EFFECT OF CUSTOMER RELATION MANAGEMENT ON CUSTOMER SATISFACTION: THE CASE

OF AMBASEL TRADING HOUSE PRIVET LIMITED COMPANY IN ETHIOPIA

By: AMINU ALEMU HASSEN

ID No. MBA 409/2014

Advisor: AshebirTekle (Ph.DCand)

A THESIS PROPOSAL SUBMITED TO THE SCHOOL OF POSTGRADUATE STUDIES IN

PARTIAL FULFILMENT FOR THE AWARD OF DEGREE IN MASTER BUSINES
ADMINISTRATION OF GAGE UNIVERSITY COLLEGE.

March, 2023

Addis Ababa, Ethiopia

TABLE OF CONTENT
 S
CHAPTER ONE............................................................................................................................................7
1. INTRODUCTION............................................................................................................................7
1.1. Background of the Study.....................................................................................................7
1.2. Statement of the problem.....................................................................................................2
1.3. Research question................................................................................................................4
1.4. Objective of the study..........................................................................................................4
1.4.1. General Objectives.................................................................................................4
1.4.2. Specific Objectives.................................................................................................4
1.5. Significance of the study............................................................................................5
1.6. Scope of the study......................................................................................................5
1.7. Operational Definitions of the Key Terms..........................................................................6
CHAPTER TWO...........................................................................................................................................7
2. REVIEW OF RELATED LITERATURE........................................................................................7
2.1. Theoretical concepts............................................................................................................7
2.1.1. Customer relation management theory..................................................................8
2.1.2. Customer Relationship Management – Implementing CRM...............................12
2.1.3. Role of Customer Relationship Management (CRM) in an Organization...........14
2.1.4. Effect of customer relationship management (CRM) on customer satisfaction. .14
2.1.5. Impact of CRM on an Enterprise.........................................................................15
2.1.6. Strategies for sacking customers..........................................................................16
2.1.7. Strategies for terminating customer relationships................................................16
2.1.8. Dimension of internal marketing..........................................................................17
2.1.9. Elements of CRM....................................................................................................20
2.2. Empirical Studies...............................................................................................................27
2.2.1. Foreign Studies.....................................................................................................29
2.2.2. Local Studies........................................................................................................30
2.3. Conceptual Framework......................................................................................................31
CHAPTER THREE.....................................................................................................................................33
3. RESARCH DESIGN......................................................................................................................33
3.1. Research Approach and Design..............................................................................................33

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3.2. Research Design................................................................................................................33
3.3. Data type and Sources.......................................................................................................35
3.4. Target Population and sample Size Determination...........................................................35
3.4.1. Target population.................................................................................................35
3.4.2. Sample size determination...................................................................................35
3.5. Sampling techniques..........................................................................................................36
3.6. Method of Data Collection................................................................................................37
3.7. Reliability and validity testing...........................................................................................38
3.8. Method of Data analysis.........................................................................................................38
3.8.1. Data Processing........................................................................................................38
3.8.2. Quantitative Data Analysis......................................................................................39
3.8.3. Qualitative data Analysis.........................................................................................39
3.8.4. Descriptive analysis.................................................................................................39
3.8.5. Correlation Analysis................................................................................................39
3.8.6. Simple Regression Analysis....................................................................................40
3.9. Ethical Considerations................................................................................................40
Annexes I. Reference...................................................................................................................................41
Annexes II. Time Frame.................................................................................................................................I
Annexes III. Proposed Budget......................................................................................................................II

LIST OF ACRONYMS

ATH PLC: Ambasel Trading House Private Limited Company

B2C: Business to Consumer Prospecting
B2B: Business-to-Business Prospecting

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 CRM: Customer Relationship Management
IT: Information Technology

LIST OF FIGURES

Figure 2.1: Five Pillars of new retailing……… …………………………………………17

Figure 2.2: Successful pricing strategy…………......................................................……28

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Figure 2.3: Conceptual Frame work-Effect of CRM on customer satisfaction…………32

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CHAPTER ONE

1. INTRODUCTION
This chapter deals with the background of the study the effect of customer relation management
on customer satisfaction and its statement of the problem, research questions, general objectives
of the study, specific objectives of the study, significance of the study, scope of the study,

1.1. Background of the Study

The concept of customer relationship management (CPM) is not new; even the earliest merchants
understand and apply CPM to build a good relationship with their customers and to keep them
coming back (Jobber, 2014)

In the business environment CRM is a known concept and every entrepreneur and executive of
any organization cannot afford to ignore this aspect for business sustenance and growth. The
influence of aspects like increasing demands of sophisticated customers, shortened product life
cycles and improvements in production/processing capacities elevated more aggressive
environment that companies operate. This has become more important to business sectors where
companies must address intangible products. Determining these tremendous challenges, business
organizations seek to provide valuable services to their customers. As companies’ business
strategies become more customer oriented with evolution of mass customization and personalized
business, information technologies are also used to serve customers (Lalitha, Prasad, Ravishanker
and sathishkumar, 2010).

In the early stage of commerce this was a much easier thing to do, the old mom-and-pop stores
are a good example of this, staff knew exactly who each customer were, and sales people knew
what customers preferred and also who could pay and who usually paid on time. However, when
firms grew, information about individual customers become lost among the masses. To deal with
the ever expanding customer bases, customer groups or segmented marketing was created, where
customers are put in slots that best fit their desires. Using these slots or groups of customers most
requirements and expectations could be me, but there is compromise on many desires as the
services are tailored to groups, not individuals. (Bose, 2012)

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To deal with this problem the term relationship management started surfacing around 2081.The
idea was to work more with direct customer relationships. Firms realized that this let them learn
more about and better tailor to their customers as well as create additional value for both their
customers and themselves. Relationship management is a group of methodologies and terms that
describes how corporations should strive for: long term relations, work with Quality goods strive
for goods strive for good customer service (BT Van, 2020)

After the introduction by Levitt in 1983 relationship management was rapidly accepted among
marketers. The popularity however soon fell as it was found that the information needed to work
R.M. was mostly missing as corporations were still much aimed at product and segmented
marketing (Peelen, 2005).

Interest was however rekindled during the 1990’s when organizations realized that customer
relations were something that had to be given more holistic views. It was found that customers do
not solely interact with the marketing department, but instead all parts of the organization. In both
business to consumer and business to business the entire organization needed to be aimed at
pleasing customers, not just marketing. Many organizations that had previously been built around
factories tried refocusing their attention on customers, aiming more on finding the 'right'
customers and creating relations in which both parties profited.(Bozkurt,2000)

However, the excitement about relationship marketing soon disappeared once again as it was
proving difficult to achieve good short term results it .The strategies and systems used to try to
keep these customer data bases also proved very expensive and tedious to maintain (Xu, Yen, et
al, 2002)

Toady CRM has been defined by many scholars in different ways. “ CRM is an IT enabled
business strategy, the outcomes of which optimize profitability, revenue and customer
satisfaction by organizing around customer segments, fostering customer satisfying behavior and
implementing a customer-centric process” (Gartner group,2008)

Another definition according to (Paul, Jonghand, Olefet al, 2003) CRM is philosophy and a
business strategy, supported by a system and a technology, designed to improve human
interactions in a business environment. It is also a continuing business initiative that demands a
dynamic, ongoing strategy of customer engagement (Paul, 2003)

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Olef.et, (2009) Saied that CRM received increased attention amongst practitioners and academia
during the last two decades and it is common that any new management or marketing philosophy
receives its own share of confusion, misunderstanding and myths. CRM is no exception, even
then it is considered as a powerful strategy to increase profitability of organizations and a lot of
investments are made on it by several organizations. Companies knew that they need to invest in
CRM for the better understanding of customers and respond quickly to their demand. (Paule et al,
2003)

Therefore the ultimate aim of CRM is to transform relationships into increased profitability by
reducing cost of customer acquisition and increase repeat purchases. According to Jongh, et.al
(2003) CRM is a broad term for managing interactions with customers. William,et.al(2005)
suggests that CRM can be understood as the implementation of specific technology solutions to a
holistic approach of managing customer relationships that simultaneously create firm’s and
customer’s value.

The fundamental reason for companies wanting to build relationships with customers is
economic. Companies generate better results when they manage their customer base in order to
identify, acquire, satisfy and retain profitable customers. These are key objectives of many CRM
strategies. Francis, (2009).

(Murphy and Murlhy, 2002) stated that when there is 5% improvement in customer retention, it
will results 25 to 125% increase in profit. Wills (2009) argued that to obtain new customers is
costly more than 5 times than to retain the existing customers. Furthermore, loyal customers are
helpful in increasing revenues in two ways. According to (Reichheld and Teal, 1996) First, loyal
customers are less sensitive to price and the premiums of loyal customers increase 8 % annually
in the personal insurance industry (JQ zhang). Second reason is that loyal customers make
frequent purchases, also purchases other products of the firm on trial basis and convince other
customers to buy from the same firm (Reichheld and Teal, 1996).

The fact that enterprises can be loyal to their current customers depends on their ability to
effectively manage their customer relationships. As customers became more active consumers,
enterprises had to pay for the mistakes they made in customer relationships. The most important
quality of the 1990's was that customers at that time realized that they had something to say and
listen to themselves. (Bozkurt, 2000) After the 2000s, with the increased use and effect of the

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Internet and such platforms as discussion groups, customers had the opportunity to be more
powerful and effective against the enterprises.

