EFFECT OF RELATIONSHIP MARKETING ORIENTATION ON CUSTOMER LOYALTY: A SURVEY OF STAR-RATED HOTELS IN NORTH RIFT, KENY

Abstract

With business rivalry getting fiercer, the most pressing issue that organizations must address is how to gain customer loyalty and maximize client lifetime value. The focus of Relationship Marketing Orientation is on building, developing, and maintaining a positive customer relationship exchange. The fruitful relationship with customers is expected to increase customer loyalty. Nonetheless, due to the competitive environment's dynamics, the building and maintenance of client loyalty is becoming increasingly difficult. As a result, it is necessary to assess the extent to which relationship marketing approach and its parts of practice have a substantial and positive impact on client loyalty. As such, this study sought to evaluate the adoption of relationship marketing orientation and its effect on customer loyalty using a census of survey of fourteen (14) star-rated hotels in North Rift Region of Kenya. The objectives included to: establish the effect of service quality, customer emotions and customer perceptions on customer loyalty in these star-rated hotels. It also examined whether hotel characteristics moderated the effects of the relationship marketing orientation on customer loyalty. The study was informed by three theories, namely Social Exchange Theory, Assimilation Theory and Equity Theory. A cross-sectional research design was used to randomly sample 384 guests using a Multi-Stage Sampling Method from the hotel guests who visited the hotels between January and June 2019. Data was collected using a questionnaire that was issued to the respondents. The reliability of the questionnaire items was tested by use of Cronbach Alpha Coefficient with a coefficient of 0.7. The validity of the questionnaire items was evaluated using expert reviews. The findings were presented using descriptive and inferential statitistics. Descriptive statitics entailed summarizing the data and Multiple Linear Regression analysis was used to test the hypothesis on the effect of relationship on Customer Loyalty. The moderating variable of hotel characteristics was used in the moderated Multiple Linear Regression. The study found that service quality, customer emotions and customer perceptions had a significantly strong positive relationship with customer loyalty, with β coefficient values of 0.326, 0.248, and 0.829, respectively, at p<0.05. The overall significance of the model was R

vii 2 =0.612, P<0.005. The hotel characteristics (size, star-rating and location) were found to have a significant effect in moderating the effect of Relationship Marketing Orientation on customer loyalty. Therefore, the study concludes that service quality, customer emotions and customer perceptions would have significant positive effect on customer loyalty and the outcomes would vary with hotel characteristics of size, star-rating and the location of the hotel. Therefore, the study recommends that, to gain customer loyalty, hotels need to continuously improve on their service quality, customer emotions and customer preceptions. Further, to gain from hotel characteristics proprietors should ensure the hotel is easily accessible, and they should obtain favourable star-rating and continue growing their business capacity to meet customers‘ expectations.