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Dr. Wann Yih Wu, Dr. Hsi-An Shih, and Dr. Hui-Chun Chan National Cheng-Kung University, Tainan, Taiwan ABSTRACT
In the current retail environment, relationship management activities and marketing tactics play a predominant role because of the increased importance that consumers attach to the relational properties of their interactions with retailers. As a result, substantial competitive advantage development is required in order to establish effective membership relations. Further, as a result of the vigorous development and competition of the Taiwanese hypermarket, establishment of the extant membership relationship becomes a key method of building competitive advantage in the hypermarket. Therefore, this study investigates the interaction of membership relationship management activities and marketing tactics in the hypermarket through: perceived relationshipinvestment linking; understood member's psychological factors that promote customer value; allowing industries and customers to establish a good membership relationship; and finally, the influences of relationship quality and membership behavior. It attempts to establish and strengthen the complete membership-relationship pattern and provides reference for industries to build their membership management. The research is conceptualized and empirically examines relationship-building efforts that are theorized to enhance perceived relationship investment and relationship quality to membership behaviors. Moreover, a further discovered initiative in the relationship-strengthening strategy is compared to passive effective; relationshipmanagement activities are more effective than relationship-marketing tactics. Therefore, the resultant constructs of relationship quality and membership behavior, which embody consumer reciprocation of the retailer’s investment, reflect the extent to which consumers want to maintain their relationship with the retailer.
In times of increasing growth or local economic development, GNP increases year over year. Until 2006, Taiwan’s average GNP is roughly rated at 16,477NTD (Department of Statistics, Ministry of Economic AffairsMOEA, 2007). According to the development model analysis about European, American and Japanese business management activities, whenever GNP reaches 1,000USD, department stores mushroom; whenever GNP reaches 6,000USD, convenience chain stores take prevalence; whenever GNP reaches 10,000USD, the hypermarket is prevalent; whenever GNP reaches 12,000USD, the large hypermarket centers arise from the business environment. The sales amount of the hypermarket in Taiwan actually accounts for 30% more within the overall retail sales amount and takes the lead in all retail trades. According to Taiwan's MOEA, sales of retail trade with general merchandise grows NT$5,232.34 hundred million in 1999 to NT$7,389.74 hundred million in 2006, while overallmarket scale rises 1.81% during the same period. Convenience stores grow 84.25% and hypermarkets grow 28.68% during the same period. In comparison with last year, whole sales of retail trade with general merchandise only increases 3.20% and the hypermarket only slightly increases by 1.59%. Thus, we know that the whole hypermarket industry has intensive competition from newcomers in recent times.
Furthermore, Grant and Schlesinger (1995) indicate there are three ways that businesses adopt to earn profits. The first method is a customer mining strategy that is used to attract new customers; namely, it is used to increase the numbers of customers who opt for products or services. The second way is the market-penetrating strategy that is used to improve the current income profit rate from customers; namely, it is used to encourage customers to opt for more purchases of products and services. The third way is used to elongate the relationship duration with customers; namely, it is aimed toward maintaining long-term relationships with customers. Currently, business owners of hypermarket centers meet with the current economic recession and the participation of new competitors to cause quite violent competition. There are countless price-breaking sales promotion activities that occur as a result. These kinds of sales promotion activities with gross-profit eroding effects will gradually force the hypermarket centers to step into the micro-profit era. Thus, how a business group effectively adopts efficient relationship management and establishment models to create new business opportunities is the most critical issue for hypermarket centers in Taiwan, which is exactly the main topic for this research.