Therefore, enterprises can only succeed if they receive customer-based marketing. The
enterprises should pay attention to the following issues so as to improve their relationships with
customers: (Holloway, 2002) Recognizing the customers, Distinguishing the customers,
Listening to the customers, Making all sorts of contacts with the customers, Enterprise
identifying itself with the customer, Adapting to the customers. As a result, Customer
Relationship Management was considered to be an important means of establishing long-term
relationships with customers to maximize the profitability and productivity of the organization
and to utilize technology for this purpose.

Ambasel Trading House Private Limited Company (ATH plc) is one of the leading players in
import-export, wholesale distribution and business representation in the nation, established on
November 1994 G.C under the commercial code of Ethiopia.
Ambasel is a name behind the life of farmers and urban dwellers for more than two decades,
starting small and through time growing big. The business is operating in almost all over the
nation /with offices in 4 cities/towns, including the Headquarters in Addis Ababa and regional
offices; Bahir Dar and Dessie are the main branch and others ordinary branches are Gondar and
Adama and also there is one sesame processing unit in Gondar town, which produces tahini,
roasted sesame, hulled, & roasted sesame seed. Ambasel is a house cemented by a committed
management staff and a workforce of about 400 permanents and 50 temporaries.

The first market opportunities for the international market began with the agricultural export
products of oilseeds and pulses. ATH plc sells imported agricultural equipment and Merchandise
goods to different customers and consumers. The company's customers will have their own
understanding of the agricultural machinery and merchandise goods. Since the company has
significant weaknesses in market development and customer management, it is important to
identify the main characteristics of customers in terms of the benefits of the study and it is
appropriate to identify these features for further reinforcement to enable competitive advantage in
different market environments. Therefore, the proposed study will evaluate and reveal the actual
effect of customer relation management on customer satisfaction specifically in Ambasel trading
PLC and will fill theoretical and practical gaps on the company.

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1.2. Statement of the problem
CRM is a management approaches that enerchables organization to identify, attract, and increase
retention of profitable customers through improved relationship management (Hobby, 2013)
citedinRamkelawon, 2010). However, successful customer relationship management focuses on
understanding the needs and desires of the customers and is achieved by placing these needs at
the heart of the business by integrating them with the organization's strategy, people, technology
and business processes (Pritesh et al.,2010).

Customer relation management can also help in breaking down the barriers between departments,
something which can prove quite difficult, as in some firms there are even deep rivalries between
departments (Edward, 2007) Customer relationship management practice, particularly in the
business, has enormous problems. The main reasons for CRM to fail are:

(i) the assumption that the technology itself is the solution; in fact, technology is relevant only if
it is combined with strategic thinking;

(ii) Absence of managerial support arising from the paucity of information regarding the
opportunities afforded by CRM;

(iii) Deficiency of customer-oriented culture;

(iv) Dearth of a clearly-outlined master plan and goals;

(v) Lack of a process redefinition; (vi) insufficient information and low quality of data;

(vi) Faulty control of the processes of change at all levels of the company; and (viii) detached
behavior of those employing the system (CRM). (Strauss and Frost,2002)

The rapid technological development supplies an increasing number of tools that enables the
company to develop a better understanding of the behavioral patterns of its clients, apart from
gaining insight into their needs and inclinations. Having this information, it is the responsibility
of the company to modify and employ these tools to customize the marketing offers to suit each
customer sector. The researcher tried to cite published studies related to this study such as (Ayda,
2017), the effect of customer relation management on Customer loyalty, Addis Ababa University.
(Benaim,2018), Assessment of Customer relation management Practice, Addis Ababa University

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and(Linda, 2013), an assessment of the customer relationship management, St. Mary’s University
College.

The study, therefore fill in these research gaps in the existing literature by doing so, this, study
provide answer to those basic questions such as:

They strive to improve service delivery and customer focus, as set out in the Company's strategic
plan with competitive business objectives and core values. It is important to maintain market
share and make the service better, more competitive and to create a unique value proposition.
(ATH plc,2023) , strategic plan

In order to increase the productivity of the farmers, their company is supplying the products
mentioned to the union & customers because various industrial products such as Agricultural
equipment, spraying equipment, Sickle, water pump, pesticides and other pesticides are needed.
(ATH plc,2023) ,strategic plan

As mentioned the above, the company has a wide range of business sector, and it is necessary for
this study to cover only the electricity and electronics sectors. Because this sector connects with
customers throughout the year and provides maintenance and a variety of services to the
customer after sales, working in this sector was a great asset for both the analyst and the company
in the future.(ATH ,2023),strategic plan

Accordingly, the company had the following problems and concerns as it evaluated its sales
performance over the past year and before.

There is no follow-up on field visits as the work of the company requires extensive support and
monitoring, high prices of products which in turn due guanine products, unwise utilization of
resources, Lack of skilled labors, Annually sales & Profit volumes decreasing and The loyal
customers are being transferred to other competitors, Lack of leadership and staffing skills, lack
of staff capacity, lack of education and long-term training and leadership skills, and lack of
leadership and leadership skills and a lack of focus on strategic issues.(ATH plc ,2017-
2022)annual Report and strategic Plan

[The reasons for studying the problem are, The potential effect on customers if they do not get
the product or service they want from the company; the role of the product / service they provide
to their customers; It is important for the company to identify and implement special products

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that the company offers and to enable the customer as a whole to focus on the company's
products and services.(ATH plc ,2022)QMS document.

This study will be attempted to force the problems associated with the CRM on customer
satisfaction in ATH plc. The crucial success or failure of company depends on its CRM &
customer satisfaction, to see their company playing a leading role nationally in import and export
trade and customers number one Choices. Also, this study will be aimed to highlight the
significance of customer management, incorporating the idea of managing customer relationship
in the context of reselling the agricultural machines& merchandize goods with the sole intention
of retaining the clients and escalating the profitability of these companies

1.3. Research question

The study will seek to answer the following questions:
1. How to improve customer satisfaction & building long-lasting customer relations in ATH
plc?
2. How does customer relation management (CRM) affect customer satisfaction in the ATH
plc?
3. What is the relationship between Customer relation management and customer satisfaction in
ATH plc?
4. What are the challenges associated with customer relationship practices the in the ATH plc?

1.4. Objective of the study

Based on the stated problems, the following general and specific objective are formulated

1.4.1. General Objectives

The main aim of this study is to investigate the link between customer relation management and
customer satisfaction with particular reference to ATH PLC.

1.4.2. Specific Objectives

 To examine satisfaction& building long-lasting customer relationship in ATH plc.

 To determine the challenges associated with customer relationship practices in the ATH plc.
 To evaluate how customer relation management (CRM) affect customer satisfaction in the
ATH plc.
 To investigate the relative influence of CRM and customer satisfaction in ATH plc.

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1.5. Significance of the study
The outcome and results of the proposed study will have potential value to customer relationship
and customer satisfaction to ATH PLC. This study explores the relationship between customer
relationship management and customer satisfaction and provides in-depth knowledge,
understanding and direction.

The marketing manager of the company and the relevant sales staff can take help from this study
to develop good relationships with the customer if the employee and the manager are in charge of
customer relationship management within the company.

Customer Relationship Management is a very strong and well organized activity to maintain and
enhance relationships with customers. Developing strong relationships with customers is essential
for business development.

The management of customer relations was very important and appropriate, based on the
intangible and tangible value chain of the agricultural equipment and commodity companies. The
first thing customers sign up for in the service is communication. Markets need to be aware of the
importance of managing customer relationships and creating trust based on customer needs.
The study enables the researcher contribute meaningfully to the scientific knowledge, confirm
existing theories on customer relation management and customer satisfaction.
This work is carried out because recent research findings show that customers still complain of
ill-treatment by company customer care personnel and those entangled in service & product
deliveries. This means that in some organizations, the customer is not yet the king as the saying
goes that “the customer is king”.
Finally, it serves as an ideal indicator for interested researchers in this area of study, and also
serves as a strategic planning and marketing strategy for businesses and can be used as a resource
for designing customer-related policies in a leadership position.

1.6. Scope of the study

The proposed study will be focused on the effect of customer relation management on customer
satisfaction in ATH plc in order to attain its stated goals or elements align with customers &
employees.

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The boundary of the study will be only focuses on the head office of Ambasel Trading House
Private Limited Company (ATH plc.) found in Addis Ababa.

1.7. Operational Definitions of the Key Terms

Customer relationship management (CRM);Vella and Caruana (2012) defined CRM as the
integration of people, systems, and processes to achieve customer satisfaction throughout the
product life cycle. CRM describes the strategic management of customer relationships using
technological tools where appropriate (Frow, Payne, Wilkinson, & Young, 2011). The three main
subcomponents of CRM are operational CRM, analytic CRM, and collaborative CRM (Tohidi
and Jabbari, 2012).
Customer Satisfaction; is the degree to which business’s product or service performance matches
up to the expectation of the customer (Roberts-Lombard, 2009).
Trust; as existing when one party has confidence in an exchange partner's reliability and integrity
(Morgan and Hunt (2019)
Commitment; refers to the efforts by a bank and its employees to serve customers with the
desired levels of performance. It also reflects the bank’s values, attitudes and beliefs in terms of
the customer orientation and CRM efforts (Padmavathy et al., 2012, p. 260)).
Product Quality; Quality can be broadly defined as fitness for use or the extent to which a
product successfully serves the purposes of consumers (Juranet at., 2000/2009)
Customer value; Customer value is the perception what a product or service is worth to a
customer versus the possible alternatives. Worth means whether the customer feels s/he or he got
benefits and services over what s/he paid (Gautam 2016)

Competitive pricing; Consists of setting the price at the same level as one’s competitors (Gael,
2015)

Attraction; the Quality of attracting; Charm or The act or capability of attraction (Farlex 2003-
2020)

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 CHAPTER TWO

2. REVIEW OF RELATED LITERATURE

This chapter presents a review of literature on customer relationship management, and customer
satisfaction which form the basis of this study. The chapter discusses the theoretical foundation
and gives a summary of the research gaps which reveal the need for carrying out this study. The
chapter also proposes a conceptual framework, Theoretical concepts and Empirical studies.

