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Published by: Allied Business Academies
Originally published in: "Journal of International Business Research", 2011
Length: 18 pages

Abstract

Marketers contend that customer satisfaction, customer loyalty, and market share are important marketing effectiveness outcome variables in assessing firm's competitiveness. This study explores these variables in Kuwait banks by interviewing three hundred thirty mutual funds investors. The authors, using path analysis, present a variety of findings as they pertain to the banking industry. First, the expected significant positive relationship of customer satisfaction with loyalty is found to exist, although the actual effect size is minimal. Second, the expected significant positive relationship of loyalty with market share is strongly supported. Third, a moderate significant relationship between satisfaction and market share exists, though the relationship is negative in nature and contrary to expectations. It appears that, within this product-market, loyalty, which is at least partly derived from customer satisfaction, is a major determinant of market share and should be a major focus of any marketing program. However, satisfaction, while having a small positive influence on loyalty, seems to have an important and undesired - negative - relationship with market share. Thus, it appears that market share is dependent on banks creating and maintaining a large and loyal customer base, which partially evolves from satisfying those customers. But, banks having the largest levels of satisfaction in the customer base seem to have the smaller market shares, possibly indicating that service levels are significantly better in smaller share banks. Therefore, if larger share banks could improve their levels of service enough to upgrade customer satisfaction levels, then loyalty figures should increase, which should then be followed by increases in market shares.

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Abstract

Marketers contend that customer satisfaction, customer loyalty, and market share are important marketing effectiveness outcome variables in assessing firm's competitiveness. This study explores these variables in Kuwait banks by interviewing three hundred thirty mutual funds investors. The authors, using path analysis, present a variety of findings as they pertain to the banking industry. First, the expected significant positive relationship of customer satisfaction with loyalty is found to exist, although the actual effect size is minimal. Second, the expected significant positive relationship of loyalty with market share is strongly supported. Third, a moderate significant relationship between satisfaction and market share exists, though the relationship is negative in nature and contrary to expectations. It appears that, within this product-market, loyalty, which is at least partly derived from customer satisfaction, is a major determinant of market share and should be a major focus of any marketing program. However, satisfaction, while having a small positive influence on loyalty, seems to have an important and undesired - negative - relationship with market share. Thus, it appears that market share is dependent on banks creating and maintaining a large and loyal customer base, which partially evolves from satisfying those customers. But, banks having the largest levels of satisfaction in the customer base seem to have the smaller market shares, possibly indicating that service levels are significantly better in smaller share banks. Therefore, if larger share banks could improve their levels of service enough to upgrade customer satisfaction levels, then loyalty figures should increase, which should then be followed by increases in market shares.

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