2 - Commitment and Customer Loyalty PDF
2 - Commitment and Customer Loyalty PDF
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Abstract
Understanding what makes business-to-business (B2B) relationships lasting and stable is one of the main areas
of academic interest in the study of organizational relations. To retain the organization’s current customers and
to make them loyal is a critical component for a company to be successful. Customers should identify groups of
suppliers based on develop strategies that are appropriate for further increasing loyalty under the conditions that
exist for the product and service. In the current paper, the authors investigate the different factors, which
influence commitment and customer loyalty on B2B context. The following paper explains the relationship
between commitment and customer loyalty by investigating relevant theories and past studies. This paper
uncovers that the literature proffer a affluent, yet fragmented, photograph of which variable or key success factor
is, and how it can be increased and profitable to customer loyalty in automotive industry. The outcomes must
lead management with the ability to map out a typology of loyalty using the available composite measures of
loyalty, purchase intentions and attitudinal loyalty. The classification system can be useful to industrial
customers as they try to increase their loyalty.
Keywords: Commitment, Customer Loyalty, B2B Context, Automotive Industry
1. Introduction
According to various researches in field of industrial marketing, there is significant mutual relationship between
customer and supplier (Dwyer et al., 1987). The relationship between customer and supplier in B2B marketing is
described as a close and long-term interaction with complexity (Håkansson, 1987). Loyalty is an objective that is
quite essential for retaining such relationship, and it has been broadly determined in marketing literatures (Oliver,
1999; Schakett, 2010). Basically, loyalty considers as the main concept and primary goal in the relationship
marketing (Sheth and Parvatiyar, 2002), and building loyal customers is a must for every organizations (Eakuru
and Mat, 2008). It is an increasing interest in the world economy particularly on B2B environment to identify
and study influences that affect customer loyalty (Fullerton, 2005). Increased comparativeness means that
businesses must be able to react even faster and more specifically to individual customer demands to win
customer loyalty for as long as possible (Afsharipour, 2006). With that said, marketers are focusing on their
customer retention and loyalty initiatives.
In order to create competitive advantages and achieve better results, B2B relationships offer opportunities for
several organizations (Ulaga and Eggert, 2006). This makes the understanding of retention and loyalty an
important area of research. Hutt and Speh (2004) stated that the essence of B2B marketing is to build long-term
relationships with customers. The single most pressing and ongoing challenge to companies must establish a
high level of customer loyalty, a core-marketing goal, which in order to establish and maintain long-term B2B
relationships (Berry and Parasuraman, 1995). The study of relationship marketing concepts is paramount to
understanding and managing industries, yet is not adequately covered by traditional management paradigms.
Relationship marketing is defined by Berry (1983) as an attempt of organizations to win over customers and to
preserve and enhance that relationship. Based on the fact that the ultimate goal for companies is to build
customer loyalty, retaining customers has become increasingly important task for organizations in order to obtain
a sustainable competitive advantage (Li, 2012). For instance, one of the benefits of loyal customers is that
companies can increase the revenue and in return customers acquire special benefits and feel secure (Dixon-
Woods et al., 2005).
As Curtis (2009) mentioned, the historical research on loyalty started viewing loyalty as a repeat purchase
behavior, and was further developed by including loyalty antecedents, consequences, and factors. Initially, we
proffer a background review of the concepts of customer loyalty and commitment of relationship marketing
theory. Then, investigate in what way to build the variables operative and attempt to recognize relations among
variables. And we display some conclusions and make suggestions for management. Consequently, this paper
utilizes commitment and customer loyalty among employees (Manager or non-manager), arguing that this
approach is appropriate to the automotive industry.
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2. Customer Loyalty
Over the last 80 years, loyalty has been received considerable amount of attention in marketing literature (Curtis,
2009). A research conducted by Boyt (1997) is identified as the first attempt to work on loyalty. Influences of
loyal customers are more likely concentrated on long-term benefits of companies and engaged in cooperative
actions beneficial to both partners in a relationship. Therefore, loyalty can enhance the competitiveness of both
partners and reducing transaction costs in B2B environment (Ganesan and Hess, 1997). Furthermore, Fornell and
Wernerfelt, (1987) claimed that the costs of customer retention are substantially less than those of customer
acquisition which means retaining the current customer is an important business objective rather than just
seeking the next or new customer (Chumpitaz and Paparoidamis, 2004). Despite the fact that there being
numerous ways of defining and measuring loyalty in a consumer market context, the concept of loyalty in a B2B
context has not been clearly defined (Gil-Saura, 2008). There is still a scarce amount of attempts trying to
conceptualize loyalty and to research its antecedents (Lam et al., 2004).
