Gwanzura-Nigel.Pdf

BINDURA UNIVERSITY OF SCIENCE EDUCATION FACULTY OF COMMERCE

DEPARTMENT OF MARKETING

RESEARCH TOPIC

IMPACT OF RELATIONSHIP MARKETING ON CUSTOMER LOYALTY IN BANKS: CASE STUDY OF ECOBANK PERSONAL BANKING

NIGEL NGONIDZASHE GWANZURA

B1336909

A DISSERTATION SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE BACHELOR OF BUSINESS STUDIES HONOURS DEGREE IN MARKETING GRANTED BY BINDURA UNIVERSITY OF SCIENCE EDUCATION.

FEBRUARY 2017

RELEASE FORM

Name of Author : Nigel Ngonidzashe Gwanzura

Registration Number : B1336909

Title of Project: Impact of Relationship Marketing on Customer Loyalty in Banks: Case Study of Ecobank Personal Banking

Program for which project was presented : Bachelor of Business (Honours) Degree Marketing.

Year granted : 2017

Permission is hereby granted to Bindura University of Science Education library and the department of business studies to produce copies for scholarly and scientific research only. The author reserves to other publication right and the dissertation extracts thereof may not be made or otherwise reproduced without author’s permission.

Author’s signature…………………… Date …………………………….

Permanent address: 2779 Morning Side Marondera.

APPROVAL FORM

BINDURA UNIVERSITY OF SCIENCE EDUCATION

FACULTY OF COMMERCE

Department of Marketing

The undersigned certify that he has supervised the student Nigel N Gwanzura. A dissertation entitled Impact of Relationship Marketing on Customer Loyalty in Banks: Case Study of Ecobank Personal Banking, submitted in partial fulfilment of the requirements for the Bachelor of Business Studies Honours Degree in marketing of Bindura University of Science Education.

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Student Signature Date

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Supervisor Signature Date

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Chairperson Signature Date

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External Examiner Signature Date

DEDICATION

I dedicate this research to my Mum and Dad who tirelessly rallied behind me through the entire research process from its formative stages until its finality. To my friends and colleagues thank you for the midnight candle we burnt together, may the Good Lord bless you abundantly.

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ABSTRACT

The research investigated the impact of relationship marketing on customer loyalty. The main objective of carrying out the study was to determine the impact of relationship marketing on customer loyalty at Ecobank. In order to achieve this research objective, the researcher carried out a critical review of theoretical, conceptual and empirical literature along the research objectives set in the study. The researcher managed to identify research gaps in literature. The study made use of a causal research design in order to ascertain the association between two research variables namely, relationship marketing and customer loyalty. Simple random sampling technique was used to determine the elements to be included in the sample and a sample size of 320 was determined using the formula Saunders et al (2005). Questionnaires were used as the chief data collection instrument since the research was more quantitative in nature. The main findings of the research revealed that, there is a strong positive relationship between relationship marketing constructs (trust, commitment, conflict handling and communication) and customer loyalty with a beta values 0.583 and 0.749. This shows that companies that carry out relationship marketing are posed to have more loyal customers. Research results also revealed that there is a strong positive relationship between trust, commitment, conflict handling and customer loyalty. Communication had a moderate positive relationship with customer loyalty. Addd more

ACKNOWLEDGEMENTS

It is my singular honour and privilege that I convey my heartfelt thanks to the following people whose contributions and support made me sail through. Firstly, I would like would like to thank my supervisor Mr. P Mukucha for the unwavering support and invaluable guidance throughout the whole project.

My friends whose encouragement and help kept me going when it mattered the most, you guys are truly heaven sent.

Finally, I am deeply highly indebted to the unwavering support of my family in your unique ways each of you thank you.

Above all, I I give praise to the Almighty God whose hand has guided me through this project against all odds.

TABLE OF CONTENTS

RELEASE FORM ...... i APPROVAL FORM ...... ii DEDICATION ...... iii ABSTRACT ...... iv ACKNOWLEDGEMENTS ...... v TABLE OF CONTENTS ...... vi LIST OF TABLES ...... ix LIST OF FIGURES ...... x LIST OF APPENDICES ...... xi CHAPTER ONE: INTRODUCTION ...... 1 1.0 Introduction ...... 1 1.1 Background of the study ...... 1 1.2 Statement of the problem ...... 4 1.3 Aim of the study...... 4 1.4 Research Objectives ...... 4 1.5 Research Hypothesis ...... 4 1.6 Significance of the research ...... 5 1.7 Assumptions of the Study ...... 5 1.8 Delimitations of the study ...... 5 1.9 Limitations of the study ...... 6 1.10 Definition of terms ...... 6 1.11 List of Abbreviations ...... 7 1.12 Organization of the study ...... 7 1.13 Summary ...... 7 CHAPTER TWO: LITERATURE REVIEW ...... 8 2.0 Introduction ...... 8 2.1 Dimensional structure of relationship marketing ...... 8 2.2 Theoretical Framework ...... 8 2.2.1 Conceptualization of Relationship Marketing...... 8 2.2.2 Customer loyalty ...... 9 2.2.3 Dimensions of Relationship Marketing...... 9

2.3 Conceptual model ...... 14 2.4 Empirical Frame Work ...... 14 ii. Commitment ...... 15 2.5 Research Gap ...... 16 2.6 Summary ...... 17 CHAPTER THREE: RESEARCH METHODOLGY OF THE STUDY ...... 18 3.0 Introduction ...... 18 3.1 Research Design...... 18 3.2 Target Population ...... 18 3.3 Sampling Procedure ...... 18 3.4 Research Instruments ...... 20 3.4.1 Primary Data ...... 20 3.4.2 Secondary Data ...... 20 3.4.3 Questionnaire ...... 20 3.4.4 Validity and Reliability of Instruments ...... 21 3.5 Data Collection Procedures ...... 22 3.6 Data Analysis Procedures ...... 22 3.7 Chapter Summary ...... 22 CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND DISCUSSION ...... 23 4.0 Introduction ...... 23 4.1 Demographic profile of respondents ...... 23 4.2 Reliability of Constructs ...... 25 4.3 Validity Test...... 26 4.4 Hypothesis Testing...... 27 4.4.1 Trust and Customer loyalty ...... 27 4.4.2 Commitment and Customer loyalty ...... 28 4.4.3 Conflict and Customer loyalty ...... 29 4.4.4 Communication and Customer Loyalty ...... 30 4.5 Discussion ...... 30 4.6 Chapter Summary ...... 31 CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ...... 32 5.0 Summary ...... 32 5.1 Conclusions ...... 32

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5.2 Recommendations ...... 32 5.3 Areas of Further Research ...... 33 References ...... 34

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LIST OF TABLES

Table 3.1: Sample Sizes At 95% Confidence Interval ...... 19

Table 4.1: Questionnaire Response Rate ...... 23

Table 4.2: Questionnaire Analysis by Gender ...... 23

Table 4.3: Questionnaire Analysis by Age ...... 23

Table 4.4: Questionnaire Analysis by Monthly Income ...... 24

Table 4.5: Questionnaire Analysis by Occupation...... 24

Table 4.6: Questionnaire Analysis by Highest Level of Educational Qualification ...... 25

