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UNIVERSITY OF GHANA 
RELATIONSHIP MARKETING AND CUSTOMER LOYALTY IN 
THE GHANAIAN HOSPITALITY INDUSTRY 
BY 
GEORGE CUDJOE AGBEMABIESE 
10080795 
Tms THESISIDISSERTATION IS SUBMITTED TO THE UNIVERSITY OF 
GHANA, LEGON, IN PARTIAL FULFILMENT OF THE REQUIREMENTS 
FOR THE AWARD OF A MASTER OF PHILOSOPHY (MPHIL) DEGREE 
IN BUSINESS ADMINISTRATION (MARKETING OPTION) 
JUNE 2009 
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DECLARATION 
I, GEORGE CUDJOE AGBEMABIESE, do hereby deelare that this thesis eonsists of my 
own work supervised by Dr. Dedman Narteh and Mr. Prinee Kodua, and that this work 
has neither in whole nor in part been presented to this university or any other institution 
for the award of any degree. In plaees where references to other people's work have been 
made, cited or their views adopted, fuD acknowledgements have been given. I also hereby 
aeeept fuD responsibility for any lapses that may result from this study•  
...... ~.:. ........... . ...."~  . .4.--...-....0...9... ..-.....Q... .9... ..... . 
George Cudjoe Agbemabiese Date 
(Stadent) 
o;..~ ...g....s....-..-.....e...c...t.r..-..6...1... ....... 
Date 
(Joint supervisor) 
~..... 0::::::~.:.:.:.:. . :~. ...... ~ ..~.....i.....~Mr.PrineeK .....l.....l.....b.....~... 1. . ... . 
(Joint Supervisor) Date 
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DEDICATION 
WfO WHOM MUCH IS GIVEN, MUCH IS EXPECTED" 
I dedicate filii work to Diy wonderful aad beloved parents, Mr. aad Mrs. AgbelUbiese, 
through whose effons aad toB I have reaehed this far in life. 
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ACKNOWLEDGEMENTS 
The preparation and submission of this thesis could not have been possible without the support 
of certain personalities and for which they deserve my gratitude. 
My greatest thanks go to the Almighty God for the strength. protection. and wisdom He has 
imbued in me that have made it possible for me to complete this work successfully. I wish to also 
register my profound appreciation and gratitude to my able supervisors and mentors, Dr. Bedman 
Narteh and Mr. Prince Koduah for painstakingly supervising the work. Their comments and 
guidance at every stage of the work were very insightful and useful. I also thank all the senior 
members of the Department of Marketing especially the head of the Department, Mr. Robert 
Hinson, for their immense support. 
My sincere thanks also go to the staff of the various hotels for assisting me with all the necessary 
information I needed to make this work a success, and all the customers who responded to the 
questionnaires. I say God bless you all. 
I also acknowledge the support of some key individuals, most especially Mrs. Kate Laryea, 
George Quaynor, and Mrs. Gladys McKenzie for contributing in diverse ways to making me 
what I am today. I am most grateful to all of you for everything. 
My sincere thanks also go to my three lovely brothers for their unflinching support both 
financially and physically throughout the research period. I say to them God bless you. 
Finally, I appreciate the help of my colleagues during the entire period of the programme 
especially George Adu-Asare, Priscilla, Joseph, Victor and Maame Yaa. You are all great 
colleagues. 
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ABSTRACT 
Relationship marketing bas become a buzz word in academia and industry due to its 
acclaimed benefits of attracting and retaining customers. The hospitality industry in 
Ghana is one sector where relationship marketing practices have not been well 
researched. This study was thus motivated to address this research gap. 
The main purpose of this study was to examine the relationship between relationship 
marketing and customer loyalty in the Ghanaian Hospitality (hotel) industry. Specifically, 
the study was meant to examine the extent of relationship marketing practice in Ghanaian 
hotels, the relationship between relationship marketing, customer satisfaction and 
customer loyalty as well as examining the practical challenges hotels in Ghana face in 
implementing relationship marketing as a strategy to win customer loyalty. 
Data was collected using a questionnaire derived from previous studies as well as the 
current literature reviewed. These questionnaires were administered and completed by 
three hundred (300) customers often rated hotels (ranging from 2-star to 5-star hotels) in 
Ghana. In-depth interviews were conducted with sales managers, marketing managers 
and sales executives of the sampled hotels. Data was analyzed using the Statistical 
Package for Social Science (SPSS) to assess the impact of six key constructs of 
relationship marketing; namely, competence, trust, commitment, communication, conflict 
handling and relational bonds (social and financial), on customer loyalty. 
The research findings revealed that all the six relationship marketing constructs 
(competence, trust, commitment, communication, conflict handling and relational bonds 
(social and financial) jointly have a significant and positive effect on customer loyalty in 
the hotel industry in Ghana. However, contrary to Ndubisi (2007) findings, this study 
found that, out of the six relationship marketing constructs, four (trust, competence, 
commitment, and relational bonds (social and financial) had significant impact on 
customer loyalty when the variables were tested individually. The study found that 
Communication and conflict handling were not significantly affecting customer loyalty in 
the Ghanaian hotel industry. The findings of the research also revealed that not all loyal 
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customers are satisfied customers. The study also discovered that even though Ghanaian 
hotels are relying more on relatioosbip l1181t:etiog as a strategic tool, their efforts are 
mostly cbaUenged by a number of factors such as high cost of building and maintaining 
relationships, low level of management support. lack of manpower and relevant skilled 
personnel, data capture and maintenance. cuts in government expenditure and lack of 
customer 1rust This research therefore reasonably concludes that hotel managers can win 
the loyalty of their customers when they increase their commitment to satisfying 
customer needs. become more trustworthy. communicate more effectively with 
customers, build stronger relational bonds with their customers and improve their 
competence levels. 
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Table of eontents 
Declaration 
ii 
Dedication 
iii 
Acknowledgements 
Abstract iv 
Table of Contents vi 
List of Figures xi 
List of Tables xi 
List of Abbreviations xii 
CHAPTER ONE: BACKGROUND OF THE STUDY 
1.1 Background of Study 1 
1.1.1 The need for R.M in Ghana's Hospitality industry 2 
1.2 Statement of Problem 4 
1.3 Justification for the study and research gap 4 
1.4 Objectives of the study S 
I.S Research Questions 6 
1.6 Significance of the study 6 
1.7 Organization of the study 7 
CHAPTER TWO: LITERATURE REVIEW 
2.0 Introduction 9 
2.1 Relationship marketing evolution 9 
2.2 Growth ofr elationship marketing 13 
2.2.1 Rapid technological advancements 14 
2.2.2 Adoption of total quality management programmes 14 
2.2.3 Growth oft he service economy IS 
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15 
2.2.4 0rgaDisati0nal development process and empowerment 
IncIeased competition and concern for customer retention 16 2.2.5 
16 
2.3 Concept ofre1alionship DUIlketing 
22 
2.4 Cbaracteristics ofr elationsbip marketing 
22 
2.4.1 Long-term orientation 
Commitment and fulfillment of promises 23 2.4.2 
2.4.3 Customer share, not market share 
23 
2.4.4 Customer lifetime value 
24 
2.4.5 Two-way dialogue 
24 
2.4.6 Customization 25 
2.5 Benefits of relationship marketing 26 
2.5.1 Organizational benefits 27 
2.5.2 Benefits accruing to customers 28 
2.6 Barriers to effective relationship marketing 30 
2.7 Customer Loyalty 32 
2.7.1 ConceptuaIising Customer loyalty 33 
2.7.2 Attitudinal loyalty (Loyalty as an attitude leading to a relationship 
with the brand) 36 
2.7.3 Loyalty mainly expressed in terms of revealed behaviour 37 
2.7.4 Loyalty based on individual's characteristics and circumstances 
and/or the purchase situation (loyalty based on contingency factors) 39 
2.7.5 Customer Loyalty in Related Literature of Relationship Marketing 42 
2.7.6 Implications for practice of the various models of customer loyalty 44 
2.8 Conceptual fiamework 45 
2.8.1 Relationship Marketing Practices 46 
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54 
2.8.2 Customer Loyalty 
55 
2.8.3 Relationship Marketing and Customer Loyalty 
2.8.4 Relationship Marketing, Customer Satisfaction and Customer Loyalty 57 
CHAPTER THREE: MEmOOOLOGY 
3.1 Methodological overview 61 
3.2 Research Design 61 
3.2.1 Model Estimation 63 
3.3 Sampling Design 63 
3.3.1 Determination of sample size 64 
3.4 Method of data collection (Questionnaire design) 67 
3.4.1 Unit of Analysis 69 
3.4.2 Data collection 69 
3.5 Data Analysis Techniques 71 
3.6 Research Limitations and Practical Challenges 72 
3.6.1 Ethical considerations 72 
CHAPTER FOUR: PRESENTATION AND DISCUSSION OF RESULTS 
4.1 Introduction 74 
4.1.1 The Hospitality & Accommodation Industry in Ghana 74 
4.1.2 Regulatory Framework: The "New Hannonized ECOWA S Standards" 76 
4.1.3 Market Analysis and Overview 76 
4.1.4 Demand Analysis 77 
4.1.5 Customer Needs Assessment 78 
4.1.6 Supply Analysis 78 
4.2 Presentation of Findings 79 
4.3 Background information 80 
4.3.1 Sex of customers: 80 
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80 
4.3.2 Occupation of customers 
81 
4.3.3 Age of customers 
82 
4.3.4 Country of origin of respondents 
83 
4.3.5 Type of hotel 
4.3.6 How long respondents have been using the services of the hotels 83 
4.4 The extent of relationship marketing practices in the hotel industry 84 
4.5 Relationship marketing and customer loyalty 
86 
4.5.1 Competence and Customer Loyalty 89 
4.5.2 Communication and Customer Loyalty 90 
4.5.3 Conflict handling and Customer Loyalty 92 
4.5.4 Commitment and Customer Loyalty 93 
4.5.5 Relational Bonds (Social and Financial bonds) and Customer Loyalty 95 
4.5.6 Trust and Customer Loyalty 96 
4.5.7 Customer loyalty and hotel type 97 
4.6 Relationship marketing and customer satisfaction 98 
4.6.1 Competence and Customer Satisfaction 100 
4.6.2 Communication and Customer Satisfaction 101 
4.6.3 Conflict handling and Customer Satisfaction 103 
4.6.4 Commitment and Customer Satisfaction 104 
4.6.5 Social and Financial Bonds and Customer Satisfaction 105 
4.6.6 Trust and Customer Satisfaction 106 
4.6.7 Customer satisfaction and hotel type 107 
4.7 Customer satisfaction and customer loyalty 108 
4.7.1 Loyal customers who are not satisfied 108 
4.8 Practical challenges facing Ghanaian hotels 110 
4.8.1 High cost of building relationships 111 
4.8.2 Low level of business support III 
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4.83 Manpower or Rdcwnt SIdlIed Penonne1 112 
4.8.4 Data Capture and Maintenance (data warehousing) 113 
4.8.S Receut Cuts in Government expenditure 114 
4.8.6 Low level ofc ustomer 1rust for relational bonds 114 
CllAPDR FIVE: CONCLUSIONS, IMPLICATIONS AND RECOMMENDATIONS 
S.l Introduction 116 
S.2 Findings 117 
S.3 Theoretical and PracticallmplicatiODS for Hotel Managers 121 
S.4 Conclusions and suggestions for future studies 124 
REFERENCES 126 
APPENDICES 
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List of figures 
35 
Figure I: Conceptualizations of customer loyalty 
45 
Figure 2.3 Conceptual framework for the Current Thesis 
80 
Figure 4.1: Sex of customers 
83 
Figure 4.2: Type of hotel and their corresponding number of respondents 
Figure 4.3: How long respondents have been using the services of the hotels 84 
Figure 4.4: Loyal customers who are not necessarily satisfied 109 
List of tables 
Table 2.1 Definitions of Relationship Marketing 17 
Table 2.2 Selected Definitions !Measures of Customer Loyalty 40 
Table 2.3 Review of Relationship Marketing Literature on Customer Loyalty 43 
Table 3.1 Sample details of Hotels 66 
Table 4.1 Summary of rated accommodation Establishments as at December 2007 75 
Table 4.2 Hotel occupancy rates between 2000 and 2006 for 2- 5 star hotels 76 
Table 4.3 Number of Hotels, Rooms & Beds 2002 - 2007 78 
Table 4.4 Occupation of customers 81 
Table 4.5 Age of customers 82 
Table 4.6 Cownry of Origin of respondents 82 
Table 4.7 The extent ofr elationship marketing practices in the hotel industry 86 
Table 4.8 Customer loyalty with regards to relationship marketing (ANOVA) 87 
Table 4.9 Customer loyalty with regards to relationship marketing (Coefficients) 88 
Table 4.9.1 Competence and Customer Loyalty 89 
Table 4.9.2 Communication and Customer Loyalty 91 
Table 4.9.3 Conflict handling and Customer Loyalty 92 
Table 4.9.4 Commitment and Customer Loyalty 94 
Table 4.9.5 Social and Financial Bonds and Customer Loyalty 95 
Table 4.9.6 Trust and Customer Loyalty 96 
Table 4.10 Customer loyalty with regards to hotel type 98 
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Table 4.11 ClI8tomeI' saDsfaction with JegBrds to relationship marketing (ANOVA) 99 
Table 12 Customer saDsfaction with Rprds to relationship marketing (Coefficients) 100 
Table 4.12.1 Competen&:e and Customer Satisfaction 101 
Table 4.12.2 Communication and Customer Satisfaction 102 
Table 4.12.3 Conflict bandling and CUstomer Satisfaction 103 
Table 4.12.4 Commitment and Customer Satisfaction 104 
Table 4.12.5 Social and Financial Bonds and Customer Satisfaction 105 
Table 4.12.6 TIVSt and Customer Satisfaction 107 
Table 4.13 CUstomer satisfaction with regards to hotel type 108 
Table 4.14 Customer loyalty with regards to Customer satisfaction (ANOVA) 108 
Lilt of Abbreriatioas 
RM: Relationship Marketing 
OTB: Ghana Tourist Board 
ODP: Gross Domestic Product 
IMP: Industrial Marketing and Purchasing 
TQM: Total Quality Management 
nT: Just-in-Time 
MRP: Material-Resource Planning 
SPSS: Statistical Package for Social Science 
www: World Wide Web 
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CHAPTER ONE 
INTRODUCTION 
t.t Baekgrouud of the Study 
"Since the 1960s the marketing mix management approach, with its 4P model, bas 
dominated marketing literature, research and practice. Academics and practitioners 
alike have been so preoccupied with this approach that it long ago achieved a 
paradigmatic position. Sometimes the marketing mix is called a model of marketing 
only" (Gronroos 1996; Gummesson 1994).Today however, this paradigm is 
beginning to lose its position (Gronroos 1994) because the focus is shifting from the 
activity of just attracting customers to activities which concern having customers and 
maintaining them for life (Gronroos & Ravald 1996). Although the Ps are not at all 
useless as marketing variables, the philosophical foundation of the marketing mix and 
its Ps are not very well fitted to the competitive situation that has been emerging in 
the hospitality industry in Ghana today. The mass marketing and transaction 
orientation, as well as the adversarial approach to customers and the functionalistic 
organizational solution inherent in the marketing mix approach, do not allow the firm 
to adjust its market performance to the demands of more and more customers today, 
(i.e. enhanced value around the core product, reliable service to accompany the 
product, a trustworthy relationship with customers, suppliers, distributors, among 
others (Gronroos, 1996). 