Loyalty in the marketing literature has been referred to essential or indispensable action or element, condition, or
ingredient (sine qua non) of an effective business strategy. Loyalty is a strategy that creates mutual rewards to
benefit firms and customers (Li, 2012). Loyalty is considered to be a source of competitive advantage and it has
proven to have a relevant impact on company performance (Woodruff and Gardial, 1996). In fact, there are
several companies that have applied loyalty as a powerful tool to positively affect their performance and it
becomes an important source of competitive advantage for them (Zineldin, 2006). Basically,having a high rate of
loyal customer gains a competitive advantage for supplier, and loyal clients are willing to pay higher prices and
are less price sensitive (Zineldin, 2006).
Bowen and Shoemaker (2003) as a construct that measures the probability the customer will return and is ready
to perform partnering activities such as referrals define customer loyalty. Some scholars refer to a similar
concept as behavioral intentions that include renewing the contract, making recommendations and increasing
patronage ( Čater and Čater, 2010). According to Jones and Sasser (1995) research, the willingness that
customers will buy same products or purchase for the same service again in the future is called customer loyalty.
It was proposed by Lee and Cunningham (2004) that the fundamental of customer loyalty is based on customers’
past experience and future expectation, which dictates, customers intentionally and regularly purchase on the
current company. Repeat purchasing behavior brought about by marketing efforts directed towards keeping
existing customers is the definition of customer loyalty according to Hennig-Thurau, Gwinner and Gremler
(2002b). In this part, we concentrate on some important customer loyalty definitions, and go away from
descriptions and definitions of the loyalty concept previous 1994.
In brief, customer loyalty is a strategy that creates mutual rewards to benefit firms and customers (Reichheld and
Detrick, 2003b). In addition, customer loyalty as repeat purchasing behavior brought about by marketing efforts
directed towards keeping existing customers (Hennig-Thurau et al., 2002a). Furthermore, deeply commitment to
re-buy or re-patronize a preferred product consistently in the future is another definition of customer loyalty (Ou
et al., 2011). As mentioned in many relative published literatures there are three main streams of research in
loyalty (Lin, 2009). These subjects include: behavioral loyalty, attitudinal loyalty and integrated or composite
loyalty (behavioral and attitudinal loyalty).
2.1 Behavioral Loyalty
Behavior such as past purchases of a brand or product, as it suggested by Tucker (1964), completely accounts for
loyalty. Alongside this point of view, Jacoby and Chestnut (1978) pointed out that the main focus in behavioral
loyalty studies was on interpreting patterns of repeat purchasing in primarily panel data as a manifestation of
loyalty. Uncles and Laurent (2003) argued that loyalty in this behavioral manner is believed to be stochastic not
deterministic. Behavioral loyalty was identified by Rauyruen and Miller (2007) as the willingness of average
customers to repurchase the service or the product, and to maintain a relationship with the service provider or
supplier. They stated “In an early school of thought, Tucker (1964) argues that behavior (past purchases of the
brand/product) completely accounts for loyalty”. The main concern of behavioral loyalty studies is toward
interpreting patterns of repeat purchasing as a manifestation of loyalty (Curtis, 2009).
2.2 Attitudinal Loyalty
Attitudinal loyalty is distinguishable from frequent purchasing which is in contrast to behavioral loyalty
(Dekimpe et al., 1997). According to Zins (2001), customers’ knowledge structures, mental and emotional work
as mediators between stimuli and responses. The level of customers’ psychological attachments and attitudinal
advocacy towards the service provider or supplier is another definition of attitudinal loyalty (Rauyruen and
Miller, 2007). Basically, the degree to which a consumers’ disposition towards a service is favorable is denoted
by attitude. Positive word of mouth, recommendation the service to others and commitment to a preferred firm
are all the different variables in attitudinal loyalty (Curtis, 2009). Therefore, attitudinal concepts can be
identified as encouraging others to use the service and recommending the service to others (Zeithaml et al.,
1996).
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3. Commitment
In the relationship marketing literature, commitment has been defined by Morgan and Hunt (1994) as the
perceived likelihood that a focal firm will terminate the relationship with another firm in the reasonably near
future. They identified relationship benefits as a key antecedent for the kind of relationship commitment that
characterizes customers who engage in relational exchange in their “commitment-trust” theory of relationship
marketing. The importance of the commitment construct has been widely acknowledged by many scholars. For
instance, Berry and Parasuraman (1988) stated in a service marketing context that “relationships are built on the
foundation of mutual commitment”. Moorman et al. (1999) referred to commitment as “an enduring desire to
maintain a valued relationship”.