The Business Review, Cambridge * Vol. 10 * Num. 1 * Summer * 2008
to achieve brand edge from the competition. (2001) propose that holding currently existing customers is important for hypermarkets. Although this membership recruiting strategy can help business groups to quickly expand market share. Sasser and Hart (1989) propose specifically that the cost to attract new customers is five times as high as the cost to hold existing customers. In addition. but instead adopt membership recruiting activities.” and “enhancing” customer relationships (Berry and Parasuraman. and Heskett. The first level relies on pricing incentives to secure customer loyalty and is often referred to as level on relationship marketing. Because the current service target of hypermarket centers focuses on the business of offering customers convenient service with “all-in-one shopping” and “mass purchases. cut-throat competition. Within the research about organizational membership identity. the authors clearly indicate that the most important part of an investigation of customer relationship management falls on customer hold. Reichheld (1996). Reichheld and Sasser (1990). Accordingly. Berry. and Oh (1987) argue that relationship marketing encompasses all of the marketing activities that are designed to establish. A second level of relationship marketing focuses on the social aspects of a The Business Review. Mckenna (2002) and Lee et al. Thus. develop.” and a “convenient shopping environment. When markets reach the maturity stages with increasing numbers of competitors. there is no research that discusses the mutual influence of management activities for membership relationships that are exerted and relationship marketing strategies that are exerted on customer values and relationship behaviors. LITERATURE REVIEW Relationship Marketing Tactics Relationship marketing is conventionally defined as “developing. there are numerous organizational researches that commonly focus on membership plans. On the other hand. but little research exists on membership management. it is required to previously gather and analyze the factors for the quick alternation of customer interest so that one can make the correct evaluation (Grant and Schlesinger. Thus. In general. which is exactly the second topic for this research. However. but the cost to obtain new customers is less than 30%. Therefore. this research aspect is quite important for those hypermarket centers under current. Reichheld. and maintain a successful relational transaction. the literature distinguishes between three levels of relationship marketing (Berry.” “maintaining. However. In addition. Further. management of customer relationship. 1991. 1996). the possibility of successfully maintaining existing customers reaches 60%. to implement excellent membership management. Blattberg and Deighton. the more contributions member will offer and the more this involvement reduces the possibility for members to leave their own organizations. and the direct relationship among customer values.According to the research results of Thomas. 10 * Num. 1 * Summer * 2008 90 . Actually. it is necessary to maintain good relationships with customers through marketing activities while maintaining and enhancing membership loyalty (Berry and Parasuraman. Through a series of activities about membership relationship management and relationship marketing activities.” “extra-value commodities. this seems an imperative issue for individuals to ponder in order to create an overall and in-depth membership management model within the violently competitive environment that currently exists. few research articles investigate these topics simultaneously with insightful discussion about the mutual influence between management and relationship marketing. 1995. what counts more is for them to hold their currently existing customers. they can enhance their market share. Blattberg and Fox (2004). Bhattacharya. Cambridge * Vol. Whenever hypermarket centers aim their efforts toward relationship management to improve member loyalty and relationship marketing tactics. Kotler (2001). the majority cause currently existing members to rely on the membership values that are created by hypermarket centers. Aside from the concern for hypermarkets to attract new customers. the customer’s hold rate will naturally reduce remarkably. 1995). 1996. 1991). There are numerous extant researches about the relevant issues of marketing relationships that focus on the investigation of relationship marketing. Schurr. If the products and service that are provided by hypermarket centers cannot satisfy their members. the management of membership behaviors is the first priority of marketing goals for the hypermarket centers. Likewise.” the said service targets are actually featured with high substitute availability and a quick alternation of customer interest. hypermarkets are required to spend more in order to attract new customers. since they lose more than 30% customers annually. acquisition and relationship maintenance. business owners abandon their past management methods of membership cards. the customer hold rate must necessarily be improved with the customers' increased loyalty toward the hypermarket center. Dwyer. Lamb. 1995). Rao and Glynn (1995) indicate that whenever their study finds more involvement to the extent of members and longer duration. Hair and McDaniel (2000). together with the assistance to membership behavior management as related to membership behavior management.