Table 4.7: Reliability Statistics ...... 25

Table 4.8: Average Variances Extracted ...... 26

Table 4.9: Constructs Data Extracted ...... 26

Table 4.10: Regression of co-efficient of trust and customer loyalty ...... 27

Table 4.11: Model summary for Trust and customer loyalty ...... 27

Table 4.12: Regression co-efficient of commitment and customer loyalty ...... 28

Table 4.13: Model summary for commitment and customer loyalty ...... 28

Table 4.14: Regression co-efficient of conflict and customer loyalty ...... 29

Table 4.15: Model summary for conflict and customer loyalty ...... 29

Table 4.16: Regression co-efficient between communication and customer loyalty ...... 30

LIST OF FIGURES

Figure 2.1: Key variables of relationship marketing ...... 11

Figure 2.2: Conceptual frame work ...... 14

LIST OF APPENDICES

Appendix 1: Request to Complete Questionnaire...... 39

Appendix 2: Letter of Research Access ...... 40

Appendix 3: Calculation of for validity using Average Variances Extracted (AVE) ...... 41

CHAPTER ONE: INTRODUCTION

1.0 Introduction

The level of competitive rivalry in the business environment continues to intensify forcing companies to devise innovative methods of capturing the attention of their target markets using cost effective measures that deliver value to customers. The need to build long term relationships has emerged as one way in which companies can build customer lifetime value with ultimate intention to tie customers with golden handcuffs of through their repeat purchases. In this vein the current study will focus on the impact of relationship marketing on customer loyalty using Ecobank as a case organisation. This section of the study will outline the background of the study that gives way to the statement of the problem and eventually the formulation of research objectives and subsequent statement of hypothesis. Assumptions, delimitations, limitations of the study then follow.

1.1 Background of the study

The Zimbabwean banking industry has transformed through various stages service delivery cycle. Traditionally banks had been predominantly occupied in cash related activities like accepting deposits, paying cash and opening accounts as well as giving out loans to customers. However, in the wake of competition and technological advancements, Zimbabwean banks have embraced innovation through crafting new ways of reaching out to prospective customers and retaining more customers to their clientele base. Various strategies have been adopted by banks to increase their market share in recent years.

The Reserve Bank of Zimbabwe is the statutory body created and empowered to regulate the Zimbabwean banking industry in terms of Reserve Bank of Zimbabwe Act, Chapter 22:15 (www.rbz.co.zw). The Zimbabwean banking industry is competitive with nineteen registered commercial banks.

In the past. banks have been characterized by the lack of innovation, bank employees were not responsive to customer demands. Bankers in the past were unwilling to adopt the marketing concept and as a result they were criticized for their reliance on “product led” (Brien & Stanford, 1995) orientations. However, intense competition in the industry has driven banks in Zimbabwe to change their approach to service delivery.

As a result, of similar services provided by the various banks it has become necessary for the banks to out compete each other in order to attain market share, market leadership, customer retention and profit. This has enhanced the approach for banks to adopt exceptional marketing strategies. With the increased competition, banks had to resort to the use of Automated Teller Machines (ATM) for convenience and to decongest their banking halls. Banks such as Barclays today has over thirty machines located across the country (zw.barclays.com). This strategic move was meant to augment the basic banking service and to leverage on enhanced financial service solutions. Through the introduction of the visa-enabled ATM’s; banks such as Standard Chartered Bank, Barclays, Stanbic bank amongst others have come together to adopt this system where any of the customers banking with any of these banks can access any of these banks anywhere in the country for cash and other visa enabled transactions. This system serves both the interest of the customers and the Visa integrated banks.

The number of banks operating under the license from the RBZ is now over eighteen and still more are in the process of registering. This means there is intense competition and innovation is required in order to sustain banking operation and make financial gains. On the other hand, customers expect nothing but good service. All over the world consumers are becoming more sophisticated as a result of technological advancement and ease of access to information. Thus, the global village syndrome and international benchmarking has driven customers to demand quality services from banks. Banks are now engaged constant quality improvements in their service mapping and delivery methods. Other banks are placing emphasis on staff training to enhance moments of truths and create a wow factor in service delivery. Others are improving and diversifying their product portfolios, improving their service scape, enhancing modes of communication and service provision in order to market themselves well.

However, since the products and services offered by the banks are very similar, it will affect growth and profitability in the long run if sustainable strategies are not adopted. As a result of these research findings there has been the need to extend literature to relational properties. For long banks have failed to differentiate themselves from their competitors, as differentiation based on price and cost strategies is normally short-lived and the only real way to differentiate is through relationship marketing Ghemawart (1999). For a competitive advantage to be established and maintained banks need retain their customer as a result of strong relations (Barnes and Howlett, 1998).

It has become imperative to consider this aspect of study that determines the relationship which exists between bankers and their customers. Satisfied customers are more willing to pay for the benefits they receive and will tolerate increase in prices. It means high margins and customer loyalty (Reicheld and Sasser, 1990).

The financial services sector is flooded with institutions which compete for customers available in the market hence the need for each player to position itself in the market to operate profitably. As such, Ecobank has got a wide range of tailor made products and services that it offers to the market to suit the needs of the customers to gain a competitive edge. The Ecobank Group is a full-service bank focused on Middle Africa. It provides wholesale, retail, investment and transactional banking services to government, financial institutions multinationals, local companies, SMEs and individuals. Ecobank’s services are delivered by three customer-focused business segments, Personal Banking, Commercial Banking and Corporate and Investment banking.

Personal banking provides services to retail customers that is individual clients. It is supported by product lines which include Visa and Master cards, mortgage, remittance, individual current account, individual savings account, Junior Saver account, Ecobank Retail Internet banking, Ecobank African Diaspora account and Ecobank Rapid transfer, personal loans and asset management for high net worth customers, mobile banking, (Zimbabwe Electricity Service Authority) ZESA prepaid payments.

Domestic Banking provides services to small and medium enterprises that fall within Zimbabwe’s Local Corporate business. The major services offered are fixed income, currencies and commodities, Transaction Banking, Loans and Liquidity supported by the product line of transaction banking, loans and liquidity.

Corporate and Investment Bank (CIB) provides treasury, corporate finance and investment banking, securities and asset management solutions to corporate and governmental customers. CIB is supported by products which include International trade solutions, loans and liquidity, cash management, corporate internet banking.

1.2 Statement of the problem

Considering the competitive nature of the banking industry on the back drop of tight economy, the question that comes to mind is how to develop exceptional customer relations to create customer intimacy and a level of confidence that will promote sustainable growth and profitability. Ecobank is faced with low depositor confidence, hence the need to study the possible benefits that it can reap from keeping one client satisfied than to go looking for a new one. The problem banks face is to develop a differential strategy to promote a consistent positive return on investment. The study is carried out against a background that all competitors in the banking industry are offering very similar products and services. Though technology has consistently enhanced the banking service delivery system it only serves as a temporal short-term strategy to attain competitive advantage. It eventually becomes affordable with time and all other competitors adopt it to augment their service. The question again will be how banks could differentiate themselves from the competition and gain customer attention, patronage and loyalty prompting the researcher to want to know whether it is as a result of relationship marketing or other variables.