With marketing increasingly moving away from a focus on individual transactions 
towards a focus on building value-laden relationships with customers (Kotler 2000; 
GriSnroos and Ravald, 1996), firms are now finding new ways of nurturing and 
sustaining their 'marriage' with the various stakeholders not only to enhance the 
firm's competitive advantage in terms of being able to offer customer value, but to 
simultaneously, augment the firm's market opportunity (Ward and Dagger,2007) and 
achieve high customer retention which described by Hinson (2006), as "a 
commitment decision on the part of a customer or client to continue to do business 
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with · .. f ..-.....: appeals from similar a particular supplier or firm, irrespective 0 ve IILU ....... 
competitive suppliers or firms" thus customer satisfaction and retention is one of the 
most important criteria for customer loyalty (Heskett et al, 1994; Gronroos and 
Ravald, 1996); and unless a customer is delighted, he or she is likely to defect or 
unfavourably alter his or her pattern of purchase and ultimate loyalty defined as "a 
deeply held commitment to re-buy or patronize a preferred product or service 
consistently in the future, thereby causing repetitive same-brand-set purchasing, 
despite situational influences and marketing efforts having the potential to cause 
switching behaviour" (Skogland and Siguaw, 2004). 
1.1.1 The need for Relationship Marketing in Ghana's Hospitality industry 
Relationship marketing is defined by (Gronroos 1990) as "Marketing to establish, 
maintain, and enhance relationships with customers and other partners, at a profit, so 
that the objectives of the parties involved are met". Hotels allover the world provide 
different services to meet the needs of their numerous customers. However building 
customer loyalty has been and still is one of the biggest challenges for the hotel 
industry (Yesawich, 1997). 
The hotel industry is today recognized as a global industry with producers and 
customers spread across the world. Hotel services have become an integral 
constituent of lifestyle today. The last two decades have witnessed the demand for 
and supply of hospitality services go beyond that of traditional services intended for 
travellers thereby leading to an escalation in the growth of the hospitality industry 
globally. Thus leading to intense competition in the market place and leaving hotel 
managers with a great challenge of how to deal with the ever-growing volume and 
pace of competition (Kandampully & Suhartanto, 2000). Ghana is no different. Most 
hospitality firms, (special reference to hotels) in Ghana, in their haste to gain media 
visibility, overlook one most important marketing resource which is the relationship 
developed between the hotels and their customers. It must be emphasized that, even 
though extensive public awareness is an equally important tool for survival in the 
hotel industry, it is not an end to itself but rather only a first step in the marketing 
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process. De Young, (1988) stressed that building constructive relationships with 
selected target audiences is more important to the long-term marketing success rather 
than just acquiring widespread public awareness. 
The hospitality industry in Ghana is gradually becoming a major contributor to the 
total wealth of the Ghanaian economy by contributing a total of $1.5 billion to the 
nation's Gross Domestic Product (GDP) annually, representing 5% of total GDP and 
provides jobs for about 250,000 individuals in Ghana. (Joy FM Business News of 
September 7th 2008, from myjoyonline.com). However, the success of this income 
generation drive through tourism largely depends on the availability of quality 
infrastructure, especially lodging facilities in the form of good quality hotels to 
provide high quality accommodation. Hoteliers must have the ability to target, 
acquire, and retain the 'right' customers whilst taking steps and the pains to 
strengthen customers' loyalty through well-conceived relationship marketing 
strategies (Lovelock and Wirtz, 2007). According to Torres and Kline (2006), 
managers are today facing a greater challenge of establishing and maintaining 
positive customer relationships. The task is even more difficult now where consumers 
have greater access to information and choices. Price cuts and intense promotional 
campaigns can no longer do the trick for businesses, making it important for 
managers to show greater interest in customer satisfaction, delight and ultimate 
loyalty. The successful hosting of the 2008 African Cup of Nations here in Ghana 
saw the reviving of many hitherto 'dying' hotel businesses. This has led to increased 
competition in the hotel industry thereby forcing many hospitality firms to 
differentiate their products and services from that of other competitors. Even though 
customer loyalty can be achieved through various carefully designed programs, this 
study will emphasize on the use of relationship marketing as one of the major and 
modem tools used by the hospitality industry to achieve high customer loyalty. Are 
the hotels practicing relationship marketing at all? If yes, is it achieving its intended 
purpose of winning customer loyalty? 
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1.2 ProbleJa Stateoaent 
In today's world, hospitality has expanded to such an extent that, it is now claimed to 
be the world's largest industry, characterized by a high rate of employment, and 
generating a lot of revenue to countries. Improvements in technology has also 
enhanced the purchasing power of tourists' who have now become more price 
sensitive, less brand loyalists, more sophisticated and experience seekers. With 
growing customer acquisition costs, increased customer expectations and high rate of 
customer tum over, hotels have realized the need to foster closer relationships with 
their customers in order to win their loyalty. However among the many journal 
articles, long essays, and thesis available to the researcher in Ghana, it is so 
uncommon to find studies done to show how Relationship Marketing (RM) practices 
could lead to Customer Loyalty in hotels within Ghana. In addition to this, there 
appears to be some structural problems associated with the effective implementation 
of RM practices. Could it also be that there is a general misconception and poor 
attitude towards the concept of RM and Customer Loyalty? lbis study thus sought to 
explore the extent of practice of RM in the Ghanaian hospitality (hotel) industry and 
whether its implementation leads to increased customer loyalty. 
1.3 Justification for the study and research gap 
As products, services and prices become less important differentiators; the 
importance of relationship marketing can no longer be overlooked and taken for 
granted (Ward et al., 1997; Ward and Dagger 2007). It has thus become very 
necessary to find out how firms in the hospitality industry in Ghana particularly, 
achieve customer loyalty in the face of increased competition through relationship 
marketing. 
The research can be justified based on its ability to satisfy the existing gap in the 
literature. To start with, no previous research has been done to investigate the 
relationship marketing practices and its ability to improve customer loyalty in the 
hotel industry in Ghana A number of studies have been done in Ghana but have only 
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focused on other sectors of the economy other than the hotel industry. Those that 
have been done on hotels have been in Western and Asian contexts such as 
(Kandampully &, Suhartanto, 2000; Ndubisi, 2007; Torres and Kline, 2006) just to 
mention a few. Therefore, Relationship Marketing and its impact on customer loyalty 
in the Ghanaian hotel industry have not yet been studied and this research hopes to 
bridge that gap. 
This research also makes valuable contributions to theory, policy and practice, as it 
appears to be the first study to examine the impact of Relationship Marketing on 
Customer Loyalty in the Ghanaian hotel industry. Thus, as a result of this research, a 
model has been constructed as a guide to the effective implementation of Relationship 
Marketing in Ghanaian hotels and the world over. In more specific terms, the study 
provides an insight into the effectiveness of Relationship Marketing in generating 
customer loyalty in the Ghanaian hospitality industry and whether the theory stands 
the test of time in a developing country like Ghana because, with such limited 
empirical evidence especially within the African context, the concept of Relationship 
Marketing may still not hold. However if much empirical evidence is made available 
firms will be more confident to incorporate and operationalize it. This thesis thus 
bridges this gap by providing some empirical evidence on the concept within the 
Ghanaian context. 
1.4 Objectives of the study 
The main purpose of this study was to explore the effective use of relationship 
marketing strategies by hotel firms in Ghana so as to discover whether its 
implementation helps to achieve customer satisfaction and loyalty within the 
Ghanaian hospitality industry. 
The study thus made an effort to explore the following specific objectives. 
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· . . ·thin th Ghanaian 
1. To examine the extent of relationship marketing practices WI e 
hotel industry. 
2. To examine the relationship between Relationship Marketing practices and 
Customer Loyalty. 
3. To examine the relationship between Relationship Marketing practices, customer 
satisfaction, and customer loyalty. 
4. To explore the main challenges hotels face as they implement relationship 
marketing strategies. 
1.5 Research questions 
Following from the literature available on RM, the research will seek to find answers 
to the following questions: 
1. What is the extent of Relationship marketing practice among Ghanaian hotel 
firms? 
2. What is the relationship between Relationship Marketing and Customer loyalty? 
3. What is the relationship between Relationship Marketing practices, customer 
satisfaction, and Customer loyalty in the Ghanaian hospitality industry? 
4. What are the challenges faced by hotels as they implement the concept of 
relationship marketing in Ghana? 
1.6 Signifieanee of the study 
Most importantly this study adds and enhances existing knowledge in the area of 
relationship marketing. As already stated, RM practices have not been consistent in 
the literature. This study provides more support for RM practices. 
This research is very significant to the survival of firms in the hospitality industry. 
This is because this study has been conducted at an opportune time when the 
government of Ghana is taking major steps to make the tourism industry one of the 
major contributors to the Gross Domestic Product (GDP) of the Ghanaian economy. 
By developing many of its abandoned tourist attraction sites, Ghana has a huge 
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potential of attracting Jarge numbers of tourists into the country. This research thus 
provides insights as to how hotels can not only attract potential visitors into lodging 
in their hotels. but also how to employ the use of relationship marketing to retain 
these customers. 
This research also comes at a time when the hotel industry is experiencing a very high 
level of competition coming after the successful hosting of the African cup of 
Nations. There is thus a growing concern among hotel managers as to how finns in 
the hotel industry can retain customers. This study therefore provides some insights to 
hotel finns as to the importance or benefits of using relationship marketing to win the 
loyalty of potential customers. It is against these justifications that the importance of 
this study cannot be underestimated 
1.7 Organization of the Study 
The study is organized into five chapters. 
Chapter one (1): Introduction 
This chapter introduces the study and includes the following: Background to the 
study, problem statement, main and specific objectives of the study, significance and 
justification for the study, and the scope and limitations of the study. 
Chapter two (2): Review of Contemporary Literature 
This chapter extensively reviews various literatures existing on relationship 
marketing practices and strategies. It also looks at other research works that have 
been done in this area not necessarily on hotels but in other topical areas to give the 
analytical framework. 
Chapter three (3): Research Methodology 
lbis chapter discusses the methodology used for this research. It comprises the 
Research design, Sampling plan, Sample population, Sampling method, 
Instrumentation, Mode of data collection, the Unit of Analysis and limitations. 
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CIIrIIpUr"'(4)"'" ... DiK• •· '. efblpirial J'iadDIp 
This secdoB p.acnts the findings of the study. The empirical evidence on the practice 
of ReJaIi t 'r naketiDg by Ghanaian ho1el firms is analyzed and presented in both 
quantitative aDd qualitative manner. This chapter also gives a brief description of the 
hospitality industry in Ghana. 
Chapter Five (5): Summary, CODclusioDS aDd RecommendatioDs 
This is the fiDaI chapter and it presents the major findings, implications for 
management, future research directions and contributions to already existing literature 
on Relationship Marketing. Useful recommendations are also made for marketing 
managers and decision makers in the hotel industry based on the findings in chapter 
four (4) 
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CHAPTER TWO 
LITERATURE REVIEW 
2.0 INTRODUcnON 
This chapter focuses on the theoretical underpinnings of the study. In view of the 
objectives and theoretical parameters of this study, the chapter reviews relevant and 
contemporary literature on the evolution of relationship marketing; growth of 
relationship marketing; definitions of relationship marketing; and characteristics of 
relationship marketing. The chapter further discusses related literature on the benefits 
and challenges of implementing relationship marketing. 
Next, a discussion is made on customer loyalty and customer satisfaction (proposed 
in this thesis as the consequence of effective implementation of relationship 
marketing) in the context of the hospitality industry. Finally, the conceptual 
framework for the current study and the variables of the components are discussed. 
2.1 RELATIONSIDP MARKETING EVOLUTION 
According to Eiriz and Wilson (2006), the study of relationships and networks is not, 
of course, a new area of research. Although it is only since the 1970s that the 
literature on management started to emphasize its importance, there are many 
previous works in disciplines adjacent to management, such as economics, political 
sciences, sociology, social psychology and law, as well as in some disciplines more 
central to management, notably organization sciences, that have influenced the study 
of relationships and networks. 
Relationship marketing, (as sited in Shammout, 2007, pp 14-15) has generated high 
interest both to academics and practitioners (Berry, 1995; Barnes, 1997; Payne, 2000; 
Egan, 2004). Diverse views about the origins of Relationship Marketing exist in 
literature, but most authors usually attribute the origin of the term to Berry (1983), 
who first proposed it in the context of services marketing. However, it has also been 
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argued that the emergence of relationship marketing in the 1980s was not so much a 
new innovation but a rediscovery of an approach that bad long been accepted as the 
focus of any successful business (Sheth and Parvatiyar, 2000). In this circumstance, 
Wilson (1995) acknowledged that relationships between buyers and sellers have 
existed since humans began trading goods and services. Parvatiyar and Sheth (2000) 
also observed that relationship marketing's roots were in the pre-industrial age. 
Within the particular discipline of marketing, Bejou (1997) cites Baggozzi (1978) as 
the first to argue that exchange relationships are the heart of marketing, and that 
Arndt (1979) introduced the notion of long-term buyer-seller relationships in the 
context of domesticated markets. According to Bejou (1997), many writers have 
made an important contribution to the understanding of earlier relationship marketing 
thought, although these theorists treated the relationship exchange as isolated rather 
than as a long-term process. 
Consequently, relationship marketing theory became globally accepted in the 1990s 
(i.e., Crosby et al, 1990; Webster, 1992; Gr6nroos, 1994; Gummeson, 1994; Morgan 
and Hunt, 1994; Palmer and Bejou, 1996; Berry, 1995; Sheth and Parvatiyar, 1995; 
Wilson, 1995; Hennig-Thurau and Klee, 1997; Gummeson, 1999), covering a range 
of marketing activities (palmer, 2000), and thus it is described as a ''new-old'' concept 
(Berry, 1995). Since then, relationship marketing has become a topic of interest in 
special issues of international journals such as the Journal of the Academy of 
Marlceting Science (Bejou, 1997). 
It was therefore not surprising that Payne (2000) identified at least seven edited and 
authored books on relationship marketing. relationship marketing has been found to 
cover several contexts including channel relationships (Anderson and Narus, 1990; 
Ganesan, 1994; EI-Ansary, 1997), business-to-business marketing (Dwyer et al., 
1987; Morgan and Hunt, 1994; Kumar et al, 1995; Wilson, 1995), business alliances 
(Sheth and Parvatiyar, 1992), service marketing (Berry, 1983; Crosby et al., 1990); 
network marketing (HAkansson and Snehota, 1995), sales management (Smith and 
Barclay, 1997); database marketing (Treacy and Wiersema, 1993), internal marketing 
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(Berry and Parasuraman. 1991), and business-to-customer marketing (Gruen, 1995; 
Sheth and parvanyar, 1995; Christy et aI., 1996; Wang et aI., 2006). 