The main belief in here is: a relationship is worth the effort to be maintained. Even if a competing supplier
outperforms the incumbent’s value offer, committed relationship partners are unlikely to switch. Thus, in order
to stabilize the relationship, a high level of commitment would be quite helpful. In a comprehensive literature
review on the commitment construct, Morgan and Hunt (1994) argued that a common pattern emerges from the
various literatures on relationships. They established that parties identify commitment among exchange partners
as key to achieving valuable outcomes for themselves, and organizations try to develop and maintain this
precious attribute in their relationships. In studies of customer–seller marketing relationships in B2B markets,
commitment is undoubtedly the most frequently studied variables (Morgan and Hunt, 1994; Gilliland and Bello,
2002).
Although, scholars of B2B relationships have an agreement about the importance of this construct, there are
differences in its conceptualization and operationalization level (Sharma et al., 2006). Gilliland and Bello (2002)
claimed that researchers study mainly commitment as a global construct that measures the intention to continue
the relationship. Commitment has been referred to as an implicit or explicit pledge of relational continuity
between exchange partners in the customer-and-seller relationship literature (Dwyer et al., 1987). Moorman et al.,
(1999) simplified this definition and referred to commitment as the motivation to stay with a supplier or
suppliers.
Commitment in a business relationship is a psychological sentiment of the mind, which is basically forming an
attitude concerning continuation of a relationship with a business partner (Wetzels et al., 1998). In any
relationship, commitment is a vital factor and B2B purchasing transaction is not an exception (Morgan and Hunt,
1994). This construct measures the commitment that the potential customers have towards the sales consultant of
the supplier. It is shown that increased level of commitment will lead to increase loyalty (Pritchard et al., 1999).
According to academic definition, commitment to the sales consultant is a desire to maintain a valued
relationship and it is an affective commitment and a psychological attachment (Morgan and Hunt, 1994),
behavioral intention, that is, the intention to continue the relationship in the future will be derived from this kind
of attachment to the sales consultant (Gundlach et al., 1995). An increase in acquiescence and a decrease in the
propensity to leave are considered as the outcomes of high commitment (Morgan and Hunt, 1994).
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In brief, if a customer is affectively committed to a supplier, they are likely to buy additional services from that
supplier in preference to their competitors. However, since calculative commitment is based on economic
considerations, a customer with calculative commitment will not necessarily purchase additional services. Berry
and Parasuraman (1991) maintain that mutual commitment is the base on which relationships develop. One
common theme that emerges from the various literatures is that: parties identify commitment among exchange
partners as key to achieving valuable outcomes for themselves and they endeavor to develop and maintain
relationships.
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Table2: Several researchers proposed that commitment is the central construct to the development of successful
service relationships in B2B markets.
Author/ Year Issue
Chow and Holden (1997) ;Money (2004); Eriksson Provide empirical evidence linking several
and Vaghult (2000); Boles et al. (1997); Lam et constructs such as relationship quality, trust,
al. (2004); Bennett et al. (2005); Gounaris (2005) satisfaction to influence B2B customer loyalty.
Lin and Wang (2006); Rauyruen and Miller (2007) The effects of relationship quality on customer
Franco et al. (2009); Liu et al. ( 2011); Ou (2011) loyalty
Ruyter et al. (2001); Gounaris (2005); Kumar et al. Relationship quality would be a predictor of B2B
(1995); Sharma et al. (2006); Wetzels et al. (1998) customer loyalty
Fullerton (2005); Garbarino and Johnson (1999); A relationship exists between customer
Geysken et al. (1996); Gilliland and Bello (2002) commitment and future purchase intentions and
Wetzels et al. (1998) intention to stay in the relationship
Ruyter et al. (2001); Gounaris (2005); Kumar et
Identified effective commitment as the strongest
al. (1995); Sharma et al. (2006); Wetzels et al.
motivator for customer loyalty.
(1998)
Commitment is a vital ingredient of successful
Berry and Parasuraman (1991)
relationships leading to loyalty
Wilson (1994); Moorman et al. (1993); Morgan Commitment indicates the motivation to maintain
and Hunt (1994); Ulaga and Eggert (2006) a relationship
Commitment indicates the motivation to maintain
Anderson and Narus (1991); Ruyter et al.( 2001);
a relationship while customer turnover among
Gounaris (2005)
committed customers decreases
Commitment indicates the motivation to maintain
Pura (2005); Shabbir et al. (2007) a relationship while customer turnover among
committed customers decreases
Dixon et al. (2005); Fullerton (2005); Garbarino Commitment has a strong positive relationship
and Johnson (1999); Hennig-Thurau (2004); with repurchase or repurchases intent
Macintosh and Lockshin (1997); Rauyruen and
Miller (2007); Curtis (2009)
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