1.3 Aim of the study

The study seeks to look at the impact of relationship marketing on customer loyalty in banks under the four dimensions of customer loyalty which are; conflict handling, trust, communication and commitment.

1.4 Research Objectives

Determine the impact of relationship marketing on customer loyalty.

1.5 Research Hypothesis

퐻1 : Trust has a significant and positive effect on customer loyalty

퐻2 : Commitment has a significant and positive effect on customer loyalty

퐻3 : Conflict handling has a significant and positive effect on customer loyalty

퐻4: Communication has a significant and positive effect on customer loyalty.

1.6 Significance of the research

This study will add to the academic research purposes of relationship marketing in banks as a strategy to sustain growth and profitability. It will also identify the preferences of customers as to which services they prefer doing with the banks. The study will also identify the various strategies that the bank under study is implementing. This will help to bring to the fore the practical relationship marketing ideas that banks are adopting in the country.

The current study is partial fulfillment of BBs Honours degree in Marketing and to enable the researcher to marry theoretical knowledge to real world horning the analysis skills of the researcher.

1.7 Assumptions of the Study

The current study is based on the assumption that there is no significant difference in respect of business customers’ perceptions and attitudes on banking services offered by various banks when determining the impact of relationship marketing on customer loyalty. This assumption will support generalization of customers’ attitudes and perceptions across the Zimbabwean banking industry since only one bank is being investigated.

1.8 Delimitations of the study

The researcher focused on the impact of relationship marketing on customer loyalty as implemented by Ecobank. The research was only confined to Ecobank employees and clients. The researcher has used Ecobank as a sample to give a true representation of the banking industry due to its Pan-African diversity. Findings from Ecobank were generalised across the entire banking industry in Zimbabwe, hence further studies must be done on other players in the banking industry to get a broader view of the nature and extent of relationship marketing on customer loyalty.

This study was aimed at assessing the impact of relationship marketing on customer loyalty within Ecobank Harare branches. Other studies looking at similar variables should be conducted within Bulawayo and Mutare. Researchers could explore to establish whether there are any significance differences relationship marketing and customer loyalty in different geographical locations.

1.9 Limitations of the study

As a result of the privacy arrangements of banks, access to client data is definitely not promptly accessible. The study will be constrained to business clients from one of the nineteen fundamental banks of Zimbabwe. The particular client information utilized will likewise be kept classified in consistence with client and bank prerequisites. The study won't concentrate on parts of brand unwaveringness, dedication programs, client prizes and motivators. These are fields for examination in their own privilege.

1.10 Definition of terms

Relationship marketing: Marketing activities that are aimed at developing and managing trusting and long-term relationships with larger customers www.businessdictinary.com.

Berry (1983) viewed relationship marketing as a strategy to attract, maintain and enhance customer relationships. Morgan and Hunt (1994:22) define the term as all marketing activities directed towards establishing, developing and maintaining successful relational exchanges

Customer loyalty: is defined as the result of consistently positive emotional experience, physical attribute-based satisfaction and perceived value of an experience, which includes the product or services. (Customer Loyalty Institute 2015)

Customer relationship management: Bolton (2000) defined customer relationship management as identifying needs of the customers and stretching out ways and means to satisfy them.

Marketing: Kotler (1993:6) stated the definition of marketing as “the business function that identifies unfulfilled needs and wants, defines and measures their magnitude and potential profitability, determines which target markets the organization can best serve, decides on appropriate products, services, and programs to serve these chosen markets, and calls upon everyone in the organization to think and serve the customer.”

“Banking business” means the business of accepting deposits of money withdraw able or repayable on demand or after a fixed period or after notice and the employment of those deposits, in whole or in part, by lending or by any other means for the account and at the risk of the person accepting such deposits.

“Banking institution” means a commercial bank, accepting house, discount house or finance house registered or required to be registered in terms of the Banking Act (Chapter 24:20)

1.11 List of Abbreviations

RBZ : Reserve Bank of Zimbabwe

CRM : Customer Relationship Management

RM : Relationship Marketing

1.12 Organization of the study

Chapter 1 provides a background of the study, statement of the problem, research objectives, research hypothesis, and delimitations of the study, limitations of the study, importance of the study, assumptions, definition of terms, and chapter summary. Chapter 2 comprises a critical review of the literature within the context of the research being undertaken that is the theoretical and empirical evidence of the research. Chapter 3 deals with research methodology used in order to gather data. Chapter 4 gives data presentation and interpretation of research findings. Chapter 5 gives conclusion and recommendations.

1.13 Summary

This introductory chapter outlined the purpose of the research, it gave a brief understanding of relationship marketing as implemented by Ecobank in the banking industry. It gave an overview of the background of Ecobank, statement of the problem, research objectives, research questions, assumptions, delimitation of the research, definition of key terms, and limitation of the research. The next chapter will look at literature review in which the researcher quoted various authorities of similar research that is useful in crafting an answer to the research problem and objectives of study crafting an answer to the research problem and objectives of study.

CHAPTER TWO: LITERATURE REVIEW

2.0 Introduction

In this chapter literature on the subject impact of relationship marketing on customer loyalty will be scrutinized. Starting with theories (theoretical frame work) that support the major dimensions of relationship marketing and then reference to other studies (empirical studies) with similar dimension will be used to support the research showing areas that still need further research.

2.1 Dimensional structure of relationship marketing

Relationship marketing measures the extent to which a company engages in developing a long-term relationship with its customers. The Analytic Hierarchical Process (AHP) method was used to identify the most important dimensions. An initial pool of 23 dimensions of RM was identified in the marketing literature, and this pool of dimensions was reduced to 10 after the empirical study. The study found that particular dimensions are more important than others when relationships are established, and that trust, commitment, conflict and communication are the most important dimensions (Gummesson, 1994). Further dimensions identified as important in the B2B financial services industry are competence, relationship benefits, bonding, customization, attractiveness of alternatives and shared values. The findings are valuable for the continual management of marketing relationships with customers.

2.2 Theoretical Framework

An analysis of major theories related to the dimensions of relationship marketing that impact loyalty.

2.2.1 Conceptualization of Relationship Marketing

Relationship marketing alludes to all marketing exercises coordinated towards building up, creating, and keeping up fruitful relationship exchanges (Mishra and Liy, 2008). Harker (2004) proposes the accompanying portrayal: An organization engaged with proactively making, developing, and maintaining committed, interactive and profitable exchanges with selected clients (accomplices) after some time is engaged with relationship marketing. Sin et al. (2005) states that the reason for relationship marketing is to identify and build up, maintain, and improve relations with clients and other stakeholders, at a profit, so that the

objectives of all stakeholders are met and this is finished by a mutual exchange and satisfaction of guarantees. Relationship marketing hypothesis proposes that fruitful relationship marketing comes about because of specific parts of corporative relationships that describe effective relational trades (Hunt, Arnett, and Madhavaram, 2005). Arnett and Badrinarayanan (2005) conceptualizes relationship marketing competence as a firm’s a capacity to identify, develop create, and manage cooperative relationships with key clients portrayed by trust, relationship commitment, and communication.