De Wulf et al. and bring the relationship to a higher level (Weitz and Jap. 1 * Summer * 2008 91 . this customer ought to be favorably impressed (Hart and Johnson. Kelly. Level three relationship marketing requires offering structural solutions to customer problems. the commitment-trust framework that is developed by Morgan and Hunt (1994) provides a general model for relationship marketing in business-to-business relationships. 1998). Through their interactions with others. and Parasuraman’s (1996) research on individual customer relationships suggests a positive.relationship. 1997). Few efforts are made in extant research to define what relationship marketing tactics really are and how valuable consumers perceive them to be (Dorsch. effort. Leuthesser (1997) indicates that retailers can proactively be concerned with customer needs through intensive communication with them. preferential treatment. 1994). Communication can also help to maintain. “at level three. Direct mail includes letters or catalogs that are mailed directly to customers. We recognize that direct mail should be a strong predictor for building customer relationships. level-two relationship marketing (direct mail. which is a proven method of communicating with customers. gifts. Relationship marketing can be effectively implemented through the application of computer database techniques to access customers (Landry. Odekerken-Schroder and Iacobucci. or coupons (Peterson. which are exemplified by regular communication with consumers or referring to their names during encounters. relationships operate in a larger social context that creates explicit and implicit constraints and pressures on the relationship. Generally speaking. Managers of membership relationships must consider the benefits that coproducing customers receive from their efforts and what can be done extrinsically to enhance the perceived value of these benefits. and other irrecoverable resources in a relationship creates psychological bonds that encourage customers to stay in that relationship and sets an expectation of reciprocity (Smith and Barclay. we distinguish between five types of relationship marketing tactics that are distributed between level-one relationship marketing (tangible rewards. the solution to the customer’s problem is designed into the service-delivery system. but this channel member framework does not explicitly model the variables that management can directly control when managing membership relationships. and interpersonal communication). recognition places an unambiguous valuation on the membership’s coproduction behavior. 1995) and even can develop another. The present study’s research goal is to understand if the application of relationship marketing tactics is helpful for developing a long-term transaction relationship. Interdependence among members is becoming increasingly managerially relevant in the rapidly expanding world of online service because the interactive networks of special interests and bulletin boards are among the more-frequently used services. efforts. Although comprehension of the organization’s goal and values helps link the membership to the mission of the organization as a whole. Cambridge * Vol. 2001). Relationship Management Activities In the relationship marketing literature. knowledge of the culture of the organization provides guidelines as to appropriate behaviors that are expected of the membership. 1999). Perceived Relationship Investment When a supplier forms a relationship investment of any kind on behalf of a customer. Anderson and Narus. Morgan and Hunt. Preferential treatment can be regarded as discriminate treatment between regular customers and non-regular customers (Wulf. and Kelley. We position relationship marketing tactics and relationship management activities that are applied by the hypermarket as antecedents of relationship investment to provide managerial guidelines as to what affects perceptions of relationship investment.” Consequently. investing time. 10 * Num. these members develop an increased belief that they ought to remain in the organization so as not to abandon the other members. Fisk (1997) finds that customer interactions during periods of waiting in line influence their level of satisfaction. Swanson. and attention aimed at maintaining or enhancing relationships with regular customers The Business Review. and level-three relationship management activities. 1995) in order to retain customer loyalty. (Dwyer. 1987. and Donnely (1992) point to dissemination of organizational knowledge as a means of enhancing the socialization of the members. Finally. and Bolton (1998) finds that the duration of the relationship is reliant on customer satisfaction. direct effect exists between core services performance on intentions to remain. Berry (1995) indicates that. Retailers offer tangible rewards. Because the value derived from extra-role (coproduction) behaviors is by nature ambiguous. One key objective is to identify a set of relationship management activities that is appropriate to managing membership relationships. 1990. Berry. customers develop a sense of belonging. Skinner. Therefore. such as visible benefits like price discounts. (2001) define perceived relationship investment as a consumer's perception of the extent to which a retailer invests resources. Zeithaml. promotion activities). Schurr and Oh. 1998). closer relationship. enforce.
and coproduction (Gruen. 1990. 1994). 1987. (b) recognition for contributions. leads to a greater perceived level of relationship investment by customers. (d) tangible rewards. and to be applied in practice (Crosby. 1 * Summer * 2008 92 . and (e) promotion activities. Thus. such as membership retention rates. and (e) reliance on external membership requirement. this research postulates the following null hypotheses. Schurr. prior conceptualization mainly emphasizes the critical importance of relationship satisfaction. H3: Relationship management activities have positive effects on relationship marketing tactics. all of which are regarded as behavioral outcomes of relationships. Although discussion still exists as to which dimensions comprise relationship quality. leads to a greater perceived level of relationship investment by the customers. Schurr and Oh. H1: A greater perceived level of the relationship marketing tactics of: (a) direct mail. 1995. and Cowles. Membership Behaviors: Retention. Morgan and Hunt. and Coproduction Three general categories of membership behaviors are said to indicate relationship marketing success in member markets: retention. each of which is examined later. Relationship Marketing Tactics Perceived Relationship Investment Relationship Quality Membership Behavior Relationship Management Activities Figure 1: The Conceptual Framework The Business Review. Dwyer. constructs in order to capture its complete meaning. 