The importance of relationship in customer loyalty strategies:
An exploratory study of Moroccan industries.
Laila OUHNA*
* Corresponding author: author: Laila OUHNA, Dr., National School of Trade and
Management/ Ibnouzohr University, Agadir, Morocco, E-Mail: ouhnalaila@yahoo.fr
Soumiya MEKKAOUI**
**Soumiya MEKKAOUI, Ph.D, National School of Trade and Management / Ibnouzohr
University, Agadir, Morocco, E-Mail:soumiyamekkaoui@hotmail.com
Abstract
Customer loyalty is crucial for companies because of the huge competition in their environment.
In Moroccan economy, the agri-food industries represent a vital sector. It contributes with 30%
of total industrial production in the country. The objective of this paper is to investigate the
relationship between agri-food industries and their customers. It aims to study how agri-food
companies retain their customers. Data of our empirical research were collected from ten
Moroccan agri-food firms.
The results of this study highlight the importance of relationship in loyalty strategies. Therefore,
to maintain distributor’s loyalty, a producer may enhance relational determinant as relationship
satisfaction, commitment, and trust.
Keywords
Agri-food businesses, Loyalty strategy, Relationship marketing, Relationship satisfaction, Trust,
commitment.
1.
INTRODUCTION
The agri-food industries represent a vital sector in Moroccan economy. It contributes with
30% of total industrial production in the country.
Nowadays, the competitive environment of industrial markets encourages companies to focus
their marketing efforts to maintain and expand their market share. Therefore, customer loyalty
represents a main factor for the companies’ competitiveness.
Indeed, it has been shown that retaining a customer is five times less costly than conquering
new one (Jones & Sasser, 1995). The prospect acquisition costs are increasingly high,
which favors keeping a good personal relationship with customers and retain them.
Loyalty strategy constitutes a good solution for developing business activity and defending
their market shares (Benavent & Meyer-Waarden, 2004). They are considered as defensive
strategy to reduce customer defection (Crié, 2002).
The existing literature on loyalty focus on the issue of loyalty programs, their efficiency and
profitability (Daams & al., 2008; Meyer-Waarden & Benavent, 2009 ; Liu & al., 2011 ;
Dorotic & al., 2011 ; Gómez & al., 2012 ; Evanschitzky & al., 2012). However, loyalty
strategies remain a subject rarely explored by researchers (Benavent & al., 1999/2000).
This research aims to investigate loyalty strategies adopted by Moroccan agri-food
companies. The objective is also to find out the relationship between Moroccan producers and
their distributors. Therefore, this paper is divided into five sections. The first section focused
on research objectives. In the second section we review the current literature on loyalty
strategies and customer relationship in B to B context. Then, we present the research methods.
In the fourth section we present and analyze the results. Finally, we discuss the results, we
present their implications, their limits and further research.
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2.
CONCEPTUAL BACKGROUND
2.1.
B to B Customer loyalty
Literature on customer loyalty has been developed since the 70s. The concept has been
defined as a behavioral measure (Massey, Montgomery & Morrison, 1970, Copeland &
Cunningham, 1986). These measures include proportion of purchase, probability of purchase,
probability of product repurchase, purchase frequency, repeat purchase behavior, purchase
sequence, and multiple aspects of purchase behavior.
Other authors defined loyalty from the consumer attitudes toward the brand (Bass & al, 1972),
preferences (Guest, 1944), or the intention of repurchasing (Labarbera & Marzusky, 1983 ).
Although, the one-dimensional view of loyalty is criticized by authors. They suggest defining
loyalty by combining the attitudinal and behavioral dimension (Jacoby & Kyner, 1973).
According to Day (1969) observing a systematic repurchase behavior without incorporating a
positive attitude of the customer is a false loyalty. The author considers that the true loyalty
must necessarily derive from intent. Indeed, the attitudinal approach considers that customer
loyalty stems from his rational decision to make the purchase. So, loyalty has both an
attitudinal and behavioral dimension (Dick & Basu, 1994). It is supposed that customers who
are behaviorally loyal to a firm display more favorable attitudes towards the firm, in
comparison to competitors. However, in some cases behavioral loyalty does not necessarily
reflect attitudinal loyalty, since there might exist other factors that prevent customers from
defecting (Liljander & Roos, 2002; Reinartz & Kumar, 2002; Aldlaigan & Buttle, 2005).