2.2.2 Customer loyalty

The principal topic in relationship marketing is to acquire and maintain customers (Grönroos, 2004). Peng and Wang (2006) characterize relationship marketing as all marketing exercises coordinated towards building customer loyalty (keeping and winning clients) by giving quality to every one of the parties involved in the relational exchanges. Customer loyalty is defined by Oliver (2000) as a profoundly held duty to re buy or re patronize a preferred product or service in the future despite there being situational influence and marketing efforts having the potential to cause switching behavior (Bolton, Ruth, Kannan and Bramlett, 2000). Loyalty may mean a significant aloof improvement of circumstance. One trusts that terrible things will change in the better later on. A loyal client has resilience to approve for a while inconvenience, for instance terrible price quality relations. (Fornell, 2002) imagines that loyalty is the function of satisfaction, creating switching barriers. Loyal clients may not be constantly satisfied, but rather satisfied customers are apt to be loyal (Fornell, 2002). The works of Bitner (2000) portrays loyalty as a procedure. At the end of the process, satisfaction has effects to perceived quality, which could cause loyalty and intention to certain behavior.

2.2.3 Dimensions of Relationship Marketing

The theoretical frame work in this study is analyzed under for construct in line with the research hypothesis. i. Trust and customer loyalty

Relationship marketing is built on the foundation of trust, as research demonstrates (Morgan and Hunt, 1994). They define trust as a willingness to rely on an exchange partner in whom one has confidence. Trust ensures that the relational exchange is mutually beneficial, as the good intentions of partners are not in doubt. Customers buying services are specially benefited by the existence and development of trust (Berry, 1983)

Trust typically refers to situations that are being characterized by the following aspects: One party who is willing to rely on the actions of another party and the situation is directed to the future (Hart and Johnson, 1999). Trust has been defined in numerous ways in the relationship marketing literature.

Customers with trust in service provider’s capability would probably be willing to commit to service relationship for meeting their expectations (Morgan and Hunt, 1994). Even when the environment is changing, the customers would believe that the service provider will take customers interest into account instead of doing anything harmful to the development of the relationship. The works of Morgan and Hunt (1994) conceptualized organizational trust by proposing three core elements trustee ability, trustees kindness and trustee integrity. Cumulative process in a relationship was considered to construct trust on the basis of a party’s capability of implementing its obligations continuously. Trust is considered so important to long term relationships and enhancing customer loyalty. Many authors have suggested that customers trust has a significant role in building long term relationship and achieving customer loyalty (Berry, 1983); Kotler and Armstrong 2010).

Trust can be examined in two levels: the macro level (organizational and Group relationships) and the micro level (interpersonal and group relations). Trust can be viewed as social phenomenon that allows individuals to manage the increasing tolerance and uncertainty (Freire, 2000). Trust is seen as the willingness of individuals to increase their vulnerability to the actions of others whose behavior cannot control.

Figure 2.1: Key variables of relationship marketing

Adopted from Morgan and Hunt (1994)

The commitment trust theory maintains that characterize these networks – is a commitment to a relationship develop cooperation. The KMV model has five key determinants cost of abortion of relationship; benefits of relationship values shared, communication, and opportunistic value and five outcomes: consent, propensity to leave, cooperation, functional conflict and uncertainty in decision making (Morgan and Hunt 1994). Figure one shows that trust is an important ingredient to commitment which only exits where there is a relationship, hence the theory contributes to the study of relationship marketing.

ii. Commitment and loyalty

Commitment can be defined as the sacrifices made by the seller and buyer to maintain a relationship. Berry and Parasuraman (2001) define commitment as an enduring desire to maintain a valued relationship. The works of Berry and Parasuraman (2001) indicated that commitment is central in relationship marketing theory, this is shown in KMV model in fig

1. Mutual commitment is very essential to build a long-term relationship. Another strong definition of commitment emphasizes on the willingness to rely on an exchange partner on whom another has confidence (Hadjikhani and Thilenius, 2005). The works of Morgan and Hunt (1994) observed that commitment was found to be the most common dependent variable used in buyer-seller relationships. The works of Mowday et al. (1982) concur that commitment is higher among buyers who believe they receive more value from a relationship.

Commitment is another important determinant of customer loyalty. Market players, and mutual effort based on commitment, would allow firms to remain competitive (Mowday et al., 1982). There are evidences suggesting that stronger relationship commitment reoffered to buyers’ repeat patronage. Morgan and Hunt (1994) found significant relationships between the level of a buyer’s relationship commitment and his acquiescence, propensity to leave and cooperation, all of which can be regarded as behavioural outcomes of relationships. Loyalty is a commitment of current customer in respect to a particular store, brand and service provider, when there are other alternatives that the current customer can choose for (Shankar, Smith and Rangaswamy, 2003). It forms positive attitudes by producing repetitive purchasing behaviour from time to time.

iii. Conflict handling and customer loyalty

Another variable of relationship marketing is conflict handling that can be used to determine customer loyalty. Conflict handling refers to a supplier’s ability to avoid potential conflicts, solve manifest conflicts before they create problems and discuss solutions openly when problems arise (Morgan & Hunt, 1994). The manner in which a conflict is handled by the seller can have either constructive or destructive outcomes (Palmatier et al. 2006). The contingency perspective of conflict handling reason that sellers must determine the right conflict management approach, after analysing a particular situation (Mowday et al. 1982). In general, the conflict management strategies aim to minimize negative outcomes and maximize positive consequences. This ability of the seller to handle conflict well is an important determinant of customer loyalty.

Clow and Kurtz (2003) suggested that customers follow a different sequence in handling conflicts. The most common technique is avoidance. They do this through patronizing

another firm. In addition to the avoidance strategy, customers will often use retaliation in the form of negative word-of-mouth. Customers also will use direct confrontation in the way that they are planning to switch venders and they have nothing to lose. Psychological withdrawal and automatic behavior is used by customers only when they are forced to stay with the service firm. By understanding these methods of dealing conflict, managers can recognize conflict at an early stage and can find the source of conflict. Information should be gathered from all parties concerned as well as others who are familiar with the situation. Once the source has been identified, efforts can then be initiated to eliminate or reduce the conflict. This therefore highlight need to examine the subject.

iv. Communication and customer loyalty

Dawson (1999) postulates that effective communication is a key ingredient for successful relationship marketing. The customers must be able to contact the organisation for technical support and to communicate with customer representatives on pain points. Therefore, communication must be effective within and outside the organisation

Communication is a process by which formal and informal sharing of meaningful and timely information between seller and buyers (Anderson and Narus, 1990). Relationship conflict can be reduced by using proper communication system (Schurr and Ozanne, 1985). Communication, which enables information exchange, is important element of relationship marketing. Communication in relationship marketing refers to keeping in touch with customers, providing timely and trustworthy information, and communicating proactively if a delivery problem occurs (Ndubisi, 2007). The more breadth and depth that exists in communication patterns, the stronger is the partnership is likely to be hence it creates loyal customers (Anderson and Narus, 1990). Several relationship marketing scholars agree that communication is a fundamental aspect of relationship development. The quality of information that is shared and the mode in which this is done plays a central role in a bank/customer relationship. Hence, careful design of communication means and forms must play a decisive role in complimenting the relationship marketing aspect of a bank.

2.3 Conceptual model

Figure 2.2: Conceptual frame work

Adapted from Hunt et al., (2006)

The above figure summarises the theoretical frame work as postulated that trust, commitment, conflict handling and communication constitute independent variables that influence customer loyalty (Hunt et al., 2006).