1987. Cambridge * Vol. Schurr. 1999). by integrating the research of Wulf et al.that do not have outside value and cannot be recovered if these relationships are terminated (Smith. and Cowles. (b) participation. (2000) and the results of numerous other scholars and then referring to the characteristics of relevant hypermarket centers. and Oh. Morgan and Hunt. and cooperation. 1990. 1987). 1998). Relationship quality is considered an overall assessment of the strength of a relationship (Garbarino and Johnson. 1998). and Oh. De Wulf et al. and coproduction or volunteering behaviors. Evans. (b) preferential treatment. 1990. (2001) and Gruen et al. A long-term relationship is enforced through a membership system because it helps members to perceive that service firms are more personal and friendly (Crosby. Morgan and Hunt (1994) find empirical support for the relationship between a customer’s commitment and acquiescence. (2001) suppose that relationship marketing tactics will affect relationship quality indirectly through the perceived level of relationship investment. By linking perceived relationship investment we can substantially understand the psychological factors of members and the enhancement of customer values so that it is available for business owners to create intimate member relationship with customers with the further influence on relationship quality for ultimate guidance as to membership behaviors. (c) interpersonal communication. Participation. we expect to create the conceptual structures for this research. trust. and (c) coproduction. H2: A greater perceived level of the relationship management activities of: (a) core services performance. Relationship quality is a higher-order construct that consists of several distinct dimensions (Dwyer. 1994). and Klee. (c) member interdependence enhancement. the degree the membership participates in and uses membership benefits. H5: The level of relationship quality has a positive effect on: (a) membership retention. Evans. and Cowles. Relationship Quality Previous literature argues that relationship quality is divided into three kinds of unique. participation. Dorsch. Dwyer. Evans. In membership relationships. 10 * Num. RESEARCH HYPOTHESES AND FRAMEWORK Conceptual Model This research aims to investigate situations in which mutual implementation is made by hypermarket centers for membership management activities and relationship marketing tactics. managers are interested in the collective behaviors of members. Therefore. (d) dissemination of organizational knowledge. H4: A greater perceived level of relationship investment leads to a higher level of relationship quality. Morgan and Hunt. 1994). and relationship commitment as indicators of relationship quality (Crosby. Swanson. as in Figure 1. but related. propensity to leave.
DF: 168.9). middle and southern parts of Taiwan.67* 0. member interdependence enhancement. As can be seen from Figure 2. 1 * Summer * 2008 93 . Taichung City and Kaohsiung City. it can be seen that: Chi-square (x2) reaches 1463. relationship marketing tactics (direct mail.60* Coproduction 0. Questionnaire design For measurement of the latent constructs. The areas under investigation include shopping mall centers that are located separately on the northern. B&Q.91* Perceived Relationship Investment Relationship Marketing Tactics Relationship satisfaction Trust 0.46* 0.RESEARCH METHODOLOGY Sample Within this research. dissemination of organizational knowledge. H3 is supported. recognition for contributions. our experimental survey subjects include eight hypermarket centers in Taiwan.045 (smaller than 0. In terms of evaluation of the appropriateness of the goodness-of-fit model. After reviewing the questionnaire responses to eliminate incomplete replies and questionnaires with the same selection scaling. Cambridge * Vol.9). CFI of 0. (1978) which suggests that Cronbach’s α must be above 0. we formulate the randomly sampling questionnaire survey with 200 questionnaires separately for northern. RMR of 0.74* Relationship commitment Tangible rewards Promotion activities Core services Recognition for contributions Member interdependence enhancement 0. H2. This research’s entire questionnaire Cronbach’s α is above 0.66* 0. Further.919 (greater than 0.38* 0. AGFI of 0. with a total of 600 questionnaires sent to respondents.33* 0. the valid questionnaires total 600 sheets with a valid return rate of 100%.55* 0. The Business Review.911 (greater than 0.83* Relationship Quality 0. the first two or the last three quality criteria for our overall model are well below the highest recommended values and above the minimum suggested values. we use scales that are developed in previous studies.66* 0.5) and RMSEA that reaches 0.115 (smaller than 0. P value reaches 0. and reliance on external membership requirement) are significant in hypermarkets. Costco and Geant.6 for statistical validity EMPIRICAL ANALYSIS The Structure Model This study follows Anderson and Gerbing’s (1988) suggestion to adopt the two-stage method.000.65. Direct mail Preferential treatment Preferential treatment Interpersonal communication 0.62* 0.5).72* Membership Behavior Relationship Management Activities 0. such as the hypermarkets in Taipei City. interpersonal communication. preferential treatment. tangible rewards. relationship management activities have a positive interaction with relationship marketing tactics.985 (greater than 0.9). we can conclude as follows: H1. with GFI of 0. Carrefour.41* 0.88* 0.94* 0. middle and southern parts of Taiwan.40* 0.68* 0. 10 * Num.65* Retention Dissemination of organizational knowledge Reliance on external membership requirements Figure 2 Completely Standardized Solution of the Empirical Causal Model Based on these results.38* 0.239. such as: RT-Mart. Our final instrument is pre-tested in a small sample study. This means that the overall model in Figure 2 fits the data very well. We first calculate the measuring model and then inspect the structural model relationship of the overall model with the results. and promotion activities) as well as relationship management activities (core services performance. The survey period is from early July 2007 to late September 2007. Focusing on hypermarket members.12* Participation 0. and is consistent with Nunnally.