Relationship marketing has been described as a new marketing paradigm based not on 
transactional exchanges but on relational exchanges (Gronroos, 1994). A consensus 
also exist amongst various authors that this new paradigm emphasizes a shift in 
marketing from short-tenn transactions (traditional marketing or marketing mix) to 
long-tenn relations (Dwyer et al., 1987; Kotler, 1992; Morgan and Hunt, 1994; 
Palmer, 1994; Lin et al, 2003), as far as this thesis is concerned. Morgan and Hunt 
(1994) have argued that, in order to clearly understand this new paradigm, there is the 
need for a clear distinction between a discrete transaction (a distinct beginning, a 
short dmation, and a sharp ending by perfonnance) and a relational exchange (tracing 
back to previous agreements, lasting longer, and reflecting on ongoing processes). A 
review of many current literatures distinguishes between these two types to deliver a 
better understanding of relationship marketing. Gummesson (1994) stressed that, the 
marketing mix and its four Ps are not at all useless and would always be needed, but 
that it had become nonessential in comparison to long tenn relationship building. 
Within the hospitality context (the interest of this thesis), Bowen and Shoemaker 
(1998) also maintain that relationship marketing means developing the customer as a 
partner, and is a process that is markedly different from traditional transaction-based 
marketing. That is, it focuses on moving away from activities for attracting customers 
to activities for having customers and taking care of them (Gronroos, 1996). Indeed, 
relationship marketing aims to retain profitable customers by building and 
maintaining strong relationships, whereas traditional marketing aims to acquire new 
customers. 
Bejou (1997) in attempting to show how much relationship marketing is important in 
services context, maintained that it will be very difficult to apply traditional 
marketing to services. In addition to the above, Bennett (1996) also argued that 
relationship marketing aims to establish long-tenn, committed, trusting and co-
operative relationships, characterized by openness, genuine customer suggestions, fair 
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~~ a ~ tD.mfiee short-tam advantage for long-term .mmtage. 
In ~l"" re1atioDsbip marketing is oriented towards long-term on-going 
relatio.DsbipJ (Kim et ai. • 2(01). A further review of literature revealed that 
reJationsbip marketing is bandled in different ways by different authors (see 
GwI!!!l!!esl!lCJf 1996). Four different schools of thought have emerged which bave 
mainly been influenced by a diversity of disciplinary and research traditions. They 
include: Nordic, Industrial Marketing and Purchasing (IMP), North American, and 
Aaglo-Australian. 
First, the Nordic school authors (i.e., GrOnroos and Gummesson, 1985) give emphasis 
to the long-term relational aspects of service marketing. To point out the relational 
nature of1his kind of marketing, they used terms such as buyer-seller interactions and 
interactive marketing, customer relationship life cycle, the new marketing concept; 
phase of the service consumption process; and interactive relationships. According to 
Parvatiyar and Sheth (2000), the Nordic school tried to integrate the network 
approach (popular among Scandinavian and European schools) with issues related to 
service relationships and relationship economics. 
Secondly, the European Industrial Marketing and Purchasing (IMP) group which is 
made up of about 300 member firms - studied relationship marketing as it occurred in 
distribution channels (i.e., Hakansson 1982; HAkansson and Snehota, 1995). Their 
research found that buyer-seller relationships are built on a series of interactions in 
which the concept of adoption is closely linked with the process of evolving 
relationships. Given the importance of process as well as outcome in these 
interactions service marketers have highlighted the potential value associated with the 
development of 'relationships' between supplier and customer. In this case, 
relationships are seen as being the outcome of a series of interactions with particular 
emphasis placed on the active role-played by buyers. 
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Tbinlly, the North American school (i.e., Berry, 1983; Perrien et al., 1993) dwelt on 
the relationship between the buyer and seDer in organizational environments within 
business-to-business markets. 
Then finally, based on the work of Christopher et ale (1991), the Anglo-Australian 
school emphasizes the integration of quality management, the use of a service 
marketing concept, and customer relationship economics. The six-market model 
introduced by Christopher et ale (1991) considers relationship marketing as having six 
markets: internal, referral, influence, supplier and alliance, recruitment, and customer 
markets, as the centre of all marketing activities. According to Egan (2001), the 
Anglo-Australian school generally investigates the nature of relationships in 
marketing. 
1.1 GROWTH OF RELATIONSIDP MARKETING 
The growth of RM is described by Sheth and Parvatiyar (2000) as the rebirth of direct 
marketing between producers and consumers and he further identifies several 
environmental and organizational development factors responsible for the rebirth. 
Sheth and Parvatiyar (2000) stressed that the evolution of and growth of RM has been 
made possible by the following; 
• Rapid technological advancements, especially in information 
technology; 
• The adoption of total quality programs by companies; 
• The growth of the service economy; 
• Organizational development processes leading to empowerment of 
individuals and teams; and 
• Increase in competitive intensity leading to concern for customer 
retention. 
Briefly discussed below are how these forces are encouraging more direct interaction 
between producers and consumers of goods and services and thus encouraging the 
growth of relationship marketing. 
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Ul Rapid~ad¥aMe"'" 
According to Sheth and Parvatiyar (2000), the impact of technological revolution is 
changing the nature and activities of marketing institutions. The current development 
and introduction of sophisticated electronic and computerized communication 
systems into our society is making it easier for consumers to interact directly with the 
producers. Producers are also becoming more knowledgeable about their consumers 
by maintaining and accessing sophisticated databases that capture information related 
to each interaction with individual consumers, at a very low cost. It gives them the 
means by which they can practice individual marketing. As a result, the functions 
formerly performed by the middlemen are now being undertaken by either the 
consumer or the producers. Producers are building such systems that allow them to 
undertake quick responses with regard to manufacturing, delivery and customer 
service, eliminating the need for inventory management, financing and order 
processing through middlemen. Also, consumers have less time and thus a reduced 
inclination to go to the store for every purchase. They are willing to undertake some 
of the responsibilities of direct ordering, personal merchandising, and product use 
related services with little help from the producers. 
Hence, given the recent technological strides and consumer attitudes, some functions 
performed by middlemen may be entirely eliminated. For instance, the just in time 
inventory system, made possible by the real time transportation and communication 
systems now available, allows a producer to eliminate the need for an intermediate 
inventory holding institutions between itself and the consumers or suppliers (Sheth et 
al., 1988). Other technological systems, such as flexible manufacturing are being used 
by some to mass-customize their offerings to individual consumers. 
2.1.1 Adoption of Tota. Quality Management Programmes 
Another major force driving the adoption of relationship marketing is the total quality 
movement that recently revolutionized industry's perspectives regarding quality and 
cost. Most companies saw the value of offering quality products and services to 
customers at the lowest possible prices (Sheth et al. 1988). When companies 
embraced Total Quality Management (TQM) to improve quality and reduce costs, it 
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.a..l.l..."i I MiICSSIIIY to,iDvelve suppliers and customers in implemeDting the program at of the value cbaiD. This needed close worldng relationships with customers, 
supplieD aad other members of the marketiDg infrastructUre. Thus, several 
compaDies, such as Motorola, mM, Xerox, Ford, AT&T, Toyota, etc., formed 
parbi.eJiDg ldationsbips with supptiers and customers in order to practice TQM. Other 
programs such as Just-in Time (JIT) supply and Material-Resource Planning (MRP) 
also made use of the interdependent relationships between suppliers and customers 
(Frazier et aI., 1988). 
2.2.3 Growth of the Serna EcoDoIay 
The third fo~ ushering in relationship marketing as discussed by Sheth et al. (1988) 
is the growth of the service economy, especially in the advanced countries. As more 
and more organizations depended on revenues from the services sector, relationship 
marketing became prevalent. This is because services are typically produced and 
delivered by the same institution (Sheth et al., 1988). Service providers are usually 
involved in the produetion and delivery of their services. For instance, in the case of 
personal and professional services, such as haircut, maid services, consulting services, 
accounting services, and legal services, the individual producer of the service is also 
the service provider. As such the users of these services are directly engaged in 
obtaining and using the service thereby minimizing the role of middlemen, if any. In 
such a situation, a greater emotional bond between the service provider and service 
user develops and the need for maintaining and enhancing the relationship. It is 
therefore evident that relationship marketing is important for scholars and 
practitioners of services marketing (Berry 1983; Crosby and Stephens 1987; Crosby 
et 81., 1990). 
2.2.4 Orguisational Development Proeess and empowerment of individuals and 
teams 
Another major factor leading to the rapid growth and acceptance of the Relationship 
marketing concept as described by Sheth et al. (1988) is the empowerment of 
individuals and teams as a result of certain organisational developments. According to 
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.... 1IIr:se OEpDi_oncl ehaages have faei1itated the growth of relationship 
marketing. Amongst these the most significant is the role definition of the members 
of the wgaaiaatioIL 'I'IDeush a variety of changes iD organizational processes, 
compaaies are now directly involving users of products and services in the purchase 
and aequisitio1'I decisions of the CODIpmy. For a considerable time, these functions 
were managed by the procurement department as a specialized function, with little or 
no input fiorD the actual users of these products and services. Thus the separation that 
existed between the producer and the user due to the existence of user middlemen, 
acting as ga:t:ekeepers, is potentially bridged in many cases. Wherever such changes 
are being made, direct interaction and cooperative relationship between producers and 
users develop (Sheth et aI., 1988) 
2.2.5 Inereasecl Competition and concern for customer retention 
Finally, in the post-industrialization period the increase in competitive intensity is 
forcing marketers to be concerned with customer retention. As several studies have 
indicated, retaining customers is less expensive and perhaps a more sustainable 
competitive advantage than acquiring new customers. Marketers are realizing that it 
costs less to retain customers than to compete for new ones (Rosenberg & Czepiel 
1984). On the supply side it pays more to develop closer relationships with a few 
suppliers than to develop more vendors (Hayes, Wheelwright and Clark 1988; 
Spekman 1988). In addition, several marketers are also concerned with keeping 
customers for life, rather than merely making a one-time sale (Cannie and Caplin 
1991). 
2.3 CONCEPT OF RELATIONSHIP MARKETING 
Although relationship marketing is a relatively young field of inquiry, relationship 
marketing theory is an extremely rich area of research (Egan, 2004). While many 
espouse relationship marketing, there seems to be little consensus concerning the 
exact nature of the discipline (Pressey and Mathews, 2000) after it was first coined by 
Berry (Lindgreen 2001). 
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Undeniably, relationship marketing consists of a variety of activities, and therefore 
could mean different things to different companies (palmer, 1994; Morris et at., 1998) 
in varying contexts (Too et al., 2001). This problem has also been acknowledged by 
several authors. For instance Nevin (1995), found multiple uses of the term 
relationship marketing within the litemture to such an extent that it has become a 
catchphmse. Parvatiyar and Sheth (2000) also pointed out that the term 'relationship 
marketing' has become ambiguous within the marketing litemture, and for this reason 
some authors have listed a range of selected definitions. Harker (1999) for instance 
listed 26 significant definitions, whereas Dann and Dann (2001) found about 50 
definitions in the literature. 
In spite of the many definitions for the term relationship marketing, this thesis will 
discuss some of the most commonly used definitions in order to identifY which 
definition is most suited to this thesis. Definitions of various scholars have been 
summarized in the table below. 
Table 2.1: Definitions of Relationship Marketing adapted from Shammout (2007, p 18) 
To establish, Non-customer 
maintain, and partnership, mutual 
enhance relationships benefit, promise 
with customers and keeping, and 
other partners, at profitability 
profit, so that the 
objectives of the 
parties involved are 
met. This is achieved 
by a mutual 
exchange and 
fulfillment of 
Promises 
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and This is 
establish, maintain all contexts different to 
and enhance, and Gronroos's (1990) 
when necessary, also definition, which 
terminate includes identifYing 
relationships with and terminating 
customers and other relationships with 
stakeholders, at a customers and 
profit, so that the stakeholders 
objectives of all 
parties involved are 
met. This is done by 
a mutual exchange 
and fulfillment of 
Morgan and Hunt All marketing Business-business All types of ongoing 
(1994) activities directed relationship as a 
toward establishing, process in relational 
developing and exchange 
maintaining 
successful relational 
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Ongoing process of Business-to- Cooperative and Parvatiyar 
Sheth (2000) engaging in customer collaborative 
cooperative and 
collectivized 
activities and 
programs with 
immediate and end-
user customers to 
create or enhance 
mutual economic 
value at reduced cost 
enhance customer 
relationships for the 
benefit of both sides, 
emphasizing 
retaining existing 
customers 
In what is probably one of the earlier attempts to clarify the concept, Berry (1983) 
defined relationship marketing as "attracting, maintaining, and - in multi-service 
organisations - enhancing customer relationships", acknowledging the idea that 
attracting new customers is seen only as an intermediate step in marketing processes. 
Several authors have built on this definition. Gronroos (1990) proposed a definition 
similar to the above definition by Berry. However, Gronroos, (1990) added the 
perspective of non-customer partnership, mutual benefit, promise keeping, and 
profitability, while viewing relationship marketing ''to establish, maintain, enhance 
with customers and other partners, at a profit, so that the objectives of the parties 
involved are met. This is achieved by a mutual exchange and fulfillment of 
promises." 
Christopher et al. (1991) viewed relationship marketing as a synthesis of marketing, 
customer service and quality management. Christopher et al. (1991) stated that 
relationship marketing has the twin focus of acquiring and keeping customers. This 
definition and a similar one used by Kotler (1992) specify that relationships are a 
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series of stakeholders or markets going beyond the basic customer-supplier dyad 
(Gummesson, 1994). Others (i.e., Palmer, 1994) view relationship marketing in terms 
of strategies that enhance profitability through a focus on the value of the buyer-seller 
relationship over time. 
Gummesson (1996) also sees relationship marketing as comprising three key 
elements including relationships, networks, and interaction. In his definition, 
relationships refer to a contact between two or more people, which could also exist 
between people and objects, whereas a network refers to a set of relationships. 
Interaction refers to activities performed within relationships and networks. In 
support of GrOnroos (1990), Morgan and Hunt (1994) provide a broadened scope 
through inclusion of the term 'relational exchange' to cover the processes of all types 
of ongoing relationships. They defined relationship marketing as "all marketing 
activities directed toward establishing, developing, and maintaining successful 
relational exchange". 