2.4 Empirical Frame Work

Literature review is an evaluative report of studies found in the literature related to a selected area. The review describes, summarize, evaluate and clarify literature. It gives a theoretical basis for the research and helps determine the nature of the research. The main purpose of literature review is to help to develop a good understanding and insight into the relevant previous research and trend that have emerged. Thornhill, Lewis, Millmore and Saunders (2003) advocated that literature review is necessary to help develop a thorough understanding of and insight into previous research that relate to the research questions and objectives. It also leads the researcher into subsequent sections of the project report.

Limited research has been conducted to ascertain levels of relationship marketing in the whole world and that those few researchers done in the field of relationship marketing were mainly restricted to retail sector, telecommunication mobile sector, hotel sector and health sector.

i. Trust and Customer Loyalty

The researcher has reasonable grounds to claim that trust has an impact on customer loyalty based on the empirical studies of Liang and Wang (2005) who tested a conceptual model in order to examine the connection between relationship bonding tactics, customer satisfaction, trust, commitment and customer behavioral loyalty in a relationship marketing system financial services industry in Taiwan. First, confirmatory factor analysis (CFA) was performed to evaluate the construct validity regarding convergent and discriminate validity. In the second stage, path analysis was performed to test the research hypotheses empirically. Research findings by Liang and Wang (2005) suggested that relationship bonding tactics, customer satisfaction, trust, commitment have a positive relationship on customer behavioral loyalty on financial products. Research findings from a study by Ndubisi (2007) showed that trust is an important ingredient in firm-customer relationships and ultimately in the development of loyalty. Findings of Morgan and Hunt (1994) concluded that customers with trusts in service provider’s capability would probably be willing to commit to a service relationship for meeting their expectations.

ii. Commitment and Customer loyalty

After a careful analysis of empirical studies can assert that commitment has a positive effect on customer loyalty. The assertion is confirmed by the finding Fullerton (2003) to this extent commitment as a dimension of relationship marketing plays a great role. Therefore, banks are expected to have committed employees to offer appropriate services and treat the customers as they want. This is supported by the results of the study. According to this researcher, commitment has a strong positive effect on the softer aspects of customer loyalty such as advocacy and willingness to pay more for the service. iii. Conflict handling and customer loyalty

Conflict handling is an important relationship builder. Even though it is difficult to service industries especially in banking sector to achieve zero service failure all a time, but it is so important that the particular banks put in place effective conflict resolution or problem- solving mechanism. The claim is backed by the following studies. Yekunoamlak (2004) conducted a survey and proved that to maintain good relationship with customers, the way customers are handled such as proper acts of frontline employees and proper customer service are significantly important for customer loyalty. He also suggested that proper complaints handling and efficient service failure recovery procedures are considered as very

important factors for customer satisfaction by many customers. This author argued that having clear and easy procedures to handle customers’ complaints and communicating it to the customers properly is equally important to get customer loyalty. Complaint handling is a special case of customer interactions.

Customers tend to be loyal to banks that handle customer complaints which will always happen and other conflicts satisfactorily (Ndubisi, 2007). It is therefore important that effective conflict resolution mechanisms are not only in place but are proactive, so as to identify potential sources of conflict and address them before problems become manifest. iv. Communication and Customer loyalty

Higher levels of customer loyalty are yielded by a high level of communication the claim is supported by the works of (Ndubusi, Malhotra, Naresh and Wah, Chan Kok, 2009) who tested the relationship between various dimensions of relationship marketing: competence, communication and conflict handling, customer satisfaction and customer loyalty. The results of the data analysis showed that the higher the level of communication the greater the level of customer loyalty. Furthermore, this study confirmed that customer loyalty depends largely on customer satisfaction with the bank.

2.5 Research Gap

Currently very little has been done to ascertain constrained research levels of relationship marketing in the entire world and that those couple of researches were done in the field of relationship marketing were primarily limited to Banking, Telecommunications, hotel industry and health sector contrasted with the present study which is seeks to analyze relationship marketing in Zimbabwean context. Most of previous researchers researched mainly other relationship marketing variables such as Bonding competence, conflict handling, empathy and responsiveness but a few researched on communication, commitment, satisfaction and trust. Hence there is need for the effect of relationship marketing on customer loyalty to be researched more in future. Previous researchers carried out studies in which a further research is required because the data analyzed were collected from one sector of the service industry in one a few countries mostly in the developed world. More studies are required before general conclusions can be drawn especially in developing countries.

2.6 Summary

This chapter discussed the literature review reviewed from other sources that is the empirical evidence and the theoretical framework. In order to remain competitive companies, have to create a unique set of four Ps which appeal each individual customer and sets them apart from their competitors. Target marketing is no longer an efficient use of marketing efforts because a great deal of resources can be lost to uninterested individuals while in the process of trying to capture potential customers. Because of the potential loss resources there was a movement away from targets markets to specific individual customers. The succeeding chapter will focus on research methodology.

CHAPTER THREE: RESEARCH METHODOLGY OF THE STUDY

3.0 Introduction

The aim of this chapter is designated to methodology and justification of each selected method to be used in the project work by the researcher to collect and analyze data on the ‘impact of relationship marketing on customer loyalty in banks: case study of Ecobank personal Banking. It takes into account the research design, population and sampling, types of sampling, sampling techniques, sample size, sampling methods, data instrumentation validity and reliability of data.

3.1 Research Design

This is a master plan specifying the methods and proceedings for collecting and analyzing the needed information. It is a plan of procedures of data collection and analysis that are undertaken to evaluate a particular theoretical perspective. Saunders, Lewis and Thornhill (2003) propose that research requires a systematic approach to find answers to the stated problems. Sekaran and Bougie (2009), proposes that after identifying the research problem and literature the step to follow will be to design the research in such a way that data can be gathered and analyzed to arrive to a solution. The study used causal research design in order to gather the data. Casual research design seeks to determine how the independent variable influences the dependent variable. For this research, a causal research design was used to assess the impact of relationship marketing on customer satisfaction.

3.2 Target Population

Target population refers to any group of subjects for study that have one or more characteristics in common which are of interest to the researcher and have a significance to the topic of study Saunders et. al (2003). In the study at hand the researcher will focus on the customers directly served by Ecobank personal banking division housed at the head office the population size is 2000 customers.

3.3 Sampling Procedure

Sampling approaches are referred to as sampling procedures, sampling methods or sampling plans Collins et al (2000). The researcher used probability sampling technique because the intent to generalize the participants is greater. Goddard and Neville (2005) quoted by Collins et al (2000) defined a sample as a finite part of a statistical population whose

18 properties are studied to gain information about the whole. A sample is a part of the whole or a sub-set of measurements drawn from a population (Collins et al, 2000). A sample then is a selected group of elements from a defined population. The quantitative data method relies on random sampling and structured data collection instruments that fit diverse experience into predetermined response categories.

The sample size refers to the number of elements in a sample. As the sample increases to a point, the accuracy of the findings increases. As the size of the population increases, progressively smaller proportion of subjects can be selected (Saunders, 2003). To give a best representative the simple random sampling procedure was used. This process guarantees in the long run that every possible sample of a given size will be selected with known and equal probability. There was a random selection of customers in the Ecobank mentioned division. The benefits of random numbers were that it allowed one to select sample without bias. The sample selected can therefore be said to be representative of the whole population. The sample size was selected from population of 2000 customers was 322 and 330 questionnaires were distributed.

