satisfaction, and Commitment

It is hypothesized that growth and satisfaction are related, as well as satisfaction and

commitment. Satisfaction is one of the key words used when defining the growth stage (Jap &

Ganesan, 2000). Andaleeb (2006) studied how trust and dependence affected satisfaction and

commitment. When dependence on a partner is high, the customer values the relationship more

and commitment increases. In addition, when there is trust in the relationship, the dependence on

a partner is a more comfortable situation. In a dissertation study of dentist-patient relationships,

Menelly (1996) found that provider trust and composure led to patient satisfaction. Smith and

Barclay (2007) found a significant relationship between trust and satisfaction. Similarly, Seines

(1998) discovered that commitment leads to trust and satisfaction in buyer-seller relationships.

Satisfied, committed partnerships may have unforeseen benefits. Interestingly, satisfied

customers are not only less likely terminate a relationship, they are also less likely to file

lawsuits (Hunt & Nevin, 1994). Given the research findings, it is hypothesized that growth yields

satisfaction, which relates to increases in commitment.

2.5.11 Customer Commitment and Purchases

There is research to support the hypothesis that there is a relationship between commitment and

purchases. Mohr and Spekman (1994) found relationships between interdependence, trust,

conflict resolution, and information sharing and sales and satisfaction. Relationship marketing

researchers have begun to find empirical evidence for satisfaction and loyalty leading to

profitability (Hallowell, 2009). Oliver's (2007) summary of empirical works depicts the loyalty

model: quality -> satisfaction -> loyalty -> profit, citing research to show satisfaction and

customer commitment can lead to an increase in purchases. Olsen (2002) found that satisfaction

mediated the relationship between quality and repurchase across four different product lines.

In addition, Anderson et.al (1994) found a positive relationship between satisfaction and profits.

Hewett et.al (2002) examined close, industrial, buyer-seller relationships and found that trust and

commitment influence repurchases intentions. Wang's model (2002) of brand commitment was

upheld across three product categories, where satisfaction and trust led to brand commitment,

which led to purchase intention. Further support for the commitment - purchase link is obtained

from Shemwell et.al (1994) study of physicians, mechanics, and hairstylists. The authors discuss

two interesting results: the higher the trust and commitment, the greater the relationship

continuance and females seek more trust and commitment than males in these service

relationships.

The research does support a link between commitment and purchases/profit. Ford Motor

Company offers an example of just how much commitment matters: A one percent increase in

customer retention is estimated to be worth over one hundred million dollars in profit

(Sambandam & Lord, 1995). Ford's loyalty-profit link is not unique, however. A study

conducted by Bain & Company for Fortune magazine (Sellers, 1993) calculated what the

percentage increases in customer lifetime profits would be for eight different industries if there

were a five percent increase in customer retention. The average percentage increase in profits is

seventy-three percent (Oliver, 2007, p. 405). Considering the evidence cited in the literature, this

study investigates the relationship between commitment and purchases.

2.6 Conclusion

This review of the literature relevant to this study of customer relationship stages has been

addressed in different sections, directly akin to the research question: the question of whether

customer relationships move through developmental stages, the relationship between awareness

and exploration, the relationship between exploration and growth, the relationship between

growth and commitment, the relationships between awareness, prosocial, and reptilian emotion,

the relationship between exploration and individualistic emotion, the relationships between

growth, prosocial, and reptilian emotion, the relationships between commitment, prosocial, and

reptilian emotion, the relationship between growth and trust, the relationship between trust and

commitment, the relationships between growth, satisfaction, and commitment, and the

relationship between commitment and purchases

Chapter 3: METHODOLOGY

The intention of this chapter is to provide a comprehensive overview of the research, covering

on research method and the specific problems addressed by the research questions and the

study itself. It assists in understanding the objectives of the research and its presence in

comparison to existing market research.

3.1 Research Approaches

As Bryman and Bell (2007) pointed out, research can be largely subdivided into two main

streams, theoretical approach and methodological approach. There are further divisions of these

two classifications. In accordance to Smart (2008), theoretical research approach can be either

deductive or inductive, whereas methodological approach can be either qualitative or

quantitative.

3.1.1 Deductive Approach

Deductive approach is defined as the conclusion a researcher can draw from an informed

assumption based on some hypotheses. Bradley (2007) highlighted that the accuracy of such

research is solely dependent on the precision of the referred theories and prepositions. Therefore,

it is imperative that data collected is accurate and the models that are used in the references are

also included and considered in the study (Curwin and Slater, 2008). This is because the

propositions that might be used are themselves based on several other assumptions and all these

need to be considered for the research to be viable.

3.1.2 Inductive Approach

Inductive method refers to the study of the original hypotheses supporting a theory that has

already been tested where the weight of the theory itself is re-measured. Since the theory that is

being studied has already been declared, the researcher can enjoy an increased amount of

freedom and flexibility in working on the study. Ferraro (2007) pointed out that often hypotheses

and theories depend on research observations.

For this particular study, a detailed literature review was done on ‘relationship marketing

development strategy’ and therefore a deductive approach was used in this research. This

is the region from which the primary hypotheses were construed from. Inductive approach

was not chosen because it is very time consuming and time constraint is a limitation for this

dissertation.

3.2. Qualitative Approach

Qualitative approach, by its definition, is research that deals with data that is not numeric in

nature. The data collected and analyzed is descriptive in nature and cannot be represented by

numbers. This approach is often selected when the researcher is looking to analyze the ways in

which humans interact in or interpret the world around them. Understandably, qualitative

approach is less structured than quantitative approach and as Salzmann (2008) pointed out, it is

open to interpretation and is allowed to generate as many hypotheses and propositions on the

matter as possible.

3.3 Quantitative Approach

Quantitative approach involves analysis and representation of numeric data. As can be predicted,

the researcher needs to construct the study beforehand prior to data collection in order to

properly dictate the structure of the research. The approach encompasses collecting the data,

organizing the variables according to the research requirements and then explaining the relations

using statistical models. Dubrin (2008) believed that the most commonly used method of data

collection is this approach is through questionnaires and equipments.

Both the quantitative and qualitative approaches were used for this specific study in order

to reach the most comprehensive conclusions.

Figure: 3.1 Types of Research Strategies Source: Adapted from Saunders et al, 2007

3.4 Research Strategies

Research strategies are selected in accordance to the control over actual events, the nature of the

research questions and the focal point of contemporary and historical phenomena (Saunders et al

2007). Based on this, for this specific research, survey and case study were selected as the

research strategies on the basis of appropriateness and the scope to analyze data more accurately.

