ASSESSING THE EFFECT OF RELATIONSHIP MARKETING ON CORPORATE PERFORMANCE IN SMALL BUSINESS ENTERPRISES.


Content

ABSTRACT

The study examined the effect of relationship marketing on corporate performance in small business enterprises using Entrepreneurs of Small Business Enterprises in Lagos state as case study. Relationship marketing is designed to develop strong connections with customers by providing them with information directly suited to their needs and interests and by promoting open communication. The objective of the study was to evaluate the extent of practice of relationship marketing in Small Business Enterprises in Lagos, to identify how relationship marketing leads to improved performance of Small Busines Enterprises (SBEs) in Lagos and to justify relationship marketing as it impacts SBEs competitiveness in the market place. The study tested the hypotheses that the practice of relationship marketing does not lead to improved performance of Small Business Enterprises (SBEs) and that relationship marketing does not lead to SBEs’ competitiveness in the market place.

 

Survey research method was used. A self-designed instrument was used as research instrument for data collection. The validity of the instrument was tested using expert opinion while the reliability of the instrument was tested using test re-test reliability technique result of which gave 0.7. the study adopted simple random technique in selecting the respondents while the sample size was one hundred (100) respondents in Ojo local government area of Lagos State. chi-square statistical verification method was used in analyzing and interpreting the data gathered from the respondents and was tested at 0.205 significance level.

 

The study found out that the relationship marketing has positive effect of the corporate performance of small business enterprise in Lagos state as it leads to organizational profitability, organizational growth, increase in revenue base, increased performance and effectiveness, customer retention, increase in client-base, increased customer loyalty and increased sales. This research work however recommends that SBEs should structure their relationship marketing strategies around their consumer/customers, get organized, know their customers, develop a communication plan and coordinate communications, strive to improve corporate performance and market share and improve customer service and focus on customer retention. It was further suggested that SBEs should not limit their focus or attention to only internal markets, but also to external markets and SBEs should build close, profitable and long-term relationship with their customers.

TABLE OF CONTENTS

CHAPTER ONE

INTRODUCTION

1.1         Background to the Study

1.2         Statement of the Problem

1.3     Objectives of the Study

1.4    Research Questions

1.5         Research Hypotheses

1.6         Scope/Delimitation of the Study

1.7         Limitations of the Study

1.8         Significance of the Study

1.9         Definition of Terms

 

CHAPTER TWO

LITERATURE REVIEW

2.0     Introduction

2.1      Concept of Relationship Marketing

2.2     Nature, Skills and Techniques of Relationship Marketing

2.2.1  Relationship Marketing Strategies

2.3     Benefits of Relationship Marketing

2.4     Corporate Performance Measures

2.4.1  Characteristics of a Good Performance Measure

2.4.2  Types of Performance Measures

2.4.3  Performance Measures in SMES

2.5     Small Business Enterprises

2.5.1 Small Business Enterprises

2.5.2  Challenges Faced By Small and Medium Enterprises In Nigeria

2.5.3  Government Intervention in Small and Medium Enterprises

2.6     Effect of Relationship Marketing on Corporate        Performance in Small Business Enterprises

CHAPTER THREE

RESEARCH METHODS

3.0     Introduction

3.1     Research Design

3.2     Sample and Sampling Techniques

3.3     Population of the Study

3.4     Research Instrument

3.5     Validity of the Instrument

3.6     Reliability of Instrument

3.7     Administration of Instrument

3.8     Data Analysis

 

CHAPTER FOUR

4.0     Data Presentation

4.1     Presentation of Data

4.2     Testing of Hypotheses

4.3     Discussion of Findings

 

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.2         Summary

5.3         Conclusion

5.4         Recommendations

5.4.1            Suggestion For Further Studies

References

 

 

 

 

CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND TO THE STUDY

According to Oyedijo, Idris and Aliu (2012), governments world-wide have come to realize that Small Business Enterprises (SBEs) contribute enormously to the growth and development of a nation’s economy. Small Business Enterprises (SBE's) play a major role in the world economy, and their contribution to economic and employment growth is widely recognized. Small Business Enterprises (SBE's) do play a major role in the world economy, and they are recognized as one of the main contributors to economic, development and employment growth.