The concept of customer loyalty is defined as a commitment to re-buy or re-patronize a
preferred product or service consistently in the future, thereby causing repetitive same-brand
or same brand-set purchasing, despite situational influences and marketing efforts having the
potential to cause switching behavior (Oliver, 1999).
In B to B context, customer loyalty is related to actions for enhancing present and future
buying behavior and other reasons for the relationship (Meyer & Oevermann, 1995).
Companies can develop customer loyalty by influencing current and future customer buying
behavior in a positive way. Accordingly, these actions have the objective to stabilize and
expand the customer relationship (Homburg & Bruhn, 1998).
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B to B customer loyalty is analyzed in different dimensions. Rundle-Thiele (2005) studied
customer loyalty in five dimensions. The situational loyalty (Oliver, 1999; Dubois & Laurent,
1999), resistance to competing offers, which has also been referred to in the literature as price
sensitivity (Hozier & al., 1985; Zeithaml & al., 1996; de Ruyter & al., 1998; Narayandas,
1999; Ganesh & al., 2000), propensity to be loyal (Mellens & al., 1996), attitudinal loyalty
(Bowen & Chen, 2001; Butcher & al., 2001; Guest, 1944; Pritchard & al., 1999) and finally
complaining behavior (Bloemer & al., 1999; de Ruyter & al., 1998). The author considered
the specifics of inter-organizational exchange and the competition to define the true B to B
customer loyalty.
2.2.
Customer loyalty strategies
Customer loyalty is considered as a main factor of firm competitiveness (Anderson & al.,
1994; Hallowell, 1996; Reichheld, 1996; Silvestro & Cross, 2000; Leverin & Liljander,
2006). Companies are seeking to adapt efficient strategy to retain their customers.
Customer loyalty strategy is defined as “a strategy which identifies, maintains and increases
the yield of the best customers, through a value-added relationship, interactive and focused
on the long term” (Barlow, 1992 ; cited by Benavent & Meyer-Waarden, 2004, p. 97).
Therefore, the customer loyalty strategy is designed as a marketing process. This process
begins by selecting best customers to retain. Then, company seeks to maintain them and to
develop their value.
The relationship has an important place in loyalty strategy. It contributes to maintain and
increases the yield of the best customers selected.
Benavent & Meyer-Waarden (2004) classified loyalty strategies into two types, which differ
according to their specific objective. The first strategy is the “customer heterogeneity
management” based on the establishment of “discrimination” between customers to manage
their diversity and needs. This strategy is required when the company has very heterogeneous
clients and the “discrimination” between them is achieved by applying marketing mix.
The second loyalty strategy is the “customer relationship management”. This type of loyalty
strategy is established to increase or maintain the level of customer business with the
company. It applies to changing customer behavior in order to increase their value (Benavent
& Meyer-Waarden, 2004). Indeed, the customer lifetime value means profitability of each
customer category. So, their profit increases across the entire customer life cycle by
implementing the exit barriers on the relationship for each customer category.
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2.3.
Relational loyalty strategy
Loyalty strategy by “customer relationship management” gives great importance to
relationship elements. Companies adopt this type of loyalty strategy act based on three
aspects:
- Relational aspect, by developing a learning relationship with their customers in order to
develop a long-term relationship based on trust and commitment;
- Transactional aspect, either by creating for each experience a satisfaction that will create a
positive attitude, or by offering complementary product and increase customer value through
promotions products;
- Customers locking aspect: This is to create a customer supply dependence on the company
by imposing exit barriers. Indeed, this aspect has been strongly linked in the literature in the
inter-organizational context. This is due to rational character of this type of exchange
relations.
Conceptually, loyalty strategies seek to build stronger and more durable relationships with
customers. Durable relationships encourage customers to do something about a problem they
have had with a product or service rather than quietly defecting from the brand (Duffy, 1998).
The relational aspect, based on relational elements as trust and commitment, develop durable
relationships.
So, building relational customer loyalty is considered as a business strategy that helps
businesses to boost loyalty and maximize share of their customers. They use to develop
relational elements.
3.
METHODOLOGY
3.1.
Data collection
The data were collected using a qualitative exploratory study of agri-food industries in Souss
Massa Drâa region in Morocco. Interviews were conducted with the responsible of ten agrifood companies in several industries (fruit and vegetable packaging house, dairy industry, fish
industry). The collection of data was done via individual semi-directive interviews in order to
touch directly the individual and to make sure that the questions are completely understood.