3.4.1 Survey

Researchers are known to use surveys the most in their research, especially if the research is on

business and managerial work. If the approach taken is descriptive and exploratory, surveys are

chosen to collect the data for the research. It also works well with deductive method and can be

used in this approach. If the research requirements include, who, what, how many and how

much, the researcher can use surveys as the collection method since it is the most comprehensive

in collecting data in accordance to the needed variables. As Housden (2007) points out,

questionnaires can be used to collect data quite conveniently and within budget restrains from a

relative large population and this is the biggest advantage of surveys.

This strategy was used to gather relevant data for this study regarding fashion retailers

emphasizing on the relationship marketing strategy in UK and the factors that influence it.

3.4.2 Case Study

A case study is done on a specific real-life phenomenon that has been updated in recent time and

has numerous sources of evidence and an empirical investigation is done to analyze the event in

accordance to the research requirements of the study of the researcher (Salzmann, 2008).

This research was a holistic investigation of the relevance of relationship marketing

strategy among the fashion retailers in UK and the factors that influence it were analyzed.

The company in focus was M&S. Case study was used to analyze the existing research done

on M&S and its relationship marketing strategies.

3.5 Purpose of the Research

Depending on the research questions and the direction in which the research is headed, there can

be more than one purpose of a case study (Malhotra, 2009). This research in particular is

descriptive, exploratory and explanatory.

3.5.1 Exploratory Research

This strategy involves locating a specific problem and analyzing the hypotheses that need to be

tested to be considered viable. The focal aim of this research is to comprehend and analyze an

identifiable event without comparison to other similar events. This type of research often helps to

locate the problem and analyze the data to draw conclusive solutions (Sumner and Tribe, 2008).

3.5.2 Descriptive Research

The fundamental factors or characteristics of a particular population are needed to be analyzed

and categorized for this research and that is done through descriptive approach. This approach

can encompass what, where, when and who requirements of the research and help the researcher

in constructing a comprehensive analysis of a specific situation or a particular population. As

Coldwell and Herbst (2004) pointed out, uncertainties and complexities need to be avoided when

dealing with these types of analysis and to do so the data collected need to be thoroughly

analyzed and there must not be any discrepancy within the understanding of the data by the

researcher.

3.5.3 Explanatory Research

In this type of research the focal agenda is to comprehend a given problem and analyze the

influence of all the variables at play and in particular the changes that occur in the variables in

accordance to a specific varying factor. According to Sumner and Tribe (2008), the relationships

between distinct variables can also be analyzed.

In this research, the varying factors that were focused on were customer’s habits, taste, and

fashion and changing trends towards M&S. Hence, in this regard, the research is

explanatory. Au contraire, the research takes a turn to exploratory as it also attempts to

differentiate the factors that influence long term relationship marketing.

3.6 Data Collection Instrument

3.6.1 Primary Data

The data collected by the researcher for the sole purpose of using it in this particular research

without any prior record of such use, is labelled as primary data. This data is imperative for

comparative analysis and also ameliorates the analysis of the relations in accordance to research

requirements. It also assists the researcher in testifying the hypotheses he/she may construct to

answer research questions. Interviews, observation, surveys, questionnaires, etc can be used to

collect primary data (Cooper and Schindler 2003).

Questionnaires and focus group interviews were used as tools to collect primary data as

discussed below in detail in the data collection section.

3.6.2 Secondary Data

Secondary data refers to the data that was collected for another purpose in another study and is

referenced in a study again. It may also include data based on other people’s experiences. This

type of data already exists and hence the researcher does not need to collect it using collecting

tools. This type of data is useful as they help to comprehend the problem better and to understand

the underlying complexities of a study without having to go back to primary tools of data

collection (Cooper et al, 2003). Sources of such data include books, journals, reviews,

newspapers, reports, magazines, articles, etc.

The secondary data used in this study have been sourced from numerous facets including

books from different libraries, internet sites, journals and articles, newspapers and

business magazines.

3.7 Research Sampling

3.7.1 Research Population

According to Bryman and Bell (2007), population is defined as a group of elements or in most

cases people on whom the data collecting tools are employed to draw informed conclusions.

Regular customers of the fashion products of M&S acted as the population set for this

study.

3.7.2 Sampling Frame

Monette et al (2005) defined sampling frame as the catalogue of all the elements of the total

population. This cataloguing is useful for the researchers as they can easily trace the elements in

the population and record their behaviour. An updated list of all the regular customers of

M&S created the basis of the sampling frame for this study.

3.8 Samples for Research

Due to the time constraint, it was not possible to include all the regular customers of all the M&S

branches of London in the sampling population. Therefore, the researcher had to employ

judgemental sampling and select only the centre London branch of M&S and consider the

regular customers to only this branch as the sampling frame. This considerably reduced the

accuracy of the sampling as it did not include the entire population which may result in skewing

of the data.

On the other hand, to improve accuracy and viability, stratified sampling was employed to ensure

that equal number of customers from each required area was included in the sample from the

branch. To create the sampling population 100 customers were randomly selected to assist

comparison and to avoid any unintentional tampering of the sampling population. Two CRM

managers were also selected to construct another sample randomly from a list of managers. The

sample size is shown in Figure 3.2.

Figure 3.2: Sample size

3.9 Selecting the Sampling Technique

There are two broad subdivision of sampling techniques: probability and non-probability

sampling. The choice of the sampling technique is entirely upon the researcher and depends on

the nature of the study, its objectives and the time and budget available (Curwin and Slater,

2008).

3.9.1 Probability Sampling

Probability sampling defers from non-probability sampling in that that the probability of an

element being chosen is known beforehand. This is often utilized in researches that include

surveys, where the elements being tested are identified before the data collection begins.

Housden (2007) highlighted some probability sampling techniques, such as simple random

sampling, systematic sampling, and stratified sampling to name a few.

3.9.2 Non-Probability Sampling

In case of non-probability sampling, every element has an equal chance of being selected. Hence

the characteristics of the population do not depend of the ingredients that ultimately get selected.

Bryman and Bell (2007) underlined some techniques of non-probability sampling: quota

sampling, purposive sampling, snowball sampling and convenience sampling.

3.10 Data Collection Methods & Instruments

There were two data collection methods utilized in this study to collect two different types of

data. Surveys were used to collect quantitative data while focus group interviews were used to

gather qualitative data.

Figure 3.3 Data Collection Instruments (Adapted from Mertens, 2009)

3.10.1 Survey

The study encompassed two separate surveys based on the subject matter and in relevance to the

requirements of the study. The first survey was conducted on the M&S 100 customers and was

done on a personal level with the researchers. The second phase of the survey was done on the

managers but this was done via electronic mail. The perceptions and personal opinion on the

subject matter was what was being focused on in the surveys and these quantitative data helped

the researcher to comprehend the subject matter and the problem at hand better.

The managers were contacted prior to sending the questionnaires to estimate their willingness in

participating in the survey. Although the managers initially showed enthusiasm, the researcher

had to constantly remind them of the questionnaires to be filled before a conclusive response was

received.