Cho, et. al. (2013) explores the effect of client relationship administration on consumer loyalty
and loyalty. The study was performed at a departmental store in Tehran, Iran. The study utilized
quantitative approach. What’s more, based on 300 respondents. The primary discoveries of the
study demonstrates that conduct of the workers is fundamentally related and added to client
dedication compared to different components of CRM i.e. connection administration ,
relationship administration and administrations quality. Cho,et al (2013).

Hisham, (2011), in his study client relationship administration and its relationship to advertising
exhibitions guaranteed that there is a positive relationship in the middle of CRM and promoting
execution, for example, consumer loyalty and client reliability . Three noteworthy variables of
Customer relation management was tried in this study i.e. concentrating on the principle clients,
association productivity and client learning administration. The study presumed that all
components of CRM have positive association with consumer loyalty and satisfaction.

Delaney, K., Phelan, P., Delaney D(2005) examined the factors influencing clients as they
formulate their expectations. It investigates why product variation causes the final product
delivered to the client to vary from that expected. The paper also described some existing
approaches that are important for reducing the effects of variation and that help suppliers deliver
what customers really expect.(Delaney et. al,2005)

2.1. Theoretical concepts

According to Hunt (2002), the idea of theory is to enhance scientific understanding through
systematized structures capable of both explaining and predicting phenomena. This way of
looking at the purpose of theory emphasizes the importance of explanation in science. Indeed,
many philosophers of science maintain that the explanation of phenomena is the sine qua non of

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science: without explanation, there is no science. Furthermore, the philosophy of science views
scientific explanations as scientific answers to “why” questions (Fetzer 2005).).

2.1.1. Customer relation management theory

The literature regarding relationship marketing and CRM is vast and is discussed extensively
elsewhere (e.g. Das, Ganguly, Haldar, 2009; Ngai, 2005; Palmatier, 2008). Influencing elements
to form CRM as marketing practices in firm have been examined from different theoretical
viewpoint and have received significant attention. Literature for CRM has developed in parallel
with the relationship marketing literature (Plakoyiannaki&Saren, 2006; Shrivastava& Kale,
2003). Sin et al (2005) states that CRM is a comprehensive strategy and process that enables an
organization to identify, acquires, retain and nurture profitable customers. Additionally, CRM is a
core organizational process that focuses on establishing, maintaining and enhancing long term
associations with customers as advocated by relationship marketing (Shrivastava et al., 2002).
The comprehensive approach of CRM is to maximize the relationship with all customers. Beside
the technological advances, CRM also covers the activities of acquisition management and regain
management at the initiation stage, maintenance stage and termination management with the
purpose to maximize the value of relationship portfolio (Chen and Popovich, 2003; Dutu and
Halmajan, 2011). Hence, it is clear that CRM is not just a technology, but is a new way of doing
business, therefore Reynolds (2002) point out that the comprehensive definition of CRM might
be the business strategy, process, culture and technology that enables organization to optimize
revenue and increase value through understanding and satisfying the individual customer’s needs.

Chen and Popovich (2007) indicate that CRM has evolved from advances in information
technology and organizational changes in customer centric process. Thus the attention in
managing a successful CRM implementation requires an integrated and balanced approach to
technology, process and people (Chen and Popovich, 2003). Coltman (2007) also addresses the
concept and argues that CRM must be viewed as more than a tool but part of a deeply embedded
strategic disposition that enables business to outperform its rivals in competitive advantage.

Andrade (2003) believes CRM is based on the ability to facilitate communication and decision
making to provide consistent, high quality and cost effective service to all stake holders. From
individualized service perspective, CRM is a concept that enables an organization to tailor

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specific products or services to each individual customer. In the most advanced scenario CRM
may be used to create a personalized, one-to-one experience that will give individual customer a
sense of being cared for, thus opening up new marketing opportunities based on preferences and
history of the customer (Wilson, et al., 2002).

CRM, from the marketing perspective, is defined as a combination of business process and
technology that seeks to understand a company’s customers from the perspective of who they are,
what they do, and what they are like (Could well, 2000). This theme is also reflected by Kotler in
1999 by acknowledging customer relationship management as principally revolving around
marketing and begins with a deep analysis of consumer behavior. Furthermore, Bose,2002 &
McKenzie,2001 define CRM within the same perspective as an integration of technologies and
business processes used to satisfy the needs of a customer during any given interaction and a
combination of strategy and information systems, that aims at focusing attention on customers in
order to serve them better, respectively.

CRM is a set of business process and overall policies designed to capture, retain and provide
service to customers (Scott, 2001), or a coherent and complete set of process and technologies for
managing relationships with current potential customer and associates of the company, using the
marketing, sales and services departments, regardless of channel communication (Injazz and
Karen, 2004). According to Swift (2001), CRM is a process designed to collect data related to
customers to grasp features of customers and to apply those qualities in specific marketing
activities.CRM consists of three components such as Customer, Relationship and Managements

CRM is primarily a strategic business and process issue rather than a technical issue.CRM tries to
achieve a’ single integrated view of customers' and a ' customer centric approach'(Roberts, 2000).
CRM consists of three Components viz. i.e. customer, Relationship and management

Customer: The customer is the only source of the company’s present profit and future growth.

However, a good customer, who provides more profit with less resource, is allows scarce because
customers are knowledgeable and the competition is fierce. Sometimes it is difficult to
distinguish who is the real customer because the buying decision is frequently a collaborative
activity among participants of the decision- making process (Wyner, 1999)

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Relationship: The relationship between a company and its customers involves continuous bi –
directional communication and interaction.

The relationship can be short-term or long-term, continuous or discrete, and repeating or one time
relationship. Even though, customers have a positive attitude towards the company & its
products, their buying behavior is highly situational (Wyner, 1999)

Management: CRM is not an activity only within a marketing department. Rather it involves
continuous corporate change in culture and processes. The customer information collected is
transformed in to corporate knowledge that leads to activities that take advantage of the
information and of market opportunities. CRM required a comprehensive change in the
organization and its people.

Customer Satisfaction: many writers use the words quality and satisfaction interchangeably.
However, service marketers and researchers argue that there is a difference between the two.
Even if there are similarities, satisfaction is believed to be a much broader concept. The main
focus of service quality evaluation is assessment of service dimensions whereas satisfaction takes
in to account additional factors such as price and product quality (Zeithaml and Bitner, 2003).
Research has found that customers’ perceived evaluation of service quality has an impact on their
level of satisfaction, Therefore service quality evaluation is an antecedent to customer satisfaction
(Clow and Kurtz, 2003).

.For Kotler and Armstrong (2012) customer satisfaction depends on the product’s perceived
performance relative to a buyer’s expectations. This is in line with scholars thought which tied
customer satisfaction to an evaluation process and which entails a comparison of product
performance and some sort of a standard in relation to this performance (Duman, 2002).

The current thought suggests that consumers develop expectations and use them as standards to
compare with perceived product performance. Expectation is the service that the customer
anticipates. Expectation can be seen as a pre-consumption attitude before the next purchase: it
may involve experience, but need not. That customers’ expectations are formed by many
uncontrollable factors these include previous experience with other companies and their

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advertising, customers’ psychological condition at the time of service delivery, customer
background and values and the image of the purchased product. The result of this comparison is
termed as disconfirmation that can be both positive and negative based on this comparison.

Bolten and Drew (1999) shown both customer satisfaction/ dissatisfaction and perceived service
quality are postulated to be influenced by the gap between expectations and perceptions of
performance (i.e. disconfirmation).

According to (Muhammad Sabbir Rahman October 2012) perceived quality of a given service is
the result of an evaluation process since consumers often make comparison between the services
they expect with perceptions of the services that they receive. He concluded that the quality of
service is dependent on two variables: Expected service and Perceived service. Quality spells
superiority or excellence (Taylor and Baker, (Mordani, Sneha, 2021)

There are five key factors that influence a customer’s expectations: previous experience; personal
recommendation; personal needs; marketing communications; and the level of involvement in the
purchase (Mudie and Pirrie, 2006).

The five gaps that organizations should measure manage and minimize:

 Gap 1 is the distance between what customers expect and what managers think they
expect – Clearly survey research is a key way to narrow this gap.
 Gap 2 is between management perception and the actual specification of the customer
experience – Managers need to make sure the organization is defining the level of service
they believe is needed.
 Gap 3 is from the experience specification to the delivery of the experience – Managers
need to audit the customer experience that their organization currently delivers in order to
make sure it lives up to the spec.
 Gap 4 is the gap between the delivery of the customer experience and what is
communicated to customers – All too often organizations exaggerate what will be
provided to customers, or discuss the best case rather than the likely case, raising
customer expectations and harming customer perceptions.
 Gap 5 is the gap between a customer’s perception of the experience and the customer’s
expectation of the service – Customers’ expectations have been shaped by word of mouth,
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 their personal needs and their own past experiences. Routine transactional surveys after
delivering the customer experience are important for an organization to measure customer
perceptions of service.