The selection of respondent firms was not random. In fact, in qualitative research, the goal is
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to have access in a small sample the diversity of views (Giordano, 2003). We seek the rich
content, diversity and quality (Evrard & al., 2003). For this reason, access to respondents was
a difficult step for us.
The interview guide used in the study explores the relationship between producer and
distributor and includes a set of themes regarding the loyalty strategy applied by agri-food
companies. The first theme tackles general information relative to the activity of a company
and its distribution policy. The second theme seeks to evaluate the formalization of loyalty
strategy. The third theme concern axes of loyalty strategy applied by the company.
3.2.
Data Analysis
We collected our data by using “audio recording” and the taking notes during the interviews.
The use of audio recorder permits us to preserve the integrality of the expressed opinions,
making data exhaustive and discursive, without worrying about the risk to miss information
(Thietart, 1999). Only one interviewee didn’t accept to be recorded, but he was very
cooperative and helps us take notes.
After collecting data, we totally transcribed the interviews in order to analyze them correctly.
This technique allowed us to make the content analysis. Then the text of transcribed
interviews has been devised, and then we combined these units as defined themes into
categories.
According to Bardin (1993) cited in (Quivy & Campenhoudt, 2011), three methods of content
analysis exist, thematic analysis, formal analysis and structural analysis. In our qualitative
study, we used thematic analysis method, and principally, a categorical thematic analysis. It
consists in calculating and comparing the frequencies of certain characteristics previously
grouped into categories (Quivy & Campenhoudt, 2011). In addition, an analysis of the
evaluation enabled us to interpret the results in a much easier way.
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4.
RESULTS
The literature review helps us to interpret the results of the qualitative study. A first theme
was to introduce the discussion and measure the degree of formalization of the loyalty
strategy in Moroccan firms.
Theme 1: Agri-food Company and their distributors
- Distribution Strategy:
In the agri-food industry, companies often adopt an intensive distribution through the use of
retailers, and for some companies, wholesalers. In addition, they distribute their products in
all super markets available in Morocco as “Marjane”, “ATACADAO”, “Carrefour Market”,
“Acima” and “Aswak Assalam”.
-Distributors loyalty:
The interviewed companies measure their customer distributors’ loyalty by return, repurchasing, re-cooperation, and renewing a contract.
Theme 2: Loyalty strategy formalization
All companies interviewed confirmed that they didn’t adopt any loyalty programs. They
adopted loyalty strategy that is not formalized. This is explained by the specificity of the food
industry. However, one company has already had experience in the implementation of a
customer loyalty program. This program was considered ineffective and was stopped. The
company explained its ineffectiveness by the fact that distributors did not accept to be
dependent on a given program.
"Adopting a loyalty program is not beneficial for us, the specificity of our activity does not
allow, and even our customers will not appreciate it " Drinks industry.
Regarding the selection of customers to retain be made loyal, all companies segment their
customers into categories, and then they determine customer to retain.
These customers are determined according to different criteria: Purchase volume, customer
solvency, their seriousness, commitment and responsiveness. “Eight to ten of our customers
are entitled to unlimited products with exceptional conditions. These eight customers are
classified according to: the tonnage purchased, their attendance, their solvency and
compliance with their commitments” Fruit and vegetable packaging house company.
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Theme 3: loyalty strategy axes
- Relationship between producer and distributors
All companies interviewed confirmed the predominance of relational bonds in their loyalty
actions with distributors. They ensure maintaining good relationship with persons in contact
as well as with institutions. They ensure to make a good relationship quality with their
distributors.
- Trust
Trust was explained by the importance of the presence of the reception, service quality, good
conditions, freedom, kindness, reliability and a friendly relationship between the industrial
and its distributor customer. These elements can be grouped into two dimensions of trust:
credibility and benevolence.
“Institutional Trust is the most vital in B to B exchange, then interpersonal trust. The
producer must be honest, loyal, helpful and friendly” Drinks company.
- Commitment:
Accordingly to our interviewees, commitment is an important element in maintaining a
relationship. Companies give importance to mutual commitment. "Mutual commitment
increases loyalty and relationships quality" Cheese Company.