The questionnaires themselves were constructed on the basis of previous research findings, the

research questions and objectives of this study. The blank questionnaires are included in

Appendix

3.10.2 Focus group Interview

Focus group interviews attempt at digging deep into the subject matter and creates an

opportunity for the researcher to analyze underlying factors that may not surface through

numerical analysis. The data collected using such tools is later used to further analyze the impact

created and comprehend the extent to which the objectives of the study are met.

3.11 Presentation of Data Analysis

3.11.1 Reliability and Validity

According to Cooper and Schindler (2003), a measure is reliable only if it maintains the degree

of consistency at a constant level. Mitchell (1985) has construed that this can only be achieved

through a large sample (in this case 100) and a viable structure of the questions. Mitchell (1985)

defined validity as the aptitude of a measuring instrument that can carefully measure anything in

the test that is proposed to be scaled, starting from the ability, skilfulness, and quality.

3.12 Limitations of this Research

The sample size was small for both managers and customers which might lead to skewed

results

Time constraint was a major limitation.

The concentration on the centre London brand was another limitation of the sample.

3.13 Ethical Issues

Certain ethical issues needed to be addressed during this study. Confidentiality has become a

major issue in recent years and was maintained strictly. Names were filtered to enhance

confidentiality. To allow information sharing, permission was taken from the authority.

Certain issues of confidentiality are highlight below:

Possible deception and consent by the participants

Privacy of the actual and possible respondents

Possible reactions of the participants

Objectivity and behavioural pattern of the researcher (Saunders et al, 2007)

Chapter 4: DATA ANALYSIS & FINDINGS

This chapter discusses and analyses the market information and survey for the sake of the research. It

also shows the data those have been gathered through survey of 100 customers of M&S in the Part I,

focus group discussion with 2 CRM managers in the Part II and analyse the data to provide a fruitful

meaning of the research finding.

Questionnaire Survey (PART I)

4.1 Customer Survey

4.1.1 Positive Customer Experience

Figure 4.1: Positive Customer Experience

The first question of the survey asked the respondents about their customer experience with

Marks & Spencer. As the above graph indicates, majority of the respondents claimed that their

customer experience with M&S is positive. This is a very significant issue in terms of customer

relationship point of view as good customer experience leads to an increase in customer loyalty

which will influence the customers in repeated buying behavior that produces productivity

The result also supported by the literature as Kurtz (2009) stated that relationships is the core

factor which influences marketing in terms of consumers and all the other business procedures

involved aiming at satisfying the consumer’s needs. In this globalised market, firms understand

the meaning of building relationships because it is more expensive to get new customers rather

than focusing on the loyalty of the existing ones.

4.1.2 Satisfaction with M&S Store

Figure 4.2: Satisfaction with M&S Store

The next question was regarding the customer satisfaction level towards their respective M&S

store. As the graph suggest, majority of the respondents agreed that they have high level of

customer satisfaction with the M&S store they visit. The result suggests that M&S is trying and

has established the importance build satisfying customer relationship among their stores and the

customers from those plazas. This finding also signifies the fact that apart from focusing on new

customers, M&S is also imperatively focusing on the existing customers. Especially promotion

such as discount, sale are more targeted towards the existing customers rather than the new ones.

This finding is also supported by literature as according to Christopher (2008), firms realize that

relationship marketing focuses on developing stronger relationship with existing customers and

selling them more products suiting their needs and expectations instead of making a single sale

and then moving to another customer.

4.1.3 Satisfaction with ongoing Relationship

Figure 4.3: Satisfaction with ongoing Relationship

In the third question, customers of the Marks & Spencer were asked regarding their satisfaction

level in the ongoing relationship with M&S. as the result indicates, majority of the M&S

customer stated that despite of having positive attitude or high satisfaction level towards M&S

store, the ongoing relationship is not that much effective. However as the differences in the result

is almost on the edge, M&S can work it out effectively in order to implement a strategy that can

result better ongoing satisfaction.

With this regard, Kurtz (2009) stated that relationship marketing strategy main target is to build

relationships with customers so that they stay with the firm and never change their loyalty. In

order to achieve these long term relationships, firms need to use these four basic elements which

not only help them to achieve customer satisfaction and retention but also guide them as a sense

of making the relationship stronger.

4.1.4 Satisfaction towards M&S Employees

Figure 4.4: Satisfaction towards M&S Employees

This question on the survey asked the respondents regarding their satisfaction with relationship

of M&S employees. As result indicates, majority of the respondents agreed that they are satisfied

with the relationship they have with M&S employees. This is another key issue in term of

customer relationship management as the employees work as the face of the organization. It is

the employees attract and maintain strong relationship with customers through excellent

customer service.

In relation to this result, Knapp's (2008) stated in his relationship escalation model, when

purchasing a product or service, customers ask questions seeking to gain information about

whether to continue the make the purchase through the relationship with the employees. Many

relationships do not progress pass this point. Customers judge by their own experiences how

trustworthy an employee is (Dwyer et.al 2007). Thus it is very significant for the employees to

judge the feelings, likes, and dislikes about the customers and progress to their potential

relationship.

4.1.5 Customer Loyalty

Figure 4.5: Loyalty towards M&S

One of the most significant issues is addressed in this question. The statement asked the

customers about their loyalty towards Marks & Spencer. As the above graph indicates, 46%

respondents claimed that they are loyal to M&S. however interestingly despite of having high

satisfaction level with the organization, a majority of 48% customers claimed they are not loyal

to M&S. this finding indicates to one of the most extreme powerful part of the external

environment of the business today, intense competition. Due to this factor every organization are

trying their best to gain customer loyalty by providing them better product/service in a cost

effective way. Customers in this generation have also become aware of the options they have in

front of them. Thus they spent more time in choosing product or service that suits their needs,

not the organization. In relation to customer loyalty, Gummesson (2009) argued that the

relationship marketing strategy approach helps the firms to satisfy customer needs as well as

make them loyal to the business. Today, firms do not see their profits first; instead they explore

their base of customers, their wants and needs which helps them to sell more products to their

existing customers rather than searching for new ones.

4.1.6 Quality of M&S Products

Figure 4.6: Quality of M&S product

Next the customers were asked regarding the quality of M&S products. As the graph indicates,

majority of the customers claimed that they are satisfied with the quality of M&S products. From

the response, it is quite evident that Marks & Spencer products are highly appreciated by its

customers. In addition, the brand image of this company also plays a significant part into the

customers mind as it is one of the most known brands in fashion retailers in the United Kingdom.

Thus the organization can use its brand image in order to attract more new customers and

maintain strong relationship with them through effective customer relationship strategy that can

diminish the potential suppliers. Otherwise new customers might get involved with other

suppliers as the competition in the market is extreme.