Research suggests that the most important of these factors in shaping expectations are the
consumer’s past experience of the service and what other people say about it. Prior to using a
service, consumers may have in mind four different scenarios of the service that they might
experience: The ideal, the anticipated, the deserved and the minimum tolerable. The consumer
can expect any of these. As it is already stated expectations shape satisfaction. If the ‘minimum
tolerable’ is expected then this or anything better may lead to satisfaction. Equally, anyone
expecting the ‘ideal’ will be dissatisfied with anything less.

Customer satisfaction comes from the quality of service delivery that is expected by the
customers during the act of purchase and while being served. Customer satisfaction of a product
is often measured with specific attributes that describe the product features. In general, the
response to a satisfactory experience will contain both emotional and behavioral elements. So
customer satisfaction will result in positive emotional states. These, in turn, mediate the response
between customer satisfaction and behavioral responses – positive word of mouth, no complaint
behavior and repeat purchase. (Mudie,2006)

For customer centered companies, customer satisfaction is both a goal and a major factor in
company success. These and other companies realize that highly satisfied customers produce
several benefits for the company. They are less price sensitive, and they remain customers for a
longer period. They buy additional products over time as the company introduces related
products or improvements and they talk favorably to others about the company and its products
(Kotler, 2005).

2.1.2. Customer Relationship Management – Implementing CRM

Customer relationships are not built overnight. They pass through different stages namely
contact, involvement, intimacy, deterioration, repair, and dissolution. A relationship can ter-
minate at any of these stages. It is, therefore, essential to understand the stage at which it could
sell services efficiently. Cross-selling or up-selling can be attempted at certain stages to get better
results.

12
Recent research indicates that some of the behavioral traits, such as adaptation, trust,
commitment, communication, cooperation, conflict resolution, interdependence, past satisfaction,
and power equation pave the way to build relations and to sustain them over a long period.

Some essential factors that aid the building of a strong bonds between the customer and the
organization are—(1) adaptation, the companies need to tailor their resources to meet the specific
needs of the individual customer; (2) alignment of a firm’s resources with the customer’s needs is
directly proportional to the quantum of trust injected into the relationship, both by the firm as
well as its customer; (3) commitment, a firm has to be committed towards the customer for
nurturing a fruitful relationship; and (4) continuity of a relationship, which is the process of
communication and interaction extending into cooperation.(Francis al.,2009)

Total Customer experience

CONVENIENCE
EMOTIONS
SOLUTION

RESPECT

PRICING
Figure 2. 1: Five Pillars of new retailing

The three other dimensions of a customer-organization relationship are continuance, normative

components, and effective components. During this phase, disagreements that creep into the
business transaction are resolved. In the final analysis, it is the power equation—the ability of one
party to evoke a change in other partner that greatly influences the continuity of any relationship.

Berry (2001) did extensive research on dozens of retailers and found that it is not the techniques
of emailing customers, hidden cameras to observe customer behavior, or analysis of scanner data
to tailor special offers and manage inventory that can offer lasting solutions in this era of fickle
customers and price-cutting customers.

He has suggested creating value for customers in five interlocking ways (Fig. 33.2). According to
him, today’s shoppers want the total customer experience— superior solutions to their needs,
respect, an emotional connection, fair prices, and convenience. The seller has to offer all these
components together for the venture to be successful.

13
Today, behavioral science offers new insights into better service management, thus enhancing
customer experience in a service encounter. According to Chase and Dasu, (2001), in any service
encounter, from a simple pizza pickup to a complex, long-term consultancy engagement,
perception is reality.

2.1.3. Role of Customer Relationship Management (CRM) in an Organization

As indicated by Peppers and Rogers. 2004, Customer Relationship Management (CRM), defines
the what, in which customers’ needs to be served and subsequently it offers more helpful,
compelling and effective method for directing business. For fulfilling the needs and needs of
clients, Customer Relationship Management (CRM) is considered as one of the best strategies of
marketing as it includes holding and creating client relationship. (Berry and Parasuraman,
1991).Firms considers Customer Relationship Management (CRM) as one of the innovative
technological tool and data forms which help them to have better association with customers
(Rogers 2005). As indicated by Liu. 2000, expanded quality to customers, is considered as the
primary objective of customer relationship marketing. A fruitful usage of Client Relationship
Administration permits an association and the general population working in the association, to
have an all-encompassing perspective on each client of the association. (Massari and Passiante,
2002).

Velnampy and Sivesan (2012), demonstrated that Customer Relationship Management is an

extremely valuable device in the present period, and the objective of CRM can be accomplished
by customers and their needs better and treating them in such way, which will at last expand
customer steadfastness for an association.

A few studies that were led previously, expresses that Customer Relationship Management is
viewed as an import method to make solid customer relationship and make an in number and
positive picture for customers. (Krasnikov et al. 2009); (Amoakoer al. 2011).Passiante, 2002).

2.1.4. Effect of customer relationship management (CRM) on customer

satisfaction
As indicated by Chime and Tang (1999), adaptation of Customer Relationship Management
(CRM) is considered to have incredible potential, as instrument for directing business and dealing
with the exercises of a business. Consumer Satisfaction is considered as a consequence of

14
effective CRM execution. Because of the current aggressive commercial center, customers are
turning out to be more demanding and the desires and expectations of customers are ascending in
a rapid growth. ( Mordani, Sneha, 2021).). Firms, particularly banks have understood the need of
being client situated and has in this manner adjusted to the device, known as Customer
Relationship Management (CRM). CRM has turned into an imperative device for the Banking
Industry, as Consumer Satisfaction has gotten to be one of the center variables of success. (Luke
Brynley –Jones, 14, 2012). Banks are adjusting to new systems with a specific end goal to gauge
Consumer Satisfaction, and they are considering this measure as an essential stride for holding
and drawing in new clients. (Ayaat El-Battawy, 2012).

As contended by Reinartz and Kumar (2003), Customer Satisfaction is a marker of an effective

Customer Relationship Management (CRM) usage, in light of the fact that unsatisfied customer
of an association may change to option association over the long haul.

Customer Relationship Management is actualized in association to decrease cost and expand

execution, and in this manner results in expanded benefit and more consumer satisfaction.
(Bhattacharya. 2011).Long et al. (2013) focused on that Customer Relationship Management
(CRM) Components has a tremendous effect on Consumer Satisfaction and Dependability, as
CRM is a procedure adjusted by associations to increase upper hand. As expressed by Wang and
Lo (2013), the model of Customer Relationship Management has two points of view. The
primary Point of view measures client conduct and the second viewpoint measure customer
satisfaction and dependability. Faed (2010) proposed a structure, which expresses that Customer
Relationship Management increases associations association with its client. He likewise
expressed that Satisfying the customer and customer satisfaction are the two primary components
in an effective Customer Relationship Management implementation.

2.1.5. Impact of CRM on an Enterprise

Customer relationship management has a number of positive effects on an enterprise. It provides
management with a clear picture of the business, thus facilitating decision-making. Using a
common architecture and data model, customer information can be shared faultlessly between the
front-end staff facing the customers to deliver services and the back-office staff who structure the
deals.

15
Front-end staff can profile a customer, create, and maintain a customer account with contacts,
manage activities, and explore business development possibilities. (Francis, 2009)

2.1.6. Strategies for sacking customers

 Raise prices: customers can choose to pay the higher price. If not, they effectively
remove themselves from the customer base. Where price is customized this is a feasible
option. When banks introduced transaction fees for unprofitable customers many left in
search of better deal.
 Unbundle the offer: you could take a bundled value proposition, unbundle it, reprice the
components and reoffer it to the customer. This makes the value in the offer transparent,
and enables customers to make informed choices about whether they want to pay the
unbundled price.
 Respectively the product: this involves redesigning the product so that it no longer
appeals to the customer(s) you want to sack.
 Reorganize sales, marketing and service departments so that they no longer focus on
the stackable segments or customers. You would stop running marketing campaigns
targeted at these
 Introduce ABC class service: you could migrate customers down the service ladder from
high quality face-to-face service from account teams, to sales representatives, or even
further to contact Centre or web-based self-service. This eliminates cost from the
relationship and may convert an unprofitable customer into profit. In a B2Ccontext, this
equates to shifting customers from a high-cost to a low cost service channel. (Francis,
2009)

2.1.7. Strategies for terminating customer relationships

Empirical evidence on how companies terminate customer relationships is sparse. However, one
study of German engineering companies reports that very few firms have a systematic approach
to managing unprofitable customers. Most respondents confirm that unprofitable relationships are
commonplace; indeed, a fifth of firms have a customer base more than half of which is not or not
yet, profitable. Companies fall into three clusters in respect of the customer-sacking behaviors:

1. Hardliners take an active and rigorous stance in terminating unprofitable relationships,

including the regular clearance of their customer portfolio. More qualitative implications,

16
 such as a potential loss of trust in relationships with other customers or negative word of-
mouth, do not seem to hinder their willingness to sack unprofitable customers.
2. Appeaser stakes a more cautious approach concerning the termination of un profitable
relationships, above all due to strategic considerations such as not playing customers into
competitors’ hands.
3. The undecided are reluctant to terminate unprofitable relationships, mainly because they
fear the costs of attracting new customers.(Francis ,2009)

2.1.8. Dimension of internal marketing

Motivation : can be defined as the self- generated factors, that affect people to behave in a
particular way or to move in a particular direction includes responsibility, freedom to act, scope
to use and develop skills and abilities, interesting and challenging work and opportunities for
advancement (George and Sabapathy, 2011). Mohsan et al. (2004) found, a significant
relationship between employee motivation and employee commitment. Warsi et al. (2009)
indicated that the work motivation is strongly associated with organizational commitment.
George and Sabapathy (2011) also argued that organizational commitment and work motivation
are interrelated.