In addition, interviewees indicate that the determinants of commitment are: trust, reliability,
reputation and positive word of mouth, and also satisfaction is a strong determinant.
- Dependence:
Dependence was negatively perceived by our interviewees. They completely refuse to accept
dependence as loyalty determinant. They would rather talk about cooperation.
"For us, high dependency is not beneficial." Vegetable packing house company.
“Dependency is not beneficial, it is dangerous. It has a risk of hostile customers, because
according to the culture of our customers, dependency disturbs them and the company will
not be motivated to develop good relationships to success." Company drinks.
-Satisfaction:
Satisfaction represent a key factor in loyalty strategies in Moroccan agri-food industries.
They also speak of the relationship satisfaction. Thus, Moroccan companies ensure the
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management of customer complaints to keep this satisfaction. "We evaluate customer
satisfaction 3 times a week and we manage claims continuously." Delicatessen Company.
5.
CONCLUSION
Based on the thematic analysis, Moroccan agri-food companies adopt loyalty strategies that
are not formalized. They do not privilege the use of loyalty programs. A loyalty strategy
begins by selection, maintain and development of profitable customers (Barlow, 1992). Food
companies interviewed are selected according to various criteria. It is principally the respect
of commitment. Then these companies operate mainly by relational elements to maintain and
develop their customers.
Moreover, agri-food companies retain their distributors primarily through relational strategies.
They are primarily interested in maintaining a good relationship to ensure loyalty.
Customer loyalty is perceived by our interviewees as a loyalty behavior. To increase the
loyalty, the Moroccan agri-food industry practices relational loyalty strategy. The main
factors of this loyalty strategy are trust, commitment and satisfaction.
Regarding trust, this concept is expressed by two dimensions: credibility and benevolence.
However, the credibility dimension is rarely cited by our interviewees. In this context, trust is
especially linked to benevolence.
Likewise, commitment is expressed through a mutual commitment. We noticed its importance
in loyalty strategies practiced by agri-food businesses. In addition, our research finds out that
it is the relationship satisfaction that contributes to customer loyalty.
Our research highlighted that dependence is perceived inefficient in loyalty strategy.
Moreover, it is badly perceived by the Moroccan agri-food businesses.
Furthermore, our results reinforce previous studies of Abbad (2006, 2007) study. This author
has addressed the relationship between suppliers and distributors in the Moroccan agri-food
businesses. These results demonstrate that the dependence has a negative effect on
maintaining lasting relationships with distributors (Abbad, 2007).
We explain this phenomenon by the discrepancy of perception of loyalty between the supplier
and the customer. Indeed, loyalty was previously defined as a set of actions aimed to increase
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the dependence of the consumer to a product or a brand (Crié, 2002). However, loyalty is
defined as "A set of elements to attract consumers freely to his perfect loyalty" (Lehu, 2003).
Loyalty insists on the customer freedom in action. Customers require in their loyalty behavior
a condition of total freedom.
5.1.
Discussion and implications
Customer loyalty is an important construct for marketers. It represents a tool to develop
relationship with customers, to increase business and to attain customer retention (Kumar &
Shah, 2004). The aim of this study was to investigate producer-distributor relationship in agrifood industries. Study results indicate that, relational determinant appears decisive in the
supplier-distributors relationship. It has an important effect on loyalty strategy.
This research find out that in the agri-food Moroccan context, companies concentrates on
trust, commitment and satisfaction in their loyalty strategy. The main finding of this research
may interests Moroccan managers regarding the development of their distributors’ loyalty
strategies. They may reinforce their relationships with distributors and satisfy them.
5.2.
Limitations and future work
This research has several limitations. Different approaches for future research may be useful
in exploring the issues investigated in this study.
First, the study was conducted in specific branch of industry « agri-food firms » in SMD
region which limits the external validity of the research. The results cannot be generalized to
other industries and business-to-business settings. The culture of agri-food firms is
comparatively specific so it might affect the nature of distributor’s relationships producer.
Hence, the relationships between firms and their distributors may be different in another
industry and region. So, we suggest testing the research in other industries in different
contexts.
Second, our research is limited by using the « seller side » method. We have collected data
only from the producers, and neglected the distributor’s perception. We used the method of
"Seller side" because it is the producers who develop loyalty strategies that are mostly
affected by our questions. So, this method has affected the validity of our research. We
suggest conducting « dyadic study » in future research to have a complete view.
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