In accordance to that, Lovelock (1999) stated that there is a situation where a customer changes

from one supplier to another thus the loyalty is also changed; this scenario is referred to as

Defection. Mostly, firms who are involved in relationship marketing strategy try their best to

achieve zero defection which is by serving every customer and retaining them for long term

instead of losing them.

4.1.7 M&S Fashionable

Figure 4.7: M&S clothing-ware is fashionable

In response to the question regarding whether M&S Clothing-wares are fashionable or not,

majority of the respondents agreed that M&S fashion clothing are fashionable. In this era of

intense competition, it is imperatively significant to have unique product range to attract the

customers. Through the innovation of the product, firms can use it both retaining existing

customers and at the same time attract new customers. in terms of fashion clothing the demand is

much higher and changing. Thus organizations such as M&S are complying with the changing

environment through producing fashion-clothing that suits their customers.

The concept is also supported by literature as Bateson (2005) stated that firms who were

pursuing relationship marketing strategy had an aim to transform new customers into regular

buyers which in turn would help them to boost up their sales and then transform these same

customers in providing strong support for their firms and well as their products.

4.1.8 Expectation of M&S Fashion-wares

Figure 4.8: Customer expectation

The next statement asked the respondents if M&S fashion-wares are exactly what they need or

not. As the above result indicates, majority of the respondents above agreed that M&S fashion-

wares are exactly what they need. The result suggests that it is very crucial for organization to

meet the customer expectation. Otherwise a very strong customer relationship can come to an

end if the firms are unable to deliver the products as per customer expectation. Although

majority of the respondents agreed to this statement, however, this outcome can be partially

biased as the entire sample selected, was from M&S customers.

This has been also correlated with the literature as Christopher (2008) stated that firms realize

that relationship marketing focuses on developing stronger relationship with existing customers

and selling them more products suiting their needs and expectations instead of making a single

sale and then moving to another customer. This strategy is based on a number of promises like

lower prices, better quality, faster delivery and better customer service as compared to their

competitors.

4.1.9 Importance of Relationship with M&S

Figure 4.9: Importance of relationship

Next, the respondents were asked regarding the importance of relationship between them and

Marks & Spencer. As the finding indicates, majority of the respondents agreed that their

relationship with M&S is significant to them. Thus, from the evidence it is quite clear that M&S

is evaluated and has implemented an effective customer relationship strategy which has made the

customers to feel the relationship important. For example, it has been discussed in the literature

as Fournier et.al (2008) stated that relationship marketing strategy is a type of strategy which

does not focus at all on selling in fact it has its main focus on building relationships with trust

between the firms, their customers, distributors, employees, suppliers and everyone who is

involved in the business. In addition it has been further discussed by Kurtz (2009) that, by

pursuing this type of marketing, firms can keep an eye on the communication between them and

the customer. They can also check whether the customer is satisfied or not. This not only helps

the firms to satisfy the customer but they can also calculate the cost if they got a new customer

on board and if they follow this strategy on his case, how much profit they will generate during

his term with the firm. This information helps the firm to find ways of increasing the value in the

new buyer seller transaction.

4.1.10 Awareness

Figure 4.10: Awareness

Another imperative question that was asked to the customers is regarding how they get

influenced or aware about Mark & Spencer. As the above graph indicates, majority of the

respondents selected television as the most popular media. Secondly, fashion magazines and

internet also play a significant role in the advertisement of M&S. 13% of the respondents

selected reference as their media which can be word of mouth from friends and family.

Awareness plays a key as it provides the customers with impression that will decide the

relationship. If it does not execute effectively enough firms will not be able to evaluate the next

stage of customer relationships. This issue is also supported by literature as according to Dwyer

et.al (2007), the awareness stage would presumably be rather short before exploration and

interaction would occur. Yet awareness is a critical stage. If the awareness stage does not occur

in a favorable way, the customer will not continue to the exploration stage of relationship

development.

4.1.11 Emotional Attachment

Figure 4.11: Emotional Attachment

As the survey was forwarding to its end, the respondents were asked if they have emotional

attachment with Marks & Spencer. According to the finding, majority of the customers claimed

they have emotional attachment with M&S. emotional attachment with the retailer is one of the

most significant customer relationship’s achievement as it signifies that what CRM is all about.

Another interesting finding in this particular question was 19% (so far the highest) of the

respondents were neutral in this regard.

In the literature review, there is some major customer relationship factors were discussed in

relation to emotion. For example, according to Berry (2000) some Starbucks customers develop

strong emotional bonds with the brand. Edell and Burke (1987) found that automobile shoppers'

decisions can be based largely on an emotional response. Emotion is thought to work in

marketing by creating positive ad and brand attitudes (Mitchell & Olson, 2001).

Marketing satisfaction researcher Oliver (1997) has begun to include emotion in the satisfaction

theoretical models and scales. Oliver theorizes that attractive information from a firm leads to the

"affective" (emotional) stage of loyalty.

4.1.12 Trust with M&S Product

Figure 4.12: Trust with M&S

The final question of the customer survey was regarding trust. As the above graph indicates,

majority of the respondents that they trust the information about the products of the M&S. this

signifies that salespersons of M&S has the ability to pursue their customers and in addition, the

quality products provided by the company has also have significant impact in this regard.

In the literature, Moorman et.al, (2003) stated that trust is defined as the customer feels trust for

the salesperson, that he or she will be honest and reliable.

Furthermore, Bateson (2005) stated that relationship marketing is the combination of superior

service, enhanced quality and marketing. It also focuses on retaining the customer, building a

long term bond with the customer thus gaining trust, as well as increasing the level of

commitment for that specific customer which helps the firm to create a good impression on the

customer and keeping him longer with the firm.

Questionnaire Survey (PART II)

4.2 Focus Group Discussion

This section of the paper analyzes the discussion with two CRM managers of Marks & Spencer.

The first question asked the managers regarding M&S’s strategy in order to build customer

relationship. In response the managers claimed that M&S always tries to store their customers’

information in their database through providing them membership cards after sales. In addition,

the company uses this database to analyze the customers purchase behavior. Through this step

M&S able to learn about their customers’ choice, habits and trends. It also helps them to find out

how to make their customer satisfied. In addition M&S also tries to enhance the buyer-seller

transaction. This step is also dedicated to make sure if the customers are satisfied or not. If not,

through this process M&S tries to attract new customers. The company also uses CRM software

in order to monitor customers’ buying activities, stated by the managers. These are the some key

steps the M&S authority implements according to the managers. These stages are also almost

similar with the steps mentioned in the literature review by Kurtz (2009).

The managers were next asked regarding the changes within the company when it comes to

customer and customer relationship. The response from the managers explored a huge operation

which is conducted by the company. According to the managers, the most significant motto,

vision and aim of M&S is to build positive relationship with their customers. Thus the

organization implements strategies that is associated with the customer or customer relationships

very significantly. These strategies include training of the employees regarding assessing

customers behavior and learn how to pursue them, taking records of the customer data etc.