In most organizations the situation is that the customers are highly demanding of employees
while the employees in turn hold high expectations from their jobs as sources of self-
actualization and self-development (Rafiq and Ahmed 1999). Here internal marketing sought to
increase employee motivation by focusing on treating the job as internal product and try to sell it
to the employees.
Safety: refers to ensuring that the building, property, medical and information technology,
equipment, and systems do not pose a physical risk to patients, families, staff, and visitors.
Security. (Zakirul, 2016)
Communication: is defined as “the consumer’s perception of the extent to which a retailer
interacts with its regular customers in a warm and personal way”. Such an interaction is reflected
in the feelings of familiarity and friendship, personal knowledge, and the use of the client’s
family name and/or first name on the sales spot (Naoui and Zaiem, 2010). Also communication is
defined as the formal as well as informal exchanging and sharing of meaningful and timely

17
information between buyers and sellers (Sin et al, 2002). Communication refers to the ability to
provide timely and trustworthy information. Today, there is a new view of communications as an
interactive dialogue between the company and its customers, which takes place during the pre-
selling, selling, consuming and post consuming stages (Anderson and Narus, 1990). According to
Aeeni et al (2013), the manner of applying of communicative mechanisms is essential in order to
enhance knowledge, skill and awareness of employees from issues related to their jobs.
Training: According to Al-Hawary et al (2013), training is defined as the accusation of skills and
attitudes required to perform specific tasks. The employees should be trained and developed in
such way that they get to understand the organization’s objectives so that they can handle the
tasks delegated to them perfectly. According to previous researches continuous efforts are needed
to ensure effective and adequate training is provided to employees in order to achieve
organizational goals with higher degree of commitment, confidence and satisfaction towards their
organization (Bulut&Culha, 2010).
According to Dowlig and Welch (2004), this dimension of internal marketing has effect on
employees’ commitment as employees feel that they work for providing more trainings and
development programs concerned about their future capacity and make them up-to-dated to the
current and future demands of the work they do and will do.

Information Technology: Information technology (IT) has long been recognized as an enabler
to radically redesign business processes in order to achieve dramatic improvements in
organizational performance (Davenport and Short, 1990; Porter, 1987). Information is critical for
product tailoring, service innovation, consolidated views of customers and calculating customer
lifetime value. Among others, data warehouses, enterprise resource planning (ERP) systems, and
the Internet are central infrastructures to CRM applications. (Chen &Popovich 2003).

CRM Benefits Companies employ CRM to develop stronger relationships with customers
Josiassen et al. (2014) found that firms who have strong relationships with customers perform
better than those who do not. However, companies can achieve many other benefits from using
CRM practices. Some examples of benefits include enabling communication, providing timely
Feedback, analysis of customer information, and providing customized product offerings
(Josiassen et al., 2014). Some of the most obvious benefits of CRM include customer retention,

18
increased cross-selling Opportunities, increased customer acquisition, and the addition of
profitable customer (Oztaysi et al., 2011).

CRM practice
This study includes the analysis of customers view in maintaining CRM practices, their opinions
on requirement of CRM practices by the service providers and their intensions regarding
satisfaction, retention, repurchase and in referring to new customers and the enhancement which
can be made through good relationship management practices. Added to it the opinions of people
who are likely to have close contact with customers like dealers and employees with customer
contacts are analyzed. Analysis of demographics and their effects are also made.(Reicheld
et.al(1990)2.1.9 Barriers of customer satisfaction
Most companies for that matter have realized the need to offer customer service to other
customers. But most often, this is just on paper. The actual service or the quality of the service is
most at times not present as promised. This often leads to customer dissatisfaction.

Meanwhile, customer service interactions can often be frustrating, and client requests can
frequently appear demanding, there may be barriers in your organization that might make
reasonable consumer requests seem excessive. Companies therefore need to understand the
barriers to customer satisfaction and take that into consideration in order to satisfy their
customers. The barriers may range from management, environment, self, processes or systems,
and communication. Enyonam,(2011)Some of the specific barriers to customer satisfaction
include:

 Poor Accountability
If the staff is not held accountable for customer service, there is no reason for the staff to try
harder to make sure customers are happy.

Your staff can always place the blame elsewhere and know they can never get in trouble for
letting a customer leave unhappy (www.entre-propel.com/customer-service).

 Insufficient Systems
If the systems used in working with clients perform poorly, are slow, contain insufficient data or
doesn’t track your client data appropriately, there will always be problem.

19
Customers will get frustrated very quickly if the turnaround time is long. Therefore they may
start looking elsewhere (www.entre-propel.com/customer-service)

 Communication of Customer Value

Customer satisfaction is the responsibility of everybody in the organization; from the Manager to
the cleaner.

All staff members must always be reminded of how valuable customers are, so your staff knows
how to treat clients in the appropriate and valued manner.

Lack of appropriate incentive to staff who give clients outstanding service. If they are not
motivated, they have no reason to go that extra mile for your customers.

Provide rewards, both monetary and non-monetary to ensure your staff is motivated and
empowered enough to want to service your clients to the best of their abilities
(http://www.ehow.com).

Lack of Understanding about Customer Needs If there’s no data; it is easy to make the claim that
you are customer-centric. But it’s just words. Information leads to the realization that there is a
gap between what your company is doing and what your customers are experiencing. Once this
gap is surfaced, management is faced with a lot of uncomfortable decisions about what to change.
Reliable information can lead to meaningful innovation that will find greater customer
acceptance and market success.

2.1.9. Elements of CRM

According to this study, there are six critical elements of Customer Relationship Management (CRM).
The elements are as follows.

Trust, commitment, attraction, values of customers, Product Quality& Competitive pricing

Play an important role in relationship markets. As in relationships between people or

organizations, especially in business relationships, whether they are big industrial cooperation or
supply chain organizations, it is commonly agreed on that related partners in business need to
have a high degree of commitment to achieve and maintain success in their relationships. Mutual
commitment plays an important role in a relationship, due to its significant benefit for companies

20
and widely considered as the most advanced phase of partner’s interdependence (Wetzels, de
Ruyter& van Birgelen 1999.)2.1.10.1 Trust

Trust isa belief in the reliability. In other word, it is one party expectation that other party will
behave in a certain predictable way in a given situation. If the other party doesn´t behave in an
expected way, then the trusting party (customer) will face the more negative situation. The trust
concept can be divided into four categories. First is generalized trust; this trust is derived from
social norms. The second is system trust is depending on the laws, contract and industry
regulation. The third is personality-based trust and this is based on a human tendency to rely upon
another person to behave in an expectable way according to expectations because of personality
trends. The last one is a process- based trust follows from contacts and experience that have been
taken place over a time an ongoing relationship between two parties. (Grönroos. 2007.)

2.1.9.1. Commitment
It is one party in a relationship feels motivated to do business with another party it is also
defined as a long-term desire to maintain a valued relationship. A customer is committed to a
supplier similarly expected loyalty from the supplier or service provider. The manufacturer may
feel committed to repair and maintenance provider who has consistently proved that it can offer
skillful and timely service of its production machines. Here if a supplier has taken extra trouble to
do so, then beside the excess demand for its service at some point the sense of commitment has
become even deeper. (Grönroos 2007) Commitment always relates to trust and trust is to be
considered the most critical and key factor for developing commitment among the partners.

Trust and commitment being two highly interrelated notions for success of any partnership that
stimulate a relational bond between the parties. Further, it leads to improvements in efficiency,
productiveness and effectiveness, when existing simultaneously (Chu & Fang 2006.)

2.1.9.2. Attraction
It is a third key concept in relationship marketing. It means there should be something which
makes supplier or service provider interesting to give the customer. (Gronoroos, 2007)

Attraction can be based on the financial, technological or social factor. A globally operating
accounting expert may find large firm affiliations in various countries an attractive potential
customer, which offers large financial opportunities. Manufacturer of the latest technology for a

21
manufacturing process is an attractive partner for a manufacturing firm. Similarly, social contact
highly appreciated may become a base for good relationship that can lead to a business
relationship. If attractions between two parties exist there is a basis for a relationship to develop.
If there is a lack of attraction the parties was probably not start doing business with each other
(Grönroos .2007) Law of attraction is one of the important principles to utilize in business to
success. Law of attraction can be understood by understanding that like attracts like. This means
a person realizes it or not he/she was responsible for bringing both negative and positive
influences into lives.

Customers are smarter, more price conscious, more demanding When Products are not conducive
to them and offered better products from competitors.

According to (Cristiana BOGDĂNOIU spring 2009), it is not to produce satisfied customers because
several competitors can do this but is to produce delighted and loyal customers. This means
Customers are not only to be satisfied with products and services but must be retained in the
company. Companies seeking to expand their profits and sales have to spend time and resources
searching for new customers.

To start, the company develops adverts and places them in media that will reach new prospects, it
also sends direct mail & makes phone calls to attract new prospect

According to Gitomer(2007), to attract new prospects, the company can use;

A Product development:
Which involves the development of new products for existing market in order to?
i. Meet changing needs of customers
ii. Mach new Competitive offerings
iii. Take advantage of new technology.
iv. Meet the needs of Specific market segment; product is appropriate When Changing
needs and tasks results in the emergence of new segments or when competitive
and technological changes motivate firms to modify their product lines.
a. Packaging: Is the development of a container and graph for a product. It is all the
activities involved in designing and producing the container or wrapper for a product.
b. Promotions: It is the use of any short term incentives to encourage customers to interact
with the company.