This defmition has however come under heavy attack by some authors (parvatiyar 
and Sheth 2000). Peterson (1995) for example, acknowledges that the definition is 
guilty of an error of commission, and states that if their "definition is true, then 
relationship marketing and marketing are redundant terms and one is unnecessary and 
should be stricken from the literature because having both only leads to confusion". It 
has been argued that the defmition only focuses on the ultimate goal of relationship 
marketing, but not on what it actually entails (Too et al., 2001). In contrast, Kim and 
Cha (2002) conducted research in the context of hospitality industry, and considered 
Morgan and Hunt's definition as a major shift in marketing theory and practice. Kim 
and Cha seem to have adopted Morgan and Hunt's definition, making minor changes 
when they focused on mutual benefits with targeted customers to make the definition 
more suited to the hospitality context. They defined relationship marketing as "a set 
of marketing activities that attract, maintain, and enhance customer relationships for 
the benefit of both sides, emphasizing on retaining existing customers". 
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Parvatiyar and Sheth (2000) found that the definitions of Berry (1983), Gronroos 
(1990), and Morgan and Hunt (1994) take the process aspects of relationship 
development and maintenance into account. Parvatiyar and Sheth (2000) further 
suggest that relationship marketing is concerned with supportive and joint 
relationships between the firm and customers. These customers could be one or many, 
including end customers. distributors or channel members. and business-to-business 
customers. They define relationship marketing as "the ongoing process of engaging in 
cooperative and collectivize activities and programs with immediate and end-user 
customers to create or enhance mutual economic value at reduced cost". 
Most recently however. Herington (2002) found that the definitions of GrlSnroos 
(1990). Morgan and Hunt (1994). and Gummesson (1996). are seen as most favoured 
by relationship marketing authors due to their frequency of adoption and concludes 
that "the definition presented by GrlSnroos (1995) is the "best" in terms of its 
coverage of the underlying conceptualizations of relationship marketing and its 
acceptability through the RM community". GrlSnroos (1994) sees relationship 
marketing as " ... to identify and establish, maintain and enhance and when necessary 
also to terminate relationships with customers and other stakeholders. at a profit, so 
that the objectives of all parties involved are met, and this is done by a mutual 
exchange and fulfillment of promises". GrlSnroos's (1995) definition was found to be 
appropriate for the needs of this thesis. This is because not only is it commonly used 
in the literature; it also includes all aspect of long-term relationships between service 
providers and customers (see Shammout, 2007 pp. 18-20) 
In sum, although coined many years ago. relationship marketing still remains an 
ambiguous concept (Lindgreen 2001) and it is characterized by rhetoric and still 
without clear empirical support (Collins 1999). There is no consensus among authors 
on one accepted definition for relationship marketing. however Harwood and Garry 
(2006). are of the view that this may be due to the debate between academics and 
practitioners about what relationship marketing actually is. when it is appropriate. 
who should be included in the relationship. and when a relationship may exist 
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""';'" ., parties. The main chalacteristics of relationship marketing are briefly 
discuBsed below 
lA CllARATERISTICS OF RELATIONSHIP MARKETING 
Based on Gr6moos's (1994) definition, the following are the main characteristics of 
relationship marketing. For the pwpose of this study, the various characteristics of 
relationship marketing have been categorized under the following headings: 
• ~ orientation, 
• COlDmitment and fulfilhnent of prolDises, 
• CnstolDer share, not lDarket share, 
• CnstolDer lifetime value, 
• Two-way dialogue, and 
• CustolDization. 
Subsequently, these characteristics are briefly discussed below. However, it must be 
noted that the categorization is made this way to suit the context of this thesis. 
2.4.1 Long-term orientation 
Long-term orientation is a key feature of relationship marketing. It assesses success in 
terms of how long a customer is kept in the relationship and the share of the customer 
in the relationship. Relationship marketing involves estimating customer lifetime 
value and engaging in relationships based on the value of those relationships over a 
number of years. Gummesson (1999) highlights long-term collaboration and win-win 
as a key feature of relationship marketing. This means viewing suppliers, customer 
and others as partners rather than opposite parties. This view promotes collaboration 
and the creation of mutual value, and relationship marketing should bring about a 
win-win rather than a win-lose situation created by the adversarial nature of 
transactional marketing (Gummesson, 1999) 
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f' \: ,'):;~:~r~~L:f1rf:~\·#~:~; ,e:~~ ,,' • 
~~\(!l'JtL'rl Mad' Tn rtef,....... 
. 'let......., marketing implies a long-term relationship and forsaking of other 
suppliers '" the customer, as well as mutual exchange of information. This suggests 
dIat there ought to be trust between the parties; that each party believes in the 
integrity of the other to keep their promise and to deliver on promises; and also that 
each party believes the relationship to be valuable enough to invest in and to commit 
to. Nurturing of trust and commitment is particularly important as it is clear now that 
satisfiwtion alone does not necessarily lead to customer loyalty. Satisfied customers 
may still wish to look elsewhere for bargains, change/novelty, and etcetera. 
Relationship marketing relies on fostering a bond between the customer and the 
supplier which is glued with empathy. Bonding is the result of the customer and the 
supplier acting in a unified way towards the achievement of desired goals (Callaghan 
et aI., 1995) and empathy is the dimension of a business relationship that enables the 
two parties to see the situation from the other's perspective and to understand their 
desires and goals (Yau et aI., 2000). 
1.4.3 Customer share, not market share 
Relationship marketing shifts the emphasis from concentrating on gaining share of 
the market and rewarding its employees for the new business which they bring in. 
instead, it concentrates on keeping customers and attempting to gain a bigger share of 
their 'wallet' by selling more of the same product or by cross-selling to them. This is 
a very important shift because traditional marketing puts the emphasis on market 
share and success is usually measured in a short timescale, i.e. growth in market share 
per annwn (Gummerson, 1999). For instance, Day (1969), from a traditional 
platform, said that share of market is a crucial tool for the evaluation of performance 
and for using as a guide for advertising, sales force and other budget allocations. 
Concentrating on customer share implies a long-term orientation and requires that 
success is measured and rewarded differently. According to Peppers and Rogers 
(1995), this approach implies that a customer with high potential is treated as an 
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:.\t:.:;;'1' ~, 
~ ..... ueecIs 1ft addressed and an attempt is made to persuade him to buy 
dICJIe oft he ClOIIJP8Dy's products during the lifetime oft he relationship. 
2.4.4 Custoaaer IifetiDIe value 
The lifetime value of a customer is a key element in the practice of relationship 
IIUIdretiDg. It is not economical for a supplier to invest in long-term relationships with 
all customers - not that all customers would necessarily want such a relationship. The 
supplier bas to identify those customers who are willing to enter a long-term 
relationship with his company, forecast their lifetime with the company, and then 
calculate those customers' lifetime values in order to identify the ones with whom it 
will be profitable for the company to have a relationship. Relationship marketing 
costs money and maintaining a customer can be expensive, hence long-term 
customers should be selected carefully. Calculating a customer's lifetime value is not 
a precise science, and each company will need to experiment and improve those 
techniques that are used to predict how much business a customer is likely to do with 
them (Gummerson, 1999; Morgan and Hunt, 1994; Gronroos, 1994) 
Generally, a customer's purchase profile, as well as the purchase profile of the 
segment to which the customer belongs, is studied and an estimate is made of the 
amount of purchases which the customer is likely to make over a given period and 
therefore the profit the company can expect from the customer. An estimate of the 
possible referral business by the customer is added to that figure. Then on the minus 
side, the cost of products to be sold to the customer as well as the cost of keeping him 
in the relationship is calculated. This is subtracted from the first figure to show if the 
lifetime value will be attractive to the company (Little and Marandi, 2003) 
1.4.5 Two-way dialogue 
A further requirement of relationship marketing is the facilitation of a two-way 
dialogue between the supplier and the customer in order to identify needs and to find 
solutions. Indeed, relationship marketing is ultimately about partnering and 
partnerships are built on, and maintained by, dialogue and communication. A 
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properly designed relationship marketing system should provide ample opportunity 
for the customer to initiate communication with the supplier. The flow of information 
must be a two-way process. While this happens frequently in industrial and business-
to-business sectors. it ought to be a part of relationship marketing in mass consumer 
goods and services markets too (Little and Marandi. 2003). This is now possible with 
the continuous improvements in technology. Gummesson (1999), viewing 
relationship marketing as relationships, networks, and interactions, proposes that 'this 
initiative to action cannot be left to a supplier or a single party of the network; 
everyone in a network can, and should be active'. 
Wolfe (1998) has argued that if dialogue is not to ring hollow, but to be fully 
satisfying to all parties involved, there are three conditions which must be fulfilled: 
• Conversational reciprocity: each party allowing the other to condition his/her 
responses, i.e. 'I influence yOU; you influence me.' 
• Reciprocal empathy: each party reaches out to identify with and understand 
the other party's circumstances, feelings, and motives. 
• Reciprocal vulnerability: both sides in a relationship let down their guard to 
some level that remains safe and comfortable, and yet allows information to 
flow and trust to build. 
The conditions set out above are in line with Berry's (1983) writings, and show that 
database and direct marketing, with their characteristic one-way flow of 
communication from supplier to customer, are not relationship marketing, even 
though 'relationship building' has now become a business phrase for the practitioners 
in those fields. 
2.4.6 Customization 
Berry (1995) asserts that through relationship marketing, service providers can gain a 
better knowledge of the customer's requirements and needs. This knowledge can then 
be combined with social rapport built over a number of service encounters to tailor 
and customize the service to the customer's specifications. An important requirement 
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or feature of relationship marketing is that of customization of product and 
communication for each customer. Customization in mass markets, however, is rarely 
a totally unique offering for one customer and no other. Often, it takes the form of 
using basic designs both for products and communication and adapting them to the 
requirements of individual customers, or micro-segments of the markets. Hence, the 
term mass-customization is often used (Berry, 1995). Mass customization is a 
recognition of the fact that today, increasing competition and customer power is 
fragmenting mass markets into smaller markets, and that the 'one size fits all' strategy 
of traditional marketing no longer applies. It is an attempt to create added value, and 
many companies, utilizing improvements in technology and flexible processes are 
able to engage in the practice profitably. Mass customization is an important 
advantage of relationship marketing to customers and one of the rewards they can 
expect in return for their commitment to the supplier. 
2.5 BENEFITS OF RELATIONSHIP MARKETING 
The concept of relationship marketing has been viewed in term of its benefits to both 
parties involved in the relationship; thus the service provider (hotels) and customer. 
Despite the fact that, there still remains some ambiguity as to whether the 
implementation of relationship marketing leads to benefits for both customers and 
service providers (parvatiyar and Sheth, 2000), research has established that several 
benefits accrue to both parties (palmer, 1994). 
In today's business environment, many outstanding companies are going all out to 
retain their existing customers. Retaining customers for the long-term offers many 
benefits. Both parties in the customer/firm relationship can benefit from customer 
retention. That is, it is not only in the best interest of the organization to build and 
maintain a loyal customer base, but customers themselves also benefit from long-term 
associations. (Sheth and Parvatiyar 2000; Reichheld, 1996b; Kim and Cha, 2002; 
Zeithaml et al. 1996; Kotler et al. 1999; Bejou, 1997; Gronroos, 1994, Zineldin, 
2006) have discussed in various ways, some of the benefits of relationship marketing. 
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2.5.1 OrgaaizatioHl beaefi. . 
There are numerous benefits accruing to the organization for developing and 
main1aining effective relationships with their customers. Some of these benefits are 
briefly discussed below. 
Inereased referrals and word-of-mouth oommunieations 
Research has shown that, relationship marketing enables both customers and service 
providers to work together in determining ways to satisfy customer needs. This 
contributes to a ''we feeling" amongst customers who in tum reward the service 
provider with their loyalty (Bejou, 1997). Due to complexities involved in the 
evaluation of services before fina1 purchase, a lot of consumers often look to others 
for advice on which providers to be considered. This is where satisfied and loyal 
customers provide a firm with strong word-of-mouth endorsements and approvals 
thereby reducing the cost of attracting and recruiting new customers (Zeithaml et aI. 
1996). Referra1s are a vital source of new customers, and customers who show up on 
the strength of a personal recommendation tend to stay longer (Zineldin, 2006). 
Inereased purchases and eontinues profit 
Research has also shown that, where a service provider engages in long term 
relationships with a group of profitable customers, customer spending will increase 
over time (Gronroos, 1994). This is because when consumers get to know a firm and 
are satisfied with the quality of its services relative to that of its competitors, they will 
tend to give more of their business to the firm. Loyal customers are also willing to try 
some of the firm's new products first, no matter the cost, because they trust the firm 
(Sheth and Parvatiyar 2000). This will ultimately lead to increased sales and market 
share dominance. For example, a customer who repeatedly stays at the same hotel 
becomes more familiar with the hotel's full product line, such as gift shops and 
banquet rooms. That customer is likely to sample other product lines of the company. 
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Reductiou iD opentioul ast 
It is an established fact that it is cheaper to retain and serve existing customers than 
attracting new ones. Most often the initial cost of attracting and maintaining new 
customers can outweigh the revenue expected from new customers in the interim. 
However as times go by. the customer tends to have a few doubts and question which 
will lead to the service provider incurring lesser cost in serving the customer (Kim 
and Cha, 2002). 
High customer retention and feedback 
The ultimate benefit of relationship marketing is increased customer loyalty. 
Empirical evidence also suggests that reducing customer defections by just 15 
percent. companies can improve their profits by 25 percent to 85 percent (Kim and 
Cha, 2002). Loyal customers will also tell service providers about problems with their 
products and services enabling the fum to improve its products and services. 
Lower employee turnover rate 
One usually ignored benefit of relationship marketing is its ability to retain employees 
(Zeitbaml et al. 1996). This is because most employees love to work for firms whose 
customers are delighted, satisfied, and loyal. As such, a firm is able to retain 
employees when it has a stable base of satisfied customers. 
1.5.1 Benefits accruing to customers 
Research has uncovered specific types of relational benefits accruing to the 
customers. These include confidence benefits, social benefits, and special treatment 
benefits. 
Confidence Benefits 
These benefits comprise feelings of trust or confidence in the provider, along with a 
sense of reduced anxiety and comfort in knowing what to expect (Reichheld, 1996b). 
Customers have the sense of well being and quality of life as they have long term 
relationship with the service provider and because customers become part of the value 
creation process, it gives them some amount of security and some sense of trust and 
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commitment from the service providers (Gronroos, 1994). Most consumers have 
many competing demands for their time and money and are continually searching for 
ways to balance and simplify decision making to improve the quality of their lives. 
When they can maintain a relationship with a service provider, they free up time for 
other concerns and priorities. 
Social Benefits 
In some long-term customer-firm relationship a service provider may actually become 
part of the consumer's social support system (Zeithaml et al. 1996). For example, 
some relationsbip managers grow to even become personal confidants of the 
customer. The social support benefits resulting from these relationships are important 
to the consumer's quality of life both above and beyond the technical benefits of the 
service provided. 
Special Treatment Benefits 
Special treatment includes such things as getting the benefit of the doubt, being given 
a special deal or price, getting preferential treatment, and etcetera (Kotler et al. 1999). 