Small Business Enterprises in conjunction with the medium enterprises are known to employ over 60% of Nigeria’s workforce (World Bank, 1995 cited in Adelaja, 2004).

 

According to Ojo (2004 as cited in Oyedijo, 2012), in the case of Nigeria, we have witnessed an upsurge in Small Business Enterprise development efforts by successive governments due to multifarious reasons such as, the failure of past industrial policies hitherto anchored on large and capital intensive industries, the discovery that vibrant small business enterprises and medium enterprises can contribute to achieving many of the objectives of Nigeria’s development plans, an increase in emphasis now placed on self-reliance as an approach to development, a world-wide acknowledgement of the successes recorded in economies such as Malaysia, Indonesia and India where small and medium enterprises development have been used to accelerate industrial transformation and the significance of small and medium enterprises in the Poverty Eradication Programme (PEP) of Nigeria’s President Olusegun Obasanjo regime during the period 1999 to 2007 and even beyond.

Small scale business constitutes the real fabric of a nation’s economic development. Globalization has made business system to have undergone a number of changes in recent years. These changes are accompanied by growth both in size and magnitude. To cope with these changes, modern marketing techniques are used in contemporary business environment. One of such techniques is relationship marketing. Relationship Marketing is a marketing strategy whose objective is to establish and maintain a profitable, long-term relationship with a customer, which goes beyond the initial contact (Dauda et al, 2010).

Relationship marketing is a form of marketing that evolved from direct response marketing; it places emphasis on building longer-term relationships with customers rather than on individual transactions. Relationship marketing involves an understanding of customers' needs and wants through their lifecycle and providing a range of products or services accordingly (Adewunmi, 2007).

Ogunleye (2004) buttressed that due to the rise in the number of competitors as well as the buying options in front of consumers, relationship marketing has been on the rise. Relationship marketing involves making strong and deep relationship with the consumers (whether they be individuals or organizations), such that the consumer does not shift a brand and has a long term and satisfying relationship with the brand.

Relationship marketing need not be used only with your end customers. Your stakeholders are equally important. That is why one of the key goals of marketing activities today is to build strong relationships with customers and stakeholders. Thus in all, the various entities involved in relationship marketing are

1.    Customers

2.    Employees

3.    Channel partners (Distributors, suppliers etc)

4.    Financial partners (Shareholders, investors etc)

A firm needs to build a strong relationship with all these entities to be in the front. Imagine having a high defection rate, or having a high attrition in the organization. Defection rate is the rate of a customer leaving its brands, whereas attrition rate is the rate at which an employee leaves a company which has hired him. You do not want a high defection or attrition rate. And hence the use of relationship marketing (Oyedijo, et al., 2012)

These four entities together can also be known as the “Marketing network” for relationship marketing. One of the smarter strategies for a company to generate profits is simple – Take good care of your marketing network and your profits will follow. Imagine a highly motivated employee working alongside a highly motivated channel partners. This builds confidence for the company from the point of view of the customers which in turn brings sales and better numbers. This attracts the financial community and they in turn start investing in the company. Thus in essence, relationship marketing can actually take the organization to a whole new level of generating business and profits.

Adekunle (2005) contributed that overall, relationship Marketing builds a tight knit for the company bringing its main players together and thereby taking the company forward. This in turn results in high performance and high rewards. As said by Leonardo Dicaprio in the movie Inception – A positive motivation always trumps a negative thought. This is where the crux of relationship marketing lies. A positive motivation which brings people together builds a strong bond and helps the company in achieving its goals.

1.2       STATEMENT OF THE PROBLEM

Small Business Enterprises contribute in no small measure to the growth and development of a country and is also seen as tool for entrepreneurial development which in turn impacts the GDP of such country. Relationship marketing has been proffered as a necessary skill if profitable and long-term relationships with customers are to be established, maintained and sustained. However, the extent of practice of relationship marketing in small business enterprises in Lagos is yet to be ascertained, while managers are also left with the task of adjudging if relationship marketing leads to improved performance of small business enterprises in Lagos at all.