22
 c. Advertising: Is a paid form of non- personal communication about a company, its
product or its activities and used to inform, persuade & remind.

2.1.9.3. The Value of the Customers

A fundamental tenet of customer relationship management is that organizations win by attracting
and keeping the most valuable customers. The most important assets of the firm are long term
customers. Firms should know the long-term value of their individual customers. The lifetime
value of the customer should be measured which will help the organization to realize the
importance of keeping the existing customers. To understand the worth of the customer it is
important to think broadly about the ways in which customers add value to the firms.
Recognizing the value of a customer will lead to better decisions about how to expand the
business activities. Most businesses understand the costs of acquiring a customer, but they are
unaware of the costs of losing a customer. There are several reasons behind the customers stop
doing business with the firm, such as uncertainties of moving away, not understanding the value
of the customer’s death and so on. Poor service, poor goods, and the quality which does not meet
the customer requirements are often the results of the giving the value of the customers away.
Here value does not refer to the price it refers to the perceived benefits stood to be gained in the
context of price. Based on the appropriate understanding of the customer situation and needs firm
should create the essential values (Gupta, Lehmann & Stuart 2004.).

Customer value and value of the customers in business have a different interpretation and that
should not be confused. Customer value refers to what the customer gets in a product or service
whereas the value of a customer in business is the stand which keeps the company in running a
business. The primary aim of the business organization is to make a clear attempt in creating
customer value in order to attract and retain customer to deliver quality as well as the superior
value of the business to the customers. Implementing an effective marketing strategy concept by
offering qualified goods and services of the company will meet and exceeds the expectations of
customer needs better than other competitors. (Jobber &Chadwick, 2012).For the long-term
survival of the company and for the success customer value can be taken as an important
prerequisite. In this competitive market, understanding the way of the customer´s judgment and
value a service or a product has been crucial. Although the research of the customer value in
many areas stands still it has already generated a lot of fruitful insights into the value creation
process from customer and company perspectives. (Jobber & Chadwick, 2012)

23
The value of the customers could not be gained at once services need to be enhanced. And one
should always remember that prospective customers may become profitable in future. Value of
customers includes:- Improvement of quality, enhancement of quality, prompt action,
improvement of productivity, customer relationship and cost management are the major factors to
be considered regarding to get the value from the customers. (Jobber & Chadwick,2020)

2.1.9.4. Product quality

The Product Quality literature is expensive and addresses the quality issues that companies
encounter throughout the life cycle of the product, from its design stage through production and
delivery to the market (Garvin, 1999; Reeves and Bednar, 1999; sebastianelli and Tammimi,
2002)

The overarching definition this research favors is that quality can be broadly defined as fitness for
use or the extent to which a product successfully serves the purposes of consumers (Juran.et al,
(2000/2009).

Therefore, four factors are more specification when describing the quality of a product are
excellence, value, conformance to specifications and meeting or exceeding consumer expectation.
(Reeves and Bednar, 1999)

2.1.9.5. Competitive pricing

Competitive pricing strategy is a pricing policy based on the use of competitors’ prices as a
benchmark to set prices. This type of strategy is often referred to as competition-based or
competitor-based pricing. In most cases, the business comes to a competitive pricing strategy
after a cost-plus approach turns out to be no longer relevant. (Robert,2019)

Competitive pricing analysis is an evaluation of the consumer’s reaction to new prices by means
of research based on historical data or poll. Most often, price analysis examines customers'
response to a price without considering the costs and potential profits for the business.
Why is a Competitive Pricing Strategy Important for Pricing Analysis? (Robert, 2019)

According to Forrester Consulting, 81% of buyers compare the offers of several stores in search
of a better bargain. Retailers that can collect and analyze market data, map their position against
competitors, and offer optimal prices are the companies that catch these buyers’ eyes first and
foremost.(Robert,2019)

24
Competitive pricing is a strategy which helps businesses attracts more customers by optimizing
prices using competitor product and pricing data. A successful pricing strategy can significantly
increase sales, result in better cooperation with suppliers, and boost revenue

Figure 2.2: Successful pricing strategy

Creating a competitive pricing strategy from scratch is no easy feat. Many factors revolving
around data, such as parameters and quality, must be carefully considered. Companies must
decide whether they will utilize automation within their pricing process and if so, to what extent.
Lastly, they also must thoroughly study their competitors to obtain a better understanding of their
place in the market in order to truly excel in it. (Robert Howells, 2019)

2.1.10. ATH plc customer relation management Document review

ATH will be monitored customers’ perceptions of the degree to which their needs and
expectations have been fulfilled and determined the methods for obtaining; monitoring and
reviewing this information.
Process Steps Description

 Identifying & Listing Customers

 Determine feedback monitoring method
 Collecting information and feedback
 Organizing & analysis of information
 Reporting customers satisfaction monitoring results
 Identifying & Listing Customers
 The plan will be periodically adjusted to account for the status and importance of
customer satisfaction with respect to particular aspects and availability of the

25
 information and methods for collecting it. Customer satisfaction monitoring should be
conducted at least once per year.
 Based on customer satisfaction monitoring plan marketing & sales will be responsible
for identifying & listing immediate customers i.e. customers with whom there will be
direct contractual relationship from customer Order Registration Logbook. The
ultimate customers/the final service users having no direct contractual relationship can
also be considered.
 Determine feedback monitoring method
 Market development Team should determine the methods(S) of monitoring & using
information relating to customer perception as to whether the organization has met
customer requirements. Measures such as service quality requirement, delivery,
price, etc. Should also be determined.
The focus areas, scope, resources and program for collecting customer satisfaction
information should also be determined. Information on customer satisfaction will be
acquired from customer feedback and by analyzing customer behavior through on or
more of the following ways:
a) Scheduled customer satisfaction survey questionnaires, sent directly to customers
Covering service aspects that should be relevant to customer satisfaction such as;
 Adequacy of product’s functional, performance and other design features
 Packaging & labeling
 Delivery performance against schedule Product information
 Availability Sales and order processing
 After sales support and service Price, etc.
b) Focus group meetings within the customer’s organization such as with top management,
marketing, purchasing and quality assurance through conferences or organized events/forums
such as customer day, etc.
c) Monitoring customer complaints such as overall number of complaints, the
 Up/downward trends, and distribution of complaints by type of customer, location
as well as nature of complaint covering all service scopes, warranty, after sales
support etc.
d) Monitoring data recorded from routine calls from departments and services, and

26
e) Any other method determined by top management.

 Collecting information and feedback

 The Market Research Officer Should Collect information and feedback regarding
customer satisfaction through customer satisfaction Survey Questionnaires or
focus.
 Organizing & analysis of information

 The Market development Team all collected information and feedback regarding
customer satisfaction through customer survey, analyzing customer complaints,
focus group meeting outcomes or other means indicating the level of customer
satisfaction are analyzed using appropriate statistical tools according to procedure
for data analysis,

 Reporting customers satisfaction monitoring results

market development Team Results of the analysis indicating the scope of the assessment,
attained customer satisfaction levels in all customer categories, statistical measures
indicating capability to meet customer requirements, comparisons with results from
previous times if any, etc.Are compiled into Customer Satisfaction Report, to be
presented to top management for management review according to Management review
procedure.

2.2. Empirical Studies

The following studies will be review to help identify the topic of customer relationship
management to address the basics of this research and to address the gaps in customer satisfaction
research.

All of the aforementioned studies had an impact on customer satisfaction management and found
that building relationships with customers is an important factor in maintaining a customer.
Companies that will be build relationships with their customers and manage them well are more
successful in their efforts to retain their customers. Most studies have been identified customer
relations as an important contribution to customer satisfaction. Here under the researcher reviews
some important issues which are directly related to the investigation under study. According to
Kapoor (2010), the many benefits of CRM include:

27
1. Better identification of customer needs.

The process of CRM helps to identify the customers’ needs and requirements in a more effective
manner. Businesses are able to deliver better products and services to their customer.

2. Improved sales.

CRM helps to identify and anticipate the needs and desires of the customers in a better way and
prior to those business that do not have an effective CRM. This leads to increased sales, as
companies that have an efficient CRM bring innovative and beneficial products into the market.

3. Enhanced cross-selling.

Effective CRM helps to increase the selling of other products that are directly or indirectly related
to the main product. The business can highlight and suggest substitutes and enhancements of the
main product that is desired by their customers.

4. Helps to categorize the customers.

An effective process of CRM helps to categorize and differentiate between the customers that are
profitable for the business from those who are unprofitable for the business.

5. Improved communication.

An efficient process of CRM aims towards successful communications that is targeted and aimed
at customer needs. Thus, there is an improved communication between the business and the
customers.

6. Development of innovative products and services.

CRM is quite a personal approach and leads to the design and development of innovative and
improved products as well as services. This surely will help the business to get profits in future.

7. Enhanced customer satisfaction.

Effective CRM aids to enhance customer satisfaction towards the business and its products.
Satisfied customers can be successfully retained for long time periods without making much
effort. This will surely ensure good reputation of the business both in the marketplace and in the
minds of the customers.(Kapoor(2010)

28
2.2.1. Foreign Studies

Rewanur(2015),“Impact of Customer Relationship Management on Customer Satisfaction. A

study on the Banking Industry of Malaysia, has one independent variable and one dependent
variable, customer relationship management is the independent variable of this study, where
customer satisfaction is the dependent variable. The independent variable of this study has been
divided into four sub variables or segments, empathy, equity, trust and commitment.