Table 3.1: Sample Sizes At 95% Confidence Interval

Population 5% 3% 2% 1% 50 44 48 49 50 100 79 91 96 99 150 108 132 141 148 200 132 168 185 196 250 151 203 226 244 300 168 234 267 291 400 196 291 434 384 500 217 340 414 475 750 254 440 571 696 1000 278 516 706 906 2000 322 696 1091 1655

The sample size is drawn at 95% confidence level as propounded by Saunders et al (2003). See the above adaptation.

3.4 Research Instruments

These are used to gather data mainly to be analyzed and interpreted so as to make better informed decisions. It is takes various ways but involves both primary and secondary data. Data is collected from two major sources that are primary and secondary sources

3.4.1 Primary Data

This is data acquired direct by the researcher on the factors of interest with the end goal of the study (Sekeran and Bougie, 2009). There are various procedures used to gather essential information, for example, observations, surveys and interviews with (Saunders, 2000). This is view was upheld by Sekeran and Bougie (2009) when they suggest that procedures, for example, focus groups, interviews, questionnaires, observation group depth interviews. This was used because of its greater control over data accuracy and relevance to the problem. The data gathered was in this manner applicable and substantial for this specific research since it was forward and gives an adjusted view regarding the matter of study. Primary data is most reasonable for the current study, it has the possibility of updating the collected data and enables the researcher to control the environment of data collection (Saunders et al, 2003). However, it is costly and long time is needed to perform it (Sekeran and Bougie, 2009).

3.4.2 Secondary Data

This is data that has been collected and assembled previously by other researchers. It assists the researcher in solving the problem at hand and develop an approach for answering research problems (Saunders et al, 2000). The current research collected basic information regarding to the impact of relationship marketing on customer loyalty, to be used in research hypothesis and designing of relevant questionnaires. Secondary data was cheap to collect and saved time. However, some of its drawbacks might be generality, outdated and less accurate. Such sources included, company records, literature reviews from textbooks and the Internet.

3.4.3 Questionnaire

The questionnaire empowered the analyst to evoke precise data on individual convictions, mentality and perspectives. A questionnaire is a printed document that contains instructions and explanations that are accumulated to get answers from respondents. As per Saunders et al (2000), questionnaires are research devices through which individuals are solicited to react to a set of questions in a foreordained request, the utilization of them ought to fit the

20 objectives of the research. A questionnaire represents information to the responded in writing or through the use of pictures whilst requiring a written or tick word response. On the off chance that legitimately constructed and administered it never the less continues to be all things considered keeps on being spread source. Respondents thought that it was more comfortable since they would fill the questionnaire in their own time, at their own speed.

The researcher utilized questionnaires based on a five-point Likert scale. The research used both open ended and closed inquiries to assemble information. Sekaran and Bougie, (2009) recommend that the closed ended which address how the respondents should reply from an arrangement of choices given by the researcher. The researcher made use of 5point Likert scale questions to measure customer perception on various aspects of research variables under consideration.

Due to confidentiality considerations that banks revere on their operations, questionnaires were the best data accumulation instrument since respondents were not expected stress over point what interviewer thought of their responses as it they were guaranteed anonymity. In this way questionnaires empowered respondents to give fair-minded reactions to the questions. The significant issue experienced by the researcher in utilizing this sort of instrument was the unwillingness by a few members to help and to be co-agent because of their bustling timetables at their work. However, to guarantee most extreme collaboration and high response rate by the respondents the researcher permitted the respondents to set aside their own opportunity to finish the questionnaire along these lines demonstrating a valuation for their hectic schedules and to make subsequent follow-ups.

3.4.4 Validity and Reliability of Instruments

Keeves (1997) characterizes reliability as the degree to which an instrument keeps up consistence in at all it is measuring at whatever point it is measuring as long as the length of the populace is the same. In this research reliability of the research instrument was set up by gathering comparative data from the customers and furthermore settled by contrasting reactions from them.

Best and Kahn (2005) characterize validity as the quality of data gathering instrument that empowers it is to gauge what it should quantify. It is the degree to which a research instrument can measure what it is intended to gauge. To guarantee positive validity, the researcher utilized expect guidance and help in the design, presentation and appropriateness

21 of the questions. Content validity was ensured through studying literature review of the previous studies in line with the present research.

3.5 Data Collection Procedures

These are tools used to collect data and information to find solution to the problem under investigation. These are basically the steps that were taken by the researcher in administering instruments and the collection of data from the respondents (Zikmund, 2006). The researcher handed out some questionnaires to respondents and to agree on the timeframe for collection after they are completed. This gave respondents enough time to consider their responses and is also convenient.

3.6 Data Analysis Procedures

After gathering of raw data from the field the researcher then transformed into information with the aid SPSS analysis. The data is correlated to measure the level of relationship of the variables under study. The information gathered was used to draw conclusions on the subject under study as presented in the next chapter

3.7 Chapter Summary

The researcher in this chapter focused on research design that was used in the study. The target population was pointed out and appropriate sample was derived, various sampling techniques were analyzed. The two types of data were discussed and primary data was chosen as a true fit into the research. The following chapter will focus on the analysis of the data for conclusion on research subject.

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND DISCUSSION

4.0 Introduction

This chapter contains data presentation, analysis and interpretation on the findings of the research study. The data was collected through the use of questionnaires as guided by the research objective. The responses given by the respondents were analyzed using SPSS version 16.

Table 4.1: Questionnaire Response Rate

Respondents Questionnaires Distributed Questionnaires Returned Response Rate%

Customers 330 309 93.64 Totals 330 309 93.64

Source: Primary data. Table 4.1, shows a 93.64% response rate of questionnaires distributed to customers to complete in their own time. 6.36% of the respondents did not bring back the questionnaire though the researcher encouraged them to return them. The response rate was high enough to allow meaningful analysis. 4.1 Demographic profile of respondents

Table 4.2: Questionnaire Analysis by Gender

Gender Frequency Percent Male 202 65.4 Female 107 34.6 Total 309 100 Source: Primary Data The research results based on gender are 65.4% being males and 34.6% female as respondents. Table 4.3: Questionnaire Analysis by Age

Age Frequency Percentage below 25 years 79 25.6 26 to 35 years 107 34.6 36 to 45 years 77 24.9 46 years and above 46 14.9 Total 309 100.0 Source: Primary Data

In terms of age, the results were distributed as follows 25.6% of the respondents were 25 years and below, 34.6% were between the ages of 26-35 years old, 24.9% ranging from 36- 45 years old and 14.9% between 46-55 years old.

Table 4.4: Questionnaire Analysis by Monthly Income

Monthly Income level Frequency Percentage Below $400 124 40.1 $400-$999 47 15.2 $1000-$2999 76 24.6 $3000-$5000 32 10.4 Over $5000 30 9.7 Total 309 100.0

Source: Primary Data

In terms of the monthly income of the respondents, 40% of the respondent earned below $400 per month and a paltry 9.7% earning above $5000.