Here customers think that the service provider knows their preferences and have 
tailored services to suit their needs over a period of time and because they do not 
want to change this arrangement, they remain loyal and the firm receives more value 
compared to competitors. 
Savings on cost 
A major benefit of relationship marketing to the customer can be expressed in terms 
of reduced cost of the service to the customer (Bejou, 1997; Gronroos, 1994). Thus, 
with programmes such as frequent stay programmes by hotels, membership and 
loyalty cards, discount cards, and club cards, a customer is able to make a lot of 
savings as a result of the relationship built between themselves and service providers 
(Lovelock and Wirtz, 2007) 
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Having discussed the benefits of relationship marketing at the instance of both service 
providers and customers, it is also imperative to shed some light on the barriers which 
can impede the effective implementation of relationship marketing. The next section 
therefore discusses briefly, some of the challenges to successful relationship 
marketing. 
1.6 BARRIERS TO EFFECTIVE RELATIONSIDP MARKETING 
This section focuses on the potential difficulties in implementing a relationship 
marketing strategy. The researcher suggests that a number of attributes characterize 
the nature of the service and market structure, and are influential in an organization's 
ability to implement relationship marketing. Specifically, these are the absence of 
mutual cooperation; low level of involvement with the purchase; lack of 
professionalism of the service provider; and low level of personal contact. 
Absence of mutnal cooperation 
.. Successful marketing relationships involve co-operative partners, not power-
conscious adversaries", (Hunt and Morgan, 1994). One antecedent of relationship 
marketing is the theory on buyer-seller relationships, often in industrial markets. In 
some instances, one organization uses a significant coercive power over the other 
party to force the partner into compliance (see, for example, Wilson, 1995; Hunt and 
Morgan, 1994). Relationships typically require mutual co-operation or partnership 
rather than just acquiescence. Such co-operation is not encouraged where one party 
(particularly the seller) dominates in the process of relationship building. 
Low level of involvement with the purchase 
An increase in customer involvement (psychological, rather than just activity based) 
can be seen as an axiom for relationship marketing. Gummesson (l994) maintained 
that ''production and delivery of services involve the customer in an interactive 
relationship with the service provider'S personnel". The level of contact between the 
customer and organization is a key issue. For example, Lamming (1992) identified 
that information will very often need to be transferred between both parties in order to 
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facilitate relationship marketing. An increased level of involvement can also lead to 
mutual relationship commitment. without a high level of involvement by both parties 
it is bard to give high commitment and 'forsake others'. 
christy et al. (1996) claim that "a retailer of do-it-yourself supplies operates in a 
product-market where marketing relationships are less likely to emerge natural", as 
"the products themselves often command only low involvement from buyers." 
Lack of professionalism from the service provider 
It is often argued that professionalism is drawn from relationships between 
professional buyers and sellers in organizations and is difficult to draw a parallel 
between. Therefore, a service provider that has professionalism, in the sense that they 
are able to provide expert advice, or effectively handle complaints, for example, will 
serve to engender trust (see, for example, Cumby and Barnes, 1998; Montenegro and 
Costa, 1998). Further, reciprocal information transfer and other relationship 
facilitators will be essential to the conduct of business (See, for example, Dwyer et 
al., 1987; Gronhaug et al., 1998). However a lack of these could spark mistrust 
especially from customers thereby ruining the possibility of a long lasting relationship 
with a service provider. 
Low level of personal contact 
The more personal the service the greater the inclination towards increased 
communication, thus, giving a higher potential for the use of relationship marketing. 
Gummesson (1994) described his sixteenth relationship type "personal and social 
networks" as often a determinant of business networks. In some cultures, even, 
business is solely conducted between friends and friends-of-friends. "Personal 
involvement can be seen as being of great importance in services marketing (and RM 
in general) allowing interaction between both parties to take place in the service 
delivery process (see, for example, Gronhaug et at., 1998; Wilson, 1995) A further 
perspective is provided by Perrien et al., (1995), they maintain that "the role of front-
line people is a major issue" that should be taken into account to prevent losing an 
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existing (good) euatoJIB'~'I1R1s, pencma1 service also facilitates customer retention 
and the lack of it could ·frusttate the building of an effective relationship between a 
service provider and a customer. 
Having discussed the nature of relationship marketing, the next section discusses 
literatme on the consequence of relationship marketing (customer loyalty). It shows 
that when firms invest in Relationship Marketing, they will be rewarded with loyal 
customers. 
1.7.0 Cutomer Loyalty 
At a general level, loyalty can be described as "something that consumers may exhibit 
to brands, services, stores, product categories (e.g. cigarettes), and activities (e.g. 
swimmingj (Uncles et al., 2003). The main objective of relationship marketing is not 
only to attract and maintain long-term relationships, but service providers' practice 
relationship marketing hoping it will in the long-run lead to ultimate customer loyalty 
(Too et al., 2(01). For the purpose of this thesis however, the researcher assumes that 
customer loyalty is a term used to describe a customer who repurchases from the 
same service provider whenever possible, and who continues to recommend or 
maintains a positive attitude towards the service provider. A number of scholars, have 
stressed that, loyalty is an experience that is related to long term relationships (i.e. 
Jacopy and Kyner, 1973; Sheth and Parvatiyar, 1995). 'This makes loyalty the most 
important aspect of relationship marketing (palmer, 1994); and very central to the 
paradigm of relationship marketing (Hart et al., 1999). 
The concept of customer loyalty has become very significant in marketing today, 
since it is almost becoming a fact that profitability is enhanced as a result of 
maintaining current customers' as compared to attracting and winning new 
customers. 'This is due to the numerous benefits that come with having loyal 
customers. Loyal customers cost less to serve, they are usually not price sensitive 
and will purchase at any price, they act as advertisers for the service providers and are 
even willing to spend more with the company «Berry and Parasuraman, 1991; 
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Dowling and Uncles, 1997; Bowen and Shoemaker, 1998; Tepeci, 1999; Noon et al, 
2003). Considering the hospitality industry as an extreme service industry, customer 
loyalty is seen as one major driver of success. This is acknowledged by Pullman and 
Gross (2004) when they argued that loyal customers are the key to success for many 
services, particularly those in the hospitality sector. Bowen and Shoemaker (1998) 
also added that a small increase in loyal customers can result in a considerable 
increase in profitability. Further to this, scholars such as Kandampully and Suhartano 
(2000) have argued that the significance of customer loyalty is likely to become an 
essential requirement for the future survival of hotel organizations. 
In a research done by Tepeci (1999), it was found that loyal customers are more 
profitable for hospitality firms, because they are easier to serve than non-loyal 
customers and that customers are willing to invest their loyalty in businesses that can 
deliver superior value relative to competitors (Reichbeld 1996). According to Yang 
and Peterson (2004) there is a tendency for customers to avoid searching, locating, 
and evaluating purchase alternatives, which predisposes them to be loyal to one 
company. That is, when customers become loyal, they tend to avoid such processes 
that consume the time and effort required to be accustomed to new vendors 
(Shammout, 2007). 
The espoused literature argues that unlike in the manufacturing sector where loyalty 
may not be such an important issue, long-term relationship and loyalty in the service 
industry (hospitality industry), is an important issue and hoteliers must put in every 
effort to win the loyalty of their customers (see also Shammout, 2007 pp 57/58) 
2.7.1 Conceptualising Customer loyalty 
Many academic scholars have called for greater knowledge and understanding in 
relation to the process of developing customer loyalty (Oliver, 1999; Tsaur et al., 
2002; McMullan and Gilmore, 2008). This knowledge could help marketers in 
segmenting customers according to their phase within the process and management 
strategy adapted to the relationship-based needs of different levels of customer 
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loyalty because customers who are at various phases of customer loyalty development 
require differentiated strategies (Rowley, 2005). 
Unfortunately, there is no universally agreed definition for customer loyalty (Jacoby 
and Chestnut, 1978; Dick and Basu, 1994; Oliver, 1999). Although there are a 
considerable number of definitions in the expanding body of literature related to 
customer loyalty, this concept remains a little understood phenomenon. This is 
possibly because there is no globally agreed definition or appropriate way to measure 
loyalty (Jacoby and Chestnut, 1978; Dick and Basu, 1994; Oliver, 1999; Uncles et al., 
2003; Shammout, 2007). However, the most widely accepted definition of loyalty is 
by Jacoby and Kyner (1973). They described loyalty as the biased behavioural 
response (i.e. purchase), expressed over time by some decision making units, with 
respect to one or more alternative brands out of a set of such brands, and is a function 
of psychological (i.e. decision making, evaluation) processes (McMullan and 
Gilmore, 2008). This definition and many others have however been criticized by 
Oliver (1999) based on the collective failure to provide a unitary definition and the 
reliance on three phases; cognition, affect and behavioural intention. These three 
phases lead to a deeply held commitment, predicting that consumers develop loyalty 
in a linear fashion (Dick and Basu 1994). 
However, Oliver (1999) places greater emphasis on situational influences adding a 
fourth phase, action characterized by commitment, preference and consistency while 
recognizing the dynamic nature of the marketing environment. Thus he defines 
customer loyalty as " ... a deeply held commitment to rebuy or repatronize a 
preferred product or service consistently in the future, causing repetitive same brand 
or same brand-set purchasing, despite situational influences and marketing efforts" 
(Oliver, 1999). "Customer loyalty presents a paradox. Many see it as primarily an 
attitude-based phenomenon that can be influenced significantly by customer 
relationship management initiative such as the increasingly popular loyalty and 
affinity programs. However, empirical research shows that loyalty in competitive 
repeat-purchase markets is shaped more by the passive acceptance of brands than by 
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stroDgIy-held attitudes about them" (Uncles et al. 2003). Acconting to Uncles et al., 
(2003), even though there is DO one UDiversa1ly acceptable definition for loyalty and 
as such still remains an ambiguous concept, review of literature shows that scholars 
have defined customer loyalty using three popular conceptualizations. 
• Loyalty as an attitude leading to a relationship with the brand (model I) 
• Loyalty mainly expressed in terms of revealed behaviour and (model 2) 
• Loyalty based on individual's characteristics and circumstances. (model 3). 
These models are shown in figure 1 below. 
Figure 1: CODeeptualizatioDS of customer loyalty 
I~ ,::::tudes & positive beliefs toward L Modell ,---__________- -. 
I --------. Attitudinal-Joyahy to the bnmd 
'.JI ~ (mainly eeen as single-brand Ioyalty-
I• cT ohme millul.nuietryn m:e eomfb siegrnshifiipc ant others, & identity . L...-m_on_o.=.gam.......:;y..:...) _______- -J 
Model 2 
I Habitual revealed behaviour ~ 
~==========::: .... Behavioural-loyalty to the brands 
Satisr~ experience & weak ,_______ (mainly seen as divided-loyalty to a 
I....c _ :om_nu t_m e_nt _ to_b_nm_ds ____~ ! few brands - polygamy) 
Model 3 
IP urchase lituarion. usage occasions & ~L..v_UKty_.~~~~=.~ __________~ .  rC-o--dc-tc-rm-in-a-nts- o-f b-u-yin-g- br-an-d-(s)- ~ 
(mainly seen as weak loyalty or no 
IA_ n _ind_ivid_ua_l', .~ ....._ .~.. ·~ _._. m.  ._ 4-_e.s-_ ..-. _~   Ll~oy_a~l'"~ -~p=ro=mi-·~=·r=tyu· )~  ____~  ... characteristiCI . 
Source: UDcles et aL, (2003, pp 295) 
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1.7.1 Attitudinal loyalty (Loyalty .. aD attitude leading to a relationship with the 
brand) 
Many scholars and consultants have argued that, in order for true customer loyalty to 
exist, there must be strong "attitudinal commitment" (Day, 1969; Jacoby and 
Chestnut, 1978; Foxall and Goldsmith, 1994; Mellens et al., 1996; Reicbheld, 1996; 
Uncles et al., 2003). This form of commitment is seen as taking the form of a 
consistently favourable set of stated beliefs towards the brand purchased. These 
attitudes may be measured by finding out from customers how much they like the 
brand, feel committed towards it, how much they are willing to recommend it to 
others, and have positive beliefs and feelings about it - relative to competing brand's 
purchase and repeat patronage. This is what Oliver (1997) bad in mind when he 
defined customer loyalty as in above (Uncles et al., 2003). Butcher et al. (2001) 
relying on the attitudinal components in modell, defined customer loyalty as 
"psychological attachment ofa customer to a particular service provider." 
Ahluwalia et al. (1999) argued that, attitudinal-loyal customers are much less 
susceptible to negative information about their preferred brand than non-loyal 
customers and whilst Gremler and Brown, (1999) have also stressed that where 
loyalty to a brand in increased, it becomes easier for service providers to predict 
future revenues from loyal customers as analyses of cases such as Pizza Hut 
franchises and Federal Express bas shown. Czepiel and Glimore (1987) described 
attitudinal loyalty as a specific desire to continue a relationship with a service 
provider. Fournier (1998) view customer loyalty as a committed and affect-laden 
collaboration between consumers and service providers and this collaboration is even 
stronger when supported by various members of a household, social class, and any 
person who plays a role in decisions of customers (Arnould et al., 2002). 
Describing attitudinal loyalty, Cbaudhuri and Holbrook (2001) stressed that, it is the 
degree of dispositional commitment in terms of some unique value associated with 
the brand. Despite the psychological and sociological richness of the "attitudes drive 
behaviour" and ''relationship" approaches to understanding customer loyalty, these 
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conceptualizations of loyalty are not without criticisms (Dowling, 2002). For instance 
they are seen to be less applicable for understanding the buying of low-risk, 
frequently-purchased brands, or when impulse buying or variety seeking is 
undertaken. than for important or risky decisions (Dabholkar, 1999). However, Oliver 
(1999) argued that, there is little systematic empirical research to corroborate or 
refute this view of customer loyalty. Other researchers have also argued that there is a 
significant difference between commitment and loyalty and that the two do not mean 
the same. For example, Pritchard et al. (1999) argue that commitment serves as a 
precursor to loyal attitude and its appraisal is a function of continued patronage. 
Evanschitzky et al. (2006) argue that commitment differs from loyalty, where 
commitment refers to the economic, emotional, and/or psychological attachment that 
the customer may have toward the brand. 
In measuring attitudinal loyalty, the literature mainly focuses on customer preferences 
for a brand through repeat purchase intention (Cronin and Taylor, 1992); advocacy to 
others, referring to intention of word-of-mouth (WOM) or willingness to recommend 
a service provider (i.e., Zeithaml et al., 1996); and a tendency to resist switching to 
alternate service provider (i.e., Crosby and Taylor, 1983). Table 2.2 provides an 
overview on how relevant literature defmed attitudinal and behavioural loyalty using 
these components. Although Butcher et al. (2001) see that positive word-of mouth is 
a common approach used to conceptualize loyalty, other authors consider customer 
preference to the brand as a central part of customer loyalty (i.e., Dick and Basu, 
1994; Oliver, 1999). However, Yi and La (2004) suggest that the use of the three 
measures of repeat purchase intention, willingness to recommend a service provider, 
and tendency to resist switching, provides insight into the nature of customer loyalty 
(see Uncles et al. 2003, pp 295-298; Shammout, 2007, pp. 60-61). 