The research concludes that:

 There is a relationship between customer relationship management and customer

satisfaction. Customer Relationship Management and Customer Satisfaction have a strong
relationship between them, as customer relationship management is used by organizations to
increase their customer satisfaction.
 There is an impact of Customer Relationship Management (CRM) on Customer Satisfaction.
The impact of customer relationship management on customer satisfaction, results in an
increase in customer satisfaction, according to the finding of this study.
There is impact of CRM on Customer Satisfaction, in the Banking Industry. Banks adapt
the tool known as Customer Relationship management, in order to make their customers
more satisfied. According to this study, the banking industry of Malaysia has
implemented customer relationship management (CRM) properly, which is resulting into
increase in customer satisfaction.
 There is a positive impact of Trust on Customer Satisfaction, and trust is strongly correlated
to customer satisfaction

Special attention should be given from banks management to technological and physical
environment.

(Egilla, 2018), “Customer relationship management (CRM), customer satisfaction, Customer

relationship management (CRM), customer satisfaction, loyalty and port performance: a case
study of Kenya Ports loyalty and port performance: a case study of Kenya Ports Authority (KPA)
Authority “A case study to examine the role of customer relationship management (CRM) in
generating customer satisfaction and loyalty and its impact on port performance. Increased
globalization has seen to ports taking up new roles as dynamic business networks.

29
This study suggests that KPA implement CRM which will enable the port enhance its quality of
services and customer value so as to enhance customer satisfaction and loyalty.

Data is collected through survey questionnaires from KPA employees and customers. Regression
analysis using SPSS is used to analyze the relationship between the variables.

The research concludes that:

The main findings and implications of this study will be approached based on the research
questions provided.

 Maintaining beneficial relationships with customers through CRM.

 Relationship between CRM, Customer Satisfaction and Customer
 Relationship between customer satisfaction, loyalty and ports performance?
 How service encounter and technology enhance port’s performance.

2.2.2. Local Studies

As the researcher try to refer local published studies in this area he find few.

Ayda (2017) “The effect of customer relation management on Customer loyalty''

The researcher used the descriptive Explanatory research design more specifically, the study tried
to see the relationship of CRM with Trust, Commitment, conflict handling, and Communication
& Primary data was obtained through structured questionnaire from customers selected banks i.e.
CBE and ZB. A convince non probability sampling technique was used to sample between
banking firms.

The research concludes that:

 The researcher could be concluded that CRM effect dimensions namely: Trust,
communication, conflict handling, commitment & Competence have positive significant
correlation with the dependent variable customer Loyalty.
 Conflict handling & Competence to be antecedents that are found to predict loyalty and
emphasize them in their marketing strategy.
Biniam (2018), “Assessment of Customer relation management Practice: The case of
Dashen Bank"

30
 The researcher used a descriptive design and quantitative data were employed to address
the objective. Both primary and secondary data were used. The quantitative data were
collected through a structured questionnaire and document review.
The research concludes that:
 According to the respondents in the Dashen Bank, it can be said that the conveniences
& physical Appearance of the branches are good, especially the bank modern and
updated infrastructure, employees’ protocol, the layout of the bank is very good.
 There is no convenient parking space for the customers in most branches.
 Employee’s behavior, Relationship development & Reliability of the bank is very good
and most respondents accept positively than any of other question. Especially the
employee’s courteousness, assurance about the facilities and services provided by
Dashen bank, cash transaction system trustworthiness and about error-free transactions
and records are very good.
 Employees and management team customer visiting character was observed as
significant weakness.

2.3. Conceptual Framework

The Figure below, illustrates the conceptual framework of this proposed study. The Framework
has been adapted from the study conducted by (Beaumont and Leland 1999),Velnampy and
Sivesan (2012). Conceptual framework is a graphical or diagrammatic presentation of the
relationship between variable in a study, it helps the researcher to see the proposed relationship
easily and quickly, in this proposal, Customer Relationship Management is the independent of the
framework and customer satisfaction is the dependent variable. As Customer Relationship
Management (CRM) is the independent variable in this study, the variable has been divided into
sex sub variables or segments. Trust, commitment & attraction, Quality of service, Quality of
Product, Competitive pricing &Trust, commitment and attraction are the seven sub variables or
segments, which are added together or joined together to establish or measure Customer
Relationship Management (CRM).

31
 Trust

Commitment
C Customer Satisfaction
Attraction
R
Quality of
M Product

Competitive
pricing

Customer value
Figure 3-Conceptual frame work Adopted from Velnampy and Sivesan (2012)
Independent Variables and Dependent Variables

 customer satisfaction is the dependent variable

 Customer Relationship Management (CRM) is the independent variable in this study.

32
 CHAPTER THREE

3. RESARCH DESIGN
This chapter outlines the research methodologies adopted in order to answer the research
questions detailed in chapter one. It looks at the proposed study research approach, It covers the
research design, population, sample size and sampling techniques, source of data, instruments
used for gathering data, procedures, method of data analysis and ethical considerations are
discussed.

3.1. Research Approach and Design

Research approach is descriptive in nature. Descriptive studies are usually the best methods for

collecting information that demonstrates relationships (Walliman, 2001)

Please organize your writings using the following procedures.

3.2. Research Design

A research design is a plan, structure and strategy of investigation so conceived as to obtain
answers to research questions of problems. Qualitative research will be considered to collect and
analyses data. Research strategy is a general plan of how to answer the research questions that
have been set. The most important thing is to look for the strategy that is appropriate for the
research question(s) and objectives to be chosen (Saunders et al. 2009).

According to Saunders et al. (2009), Survey method is a popular and common strategy in
business research. It enables large amount of data to be collected from an ideal population and in
a highly economical way. Often, questionnaires were used and data are standardized, it is easily
understood and easy to compare.

This method tends to gain a deeper understanding for the problems investigated through different
sources of information, as well as to be able to describe a general picture of the reliability in
which the problem is involved (Walliman, 2005).

The aim of this proposed study has been to analyze the effect of CRM on customer satisfaction,
identify gaps and describe the effects of Customer relation management and customer satisfaction
in ATH plc

33
Descriptive research design
The descriptive research design; Are those researches, which concentrates on relating and
examining issues, and finds out the relationship between the present phenomena. (Cho, et
al.,2013). Descriptive research is also known as statistical research, where scope and depth of the
study is covered.

According to Pilot and Hurgler (1999), descriptive survey aims predominantly at observing,
describing and documenting aspects of a situation as it naturally occurs rather than explaining
them. Gay (1999) opined that, descriptive design describes and provides understanding of a
phenomenon usually with simple descriptive statistics. Gay (1999) further explained that, the
descriptive survey method is useful for investigating a variety of social problems including
assessment of attitudes, opinions, demographic information, conditions and procedures; and that
descriptive data are usually collected through questionnaire and interview. Therefore, the
proposed study will be adopted in quantitative and qualitative approach on the CRM on Customer
satisfaction in ATH plc Quantitative research method and explanatory in nature will be used to
quantify the problem by generating data that can be transformed into usable statistics, which has
been through distribution of structured, non-structured, detailed questionnaire and Interview

Qualitative Methodology

Qualitative Methodology; is an approach for exploring and understanding the meaning

individuals or groups ascribe to a social or human problem. The process of research involves
emerging questions and procedures, data typically collected in the participant’s setting, data
analysis inductively building from particulars to general themes, and the researcher making
interpretations of the meaning of the data. The final written report has a flexible structure. Those
who engage in this form of inquiry support a way of looking at research that honors an inductive
style, a focus on individual meaning, and the importance of rendering the complexity of a
situation (Newman & Benz, 1999).

34
3.3. Data type and Sources
The source of data ultimately determines the validity of the research. It will be believed that all
employees ‘of the Supply & Sales marketing department are well conscious about the customer
relation management of ATH plc. The researcher will be used both primary and secondary data
sources, the Primary data will be collected through open, close ended questionnaires and a
personal interview has employ. Secondary data will be also, collect through written documents
on corporate strategies, different reference books, journal articles, Internet web sites, policies,
procedures, and document reports from ATH plc Company will be referred. The information that
has been obtained by using both instruments will be integrated during data presentation and
analysis phase.

3.4. Target Population and sample Size Determination

3.4.1. Target population
A population is a group of individuals, objects, or items from among which samples are taken for
measurement (Singh, 2007).The target population for this study have Customers, employees of
the two business sectors. The population of the two important business companies that work, in
one way or the other, on internal & external customers has takes part in the study.

3.4.2. Sample size determination

The sample size of the proposed study will be 150 respondents that the target population has been
divided into subgroups and respondents pick randomly from each group. Under this study, the
target populations has compos of 70 currently and related And from the total customers
population 700 by 10% such a purposive sampling from this A sample size of 10% has justifiable
since according to Orodho (2003) 10%-20% of the sample gives unbiased representation of all
respondents’ opinion in the target population and this assists in generalization of research
findings when the study design is descriptive. Whole total population target here under the table
shows that in Ambasel Trading House Pvt. Ltd. Total target is 76 sample populations. Who are
working in the Electric & Electronics supply & sector at head office Addis Ababa including four
branches Addis Ababa, Dessie, Bahr Dar, and Gonder. It will be intended to collect the data in
the company's electricity and electronics supply and sales department, and the customers 70
respondents, 76 employees & 4 managers .Thus, a population of the proposed study will be the
customers and employees for these supply and sales unit and branches staffs. Therefore,

35
considering the size of the population has small, the target population has been 150 in general, it
used to address fully through census.