Table 4.5: Questionnaire Analysis by Occupation

Occupation Frequency Percentage Private sector 61 19.7 Government 93 30.1 Own business 77 24.9 Student 62 20.1 Other 16 5.2 Total 309 100.0 Source: Primary Data

When we see the occupation of the respondents, most of them are working in government which accounted 30.1%, and followed by 24.9% having their own business.

Table 4.6: Questionnaire Analysis by Highest Level of Educational Qualification

Level of Education Frequency Percentage Diploma 63 20.4 Bachelor’s Degree 139 45.0 Master’s Degree 107 34.6 Total 309 100.0

Source: Primary Data The majority of respondents were first degree holders with 45% followed by Master’s Degree holders who accounted for 34.6% of respondents.

From demographic factors none have been correlated with customer loyalty they were only used to describe the sample based on demographics.

4.2 Reliability of Constructs

Table 4.7 shows the reliability statistics of the constructs used to measure the relationship between relationship marketing and customer loyalty.

Table 4.7: Reliability Statistics

Construct Cronbach alpha Trust .758 Commitment .824 Conflict Handling .833 Communication .762 Customer Loyalty .815 Source: SPSS output data Cooper (2003) and agree with (Nunnally, 1978) who state that reliability constructs are accepted if they are above 0.7. Therefore, all five variables are reliable as their Cronbach alpha values are above 0.7.

4.3 Validity Test

In this study, the researcher tested for construct validity, which consists of a discriminant and convergent validity. Exploratory factor analysis was utilized to analyze data. The researcher used average variances see appendix 3 extracted for the five variables trust, commitment, conflict handling, communication and customer loyalty.

Table 4.8: Average Variances Extracted

Construct AVE Trust 0.695 Commitment 0.623 Conflict handling 0.695 Communication 0.673 Customer loyalty 0.695

Source: SPSS output data All the above five factors are valid as they have average variances extracted values above 0.5. Variances extracted estimates should be greater the squared correlation estimates for discriminant validity to exist (Larcker, 1981) and convergent validity occurs if the averages for the variables is greater than 0.5.

Table 4.9: Constructs Data Extracted

Source: SPSS output data

From the above table, the squared correlations values for the constructs are shown. It is evident that the AVEs values for these two constructs were greater than their squared correlation value, proving that there was discriminant validity and convergent validity since the AVEs for the constructs were greater than 0.50.

4.4 Hypothesis Testing

The researcher in this study used regression analysis to analyze the relationship between (relationship marketing and customer loyalty).

4.4.1 Trust and Customer loyalty

푯ퟏ : Trust has a significant and positive effect on customer loyalty Results as shown below in table 4.10

Table 4.10: Regression of co-efficient of trust and customer loyalty

Coefficients

Standardized Unstandardized Coefficients Coefficients

Model B Std. Error Beta t Sig.

1 (Constant) .395 .175 2.255 .025

TRUST .923 .047 .749 19.794 .000 a. Dependent Variable: CUSTOMER LOYALTY Source: SPSS output data The relationship between customer loyalty and trust is analyzed, from the table there is a strong positive relationship between trust and customer loyalty. This is supported by the standardized coefficient which is .749, (p=000, t 2.255). This indicates customer loyalty is influenced to a greater extend by Trust as shown by beta value of .749 which is above 7 therefore 퐻1 is accepted.

Table 4.11: Model summary for Trust and customer loyalty

Model Summary

Adjusted R Std. Error of the Model R R Square Square Estimate

1 .749a .561 .559 .42929

a. Predictors: (Constant), TRUST Source: SPSS output data 27

Table 4.11 shows the model summary for the regression for trust and customer loyalty. R square is 56.1% which implies that 56.1% of the variation in customer loyalty is leveraged by trust. The R square is 56.1% which implies that 56.1% of the variation in relationship marketing is caused by trust and the other 44.4% was caused by other construct besides trust.

4.4.2 Commitment and Customer loyalty

퐻2 : Commitment has a significant and positive effect on customer loyalty

Table 4.12: Regression co-efficient of commitment and customer loyalty

Coefficientsa

Standardized Unstandardized Coefficients Coefficients

Model B Std. Error Beta T Sig.

1 (Constant) .888 .153 5.806 .000

COMMITMENT .787 .040 .744 19.495 .000 a. Dependent Variable: Customer Loyalty

Source: SPSS output data

The relationship between customer loyalty and commitment shows that there is a strong positive relationship between commitment and customer loyalty. This is supported by the standardized coefficient which is .744, (p=000). This indicates customer loyalty is influenced to a greater extend by commitment as shown by beta value of .744 which is

above 7 therefore 퐻2 is accepted.

Table 4.13: Model summary for commitment and customer loyalty

Model Summary

Adjusted R Std. Error of the Model R R Square Square Estimate

1 .744a .553 .552 .43295

a. Predictors: (Constant), COMMITMENT Source: SPSS output data

Table 4.13 shows the model summary for the regression for trust and customer loyalty. The R square is 55.3% which implies that 55.3% of the variation in relationship marketing is caused by commitment and the other 44.7% was caused by other constructs.

4.4.3 Conflict and Customer loyalty

퐻3 : Conflict handling has a significant and positive effect on customer loyalty

Table 4.14: Regression co-efficient of conflict and customer loyalty

Co-efficientsa

Standardized Unstandardized Coefficients Coefficients

Model B Std. Error Beta t Sig.

1 (Constant) .987 .177 5.572 .000

CONFLICT handling .753 .046 .753 16.246 .000 a. Dependent Variable: CUS LOYALTY Source: SPSS output data

Beta value of 0.753 on conflict handling shows that there is a significant and positive relationship on customer loyalty.

Table 4.15: Model summary for conflict and customer loyalty

Model Summary

Adjusted R Std. Error of the Model R R Square Square Estimate

1 .680a .572 .571 .47493

a. Predictors: (Constant), CONFLICT Source: SPSS output data

The model summary above, points out that 57.1% of variation in relationship marketing is a result of commitment-based factors.

4.4.4 Communication and Customer Loyalty

푯ퟒ: Communication has a significant and positive effect on customer loyalty

Table 4.16: Regression co-efficient between communication and customer loyalty

Coefficients

Standardized Unstandardized Coefficients Coefficients

Model B Std. Error Beta T Sig.

1 (Constant) 1.876 .159 11.835 .000

COMMUNICATION .538 .043 .583 12.559 .000

a. Dependent Variable: Customer Loyalty Source: SPSS output data The beta weight of 0.583 signifies a moderate relationship between communication and customer loyalty.

4.5 Discussion

This research investigated the impact of relationship marketing on customer loyalty in banking industry, specifically in Ecobank personal banking. This research has identified four elements of relationship marketing that have an impact on customer loyalty in banking industry particularly in Ecobank personal banking, trust, commitment, conflict handling and communication.