2.7.3 Loyalty mainly expressed in terms of revealed behaviour (Behavioural Loyalty) 
With respect to behavioural loyalty as represented in model 2 above, there seem to be 
so much controversy surrounding it, because loyalty in this model has been defined 
mainly with reference to the pattern of past purchases with very little regards to 
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customer motivation and commitment to the brand (Ehrenberg, 1988; Kahn et a1., 
1986; Fader and Hardie, 1996). However it could refer to a customer's behaviour on 
repeat purchases, indicating a preference for a brand or a service over time (Bowen 
and Shoemaker, 1998). Relationship marketing scholars have however found that 
only a few customers are absolutely loyal or disloyal, (Uncles et a1., 2003). Uncles et 
a1., (2003) found that only few customers are ''monogamous'' (100 percent loyal) or 
"promiscuous" (i.e. loyal to a portfolio of brands in a product category) thereby 
leading some scholars to define loyalty as "an ongoing propensity to buy the brand, 
usually as one of several" (Ehrenberg and Scriven, 1999). 
The behavioural concept was developed to understand brand loyalty related to goods 
in the marketing domain, which was later used within the service marketing context. 
From this behavioural perspective, loyalty generally has been defined in terms of 
purchases measured over a defined period of time. These measures include 
purchasing frequency (i.e., Liljander and Strandvik, 1993a), proportion of purchases 
(i.e., Backman and Crompton, 1991), purchase sequence (i.e., Kahn et al., 1986), and 
probability of purchase (Massey et al., 1970). Scholars argue that behavioural loyalty 
arises as a result of trial and error. Thus through trial and error, the customer chooses 
the brand that provides the most satisfactory experience; making loyalty (measured 
by repeat purchase), the result of repeated satisfaction that in turn leads to a weak 
commitment. 
Consumers buy the same brand again, not because of any strongly-held prior attitude 
or deeply-held commitment, but because it is not worth the time and effort to search 
for an alternative. Thus if the usual brand is not available or in short supply, then a 
substitute brand will be purchased (e.g. East, 1997; Ehrenberg et al., 1997; Ehrenberg 
et al., 2003; Uncles et al., 2003). Despite the use of behavioural measures such as 
repeat purchase in loyalty research remains accepted (Bloemer and de Ruyter, 1998), 
these behavioural measures have received their fair share of criticisms. For instance, 
it has been argued that repeat purchase does not provide a clear distinction between 
true, or intentionally loyal, and superiorly loyal customers (Moulson, 1965). This is 
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because, a customer may purchase a product not necessarily because of loyalty but it 
may be due to lack of choice or even low income (Hart et al., 1999). It has also been 
argued that, the behavioural approach to loyalty fails to explain why and how 
customer loyalty develops (Dick and Basu, 1994). As a response to these criticisms of 
both attitudinal and behavioural perspectives of customer loyalty, studies on customer 
loyalty have suggested a third approach to customer loyalty known as the 
circumstantial loyalty discussed in the next section (see Uncles et al., 2003, pp 295-
298; Shammout, 2007, pp 59-60) 
2.7.4 Loyalty bued on individual's characteristics and circumstances and/or the 
purehase situation (loyalty based on contingency factors) 
The shortcoming of adopting either behavioural or attitudinal measures of loyalty was 
questioned in an earlier study by Day (1969), who argued that an attitudinal 
dimension should be added to the behavioural dimension. In practical terms, he 
described loyalty as " ... a buyer has a brand loyalty score for each brand purchased in 
a given period based on share of total purchases and attitude toward the brand". 
Further support for Day's two-dimensional view can be found in the empirical study 
of Olson and Jacoby (1971), who define loyalty as "a process in which various 
alternative brands are psychologically compared and evaluated on certain criteria and 
the selected brand or brands are selected." Assael (1992) defined brand loyalty as "a 
favourable attitude toward a brand resulting in consistent purchase of the brand over 
time". Accordingly, the interaction of attitudinal and behavioural components has 
become frequently used in the theoretical literature conceptualizing loyalty. 
Therefore, in this thesis customer loyalty is considered as a composite concept 
combining both behavioural and attitudinal loyalty. The proponents of this model also 
known as the circumstantial or contingency approach to customer loyalty, have 
argued that, the best way of operationalizing loyalty is ''to allow the relationship 
between attitude and behaviour to be moderated by contingency variables such as the 
individual's current circumstances, their characteristics, and/or the purchase situation 
faced" (Uncles et al., 2003). These individual circumstances include limitations in 
finances (limits desire to purchase expensive brand), time pressure (e.g. the need to 
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buy any brand in the category at the next available opportunity). Individual 
characteristics are reflected in the desire for variety, habit, the need to conform, the 
tolerance for risk, amongst others whereas purchase situation effects are reflected in 
the availability of products, promotion and deals, the particular occasion when 
product is used (example, gifts, personal use or family use) 
According to Uncles et al., (2003), the main difference between the contingency 
perspective and attitudinal approach to loyalty is that the former's variables are 
elevated from the status of loyalty inhibitors as shown in model one to loyalty co-
determinants in Model three. They stressed that Oliver's (1997 and 1999) definition 
reveals that attributes of the individual and the purchase situation are conceptualised 
as irritant variables that inhibit the natural evolution of customer loyalty, whereas in 
the contingency model these variables are seen as playing very important roles in 
explaining the observed patterns of purchase behaviour and that it is even more 
obvious where attitudes are weakly held. They further stressed that, in such situations, 
it is repeated satisfaction and weak commitment together with other pertinent 
contingency variables that co-determine future brand choices. Below are some 
selected definitions and measures of customer loyalty as adapted from Shammout, 
(2007, pp 63) 
Table 2.2 Selected Definitions !Measures of Customer Loyalty 
Behavioural new measures, 
sequence 
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as a buyer 
Attitudinal brand loyalty score for 
each brand purchased in a 
given period , based on 
share of total purchases 
and attitude toward the 
brand 
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2.15 CustoDIer Loyally ia Related Litentore of ReiadoDShip Marketing 
Authors have defined andlor measured the construct of customer loyalty differently, 
based on the three approaches demonstrated earlier. For example, some authors only 
viewed customer loyalty from a behavioural perspective. This can be clearly seen in 
the recent study of De Wulfet al. (2001), who view customer loyalty as"a composite 
measure based on a consumer's purchasing frequency and amount spent at a retailer 
compared with the amount spent at other retailers from which the consumer buys." 
They have built up their definition of loyalty based on the idea suggested by Sharp 
and Sharp (1997) that the effectiveness of relationship marketing tactics should be 
evaluated through the behavioural changes they created. More recently, Liang and 
Wang (2005) also investigated customer loyalty in a financial service context, and 
define it as a behavioural construct, although the items they used to measure customer 
loyalty reflect attitudinal as well. 
They measure behavioural loyalty in terms of repurchasing intentions, 
recommendations to others, and intersecting purchase intentions. On the other hand, 
authors such as Hennig-Thurau et al. (2002) have defmed customer loyalty from an 
attitudinal perspective by including word-of-mouth as a separate variable in their 
model. Because most research in relationship marketing focuses on repeat purchase to 
capture customer loyalty (Too et al., 2001), recent studies have included attitudinal 
and behavioural customer loyalty. Palmatier et al. (2006) view customer loyalty as 
combining intentions, attitudes, and seller performance indicators. They argue that 
customers with weak relational bonds and little loyalty may continue dealing with 
their service provider due to perceptions of high switching costs or insufficient time 
to evaluate alternatives. Table 2.3 summarizes the various definitions of customer 
loyalty as reviewed in relationship marketing literature and the context in which they 
were defined. 
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Table 2.3' Review of Relationship Marketing Literature on Customer Loyalty 
Authors ADDroaeb DefinitioDSIMeasures Context 
DeWulf et al. Behavioural Defined as a composite measure Cross-industry 
(2001) based on a consumer's 
purchasing frequency and 
amount spent at a retailer 
compared with the amount spent 
at other retailers from which the 
consumer buys 
Liang and Wang Behavioural Measured in terms of Financial service 
(2005) repurchasing intentions, industry 
recommendations to others, and 
intersecting purchase intentions 
Hennig-Thurau et Attitudinal Measured in terms of attitudinal Different 
al. (2002) loyalty Services 
Shamdasani and Behavioural Defined in terms of repeat Personalized 
Balakrishnan and patronage, switching service 
(2000) attitudinal behavioural, word of mouth 
recommendations, and 
complaints 
Too et al. (2001) Behavioural Defined as a multi-faceted Retail 
and construct which takes into 
attitudinal account both psychological and 
behavioural components 
KimandCha Behavioural Share of purchase, relationship Hotels 
(2002) and continuity, and word of mouth 
attitudinal treated as a separate construct 
and consequence of relationship 
quality 
Lin and Ding Behavioural Defined in terms of repeat ISP service 
(2005) and patronage, switching 
attitudinal behavioural, and word-of-mouth 
recommendations 
Palmatier et Behavioural Defined as composite or Meta-analysis 
al. (2006) and multidimensional construct framework 
attitudinal combining different groupings 
of intentions, attitudes, and 
seller performance indicators 
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1.7.6 bnplicatioBs for practice of die various models of customer loyalty 
The implications for practice of the various loyalty conceptualizations largely depend 
on the model one adopts. For example, proponents of the attitudinal approach as 
depicted by model one will usually aim to boost sales by enhancing beliefs about the 
brand and strengthening the emotional commitment of customers to their brand. Other 
tactics used also include image-based advertising, persuasive advertising and personal 
service programmes (Brown, 2000). As regards supporters of the behavioural model 
where it is suggested that most customers have double loyalty to frequently purchased 
brands, customers tend to view Relationship practices more as publicity that sustains 
awareness and offers reinforcement, rather than as highly persuasive information that 
fundamentally changes their attitudes and/or levels of commitment (Ehrenberg et al., 
1998). Uncles et al., (2003) thus suggests that, managers who refer to the use of the 
behavioural approach try to maintain their sales growth by matching competitor 
initiatives and being consistent with product supply. Proponents of the contingency 
model usually adopt a slightly different approach. They lay emphasis on what might 
seem to be ordinary factors such as continuous availability of stock (hotel rooms in 
this case), extending opening hours (Le. casinos) and offering appropriate assortment 
mix for various usage situations (see Uncles et al., 2003, pp 295-299) 
In summing up on the definition of relationship marketing, literature has clearly 
demonstrated that customer loyalty is a crucial component in relationship marketing 
and in particular the hospitality sector. In agreement with previous literature, 
customer loyalty in this thesis has been reviewed through three popular approaches 
namely behavioural, attitudinal and a composite of behavioural and attitudinal (two-
dimensional approach or contingency approach). A review of literature has revealed 
that it is insufficient to define customer loyalty from a single perspective of either 
behaviours or attitudes. Thus, scholars in relationship marketing, empirically support 
the use of a combined approach to defining customer loyalty as Too et al. (2001) 
argued that "the strongest conceptualization of customer loyalty is a multi-faceted 
construct which takes into account both attitudinal and behavioural aspects." In line 
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with this, the thesis adopts the use of this combined approach to defining customer 
loyalty. 
1.8 CONCEPTUAL FRAMEWORK 
As discussed earlier, this study is concerned with understanding Relationship Marketing, 
Customer Satisfaction. and Customer Loyalty. The previous chapters have discussed 
these constructs. However, their linkages have not been well developed. 
This section integrates the discussions in the previous sections to provide a broader 
perspective of Relationship Marketing, Customer Satisfaction and Customer Loyalty. In 
this direction, a model of Relationship Marketing, Customer Satisfaction, and Customer 
Loyalty is first presented. This is followed by a discussion of the variables of the model 
and how they are linked together. The framework assumes that Relationship Marketing 
has certain core practices which are clearly delineated as trust, commitment, 
communication, conflict handling, competence, and relational bonds. I also show how the 
constructs of relationship marketing and customer loyalty are measured. 
Figure 2.3 Conceptual Framework for the Current Thesis 
RelatioDflUp pradices 
Customer Loyaltv 
Commitment 
Attitudinal loyalty 
CommODieation 
Behavioural loyalty 
Confliet handling 
Composite measures 
Competence 
(combination of attitudinal 
Trust 
and behavioural loyalty) 
Relational Bonds: 
(Social and Financial) 
Customer 
Satisfaction 
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The core contribution of the framework is that, it is designed to depict a relationship 
situation where relationship marketing could have two outcomes; customer loyalty and 
customer satisfaction. In this direction. relationship marketing can lead directly to 
customer loyalty or it can lead to customer satisfaction and subsequently customer 
loyalty. Our main concern is to investigate and clarify the relationship between 
relationship marketing and customer loyalty, customer satisfaction and Customer loyalty 
and whether all loyal customers are necessarily satisfied. As such two scenarios will be 
examined and various circumstances under which each scenario occurs will be examined. 
The variables in the model are subsequently discussed below. 
2.8.1 Relationship Marketing Practices 
The literature review bas been silent on the practices of relationship marketing. However 
these practices as have been discussed in various literatures are critically examined in this 
section. A review of current literature clearly shows that scholars agree that relationship 
marketing practices is multi-faceted (Claycomb and Martin, 2002; Narteh, 2009). Even 
though scholars have identified about eighteen practices that lead to effective relationship 
marketing (Narteh, 2009), this study focuses on six common practices because these 
practices have been frequently discussed in the literature as practices of relationship 
marketing. 
Trust 
A review of current literature shows that trust bas frequently been mentioned as one of 
the most important underpinnings of relationship marketing. Relationship marketing is 
based on a notion of trusting co-operation with known customers. Hence, firms have to 
get to know their customers much better than is the case today (Gronroos, 1996). Trust 
bas been described as " ... a willingness to rely on an exchange partner in whom one has 
confidence" (Moorman et al., 1993). A betrayal of this trust by the supplier or service 
provider could lead to defection. Schurr and Ozanne (1985) defined the term as the belief 
that a partner's word or promise is reliable and a party will fulfill his/her obligations in 
the relationship. Other authors have defined trust in terms of opportunistic behaviour 
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(Dwyer et aI., 1987), sbared values (Morgan and Hunt, 1994), mutual goals (Wilson, 
1995), uncertainty (Crosby et aI., 1990), action, with positive outcomes (Anderson and 
Narus, 1984) and making and keeping promises (Bi1Der, 1995). 