The next question asked the managers regarding M&S’s strategy to interact with the customers.

According to the managers, the company uses various media to gain customers’ attention. M&S

spends a significant amount on advertisement in Television as it is the most watched source of

exposure. The managers further claimed that word of mouth regarding the M&S brand is another

source of interacting with the customers. Although it has been found nominal percentage the

consumer survey, but the managers claimed this kind of interface are driven by family and

friends, which results curiosity and positive emotions towards the brand. In addition, as fashion

retailer stated by the managers, M&S also uses the exposure of the fashion magazines to interact

with the customers. The company also uses Internet and newspaper to broadcast about sale or

discount information.

When the managers were asked regarding the customer satisfaction towards Marks & Spencer,

both of the respondents claimed that customers are satisfied with the products of M&S. in

addition, the managers claimed the organization conduct survey among the customers in order to

measure their satisfaction level and take initiatives to overcome any constraints mentioned by the

customers as special 24 hours hotline is available for the customers to make any kind of feedback

about the products or stores.

In addition, according to the respondents view, M&S put lot of emphasis on retaining the

existing customers as they are considered to be the most valuable asset in customer relationship

management mentioned by the managers. Moreover, the managers also claimed that the

company uses the telemarketing concept with the existing customer to make sure they are

satisfied with their products and aware them regarding new coming surprises.

The respondents further claimed that it is much easier with dealing with the existing customers

as they are already familiar with store management, employees and salespeople. Hence in order

to retain these customers, the organization offers token such as honorary membership cards that

will give the retaining customers a significant amount of discount on their purchase. The

company also provides these customers with the facilities such special discount on a price limit

excision.

In relation to M&S strategies to retain customers, the managers claimed that it is the most

significant part of the organization’s success. The retaining customer adds extra value to the

business as they are more loyal and satisfied towards the respective brand, refers to other about

the company and also make additional purchases on products or services. Thus in order to retain

customers, M&S tries to focus more on the existing consumers as they are the primary retention

asset. In addition it is important for the organization to be consistent with the approaches towards

the retaining customers and dealing them with honesty. By evaluating their purchase behavior

and taste of products, M&S management tries to connect to the customers as far as possible so

that both parties can understand each other. And last but not the least; the manager claimed that

the organization rewards them for staying with the company.

Next, the manager were asked regarding the importance of customer’s habits, taste, fashion and

changing trends towards M&S. the managers claimed that it is very significant for the

organization to synchronizes its fashion wares with the constantly changing trends in the fashion

industry. However the managers also claimed that M&S also focuses its fashion ware

competencies not only for a selected segment that are moving through the constantly changing

environment such as young generation, but also for the customers of all ages. Through this

strategy M&S tries to fulfill all the requirements for people from different segments. In addition,

the managers also claimed that they analyzes their existing customers’ record in order to get

ideas about their habits and tastes in relation to fashion wares.

The final question in the focus group discussion asked the managers regarding the

responsibilities of the of the M&S employees in relation to customer relationship and retention.

According to the managers, it is the most significant factor for the organization to train their

employees so that they can gain the ability to interact with the customers and peruse them in

making purchase decision. The company provides special training session for the in store sales

representatives where the primary focus is on customer relationship. Because of these initiatives,

employees at M&S are much more efficient in customer relationship from other competitive

firms, claimed by the managers. Thus from the discussion, it is evident that M&S is successfully

taking all the steps to build strong relationship with their customers. In addition, the organization

is also utilizing its human resource in effective customer retention.

Chapter 5: CONCLUSION & RECOMMENDATIONS

This chapter interprets the results generated in previous chapter. Also, directions for future

research are suggested, and, in addition, the managerial recommendations are suggested and

limitations of this dissertation are discussed

The purpose of this research was to understand the initiatives firms’ take in order to build

customer relationships. Insight into the customer experience may help relationship marketers

succeed by matching strategic planning and specific communications to customer stages. This

study has discussed several developmental stages perspective to a relationship marketing context.

Some key factors from those models are also identified which is implemented by the firm. An

overall model of customer relationship model is developed for recommendation.

The results indicate that relationship development theory was applicable in the relationship

marketing context. In general, customer stages did progress and stages changed in relation to key

factors.

In this final section of the paper, the research question will be answered in align with the

justification of the research objectives. The chapter further provides recommendation on

managerial perspective with recommendation for future research and limitation.

5.1 Justification of the Research Questions

Question 1: What are the steps followed by firms in order to develop relationship

marketing strategy aiming to make it effective?

Answer: In relation to the question regarding the steps followed by firms in order to develop

relationship marketing strategy, the findings from the one organization that is using the steps has

been identified. Thus, according to Marks & Spencer management, the organization firstly create

awareness among their potential customers through media or word of mouth advertising. Once

the the new customers become regular, they offer them M&S membership cards in order to store

the customer data in the database. The organization additionally uses these data to analyze

customer purchase behavior and tries to entertain them with value added services. Through this

process the company also tries to measure the customer satisfaction level towards the

organization. In the last step M&S uses CRM software in order to track down every customers

habits, taste or purchase behavior for taking action in the future in regards with building

customer relationship.

Question 2: What are the factors need to be considered in relationship marketing

development strategy?

Answer: There are several factor has been identified in the building of this research that are need

to be considered in relationship marketing development strategy. It has been found that it is

imperative for the organizations firstly create awareness and identify the potential customers.

The organization can choose various cost effective channels in order to reach out to these

customers. The next but probably the most significant factor is to retain the existing customers.

When retaining the existing customers, there are several other factors are also associated with it

such as customer satisfaction, attitude towards the brand, emotion etc. additionally it is also

important for the organizations to comply with customers feedback which will cause immediate

satisfaction among the customers. thus if organizations can utilize all these factors in their

relationship marketing development strategy, it will automatically result the creation of

referencing or the word of mouth awareness among the new customers which is another crucial

part of relationship marketing as referencing most of the time driven by emotions.

Question 3: What are key challenges faced by firms following relationship marketing

strategy in this global Market?

Answer: Literature review and data analysis revealed that, when it comes to relationship

marketing, organisation’s are facing various challenges such as intense competition, changing

consumer demand, rapidly changing technological environment, pressure from the suppliers and

stakeholders etc. Data analysis revealed that consumer loyalty is significantly low in the fashion

industry of UK, and in this era of economic recession consumers are lot more price sensitive than

before. Therefore, focusing on quality of the product or maintaining and establishing relationship

with customers cannot guarantee success for the organizations. The research revealed that

organizations needs to stay ahead of the competition through lower price, quality product and

enhanced relationship with the customers. As Kotler (2009) mentioned that soon enough

consumers are going to tell firms what they want or simply they are going to dictate the terms

and firms will be obliged to respond accordingly. Therefore, relationships with the customer

remains important, however ability to respond quickly to their demand is also very important.