Based on the Pearson correlation test of correlation results, trust dimension positively correlated with customers loyalty (r=0.749). The findings of this research concur with findings of Ndubisi (2007) who suggested that the greater the trust in the bank, the higher the level of the bank’s commitment, the more reliable and timely its communications and the more satisfactorily it handles conflicts, the more loyal its customers will tend to be. Therefore, the results of this research are consistent with the findings of Ndubisi (2007). Commitment is another element of relationship marketing that is taken into account to explain customer loyalty. Based on the correlation result as it is shown by Pearson correlation test, commitment dimension is positively and highly correlated with customer’s loyalty. The correlation coefficient between commitment and customer loyalty is 0.744. This shows that commitment dimension is a major determinant of customer loyalty and customers will critically evaluate the commitment of the bank employees towards the services gained from the bank. This result is supported by findings by Fullerton (2003).

Furthermore, Morgan and Hunt (1994) viewed that a committed partner wants the relationship to endure indefinitely and is willing to work at maintaining it. As it is indicated in the correlation analysis, conflict handling dimension has positive and high relationship with customer loyalty. The above result is supported by Tax (1998). The results indicate that investments in complaint handling can improve evaluations of service quality, strengthen customer relationships, and build customer commitment. Ndubisi and Wah (2005) found a significant relationship between conflict handling and customer loyalty. The last but not the least factor included in the relationship marketing is communication. The correlation coefficient 0.583 denote that communication does not impact to a larger extend customer loyalty. The result of Morgan and Hunt (1994) suggest that communication oils a relationship but do not keep it there is of importance to avoid fall out between trading partners. The regression analysis indicates that 33.9% in customer loyalty has been significantly explained by communication.

4.6 Chapter Summary

This chapter’s main thrust was to present and analyze the findings of the research. The next chapter will give an overview of the subject researched and give recommendations to industry and for further study.

CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.0 Summary

The research investigated the impact of relationship marketing on customer loyalty. The objective used in the study was to determine the impact of relationship marketing on customer loyalty at Ecobank. Causal research design was used to analyze the objective. Simple random sampling technique was used to determine the elements to be included in the sample and a sample size of 320 calculated using Saunders et al (2005) formulae was used. The researcher used questionnaires to collect data. Research findings revealed that, there is a strong positive relationship between relationship marketing constructs (trust, commitment, conflict handling and communication) and customer loyalty with a beta values 0.583 and 0.749. This shows that companies that carry out relationship marketing are posed to have more loyal customers. The results show that there is a strong positive relationship between trust, commitment, conflict handling and customer loyalty. Communication had a moderate positive relationship with customer loyalty.

5.1 Conclusions

The study outlined that the most important factors are trust, commitment and conflict handling, which are the major constructs of customer loyalty at Ecobank Zimbabwe. The research concludes that, there is a strong positive relationship between relationship marketing and brand loyalty based on the positive relationship of the constructs of relationship marketing. Secondly, an increase in relationship marketing has a positive increase on customer loyalty. Thirdly, the research confirms that, if a bank carries out relationship marketing, it stands to leverage on customer loyalty. Customers prefer to be associated with an organization, which make great effort in creating and nurturing relationships.

5.2 Recommendations

The findings of this research basing on the above conclusion are an essential marketing tool for Ecobank management. In light of the findings and conclusions, are suggested as being valuable to the Ecobank for improving relationship marketing to leverage customer loyalty as was highlighted in the literature review that it is much more difficult to acquire a new customer than to retain an existing one.

Based on the research results Ecobank must improve its communication drive as it scored least in the factors that drive customers to be loyal to it. The bank must invest in communication technologies such as call centers that are able to assist customers round the clock, furthermore the communication must not be rigid it must adapt to suit the local environment and probably in all major languages.

5.3 Areas of Further Research

Further research should be to ascertain whether relationship marketing impacts financial performance. This will would then justify the pouring of resources to nurture relationships with customers

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Appendix 1: Request to Complete Questionnaire

BINDURA UNIVERSITY OF SCIENCE EDUCATION

FACULTY OF COMMERCE

DEPARTMENT OF MARKETING

Dear sir/madam,

RE: Request for Responses to the Questionnaire

I am a student at Bindura University of Science Education and carrying out a research on ‘Impact of Relationship Marketing on Customer Loyalty in Banks: Case Study of Ecobank Personal Banking,’ in partial fulfillment of Bachelor of Business Studies (Honours) degree in Marketing.

Collectively, your responses will add valuable input to the research and shall be used strictly for academic purposes. I would like to assure you that anonymity will be maintained, so please feel free to express your view by answering the questions contained in the questionnaire.

Will you kindly complete sections A and B; and return the completed questionnaire to the researcher.

Your co-operation will be greatly appreciated.

N.Gwanzura……B1336909

Appendix 2: Letter of Research Access The CEO

Ecobank Zimbabwe Ltd Harare January 2017

Dear Sir/Madam

REF: REQUEST FOR PERMISSION TO DO MY RESEARCH

I am Gwanzura Nigel, a fourth-year student at the Bindura University, studying for a Bachelor of Commerce Degree in Marketing. I am carrying out a research on, ‘‘IMPACT OF RELATIONSHIP MARKETING ON CUSTOMER LOYALTY IN BANKS: CASE STUDY OF ECOBANK PERSONAL offices in at 2 Piers road Borrowdale Harare in partial fulfilment of the requirements of my degree programme.

Your assistance will be greatly appreciated. All information will be treated with the strictest confidentiality as the study is purely for academic purposes.

Yours Faithfully

Nigel N Gwanzura

Appendix 3: Calculation of for validity using Average Variances Extracted (AVE) AVE = ∑ (standardized loadings2)

∑(standardized loadings2) + ∑Ej

Ej =1─standardised loadings2 Extracted variance for trust ET.R= ∑(0.735)2+(0.615)2+(0.755)2+(0.755)2+(0.612)2 ∑(0.735)2+(0.615)2+(0.755)2+(0.755)2+(0.612)2++∑(1-0.735)2+(1-0.615)2+(1- 0.755)2+(1-0.755)2+ 1-0.612^2) =3, 47252 5

=0.695

Extracted variance for commitment

ET.R=∑0.8462) + (0.8282)+ (0.3662)+(0.8762)+(0.8562)

∑ (0.8462)+(0.8282)+(0.3662)+(0.8762)+(0.8562) +∑(1-0.8462)+(1-0.8282)+(1- 0.3662)+(1-0.8762)+ (1-0.856^2)

=3.739289 5

=0.623

Extracted Variance Conflict handling

L.R = ∑(0.735)2+(0.615)2+(0.755)2+(0.755)2+(0.612)

∑(0.735)2+(0.615)2+(0.755)2+(0.755)2+(0.612)2++∑(1-0.735)2+(1-0.615)2+(1- 0.755)2+(1-0.755)2+ 1-0.612^2)

=3. 47252

=0.695

Extracted Variance of economic responsibility

EC =∑(0.831)2+(0.874)2+(0.815)2+(0.871)2+( 0.699)2

∑(0.831)2+(0.874)2+(0.815)2+(0.871)2+( 0.699)2+∑(1-0.8312)+(1-0.8742)+(1- 0.8152)+(1-0.8712)+(1-0.6992) 41

3.365904

=0.673

Extracted Variance for Conflict handling

BR =∑(0.898)2+(0.857)2+(0.712)2+(0.874)2+(0.815)2

∑(0.898)2+(0.857)2+(0.712)2+(0.874)2+(0.815)2+∑(1-0.8982)+(1-0.8572)+(1- 0.7122)+(1-0.8742)+(1-0.8152)

=3.365904

=0.695