Calonius (1988) emphasized that an integral element of the relationship marketing 
approach is the promise concept. He argued that the responsibilities of marketing do not 
only, or predominantly, include giving promises and thus persuading customers as 
passive counterparts in the marketplace to act in a given way, but also in keeping 
promises, which maintains and enhances evolving relationship. Fulfilling promises that 
have been given is equally important as a means of achieving customer satisfaction, 
retaining the customer base, and securing long-term profitability besides fanning the fire 
of trust (Reichheld and Sasser, 1990), Indeed, one would expect a positive outcome from 
a partner on whose integrity one could confidently rely (Morgan and Hunt, 1994). The 
study therefore posit that if the resources of the hotels are used in such a manner that the 
customer's trust in them, then the relationship between the hotels and the customers will 
be maintained if not strengthened resulting in improved customer loyalty. 
Commitment 
Commitment is another very important determinant of the strength of a marketing 
relationship, and a useful construct for measuring the likelihood of customer loyalty and 
predicting future purchase frequency (Gundlach et aI., 1995; Morgan and Hunt, 1994; 
Dwyer et aI., 1987). Wilson (1995) observed that commitment was the most common 
dependent variable used in buyer-seller relationship studies. In sociology, the concept of 
commitment is used to analyze both individual and organizational behaviour (Becker, 
1960) and mark out forms of action characteristic of particular kinds of people 0: gr.;~:: 
(Wong and Sohal, 2002), while psychologists define it in terms of decisions or cognitions 
that fix or bind an individual to a behavioural disposition (Kiesler, 1971). 
In the marketing literature, Moorman et aI., (1992) have defined commitment as an 
enduring desire to maintain a valued relationship. This implies a higher level of 
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obligation to make a relationship succeed and to make it mutually satisfYing and 
beneficial (Gundlach et aI., 1995; Morgan and Hunt, 1994). Since, commitment is higher 
among individuals who believe that they receive more value from a relationship. highly 
committed customers should be willing to reciprocate effort on behalf of a firm due to 
past benefits received (Mowday et al. • 1982) and highly committed firms will continue to 
enjoy the benefits of such reciprocity. This indicates that if the hotels show more 
commitment to their customers. they will reap the benefit of repeat business from the 
customers leading to customer loyalty 
Communication 
In this context, 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). Communication in 
relationship marketing means: keeping in touch with valued customers. providing timely 
and trustworthy information on service and service changes, and communicating 
proactively if a delivery problem occurs. It is the communicator's task in the early stages 
to build awareness. develop consumer preference (by promoting value, performance and 
other features), convince interested buyers, and encourage them to make the purchase 
decision (Ndubisi and Chan, 2005). Communications also tell dissatisfied customers what 
the industry is doing to rectify the causes of dissatisfaction (Ndubisi. 2007). According to 
Kotler and Keller. (2006), Companies are beginning to realise the need to customize 
communications to meet the need of different target groups of consumers. Companies are 
thus no longer concerned with how they can reach their customers but how they can 
make it easy for their customers to also reach them. This study assumes that if the 
communications between hotels and its customers is effective, a better relationship will 
result and customers will be more loyal to the hotels. 
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Confliet Handliag 
In the course of delivering a service, there are bound to be some occasional service 
failures in spite of all the efforts put in by the service provider (Lovelock and Wirtz, 
2007). According to Zeithaml and Bitner, (2000), "Service failure is inevitable even for 
the best firms with the best of intentions and even for those with 'world class' systems". 
Dwyer et al. (1987) viewed conflict handling as a supplier's ability to avoid potential 
conflicts, solve manifest conflicts before they create problems, and discuss solutions 
openly when problems do arise. How well this is done will determine whether the 
outcome is loyalty, "exie' or "voice". Rusbult et al. (1988) concluded that the likelihood 
of these behaviours in individual cases depends on the degree of prior satisfaction with 
the relationship, the magnitude of the customer's investment in the relationship, and an 
evaluation of the alternatives available. Ndubisi and Chan (2005) found a significant 
relationship between conflict handling and customer loyalty, indirectly through trust and 
perceived relationship quality. The study therefore assumes that if the hotels handle 
conflict well, it will directly influence their customer's loyalty. 
Relationship Bonds 
Building strong bonds is a key objective of relationship marketing (Smith, 1998). Bonds 
have been described as "psychological, emotional, economic, or physical attachments in a 
relationship that are fostered by association and interaction and serve to bind parties 
together under relational exchange" (Smith, 1998). In a hotel's attempt to build and 
maintain relationships with customers, emphasis must be placed on the need to establish a 
personal rapport. This could be in the form of service providers taking steps to make 
friends with their customers and to establish name basis contact early in the relation!:hip 
(Beatty et al. 1996). (See Shammout, 2007), it has been suggested by Lin et al. (2003) 
that hotels can build customer relationships by developing one or several types of bc::d~. 
Vieira and Ennew (2004) also maintain that certain types of bonds or ties are required to 
develop relationships between two parties, in this regard customer and service pro. .. id~. 
Other authors have argued that in order to strengthen the relationship between customers 
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and service providers, a variety of bonds are needed (Liljandar and Strandivik, 1995; 
Wilson and Mummalaneni, 1986). 
Several types of bonds have been investigated in relationship marketing literature (i.e., 
HAkansson, 1982; Wilson and MummaIaneni, 1986), the main focus of relationship 
marketing researchers is to examine three types: financial, social and structural. With the 
exception of Smith (1998), the earlier works by business-to-business authors have only 
established empirical evidence for two of them, social and structural bonds (see Han, 
1991; Wilson, 1995; Holmlund and Kock, 1996; Rodriguez and Wilson, 2002). This is 
because they are applicable to the effective development of buyer-seller relationships. 
Holmund and Kock (1996) argue that social and structural bonds are more widely 
discussed in relationship marketing than others. Williams et al. (1998) point out that 
bonding is typically conceptualised as "a dichotomy between structural and social 
bonding." However, within the same setting Smith (1998) argues that functional or 
economic bonds also serve to bind parties to a relationship. Thus, relational bonds in his 
study have been treated as a higher order construct comprising the three types of 
functional, social and structural relational bonds. 
Following Smith's (1998) study, financial bonds also have become the main focus of 
business-to-customer studies. This can be seen in the studies of Peltier and Westfall 
(2000), Lin et al. (2003), Hsieh et al., (2005), Liang and Wang (2005), and Wang et al. 
(2006), who have separately investigated the impact of each of the three relational bonds 
on other relational outcomes, rather than treating them as one higher-order construct. This 
way is consistent with earlier works of Berry and Parsuraman (1991) and Berry (1995), 
who theorised that relationship marketing, can be practiced on one of three levels, 
depending on the type and number of bonds implemented to secure customer loyalty. 
According to Berry and Parsuraman (1991) and Berry (1995), the first level of 
relationship marketing relies on pricing incentives to secure customer loyalty (i.e., 
financial bonds). This is usually referred to as level one relationship marketing, and 
considered the lowest level because competitors can easily duplicate price stability. 
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f!'~, . 
~'(!. ICIC8J1d level ...... _ 1M soeiaJ ~ through personalization of the 
teIatiousbip, which is less easily imitated by competitors (i.e., social bonds). Level three 
of'~ ma4eting offers sIruebIntI soluticms to eustomer problems, providing the 
most potential thr oompedtive difIeren1iation. DeWulf et aI. (2001) and De WuIf et aI. 
(20&3) have been the only notable studies to distinguish between four types of tactics 
being distributed across only two levels of relationship marketing rather than three. Level 
one ofrelatioDship marketing consists oftaDgible rewards (financial bonds), whilst level 
two consists of direct mail, preferential treatment, and interpersonal communication 
(social bonds). These authors did not examine the third level of relationship marketing 
(structural bonds) because they believe that solutions to customer's problems belonging to 
this type are built into the service-delivery system rather than depend on relationship 
building skills (see Shammout, 2007, pp 28-29). 
In line with DeWulf et aI. (2001), this thesis focused on social and financial bonds 
because preliminary investigations prior to the start of this study revealed that most hotels 
within the greater Accra region relied heavily on social and financial bonds to secure the 
loyalty of their customers. Consequently these two are discussed below. 
SoeiaIaad FinaDeiai beads 
Social bonding is referred to as ''the degree of mutual personal friendship and liking 
shared by the buyer and seller" (Wilson 1995). In relationship marketing, the root of this 
type ofbond is derived from business-to-business literature, where it was used to indicate 
good personal relations (i.e., Smith, 1998; WIlliams et aI., 1998; Rodriguez and Wilson, 
2002). In conceptualising social bonds, Han (1991, p.61) describe these as ''the degree to 
which certain ties link and hold a buyer and seller together closely in a personal 
(emotional sense)." Other studies expanded this definition and included buyer-seller 
interactions. For example, Smith (1998), and Ling and Wang (2005) define social bonds 
as personal ties or linkages that are forged during interaction at work. Their view was 
adapted from the earlier work of Turner (1970), who saw personal bonding as similar to 
the social bonds. Thus, social bonds include linking of identities through self-disclosure, 
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~li~_ II, pnwiding support OJ' ..mee. beiDg empatI1etic 8Ild respcmsive. feelings Of 
ditiation, attacfunesrt, or (l()DIlCCtednes and sIwed experience. Lin et aI. (2003) and 
Hsieh et al. (2005) pmride a IDOIe eompleIe view by defiDiDg social bonds as personaI 
ties that relate to service dimensions that offer interpersonal exchanges, friendships. and 
identifications. 
This view is included in this thesis, as it includes all aspects of personal treatment that 
loyal guests may experience during their interaction with hotels. Berry and Parasuraman 
(1991) 8Ild Berry (1995) referred to social bonds as level two (intennediate level) of 
re1ationship maJ:keting in securiDg customer loyalty. At this level, the service provider 
goes further than price incentives to build lasting relationships by building social bridges 
with customers without neglecting the price competition. They maintain that customers 
who are treated personally should have stronger reasons not to switch companies, 
although social bonds do not overcome price differences or any weaknesses in service 
delivery (Berry and Parasuraman, 1991). Liang and Wang (2005) supported this view 
when he argued that "although social bonds cannot replace price attraction, social 
bonding provides customized services that develops an independent relationships, allows 
the customers to trust and be satisfied with the retailers' service, and assists 
understanding and learning about the customer's needs and expectations." 
In general, social bonds consist of many aspects, including familiarity, friendship, social 
support, keep in touch, self-disclosure, or any interpersonal interaction (Price and 
AmouId, 1999). According to Han (1991), these aspects measure the strength of personal 
relationship between two parties, buyer and seller. This type of relationship is likely to 
range from a business relationship to a close social relationship. Social bonds develop 
through subjective social interactions (Wilson, 1995). Zeithaml and Bitner (1996) 
maintain that these bonds can be derived from both customer-customer and customer-
provider interactions. Thus repeated interpersonal interactions foster the development of 
familiarity towan! one's exchange partner, and attraction not only towan! the relationship 
but also toward the partner (Han, 1991). 
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On the other hand. financial bonds have been described as frequency marketing or 
retention marketing, where the service provider uses economic benefits, such as price, 
discounts or other financial incentives to secure customer loyalty (Berry and 
Parasuraman, 1991; Berry, 1995; Lin et al., 2003; Hsieh et al., 2005). In a hospitality 
context, for example, hotel chains may provide free or discounted travel services to 
frequent guests through loyalty programs (Berry and Parasuraman, 1991). Airlines may 
design financial programs enabling frequent travellers to accumulate mileage redeemable 
for free or upgraded travel is another example (Lin et al., 2003). 
Berry and Parasuraman, (1991) and Berry (1995) suggested that financial bonds are the 
easiest type of bond for competitors to imitate. This type of bond does not offer long-term 
competitive advantages leading Berry and Parsuraman, (1991) and Berry (1995) referred 
to this type as level one, which is considered the weakest or the lowest level of 
relationship marketing building. Dwyer et al. (1987) supported this view when they 
reiterated that economic rewards could be used in the exploration phase of the 
relationship development process. More recent empirical research has found that 
financial bonds need to be modelled in addition to other relational bonds, such social 
bonds (Smith, 1998; Lin et al., 2003; Hsieh et al., 2005; Liang and Wang, 2005). That is, 
researchers agree that saving money is one motivation for engaging in a relationship with 
the service provider (Berry, 1995; Peterson, 1995; Lin et al., 2003; Hsieh et al., 2005; 
Liang and Wang, 2005; Wang et al., 2006) (see Shammout, 2007, pp 27-31). The 
researcher thus stresses the importance of bonds between service providers and customers 
are an important factor in the achievement of a higher level of customer satisfaction, and 
long-term loyalty of the customer and thus prevent customers from switching to another 
competitor. 
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Competenee 
Competence has been reviewed in many literatures as the buyer's view of the supplier's 
tecbnological and commercial competence (Anderson and Weitz, 1989). Researchers 
have operationalised competence in four ways: 
• The amount of knowledge a service provider possesses about the market 
• The ability of the service provider to give good advice on the operating business, 
• The ability to help the buyer plan purchases and 
• The ability to provide effective sales promotion materials. 
Empirically, Aldlaigan and Buttle (2005) established that one major way by which 
customers become very attached and committed to service providers is the level of 
organizational competence displayed by the service provider. Within the hospitality 
sector, competence could imply deploying knowledgeable staff capable of providing 
accurate and timely services handle customer complaints and above all be passionate 
about service quality. Thus the hotel must display that it has the capacity to provide fIrst 
class hotel service to its customers if it is to win their confIdence, trust and ultimate 
loyalty (see Narteh, 2009, p. 18). Even though Ndubisi's model which formed the basis 
for this study excluded competence and relational bonds, the researcher deemed the two 
as very important determinants of customer loyalty in the hospitality industry considering 
the nature of its operations. 
2.8.2 Customer Loyalty 
In general, there are three distinctive approaches to measuring customer loyalty. These 
have been extensively discussed in the literature and include: 
• Behavioural measurement 
• Attitudinal measurement and 
• Composite measurements (a combination of the above two) 
The behavioural measurements consider consistent, repetitious purchase behaviour as an 
indicator of loyalty however it has been argued that repeat purchases are not always the 
result of a physical commitment toward the brand (Tepeci, 1999). For example, a 
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1l'aveller may stay at a hotel because it is the most convenient location. When a new hotel 
opens across the street. they switch because the new hotel offers better value. Thus, 
repeat purchase does not always mean commitment or loyalty to a service provider. As 
regards attitudinal measurements, it uses attitudinal data to reflect the emotional and 
psychological attachment inherent in loyalty. The attitudinal measurements are concerned 
with the sense of loyalty, engagement and allegiance. There are instances when a 
customer holds a favourable attitude toward a hotel, but he/she does not stay at the hotel 
(Toh et aI., 1993). A guest could hold a hotel in high regard, recommend the hotel to 
others, but feel the hotel was too expensive for him/her to use on a regular basis. Whilst 
behavioural and attitudinal measures of customer loyalty measure loyalty "uni-
dimensionally", a third approach composite measurements of loyalty, combine the first 
two dimensions and measure loyalty by customers' product preferences, propensity to 
switch, frequency of purchase, recency of purchase and total amount of purchase 
(Pritchard and Howard, 1997; Hunter, 1998; Wong et aI., 1999). The use of a composite 
approach to measure customer loyalty goes a long way to increase the predictive power 
of loyalty (Pritchard and Howard, 1997). The two-dimensional composite measurement 
approach has been applied and supported as a valuable tool to understand customer 
loyalty in several fields, such as retailing, recreation, upscale hotels and airlines (Day, 
1969; Jacoby and Kyner, 1973; Backman and Crompton, 1991; Pritchard et aI., 1992; 
Pritchard and Howard, 1997). The study thus adopts the composite approach to customer 
loyalty and assumes that loyal customers are customers who hold favourable attitude:: 
toward the company, commit to repurchase the product or service, and recommend the 
product to others. 