This is where innovation and continuous improvement of the business processes comes in the

scenario. Organisation like M & S are continuously reinventing their product line and this has

been one of their main success criteria.

Technology remains another major challenge. Firms still find to find the right balances between

technology and human touch when it comes to providing superior customer service. Research

revealed that so many firms deploy technology excessively to communicate with customers and

subsequently end up losing the sales and customers. However, research revealed that M&S

managed to integrate technology with their overall business strategy. This enables them to utilize

technology to improve consumer experience and confidence.

5.2 Validation of the Research Objectives

Objective I: The first objective of the paper was to explore the long term relationship

development stages of M&S. from the result of the data analysis; it has been found that Marks &

Spencer implements five key development stages in order to maintain long term relationship

with the customers. The first stage of this process is to create awareness. The next stage is based

on gaining customer information about the customers through exploration. In the next stage, the

company focus on maintaining the relationship with their existing customers by offering them

value added service such as discount card. This is the stage where the relationship is on a

growing process. In the fourth stage, M&S makes sure that the customers are satisfied with the

organization and if not they tries to sort out the factors mentioned by the customers in their

feedback. In the final stage M&S signifies the referencing value of the satisfied existing

customers by which they can target the potential new customers.

Objective II: The next objective of the paper was to understand the importance of customers’

habits, taste, and fashion and changing trends towards M&S. from the finding it has been found

that the clothing that Marks & Spencer uses are fashionable according to the customers. The

organization understands the significance of providing quality and unique clothing wares and at

the same time accordance with the current trends in fashion. Thus M&S tries to use innovation of

the product, by which it can be used in both retaining existing customers and at the same time

attract new customers. in addition as the fashion clothing demands are rapidly changing, the

organization use their brand image in association with their fashion wares as the competition is

significantly high. Hence organizations such as M&S are complying with the changing

environment through producing fashion-clothing that suits their customers.

Objective III: The third objective of the paper was to identify the factors need to be considered

in order to maintain long term relationship marketing. From the customer survey and

management discussion, it has been found that there are some key factors associated with the

maintenance of long term relationship marketing. It is imperative to promptly respond to any

required assistance of the customers. The employees or in store sales representatives should have

the ability to convince the customers regarding their best offer in products or services with being

honest. These kinds of assistance convey satisfaction in the consumers mind and they feel

emotionally attached with the respective brand. Also after sales services is another important

factor that needed to be considered in maintaining long term relationship marketing.

Objective IV: The final objective of the paper was to recommend how consumer loyalty plays

an important role in trust based marketing. According to the findings from the data analysis, it is

evident that customer loyalty is an imperative factor in customer relationship management. Its

role in trust based marketing is very crucial as customer loyalty is invented from the trust. Thus

when organization presents trustworthy information to its customers, the initial attitude about the

firm becomes positive. Further in a growing relationship, customers become more emotionally

attached with the respective organization which makes them loyal to the brand. Thus in trust

based marketing customers are emotionally attached with their respective organization, which

results loyalty and commitment towards the products or services of that organization.

5.3 Recommendations

Although this study revealed important positive results, such as awareness can lead to prosaically

emotion, growth, trust, and commitment, these findings also show that unresolved doubts can

terminate customer relationships. Furthermore, if a customer’s emotions and trust levels are not

positive, relationship development may cease, as these variables are central drivers in customer

relationships.

Customer relationship stages discussed in the literature need not be a marketer’s minefield,

however, it is recommended that some factors can be utilized and there is room for various

solutions and improvements. These recommendations include planning and practicing for stages

and a restructuring of the front-line employees as the leaders who own the intimate moments

with the customer.

5.3.1 Planning and practicing for stages

The implication of this study is that relationship marketers meet customers where they are in the

relationship stages. If a customer in the awareness stage receives marketing communication

better suited to the commitment stage, the relationship may be more likely to fail. However, if

relationship marketers match customer communication in depth and breadth considering the

customer's stage, relationship marketers may earn a functional, long-term, committed customer

relationship. Thus in order to develop or plan an effective model for stages, the factors outlined

below needs to be considered.

Awareness

Exploration

Consumer data

Analysis of data

Exploration

Growing relation

Trust

Customer feedback

Customer satisfaction

Loyalty

Commitment

As it has been found that customer satisfaction is one of the key elements of customer

relationship, routine customer satisfaction surveys should be linked to actual customer

relationships and problems directly solved. Direct and immediate customer problem-solving can

be achieved through entering in comments to a database and following up with each issue daily.

5.3.2 Internal relationship marketing to employees

Front-line employees should be viewed as crucial team leaders and more resources should be

allocated to empower employees and salespersons in direct, daily contact with customers.

Employee pay should not be commission-based, but should reflect the degree to which

employees help, serve, and build long-term relationships with customers. Relationship training

programs with role-play of customer stages may be especially illuminating to relationship

marketers, particularly in preparing for stressful situations.

The seller must recognize the customer moment, get a sense of the customer's needs, and as

accurately as possible, match a communication appropriate to the customer’s breadth and depth

level. The metaphor of talking with someone would like to date might be useful when training

salespeople on the opportunity of customer moments. Therefore, it is the seller’s job to initiate

the verbal or nonverbal communication and make the moment a relational one.

Figure 5.1: Recommended model for the study (Adapted by researcher)

Implementation Success

5.4 Limitation & Future Research

Generalizations from the results of this study are limited because a convenience sample was

used. These results should be interpreted while acknowledging that those who participated may

not have been representative of the non-volunteers. Perhaps participants responded more

enthusiastically about their relationships with marketers than those who refused to participate.

Furthermore, the sample was not pulled at random from the entire population of those in

marketing relationships; it was conducted among the customers of Marks & Spencer.

Due to these reasons, future research should be conducted with the same topic but from the

industry perspective. Also the sample size should be bigger and random.

In addition, because of the resource limitations to make direct observations and recordings of the

key variables, validated self-report measures were used. To encourage honest, reflective answers,

questionnaire instructions called for anonymity and honesty.

The scope for this study is limited to the customer-seller aspect of relationship marketing and

results may be appropriately applied to customer relationships from the customer’s point of view.

The study scope of testing customer stages is a subset, and a function of corporate, store, and

brand relations that were not explored in this study. Thus future research should be focused in

those areas.

In addition, although the relationships involved with the exploration factor were corrected for

attenuation, the exploration measure’s validity and reliability could be improved. Future research

may also benefit from the inclusion of a measure of emotional involvement, although this sample

indicated a high involvement with this product category, i.e., fashion wares. Even though the

extra predictor variables such as individual importance of friendships and social bonds,

enthusiasm for gadgets, and general happiness, for example, did not appear to have a large

impact on the relationship study factors, future studies may benefit from the inclusion of

measuring specifically if a friend told the customer to buy or not to buy from the seller.

