ABSTRACT
In the wake of increased competition, the Nigeria mobile telecommunications market continues to undergo considerable changes. The mobile subscription, penetration and coverage continue to grow since 1999 when the first mobile operators started operating. The main focus for most companies in the present day competitive marketplace is on building long –term relationships that are mutually beneficial with customers which in turn lead to CL. The research objective was to determine the effect of DM on CP in Lagos's mobile telecommunications sector. Design utilized for study was descriptive cross-sectional survey, using all of the customers from Nigeria's top five service providers as the study's population; namely Globacom, Airtel Nigeria, MTN Nigeria. The study employed convenience sampling that saw all the 100 questionnaires filled thus indicating a 100% response rate. For the purpose of gathering data, the study used a structured questionnaire with a Likert scale. All the study variables formed the basis of structured questions where the 5-point scale with levels of agreement were used to seek respondents’ feedback. Both inferential and descriptive techniques were utilized in data analysis including frequencies, percentages, mean, standard deviation and multivariate linear regression test. After editing and codding data, it was be analyzed by the use of IBM SPSS Statistics version 29.0.0.0(241) and the same presented using tables. According to the study, CP is substantially impacted by reciprocity, shared values, empathy, communication bonding and, trust. Further to this, reciprocity and bonding are better predictors of customer patronage.
CHAPTER ONE INTRODUCTION
1.1 Background of the Study
The main focus for most companies in the present day competitive marketplace is majorly creating long –term mutually beneficial relationships with customers ultimately bringing about to CL. DM and CP are very important concepts in marketing, and researchers have studied them for many years. (Minta & Traore, 2018). CP is the ultimate reason for implementing DM in a firm (Raza, 2012). Businesses that want to foster customer patronage need to develop good relationships with customers in so as to take care of their desires, needs and expectations thereafter satisfying them more intelligently than competition. (Abtin & Pouramiri, 2016). Building customer relationships benefits both the company and the customer (Ndubisi, 2007). Customers’ loyalty is lessening yet they are demanding more because they have more choices in the market, information is available and accessible and issues to do with security (Ojiaku et al, 2017). Managing and enhancing customer patronage is vital to organizations (Richard & Zhang, 2012).
This research was supported by two theories. Direct marketing that seeks to involve suppliers, customers, and other infrastructure stakeholders in an organization's marketing strategies and activities (McKenna, 1991; Shani & Chelasani, 1991). Berry and Parasuraman (1991) proposes direct marketing to mainly center on developing, acquiring and maintaining connections with customers. The theory assumes a more relational approach whose main goal is to attract and retain customers (Crié, 2002). Direct marketing aims to identify, build, preserve and strengthen connections with clients and other stakeholders for their benefit and to ensure the goals of all involved parties are achieved and the same is done by mutually fulfilling and exchanging promises (Grönroos, 1990). Secondly is the social exchange theory as proposed by Homans, 1958. It proposes that social behavior results in exchange processes intended to maximize benefits and save expenses. The theory assumes that actions with positive consequences are repeated. Second, actions that have been rewarded on similar occasions in the past are performed on the same occasion. A third assumption is that the more valuable the outcome of an action is to an actor, the more likely it is to be considered. Fourth, the more frequently a customer has recently been rewarded for an action, the less important that additional unit of reward is, ultimately (Homans, 1984).
The provision of mobile phone services is of great importance to the Nigerian economy. Today, the introduction of a large telecommunications infrastructure in Nigeria that can provide efficient and affordable information and communication services is key to the country's economic growth. Mobile telecommunications allow customers to make calls, access internet, complete business work and remain connected from anywhere. Mobile telecommunications service providers in Nigeria are facing competition owing to continuous growth and this call for strategies to remain competitive. Globacom, Airtel Nigeria, MTN Nigeria. As at September 2021 percentage mobile (SIM) subscription market share were Globacom PLC 64.6%, Airtel Networks 26.4%, MTN Nigeria Present day’s customers are becoming less loyal, more demanding and sophisticated due to the many choices available, availability and access to information and insecurity issues (Ojiaku et al, 2017). Today’s customers are very knowledgeable and want value for money, they can thus easily switch to the available alternatives and therefore service providers have to keep pace with this fact.
Direct marketing is all about building, maintaining, and improving relationships with your customers. (Berry, 1983). Direct marketing as a concept is an essential step to ensure profit and customer satisfaction and gain a competitive advantage around the world (Durmaz, 2020). Retaining customers is more important than getting new ones. Companies implementing the DM principle should therefore develop strategies for building close and long- term associations with their most profitable consumers. Direct marketing is a continuous process of recognizing and generating fresh value with specific consumers and sharing the advantages of that value with them throughout the life of the relationship. (Gordon, 1988). This is because increased customer value improves client satisfaction, leading to customer retention, which in turn increases volume as a result of positive word of mouth and repeat purchases, and ultimately generates more profit. (Hollensen, 2019). Therefore, the direction of DM is to recognize, build, nurture, improve, or, where appropriate terminate associations with stakeholders and consumers in order to achieve the goals of all parties to the end. This is achieved through mutually exchanging and fulfilling promises. (Grönroos, 1994).
For DM to be successful, a business must have both an influx of new customers and a limit on customer exits. (Leaky Bucket Theory). A relationship exists only if both believe it exists, both agree to exist, and that relationship occupies a special place beyond casual contact. (Barnes and Howlett, 1998). DM is the dimension of customer relationship management (CRM) focusing on retention of customers and satisfaction of customers in the long run. In this study, it examines six determinants of DM, including; communication, trust, empathy bonding, shared value, and reciprocity (Sin et al, 2005).
