Impact of marketing activities on relationship quality in the Malaysian banking sector

Outline

• Abstract
• Keywords
• 1. Introduction
• 2. Literature Review
• 2.1. Relationship Marketing
• 2.2. Relationship Quality
• 3. Methodology
• 3.1. Data Source and Scale
• 3.2. Development of Measures
• 3.3. Model and Hypotheses
• 3.3.1. Antecedents (marketing Actions)
• 3.3.2. Consequences (performances)
• 4. Results
• 4.1. Confirmative Factor Analysis and Correlation Analysis
• 4.2. Reliability Test
• 4.3. Overall Model Fit
• 5. Conclusion and Implications
• 6. Limitations and Directions for Future Research
• References

Conclusions

This study adds to the growing literature on relationship marketing by examining the impact of marketing activities on relationship quality in the Malaysian banking sector. The findings revealed that greater client and employees’ relational orientation not only yield higher relationship quality but also result in better relationship continuity. In addition, committed client relationships were found to result in client satisfaction, loyalty, positive word of mouth, and promotion. However, mutual disclosure was found to have no significant relationship with relationship quality.This may indicate that bank customers in Malaysia do not feel that having close relationships with the bank will have any positive impact on relationship quality. This particular finding may serve as a warning signal to practitioners and scholars alike that thorough research must be carried out on the use of relationship marketing prior to implementation. Failure to do so may result in a state where money and resources are wasted developing a relationship with customers when they do not perceive or regard such a relationship with certain service providers. It should be clearly stated that forging and developing closer lengthy relationships with customers is very costly on the part of the banks and the sheer volume of customers might make this strategy prohibitive. Therefore a more realistic strategy may be for banks to be more selective in terms of which customers they forge and maintain closer relationships with.

The findings of the current study show how each of the proposed marketing actions provides an opportunity to bank managers who should develop and implement relationship marketing strategy with the general goal of increasing marketing efficiency and effectiveness. It seems that relationships are more likely to develop where the client perceives the relationship to be important.

This perception is often based on past client experiences with the service provider, and the rewards gained by the client from such relationships. It is therefore imperative that bank management clearly understands what relationship marketing is and the ramifications of its application in varied situations and among different segments and customers. For example, in order to enhance the employee’s relational orientation, bank managers (e.g. assistants, supervisors and tellers) must maintain well-planned and organized interactions with clients. This is so because relationship orientation approach implies that relationships are more likely to develop and endure in situations where the client comes in more frequent contact with the service provider, and /or when he/she believes that such kind of relationship is mutually beneficial.

In order to improve client orientation, the bank should translate the detailed information about their clients into actionable practices. One-to-one marketing seems to be reasonable in helping banks to generate the required information about their clients’ behavior. This information then could be aligned with the bank strategy to deliver high quality service, resulting in high client satisfaction.

Finally, relationship quality in the bank setting should be considered by those in charge of the bank (e.g. general managers, assistants, tellers) as the ability to meet the stated and implied requirements of the clients and employees alike rather than elegance. Ideal relationship quality in our case may enable the bank to develop ties of trust and long term commitment with their clients. Such commitment may increase the length of clientservice relationship, allowing the bank to increase its credibility and enhance its brand name and position itself as a market leader in delivering zero error financial services. Indeed, endured relationships may lead to the maximization of customer life time value, which is the cornerstone of relationship marketing.

Research has shown that strong relationships contribute to the perceptions of quality, and increase customer satisfaction and loyalty to the service firm (Goodwin and Gremler, 1996).However, banks will need to be more selective in terms of which customers they forge and maintain closer relationships with. For example, they might have to target high income or high net worth customers. This suggests that they have the means to segregate the customer base.