The theoretical and practical world.

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Chapter 1


1.1 Overview

This chapter preliminary aims to introduce background, research objectives, scope of the study and the significance of this research in the theoretical and practical world. This chapter is organized into eight sections. After the overview, the section 1.2 describes the background of the topic, i.e. CRM general perspective and IT application, development and some issues in CRM. Section 1.3 outlines the research questions and its objectives; the section 1.4 draws scope of the study. The section 1.5 and 1.6 run through the methodology and the significance of this research from theoretical and practical perspective. Following them the section 1.7 sketches the organization of the entire structure of the research. In the end, to wrap up a brief synopsis of this entire chapter is portrayed.

1.2 Background to Research

In an intense competition market environment, where the traditional marketing is insufficient to achieve a sustainable competitive advantage, the relationship between companies and customer might become a new competitive mean for differentiation (Gronroos, 1997). As a result of new marketing concept, many companies realize the importance of generating experiences that meet or exceed the customer's expectation in order to acquire and retain customers.

It is important to determine if service quality is maintained while consumers take advantage of e-commerce benefits and how the e-merchants achieve customer retention on the web via a systematic customer relationship management with the application of the internet technology. CRM has become a key process in strengthening customer loyalty and helping businesses obtain greater profit from low-value customers. The manner in which companies interact with their customers has changed tremendously over the internet. Customers no longer guarantee their loyal patronage, and this has resulted in organization attempting to better understand them, predict their future needs, and decrease response times in fulfilling their demands (Nemati et al, 2003).

ECRM derives from CRM techniques that leveraged call centre and direct marketing technology to market mass-produced goods and services to small market sub-segments. eCRM expands on this technology by using next generation segmentation and analysis technologies, comprehensive customer interaction data, multi channel communications and one-to-one interactions to market customized products and services to ever-more precise segments (Microstrategy Inco., 2003). The eCRM business process can be mapped to the following integrated activities.

  • Designing an interaction based on relevant information
  • Personalizing every interaction
  • Reaching the customer at the appropriate place and time
  • Facilitating the interaction and closing the ensuring transaction.

(Dyche, 2001), mentioned two types of eCRM; operational and analytical. The above integrated activities are in accordance to the operational eCRM application type, which is more concerned with the contact of customer and organizations. However, the analytical eCRM is processing the data during and after this operational type to analyze and profile customer behavior.

1.3 Research questions and research objective

Research problem of the study can be stated as follows:

What is the relationship of e-CRM strategy on Customer loyalty?

The research problem can further be divided into two sub-questions, which will help in solving the main research problem. The sub-questions are:

Whether does e-CRM strategy enable customer loyalty?

Whether will service quality, which developed through e-CRM strategy, enhance customer loyalty?

The purpose of this research is to examine the relationship between electronic customer relationship management and customer loyalty. The specific objectives of this study are:

  • To investigate the effectiveness of e-CRM strategy on customer loyalty
  • To determine whether service quality, which developed through e-CRM strategy, will enhance customer loyalty.

1.4 Scope of the study

This research will specifically focus on investigating the relationship of customer relationship marketing strategy on customer loyalty based on information technology of supermarket industry in the UK. Many supermarkets have developed web based strategies to attract customers, Tesco and Sainsbury's, two major supermarket chains in the UK, have implemented customer schemes and provide their customers with loyalty cards and use of IT resources. The loyalty cards, web based attractions, and in-store electronic gadgets (Self service checkouts, information kiosk etc) are used in order to encourage repeat purchases by offering rewards, while at the same time gathering data. The aim of these loyalty schemes are the achievement of customer loyalty and also the enhancement service quality.

1.5 Research Methodology

The basic purpose of this research is to provide information to assist in research to gain knowledge and to understand the problems. The question under discussion is related to people attitude towards the loyalty. Taking this point into consideration, this investigation is an exploratory research, with the aim to test relationship between relationship marketing and building customer loyalty based on Information systems in the UK supermarket industry. The strategy selected to carry out this research is on case study using two organizations Tesco and Sainsbury. The approach for this study is quantitative, as to analyze people behavior; researcher used survey to ask questions and having their response. The logic of this research is on deductive approach to see the relation between the research questions. The secondary data would be collected from the books, journals and online resources.

This research will conduct 100 questionnaires, 50 of Tesco and 50 of Sainsbury's will be selected as the sample in this study. As for the pilot study and for the accuracy of the questionnaire sample questionnaire would be emailed to friends and associates who use online services. Before the questionnaire will be given to respondents, the researcher will ask pre-screening questions whether they have the store loyalty card.

After the data collection and its editing and coding, statistical tools Statistical Package for Social and Sciences (SPSS) would be used to test the hypotheses and to assess the characteristics of the data. As the study is to see the relationship, Correlation Analyses will be used to demonstrate the strength and the direction of the relationship. Kolmogorov-Smirnov will be employed to check the normality of the distribution of scores. Scatterplots will be used to check the validation of the assumption of linearity.

1.6 Significance of the Research

The research not only targets the issue but can lead to understand and add-on to the best practice available in the supermarket industry. We hope that this research may have a significant value in assisting leaders in business management software (e.g. SAP, Microsoft Dynamics, SALESFORCE etc.) to replicate best practices for organizations to carry out their operations more scientifically and with prudent approach. Moreover, our research findings may strengthen the understanding of IT managers on how to utilize online information systems to effectively build and maintain high-level customer loyalty, customer satisfaction, and customer retention and consequently achieve success in sales, services and marketing sectors, gain and maintain competitive advantage. It could lead in the improvement of revenues and profitability, employees' productivity and minimizing overall expenditures.

From the theoretical point of view, this research would help us understand the research question in detail and provide a platform for further research.

1.7 Structure of the study

This research consists of five chapters. The first chapter presents preliminary introduction from many aspects. It includes background o research, research methodology its significance and much more. The second chapter reviews the relevant literature concerning the subject of the research and the hypothesis model. The third chapter includes the detailed methodology. The fourth chapter presents the data analysis and the testing of the hypothesis. And finally, the fifth chapter concerns with the discussion of the findings, the limitation of the study and the managerial implication and provides recommendation for further research.

1.8 Chapter Summary

To summarize what we have done in this chapter, is introduced the research topic, its background, how it will be conducted and what are the significant importance it has for future researches. Moreover, entire framework of the research presentation is outlined chapter wise in the structure of the study.


1.1 Overview


Research Questions & Research Objectives

Scope of the Study

Research Methodology

Significance of the Research

Structure of the Study

1.8. Chapter Summary