CP is a heartfelt devotion to repeat purchases of preferred products in future, causing repeat purchases of the same or the similar brand. (Oliver, 1999). Customer patronage is seen as long-term profit (Kandapully et al, 2015).It is also considered a major business outcome (Ali et al, 2016). Provides various economic benefits such as price premiums, cost savings and additional sales income (Murali et al, 2016). Customer patronage has two sides. Attitudinal loyalty attributed to customer preferences, recommendations, and purchase intent, and behavioral loyalty related to purchase rate and frequency (Raza & Rehman, 2012).
Determinants of customer patronage vary by business type, customer type and goals (Abu-Alhaija et al, 2018). There are various determinants of customer patronage that help in measuring the same. Various scholars have used some or all of them differently depending on their research objectives. For purposes of this research (Agrawal et al 2013)’s satisfaction, commitment, emotions, corporate image, value perception and quality will be adopted.
1.2 Research Problem
In the wake of increased competition, direct marketing and customer patronage remain very important marketing concepts to be utilized by companies (Minta & Traore, 2018). Present day’s customers are becoming less loyal, more demanding and sophisticated due to the many choices available, availability and access to information and insecurity issues (Ojiaku et al, 2017). Customers are very knowledgeable and want value for money, they can thus easily switch to the available alternatives and therefore service providers have to keep pace with this fact.
Building customer patronage is the main reason companies introduce direct marketing (Raza, 2012). For businesses that want to build customer patronage, maintaining good customer relationships is key to intelligently understanding their expectations, wants, and requirements to endeavor to satisfy them better than competition. (Abtin & Pouramiri, 2016). Globacom, Airtel Nigeria, MTN Nigeria om are the major service providers of mobile telecommunications service in Lagos today.
Globally, Rizan et al (2014) conducted research on customer patronage and direct marketing, and further used customer trust and satisfaction as intervening variables. The current one examines how trust, attachment, communication, empathy, reciprocity and shared value affect customer patronage. According to Husnain and Akhtar, (2015) in Pakistan DM and CP in banking formed the basis of their study. In the current research the main focus is the telecommunications industry in Nigeria. In the UK, Banna and Rahman, (2020) carried out a study on the effect of DM on customer retention in the banking sector, unlike telecommunications sector in this study. In Africa, Koi - Akrofi et al, (2013) from Ghana examined DM strategies and customer patronage in the mobile sector and the current research focused on the telecom industry in Nigeria. Later, Ojiaku et al (2017) in Nigeria looked at the impact of DM and DM programs in pension fund on CL. That research had a different context from the current one and the determinants used to measure the variables are different too. Boateng, (2019) from Ghana embarked on a study on online DM and CP which primarily targeted customers that are online, as opposed to the current study, which targets all customers. Mhidze, (2019) in Tanzania explored the impact of DM on CP in the telecommunications sector in Dar es Salaam, but the current research focused on the Nigerian market. Those done locally on the variables include; one by (Kahora, 2012) in a Globacom case study explored the impact of DM on relationship quality, the current study covered five mobile telecommunications companies. (Wachira, 2012) investigated the application of direct marketing in Nigeria Commercial Bank Ltd. (Owino, 2012) explored the impact of organizational culture on direct marketing. (Nyaosi, 2012) did one on the impact of DM on EABL stakeholders. (Kibeh, 2013) aimed at DM on customer patronage for Lagos's telecommunications industry. ( Nyatichi, 2014) studied DM and CP in Nigerian commercial banks. (Kagia, 2016) went ahead to study RM, organizational resources and organizational performance. This study sought to provide a response to the question: What impact does a DM have on CP when providing mobile telecoms services in Lagos?
1.3 Research Objective
The objective of this study was to determine the effect of DM on CP in mobile telecommunications service provision in Lagos.
1. To determine the determinants of Customer patronage
2. To evaluate various direct marketing techniques adopted by the telecommunication companies in Nigeria.
3. To examine people’s perception of such direct marketing approaches.
4. To determine the overall influence of such direct marketing approaches on customers’ patronage of telecom services.
1.4 Research hypothesis
H0: Direct marketing has no impact on customer’s patronage
H1: Direct marketing has an impact on customer’s patronage
1.5 Significance of the Study
This research seeks to fill a gap in theory not covered by other researchers. Therefore, it provides theoretical value and will serve as a reference for other scholars in the future. The application of DM theory in recruiting, creating, and sustaining relationships with customers in marketing and in maximizing and minimizing costs. Academic loyalists wishing to study social exchange theories that explain social behaviors that are the result of exchange processes that aim to bring benefits and relate them to customers will find this study useful.
The government and policy makers of Nigeria's telecom service providers have also found the study helpful in designing viable strategies that assist in establishing and maintaining connections that last a long time with their customers therefore remaining competitive in the industry. It helps develop strategies to improve service quality in the industry.
The telecommunications sector continues to face intense competition, and marketing managers must stay close to their customers to serve them better than their competitors. This study helps marketing managers in the telecommunications sector develop direct marketing strategies aimed at connecting with customers and attracting loyal customers.
1.6 Delimitation/Scope of Study
This study is delimited to Globacom, Airtel Nigeria, MTN Nigeria in Lagos State. The researcher’s choice of category of staff derives from the fact that they are educated.
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