It was beyond the scope of this study to investigate stages in a longitudinal design or to capture

the relationship from entirely the view of the marketer (the focus group discussion had nominal

impact). These omissions could create some discrepancies as to causal direction. Testing

relationship stages, and particularly identifying exploration processes, in a field experiment with

a repeated measures design would be ideal for the study where participants could experience the

actual relationship stages to help arrive at externally reliable consumer behavior outcomes.

Furthermore, a longitudinal design could rule out cohort effects as an explanation for stages. An

overtime design could help establish causal order and could test a multiple sequence model.

Examining customer defections in depth and the process of relationship dissolution was also

beyond the scope of this study. Thus these factors can be examined in the future research.

5.5 Concluding Thoughts

Most importantly, relationship marketers may use this study to act upon what being a partner in a

relationship really means. Above all, relationship marketers may now understand that customer

emotions and trust vary over different stages. This study shows there are customer relationships

based on emotions and trust that succeed and there are customers who spiral down to doubting

and dissatisfaction to end the relationship. Hence trust is considered to be the foundation of any

relationship.

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Appendix I: SAMPLE QUESTIONAAIRE

PART I

Consumer Survey on M&S Customers

1. My customer experience regarding M&S product/service makes me feel good/positive about the organization.

□Strongly Agree □Agree □Neutral □Disagree □ Strongly Disagree

2. I am very satisfied with this relationship with the M&S store.

□Strongly Agree □Agree □Neutral □Disagree □ Strongly Disagree

3. I am satisfied with the way this relationship with M&S is going.

□Strongly Agree □Agree □Neutral □Disagree □ Strongly Disagree

4. I am satisfied with the relationship with M&S employees.

□Strongly Agree □Agree □Neutral □Disagree □ Strongly Disagree

5. I am loyal to M&S.

□Strongly Agree □Agree □Neutral □Disagree □ Strongly Disagree

6. I am satisfied with the quality of M&S product.

□Strongly Agree □Agree □Neutral □Disagree □ Strongly Disagree

7. M&S clothing wares are fashionable.

□Strongly Agree □Agree □Neutral □Disagree □ Strongly Disagree

8. M&S fashion wares are exactly what I need.

□Strongly Agree □Agree □Neutral □Disagree □ Strongly Disagree

9. How important is the relationship you have with Marks & Spencer?

□Very important □Important □Somewhat important □Not important □ not at all

10. How do you get influence and aware about M&S products?

□ Television □ Radio □ Internet

□ Newspaper □ Fashion magazine □ Reference

11. I feel emotionally attached with M&S.

□Strongly Agree □Agree □Neutral □Disagree □ Strongly Disagree

12. My trust level towards M&S is high.

□Strongly Agree □Agree □Neutral □Disagree □ Strongly Disagree

PART II

Focus Group Discussion With Two CRM Managers of M&S

1. What is M&S’s strategy in order to build customer

relationships?

2. What are the changes within the company lately when it comes

to customers and customer relationships?

3. What are the strategies to interact with the customers?

4. Are the customers satisfied within the company?

5. What steps do you take to keep existing customers?

6. What are the methods that simulate repeated buying

behavior?

7. What is the importance of customer’s habits, taste, fashion

and changing trends towards M&S?

8. In regards to customer relationship and retention, what are

the responsibilities and attitude of the employees?

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Appendix II: Overview of Marks & Spencer

Macro Environment Analysis of M&S

The macro environmental factors can be divided into six broadly categories, which are political,

environment, social, technology, environment and legal (Johnson et al, 2005). The critical

analyses of the M&S’s macro environmental factors are given below:

Political and Legal

It is important for companies to follow government policies and global organisation systems,

such as World Health Organization (WHO), while they make marketing plans. The UK

government has introduced energy saving organisations, such as ‘Climate Change Levy’ and

‘Green Tax’ on energy use to reduce CO2 by 2010 by 20% against 1990 levels, and supplied

subsidies to improve its policies (M&S Annual Report, 2002/03). In recent years, gene

technologies have increased substantially. Some of these technologies have used to produce

food. However, some of these technologies may cause natural environment pollution and

endanger human’s health. “Some European supermarkets are moving towards selling only meat

from animals produced fed on non-GM feeds. This is building on moves by many retailers in the

UK to go non-GM” (Meat & Livestock Australia, 2001). M&S also announced that it supplied

all non-GM foods on its shelves (BBC News, 1999).

Economic

Economic factors have affected companies to extend their business or retrench its business, such

as close loss-making operations, and sale their non-core business. For example, the 11th

September 2001 accident in USA has caused many companies to face the recessions in North

America and European countries. The 11th September accident in USA caused economical crisis

in North America and other countries. It caused consumers to change their purchasing habits,

and retailers were seeing sales decreases (BBC News, 2001).

Social

The requirements of consumers are changeable. People want to feel special, modern, and

convenient. Hence, people purchase fashionable clothing and use credit cards to satisfy their

needs. M&S keeps with the latest style and colour, although it has high quality goods. M&S

does not consider with customer needs, especially in clothing market, it may cause M&S to lose

its sale to competitors (Jobber, 1999). Another social factor is that credit card acceptance has

increased more than 10% of all trade (BBC News, 2000).

Technological

At the present time, information technology changes fast, and most companies has built their

own websites, online shops, and databases to help them to increase their sales from online

customers. They collect information and analyse their customers to know their customers’ needs

and wants. Therefore, M&S has invested its information technology, such as online shop in

1999. In addition, most stores in the UK and Western Europe were running a trial of the EPOS

(Electronic Point Of Sale) systems. M&S has also used this system to drive sales, increase

customer service, and improve its efficiency (Yorwerth, 2001 Cited in Fahad, 2008). However,

M&S did not control its online shop and EPOS system effectively. Actually, its website could

not show its stocks immediately. Customers, who use its online shop, still feel inconvenient.

Micro Environment Analysis of M&S

The task of marketing management is to attract customers and establish good relationship with

customers by creating the worth and satisfaction of customers. However, marketing managers

not only pay attention to the needs of target market, but also need to realize the effect on

microenvironment that are suppliers, distributors, customers, and competitors (Kotler and

Armstrong, 2001: 78). The critical analyses of the M&S’s micro environmental factors are given

below:

Suppliers

M&S has not only established good relationship and reciprocal profit with suppliers but also

maintained long-term partnerships to cooperate with suppliers (Wilson and Gilligan, 1997: 204).

Suppliers supply necessary resources to companies for producing products or services.