The influence on the behaviors of participation and common productivity show non-remarkable levels. The second influential factor is interpersonal and preferential treatment. This organizational knowledge must be actually distributed and the socialized extent of members is deepened to enhance the company and value identity of hypermarket members. Reliance on external membership requirements is trusted the most. the relationship quality of the hypermarket enhances the behaviors of the membership hold. these will indirectly enhance membership loyalty toward the hypermarket. there are those that cause positive effects on the perceived relationship investment of members. relationship management activities and perceived relationship investment that are made by hypermarkets form a positive correlation. Namely. competitors in the same trade will pattern their activities to match whatever the successful hypermarket has done.72). as it indicates that when hypermarkets cast in higher sensible quality of services about the relationship between hypermarkets and members. the behaviors that the membership hold is influenced most. whenever hypermarkets implement activities of relationship management. Namely. according to the results. The second most-trusted is the relationship promise and relationship satisfaction. H5 is supported as it indicates that the relationship quality of the hypermarket strongly affects member behaviors (0. Such situations cause members to continue to hold their membership and also cause them to recommend that other consumers become members of said hypermarket. As a result. rewarding feedback of relationship marketing tactics causes continuous patronage by hypermarket members and some extra rewards should be allowed to customers who enjoy a special discount. it is wise to focus efforts on those that link to psychological aspects. but also get organizations and members closer in order to enhance the engagement promise of members so that the activities of common productivity shall be enhanced. influences members much more than direct advertising activity strategies. commodity quality and commodity divergence of hypermarket satisfies members well. In the view of a satisfied transaction. When a hypermarket implements relationship marketing tactics. an increase in the sensible values of members cannot only be helpful to intensify the overall evaluation and continuous maintenance of membership. The content of such activities are almost the same. it is required that they actively provide services and inform members about their rights. excellent shopping environment. 10 * Num. Within promotional activities. The distribution of organizational knowledge means that hypermarkets need not only actively keep in touch with members. distribution of organizational knowledge. Thus. It is also necessary to encourage or invite membership participation and maintenance of membership through the recommendation of friends and relatives. and reliance on external member demands are positively correlated with the quality of a sensible relationship. whenever a hypermarket implements activities of relationship marketing or relationship management. Also. If service quality. within a relatively short time. actual customer touch will cause greater effects than any other method. a greater relationship quality is created. Cambridge * Vol. the more intimate the membership emotions are linked to cause members' continuous membership behaviors. the way for members to sense the perceived relationship investment that is made members lies in the touch methods. traffic convenience. the hypermarket recruits additional new members as a result. Thus. core service performance. they cause a positive perceived relationship investment among customers and both come away with a mutually-intensifying effect. 1 * Summer * 2008 94 . whether members of hypermarkets perceive that greater levels of interaction that are allowed by business owners to provide products that really meet their value perception levels in an aggressive manner. Within each dimension of relationship marketing tactics. when there is a hypermarket that reaches any remarkable sales performance from its promotion activities. From this situation. We can easily find a series of price-down promotional activities for hypermarkets during festivals and anniversaries that provide similarly favorable promotion activities. hypermarket members show preference toward price-down promotion methods. The Business Review. The three aspects of relationship marketing tactics. Among these.H4 is supported. Also. Within the management activities of a hypermarket. Among these. but merely vary in activity titles. we find that the effect of relationship management activities is slightly higher than that of relationship marketing tactics. but it shows no remarkable effect on the intention to become further involved with the service and products that are provided by the hypermarket. the membership reliability of the hypermarket is enhanced such that membership loyalty is enhanced accordingly. but also incurs the perception of reliability and complete confidence from members of hypermarket. We can clearly see that if business owners intend to implement other activities of relationship marketing management. relationship marketing tactics can utilize promotion activities and tangible rewards to cause the strongest influence on members' perceived relationship investment. Direct mail shows the least effective result. Actual. the better the core service performs in terms of quality and quantity. CONCLUSIONS AND IMPLICATIONS Conclusions When hypermarkets handle the mutual implementation of both membership relationship management and relationship marketing tactics well.
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