Another problem is ascertaining if relationship marketing impacts small business enterprises competitiveness in the market place. It is these gaps in literature that this study sets out to fill.

1.3    OBJECTIVES OF THE STUDY

          The objective of this study can be stated as follows:

1.   To evaluate the extent of practice of relationship marketing in Small

      Business Enterprises in Lagos.

2.   To find out whether relationship marketing leads to improved performance of Small Business Enterprises (SBEs) in Lagos.

3.    To establish whether relationship marketing impacts SBEs competitiveness in the market place.

1.4   RESEARCH QUESTIONS

In order to give focus to the study, the following research questions were set to guide the study:

1.       What is the extent of practice of relationship marketing in Small Business Enterprises in Lagos?

2.       Does relationship marketing lead to improved performance of Small Business Enterprises (SBEs) in Lagos?

3.       Does relationship marketing impact SBEs competitiveness in the market place?

 

 

 

1.10    RESEARCH HYPOTHESES

The study tested two null hypotheses, viz:

1.  That there is no significant relationship between relationship marketing and improved performance of Small Business Enterprises (SBEs) in Lagos.

2.  That there is no significant relationship between relationship marketing and SBEs’ competitiveness in the market place.

1.11    SCOPE/DELIMITATION OF THE STUDY

This study is limited to Entrepreneurs of Small Business Enterprises in Lagos. It will focus more on enterprises that actively embrace marketing. It will lay emphasis on the extent of practice of relationship marketing on small business enterprises in Lagos, its impact on SBEs competitiveness in the market place, and how it impacts on improved performance in Lagos.

1.12    LIMITATIONS OF THE STUDY

This research work is limited by finance and time. Time needed to extend the research work to different local government and council areas in Lagos, time needed to take the research work outside Lagos and finance needed to engage this task in terms of transportation, stationery etc.

1.13    SIGNIFICANCE OF THE STUDY

This research work provides readers with various skills and techniques of relationship marketing with its overall effect on the growth of SBEs. It will also get the researcher acquainted with the concept while prospective entrepreneurs will also be equipped with the rudiments and required marketing skills needed to expand their business and improve their performances. It is also hoped that the society will be empowered with these skills and techniques while government will also be informed on the need to create necessary conditions needed to make SBEs thrive and improved in the country through relationship marketing.

1.9    DEFINITION OF TERMS

Marketing: The management process through which goods and services move from conception to the customer (www.businessdictionary.com).

Relationship: A connection between variables, such as a correlation, or between people, such as a marriage (www.businessdictionary.com).

Corporate: Formed into an association and endowed by law with the rights and liabilities of an individual (www.businessdictionary.com).

Enterprise: A project or undertaking that is especially difficult, complicated, or risky (www.businessdictionary.com).

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

Customer: One that purchases a commodity or service

Development: The act, process, or result of developing

Growth: The process of growing

Performance: The execution of an action

Organizational performance: An analysis of a company's performance as compared to goals and objectives. (www.businessdictionary.com)

Small business enterprise: Independently owned and operated and not dominant in its field of operations. The size will vary from industry to industry (www.frbatlanta.org).

Profitability: The state or condition of yielding a financial profit or gain. It is often measured by price to earnings ratio (www.businessdictionary.com).

Customer’s loyalty: Likelihood of previous customers to continue to buy from a specific organization (www.businessdictionary.com).

Economic development: Progress in an economy, or the qualitative measure of this (www.businessdictionary.com).

Market place: Alternative term for market (www.businessdictionary.com).

Competitiveness: Ability of a firm or a nation to offer products and services that meet the quality standards of the local and world markets at prices that are competitive and provide adequate returns on the resources employed or consumed in producing them (www.businessdictionary.com).

Entrepreneur: Someone who exercises initiative by organizing a venture to take benefit of an opportunity and, as the decision maker, decides what, how, and how much of a good or service will be produced (www.businessdictionary.com).

 

 


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