Table 3.2. 1: population size at ATH P.L.C in the sales marketing Unit

TYPES OF BRANCHES AND External Internal TOTAL

DEPARTMENT Customers Employees Managers POPULATION
SIZE
Electric & electronics Supply and Sales 13 64 4 79
sector(AA)
Dessie Branch (Electric & electronics 25 4 29
supply and sector)
Bahr Dar Branch(Electric & electronics 22 4 26
supply and sales sector)
Gondar Branch( Electric & electronics 10 4 14
supply and sales sector)
Total 70 76 4 150

Source: Own computation; based on ATH P.L.C Manning (2022)

3.5. Sampling techniques

The sampling method that has been employed in this study that will be used for purposive
sampling because of Purposive sampling is a non-probability sampling approach that conforms to
certain criteria. Non-probability method mostly involves judgment, instead of randomization;
participants are selected because they are easy to access (Andale, 2015). From this point view
researcher has been selected as judgment sampling because of the respondents are somehow
specific in CRM professional customers & employees.
Purposive or judgmental sampling is a strategy in which particular settings persons or events was
selected deliberately in order to provide important information that cannot be obtained from other
choices (socialite. In 2021).
The sampling techniques which are used to select from the target subject for the qualitative data
gathering are discussed below.
The researcher might be select departments from the one organization to gain insight through
ATH plc, from this company including the Supply and sales department managers.

From here on out, total of 4 respondents from the company will select for the key informant
interview.

36
The researcher will be prepare yes/no Questions, short answer questions &Likert scale. In
Questionnaire method, that will be the researcher also, distributes such forms to the people to
whom s/he deems appropriate

Totally, the sample population of the study has been ATH plc 4 interviewee participants and
questionnaire respondents =146, total populations size from =150 populations.

3.6. Method of Data Collection

To obtain data concerning the impact of CRM on customer satisfaction, the researcher will be
employing both primary and secondary data sources for the study.

The selection of appropriate data collection method is important for gaining success in the
research. There is a number of data collection methods used in research, however, the data
collection method is different for primary and secondary data collection methods.

For the purposes of gathering primary data for this research report, the proposed study
questionnaires will be prepar, to collect through Primary data based on structured
questionnaires. Structured questionnaire will be used to collect primary data from respondent, by
focusing on the research objective; the questionnaire will be adopted to extract customers’
experience regarding the customer relationship management elements towards their customer
satisfaction to ATHplc. The questionnaires will be consist of two parts. Part one will be prepared
to gather general information about the respondents’ Part two will be prepared to ask respondents
to answer customer relationship management and customer satisfaction questions. This part
consists of questions and measures the effect of customer relationship management on customer
satisfaction which is both employees & Customers dimensions. To gather primary data during the
study of structure question that will be prepare in English and translated to Amharic (local
language) for the customers to understand the questionnaire and then translat it back to English
for the analysis.

In addition, secondary information would be collected through the case studies from the previous
articles or other research and company websites. Pickard A, (Facet 2007) and Driscoll and
Brizee., 2017

All items in Sections used a five-point Likert-type scale ranging from Strongly Disagree (1) to
Strongly Agree (5). A five point Likert type scale ranging from 1 (one being strongly disagree) to

37
5 (five being strongly agree) is a widely used rating scale which requires the respondents to
indicate a degree of agreement or disagreement with each of a series of statements or questions .
(Album, 1999).

The independent variable is customer relationship management and it will be measured by six
dimensions that are trust, commitment, Attraction, Quality of Product, Competitive pricing and
customer value and The dependent variable is customer satisfaction and it will be measured by
the feelings of customers’ satisfaction towards their Company branches for customers and also,
the same too employees have been included.

3.7. Reliability and validity testing

Content Validity: Ndubisi and Wah (2005)? Standard questionnaire will be used with minor
adjustment. Each attribute will be derived from relevant literature to ensure the validity of the
questionnaire.
Reliability refers to the consistency or dependability of a measurement technique (Andrich, 1981;
Leary, 2004) more specifically, reliability is concerned with consistency or stability of the score
obtained from a measure or assessment techniques over firm and across setting or conditions
(AnastasiUrbina, 1997; White &saltz, 1957).
Reliability can be equated with the stability, consistency, or dependability of a measuring tool.
Cronbach’s alpha is one of the most commonly accepted measures of reliability. It measures the
internal consistency of the items in a scale.
The Normal range of Cronbach’s Coefficient alpha value ranges b/n 0-1 and the higher value
reflects higher degree of internal consistency. (Sekaran, 2003)

3.8. Method of Data analysis

3.8.1. Data Processing
In this study the researcher will use Quantitative and Qualitative method in order to provide an
extensive explanation on the subject matter.

Data analysis will be done based on SPSS and Microsoft Excel to generate quantitative reports
through tabulations, valid percentages, and frequency distribution. Version 24.00 and descriptive
statistics will be used to analyses and present results. Tables and graphs has been used to present
responses and facilitate comparison.

38
3.8.2. Quantitative Data Analysis
For analyzing the quantitative data collected from the customers of the ATH PLC, the statistical
analysis will be used to obtain via Questionnaire & document analysis and the results will be
present in the graphical and tabular form.

3.8.3. Qualitative data Analysis

The qualitative data will be collected from the managers of the ATH plc through Descriptive
analysis.

3.8.4. Descriptive analysis

It is used to summarize the demographic characteristics of the respondent and to know the level
of employee perception of performance appraisal based on the response for each item and
analyzed by comparing the “mean” and “standard deviation” score of each variable. According
to Zaidaton&Bagheri (2009) the mean score below 3.39 was considered as low, the mean score
from 3.40 up to 3.79 was considered as moderate and mean score above 3.8 was considers as
high as illustrated below.

Table 3.3 Comparison bases of mean of score of five point Likert scale instrument

Mean Score description

<3.39 Low
3.40 -3.79 Moderate
>3.80 High

3.8.5. Correlation Analysis

It is used to show the strength of the association between the variables involved. Inter-correlations
coefficients (r) have calculated by using the Pearson’s Product Moment. According to Cohen (1998 as
cited by Warokka and Gallato, 2012), the correlation coefficient (r) ranging from 0.10 to 0.29 may be
regarded as indicating a low degree of correlation, r ranging from 0.30 to 0.49 may be considered as a
moderate degree of correlation, and r ranging from 0.50 to 1.00 may be regarded as a high degree of
correlation. Field (2006) also state that the output of correlation matrix can be the correlation coefficient
that lies between -1 and +1 within this framework, a correlation coefficient of +1 indicates a perfect
positive relationship, and a correlation coefficient of -1 indicates a perfect negative relationship; whereas a
coefficient of 0 indicates no liner relationship. While, for correlations purposes, the descriptors developed

39
by Resources, March 28, 2014, as cited by Alwadaei, 2010) the interpretation of strength of correlation
coefficient is shown in table 3.4

Table 3.4 Interpretation of strength of correlation coefficient

Value of coefficient Relation between variables

0.70-1.00 Very strong association
0.50-0.69 Substantial association
0.30-0.49 Moderate association
0.10- 0.29 Low association
0.01-0.09 Negligible association

3.8.6. Simple Regression Analysis

Regression is the determination of a statistical relationship between two or more variables. In
simple regression, we have only two variables, one variable defined as independent is the cause
of the behavior of another one defined as dependent variable. Since the correlation result provides
only the direction and significance of relationship between variables, simple regression analysis
will be done to examine the contribution of Customer Relation Management System and
employees Satisfactions in service delivery of ATH Plc (Company) and to assess the extent of
relationship between independent and dependent variable of the study.

3.9. Ethical Considerations

Ethical conduct states that it is the responsibility of the researcher to assess carefully the
possibility of harm to research participants, and to the extent that it is possible, the possibility of
harm should be minimized (Bryman& Bell, 2007).Every questionnaire that have been sent out be
attached to a cover letter which clearly that will be explained the purpose of the survey. The
questionnaire will not require the names of the respondents; this will be protected their identity
and remain anonymous. As a result, the employees aware from the beginning what the researcher
was done, why and where the information will be gathered, why it will be collected.

40
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 Annexes II. Time Frame

No Activity Duration CommencementCompletion

1 Preparing thesis proposal 2 weeks Feb 14 Feb 22

2 Literature review 2 weeks Feb 22 Mar 5

3 Submission of draft Proposal March 10

4 Collecting feedback from Advisor 1weeks March 12 March 17

5 Submission of Final Proposal 1 weeks March 17 March 22

Data collection and Administer2 weeks March 21 April 2

6 questionnaire

Data screening, encoding, entry, generating1 weeks April 4 April 9

7 preliminary analysis and interpretation

8 Writing draft 2 weeks April 10 April 20

9 Submission of first Thesis draft to Advisor 1 days April 21

Collect feedback and restructuring final1 weeks April 21 April 28

10 draft

1. 11 Submission of final thesis 3 days April 30 May 3

2. 12 Final Thesis Defense Workshop May 10 May 20/2023

Annexes III. Proposed Budget

No Expense Item Amount (Birr)

1 Travel 2800

2 Telephone card 2000

3 Photo copy 1600

4 Print and CD 3000

5 Stationary Materials 5000

6 Miscellaneous 3000

7 Contingency (15%) 2,269.57

Total 17,400.00

II