Therefore, the development of suppliers may bring enormous influence to the company (Kotler

and Armstrong, 2001: 78-79). It is a right policy that M&S values suppliers for maintaining its

business. Nevertheless, it may cause suppliers to raise the cost of materials. M&S needs to

consider the issue. M&S has built a good reputation for supplier management. If a supplier

refuses to supply materials to M&S, it can turn to another supplier (Christopher, 2001). The

company has this advantage that can supply it with an unfailing supply of materials. If suppliers

cannot supply materials to the company immediately, customer loyalty may be reduced by lack

of products. M&S has controlled this matter.

Distributors

M&S is the largest and the leading variety store retailer in the UK (Textile Outlook International,

2002). “New brand and product development over the last ten years in fast-moving consumer

goods sectors in the UK is that many of the most original and successful initiatives have been

taken not by manufacturers but by retailers” (Textile Outlook International, 2002). M&S has

changed the marketing structure from manufacturers to retailers and inspired other major

retailers to follow. This is a very significant even for retailers’ change. However, M&S does not

control the stock on popular selling clothing (Jobber, 2001: 149). Customers cannot purchase

products that they really want. This situation needs to be handled and improved.

Customers

M&S believes that customers are the most important element of consideration and understands

that customers are very important for its origination (Stokes, 1997: 5-7). Companies should

understand that customer satisfaction is more important than product sale. M&S realises this

main attribute and provides good services and high quality products to customers for raising the

customer loyalty. M&S believes that precise quality controls must persist forever (Macrae, 1996:

394).

This company always considers customers’ concern and tries to provide the best quality or

services to customers. Consumers perceive that all St Michael products are in good quality

standards (Macrae, 1996:394). Nevertheless, “own labeling’ of over 30% of stores’ lines is often

perceived by consumers as restricting their lifestyles” (Macrae, 1996: 394). Consumers prefer

good quality of products, however, they do not want to be confined their lifestyle by ‘own

labeling’. M&S realized this matter and tried to avoid this impression.

Competitors

M&S focuses its business on the quality and service. Sainsbury and Tesco that are the

competitors for M&S focus its business on the quality, convenience, breadth of range (Wilson

and Gilligan, 1997: 302). A company not only satisfies the needs of customers but considers

strategies of competitors in the same target market. M&S has some competitive advantages that

are over one hundred years in business, recognizable brand name, and good supplier relationship

(Christopher, 2001). In particular, M&S has its own market testing and exercise tight quality

control (Hart and Murphy, 1998: 7). The quality and service can keep customers’ loyalty. M&S

has done this great. Unfortunately, Sainsbury and Tesco not only emphasize the quality but

establish their stores universally. M&S needs to improve this disadvantage certainly.

SWOT Analysis

SWOT analysis is a pre-condition in judging any companies’ feasibility and its competitiveness

over the other company. It helps to assess the possible cost benefit and opportunities that will

lead to select a viable project. We can present SWOT analysis for Marks and Spencer in the

given way:

Figure: 2 SWOT Matrix

Strengths Weaknesses

Opportunities Threats

Opportunities and Threats of M&S

Opportunities

Internet Technology

Internet technology has developed fast, it offers an opportunity to increase the demand for the

online products (Zakon, 1999). In terms of this circumstance, buying products online became a

new trend. Customers are getting used to accept the model and adapt it to their daily lives, and

the demand for this kind of products would be increased in the future.

Healthy Eating

Healthy eating offers an opportunity that the demand of specific food will be increased

(Leyshon, 2002). People pay attention to the life quality, they request companies to offer varied

products to satisfy their needs. For example, in the food market, M&S does good segmentation

in providing the vegetarian, low fat or organic food. This is the advantage that the competitors

have not aware of it.

Threats

Although M&S has its own strengths, opportunities and weaknesses, it still occurs some threats

from itself and other competitors.

Strong Competitors

Strong competitors are the most threat to M&S. For example, in the food market, there are four

main supermarkets, such as Tesco, Asda, Safeway and Sainsbury (Ocr, 2006). They provide not

only high quality but also value-added products to build customers’ loyalty. In the clothing

market, Gap, Next, Topshop and other fashionable brands may compete with M&S (M&S

Annual Report, 2007/08).

The Change of Social Environment

Except other competitors, M&S will be influenced by social environment. Since the social

environment changes at any time, the customers’ tastes are also changed. For example, people

move to other countries, and their culture will affect the local people’s lifestyles, such as eating,

and dressing. M&S can adjust its products to satisfy different needs.

Chemical Pollution

Environment pollution is a threat for M&S. An environmental systems manager of M&S

claimed, “Every one of the 30,000 product line that M&S sells is dependent on chemicals”

(Friend of the Earth, 2002). Governments are taking measures to protect natural environment

and reduce pollution. This potential risk will affect its development of M&S in the future.

Internal Environmental Factors of M&S:

The internal analysis leads to a clear assessment of the organization’s resources and

capabilities in performing the different functional activities. Positive activities and unique

resources are organization’s strength. The opposite is the weakness. This step forces managers to

recognize the resources and capabilities it has available (Robbins and Coulter, 2005)

Strengths

High Quality

High quality is the major strength that makes M&S successful. Customers always find high

quality goods such as fresh fruits, vegetables, and other superior goods in M&S’s food hall

(Ciao, 2002). With many people turnning to eat vegetarian meals, M&S grasps the consumers’

need. M&S has high quality of products that are the food and other products, such as baby

products and women’s underwear.

Customer Services

M&S has high reputation for focusing on customer service (Christie, 2002). This is one of the

most important methods to make a good relationship between customers and M&S. For

example, when women want to buy underwears for themselves, the shop assistants will help

them to measure sizes and give them good suggestions.

Shopping Environment

M&S tries to make customers feel more convenient and comfortable. It makes stores brighter,

and uses modern designs (Rungfapaisarn, 2001). All goods in the shop can be seen immediately.

Furthermore, customers do not worry about being drowned in many shelves and avoiding

multitudinous people.

Manager Training

One of M&S’s strengths is its strict and excellent manager training system (Retail Technology,

1999). Every manager of M&S must be familiar with duty of every post. In fact, managers of

M&S are arranged practice of every post. It helps them to improve both work experiences and

management skills.

Weaknesses

Clothing Lack Segmentation

The clothing market of M&S has many segments. In fact, the merchanclise, especially ladies

outerwear, is outmoded design and cut. In addition, affluent younger consumers prefer

purchasing brand-labels, such as Gap, Next and Topshop (Jobber, 2001: 149).

Stock Control

“The non-performance of the home delivery/shopping service even sometimes involves wedding

lists. Customers were told that items were out of stock” (Jobber, 2001: 149). Customers

complain the defect of e-shooping and delivery services. To some extent, M&S suffers from the

unbalance between the stock and Information Technology System.

Waste Store Spaces

Another problem is that M&S has many store spaces. In fact, it has added 75 percent of square

footage since the early Eighties, but its market share in clothing has not increased (Stewart,

2000). M&S needs to find some new products to stuff its extra spaces.