2.8.3 Relationship Marketing and Customer Loyalty 
Reading through the many literatures available, it is without doubt that the target of 
relationship marketing between customers and service providers is customer loyalty. 
According to Palmatier et aI. (2006), improvements in customer loyalty is one of the most 
desired outcomes of adopting the use of relationship marketing activities. This is because 
the main objective of Relationship Marketing is to establish a long-term relatio:-.:;h!y 
which translates into customer loyalty. In order to achieve loyalty however, Palmatier et 
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al. (2006), argued that the quality of Relationship should be given the highest level of 
attention as the main predictor of relationship marlteting. Thus the relationship marketing 
practices as showed in the conceptual framework, must be constantly improved to 
guarantee continuous loyalty of the customer. 
There is ample evidence by many authors that the linkage between relationship marketing 
constructs namely: commitment, trust, competence, relational bonds, and satisfaction and 
loyalty is not in doubt (Kim et a1. 2001). As such there is enough evidence to support the 
framework developed for this study. Ndubisi, (2007), demonstrated clearly that the 
measurements of the "underpinnings" of relationship marketing are sure predictors of 
customer loyalty and thus urged researchers and strategists aiming to nurture loyal 
customers to pay close attention to issues of trust, commitment, communication and 
conflict handling. Kim et a1., (2002) again found out that there is a positive link between 
relationship marketing practices and repeat purchase. Liang and Wang (2005) also found 
that relationship marketing practices have led to greater behavioural and attitudinal 
loyalty. 
Kim and eha again (2002) reiterated that, hotel managers must foster trust and 
satisfaction in order to generate relationship continuity and increased word-of-mouth 
communications. Concerning trust, Reicbbeld and Schefter (2000) stressed that it is 
important to first gain the trust of your customers if a service provider will at all gain the 
customers loyalty. Thus the more a customer trusts a relationship, the more he becomes 
loyal. On the issue of commitment, almost all available literature on marketing have 
stressed the important link between commitment on the part of the service provider 
towards meeting the needs of the customer and achieving customer loyalty. Most authors 
have argued that customers, who feel committed to a service provider, are more likely to 
stay loyal to a service provider rather than switching to other competitors. Amongst the 
many proponents of a positive relationship between commitment and loyalty include 
Ndubisi, 2007; Pritchard et a1., 1999; Gronroos, 1994; and Morgan and Hunt, 1994. 
Ndubisi, (2007), again found a positive relationship between conflict handling and 
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communication and customer loyalty. Furtherance to this, customer loyalty has been 
considered as an important source of long-term business success (Rust and Zahorik, 
1993), and building a relationship with a customer is a good way to retain loyal 
customers in the long-term (Sheaves and Barnes, 1996). To further reinforce this stance, a 
study conducted by Barnes (1997) suggested that it is unlikely that customers may be 
retained, often for very long periods, without a genuine relationship being present. Thus 
the framework assumes that a positive relationship exists between relationship marketing 
practices and customer loyalty. 
2.8.4 Relationship Marketing, Customer SatisfaetioD aDd Customer Loyalty 
A significant way to achieve strong relationships and hence long term customer loyalty is 
to ensure that customers are satisfied. Customer satisfaction has been described as one of 
the major determinants of a customer's decision to switch or remain loyal to a service 
provider (Lemon et al., 2002). Customer satisfaction is an important issue for marketing 
managers, particularly those in services industries (Bennett and Rundle-Thiele, 2004). 
Customer Satisfaction is defined as "the individual's perception of the performance of the 
product or service in relation to his or her expectations" (Torres & Kline, 2006). 
Expectations as used in the definition, relates to the perceived level of service that 
consumers hope to obtain from a hotel (Torres & Kline, 2006). According to Kotler and 
Keller (2006), the satisfaction level of a consumer is determined at the evaluation stage of 
the decision making process when the consumer compares the level of service obtained 
with their level of expectations. The customer after the evaluation will either come out 
satisfied or dissatisfied 
The usual proposition is that dissatisfied customers will defect thus ending the 
relationship. However several researchers have proposed that, the above proposition is 
only a simplification of the issues (Liljander and Strandvik, 1993a, 1993b; Oliver, 1989; 
WoodrufIet al., 1983; Zeithaml et aI., 1993). This assertion that customers defect when 
they are dissatisfied has been refuted by Zeithaml et al., (1993). According to Zeithaml et 
al., (1993), customers appear to have a zone of tolerance which they defined as "the 
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difference between an adequate and a desired level of service". Preceding this argument 
was also the assertion made by Kennedy and Thirkell (1988), that customers are 
"prepared to absorb some unfavourable evaluations before expressing them in terms of 
net dissatisfaction" in that a customer may be dissatisfied with the quality of service 
provided but yet be satisfied with the relationship he has with the service provider hence 
deciding to continue doing business with the service provider. 
Therefore it is not all loyal customers who are satisfied with the services of a service 
provider. Some customers may continue to remain loyal despite being dissatisfied with 
the service provided. Reicbbeld (1993) have also argued that customer satisfaction may 
not always lead to customer loyalty. Thus even though some customers may be very 
satisfied with the long term relationships and service provided, it will not always translate 
into loyalty. Reicbbeld, (1993) argued that between 65 per cent and 85 per cent of 
customers who defect say they were satisfied or very satisfied with their former supplier. 
GrOnbaug and Gilly (1991) argue that dissatisfied customers may remain loyal because of 
high switching costs. Establishing a new relationship represents some sort of investment 
of effort, time and money which amounts to a significant obstacle to the customer's 
taking action when dissatisfied with a distinct interaction during a relationship. 
There are clearly aspects of relationship strength other than customer satisfaction. For 
instance there may be strong bonds between the customer and the provider. These bonds 
serve as switching barriers despite the customer not being satisfied with the relationship 
strength (Liljander and Strandvik, 1995). An additionally interesting perspective on how 
relationship strength is achieved is the commitment of customers. Liljander and Strandvik 
(1993b) conclude that commitment and loyalty are related concepts, although they 
emanate from different research traditions. Commitment has been used within the 
interaction approach of industrial marketing. It refers to adaptation processes which are 
the result of the parties' intentions to act and positive attitudes towards each other. 
Liljander and Strandvik (1993b) defined loyalty as only repeat purchase behaviour with!!: 
a relationship. They argued that loyalty can occur with three different types of 
commitment, positive, negative or no commitment. A negatively committed customer 
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shows a negative attitude but might still buy repeatedly because of bonds. This also 
means that customer loyalty is not always based on a positive attitude, and long-term 
relationships do not necessarily require positive commitment from the customers. This 
distinction is important as it challenges the idea that customer satisfaction (the attitude) 
leads to long-lasting relationships (the behaviour). Marketers must thus learn that the 
importance of relationship building for customers varies significantly. Some customers 
may be very committed to the relationship and for these customers the perceived 
satisfaction with the relationship is very important. Others may find the relationship 
basically unimportant and for these customers the satisfaction component is not as 
important (Liljander and Strandvik 1993b). 
Studies conducted by Cronin and Taylor (1992) in service sectors such as banking, pest 
control, dry cleaning, and fast food, found that customer satisfaction has a significant 
effect on purchase intentions in all four sectors. Similarly, in the health -care sector, 
McAlexander et aI (1994) found that patient satisfaction and relationship quality have a 
significant effect on future purchase intentions of the customer. 
Getty and Thompson (1994) studied relationships between quality of lodging, 
satisfaction, and the resulting effect on customers' intentions to recommend the lodging 
to prospective customers. Their findings suggest that customer's intentions to recommend 
are a fimction of their perception of both their satisfaction and relationship quality with 
the service provider. Hence it can be concluded that, there is a positive relationship 
between customer satisfaction and customer loyalty (Kandampully and Suhartanto, 2000, 
pp 347). 
Available literature shows that, whilst some authors have found a positive relationship 
between satisfaction and loyalty, others have refuted that assertion saying, satisfaction 
does not necessarily lead to customer loyalty. Among the authors who hold the view that 
satisfaction leads to loyalty include Bitner, 1990; Oliver et a1., 1997; and Pritchard and 
Howard, 1997. Similarly, Anderson and Narus (1990) upheld the argument that 
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sat!isfae&ion leads to cusbDer loyalty wIleD they mai1dained that satisfaction' is predictive 
of fbture actious by partners in the relationship bui1diDg process (in this context service 
providers ... customers) henee they viewed satisfaction as leading to the long-term 
sustainability of a relationship. However, Bennett and Rundle-Thiele, (2004), disagrees 
with the assertion that satisf8ction will at aU cost lead to customer loyalty and argues that 
the assumption that satisfied customers are loyal customers and thus high levels of 
satisfaction will lead to increased loyalty and sales is not always true. The authors 
empirically demonstrated that satisfaction is not the same as attitudinal loyalty and that 
there are instances where satisfaction does not result in loyalty. Following from the 
disagreements as to whether satisfaction is an important determinant of customer loyalty 
or not, this study tries to explore the role customer satisfaction plays in determining 
customer loyalty within the Ghanaian hospitality industry. 
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CHAPTER THREE 
MEmODOLOGY 
3.1 Metbodologieal overview 
This chapter outlines in a systematized manner the details of the methodology used for 
the research. The chapter is organized into six (6) main sections. Section one (1) 
discusses the overall methodological overview; section two (2) further discusses the 
research design and provides justification for the choice of survey research design 
adopting the use of both quantitative and qualitative methods of data collection. This is 
followed by section three (3) which discusses the sampling design including the sample 
population, sampling frame and sample size. Section four (4) then describes the method 
of data collection. Steps taken in the development of questionnaire, the unit of analysis, 
field work data collection and other preliminary activities preceding data collection are 
all discussed in this section. Section five (5) further discusses the processes involved in 
the preparation of empirical data for analysis. Section six (6) then talks about the 
limitations, practical challenges and ethical issues considered during the study. 
3.2 Researeh Design 
A research methodology refers to the procedural framework within which a research is 
conducted (Malhotra and Birks, 2007). In order to draw meaningful conclusion from any 
piece of research, the procedural framework of data collection must be appropriate and 
relevant. The research is both quantitative and qualitative and adopted the survey 
approach in collecting the data; specifically, through the use of a questionnaire and in-
depth interviews. A survey is a means of information about the characteristics, actions, or 
opinions of a large group of people, referred to as a population (Malhotra and Birks, 
2007). This study adopted the survey strategy because this thesis is cross-sectional in 
nature and cross-sectional studies usually employ the survey strategy (Easterby-Smith et. 
aI., 1991; Robson, 1993). The choice for this research design therefore became necessary 
not only due to the exploratory nature of the study but also because it has been found to 
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I:.IIIitaWe tbr .....,... a pi_ II, ....,., poblem. attitude or issues by 
ijOf';1 me a cross section of the popu1aDon at one point in time (Robson, 1993). Again 
the suitability of usi.tIB die survey stnd8gy iD this study is to help the researcher identify 
aad explain statistically, the filctors that explain customer expectations, experiences and 
pereeptioDs of reIatioBship marketing in the hospitatity industry in Gbaoa. It employed 
the use of both quantitative and qualitative methods of data collection. This is because 
quantitative research bas been used to measure how people feel, think or act in a 
part:icuIar way and it is a research technique that seeks to quantify data and apply some 
statistical analysis. It is often formalized and well structured and data is usually obtained 
&om large samples - anything from SO upwards (Tull & Hawkings, 1990). It also 
involves the use of structured questionnaires usually incorporating mainly closed ended 
questions with set response (Bums, 2000). The choice of quantitative methodology can 
also be justified based on the fact that it is concise, it describes and examines 
relationships, and determines causality among variables, where possible, sample is 
usually representative of a large population, reliability and validity of the instruments are 
crucial, and also provides an accurate account of characteristics of particular individuals, 
situations, or groups. The researcher was however mindful of the disadvantages 
associated with the use of quantitative method of data collection which is that, knowledge 
produced may be too abstract and general for direct application to specific local 
situations, contexts, and individuals (Yin, 1994). 
Qualitative methodology (in-depth interviews) on the other hand was also adopted 
because the study is primarily an exploratory design based on small samples, intended to 
provide insight and understanding. It encompasses a variety of methods that can be 
applied in a flexible manner, to enable participants to reflect upon and express their views 
or to observe their behaviour. It seeks to encapsulate the behaviour, experiences and 
feelings of participants in their own terms and context (Yin 1994). Qualitative method of 
data collection was also seen to be useful for this research for the following reasons; the 
data is based on the participants' own categories of meaning, it is useful for describing 
complex phenomena, it provides understanding and description of people's personal 
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experiences (which otherwise could not be obtained by the use of a questionnaire which 
is the main instrument used in quantitative method of data collection) of phenomena 
(insider's viewpoint), it describes, in rich detail, phenomena as they are situated and 
embedded in local contexts and qualitative approaches to data collection are responsive to 
local situations, conditions, and stakeholders' needs (Malhotra and Birks, 2007). Based 
on the above reasons, the adoption of both quantitative and qualitative method of data 
collection is justified. 
3.1.1 Model Estimation 
To test the relationship between Relationship Marketing and Customer Loyalty, a 
regression model was estimated using Customer Loyalty as the dependent variable and 
Relationship Marketing as the independent variable. The model is stated as follows: 
Let: Customer loyalty=Y It Competence=XIt Communication=Xl, Conflict 
handliDrXa, eommitment=x., social and finaneial bond= Xs, Trust=Xt;, and Error 
term=E 
B = coefficients which show the direction of relation between dependent and 
independent variables 
x = mean scores of the various variables of relationship marketing 
3.3 Sampling Design (Sample Population, Sample Frame, and Size) 
For the purposes of generalization, the research population for this study comprised all 
licensed hotel firms in Ghana This is in agreement with Salant & Dillman, (1994), who 
observed that a prerequisite to sample selection is to define the target population as 
narrowly as possible and that sample selection depends only on the population size, its 
homogeneity, the sample media, its cost of use, and the degree of precision required. 
Since it may not always be possible to know the true population, researchers have 
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suggested that a theoretical sample may be used (Attewell and Rule, 1991). Theoretical 
samples purposively select organizations that exhibit the desired features of prime focus 
to the researcher. Theoretically, therefore the research population for the study comprised 
1432 licensed hotel firms (both rated and non-rated) as at the end of 2007 as provided in 
the 2007 directory of licensed hotels in Ghana. Following a clear definition of the 
research population, a complete list of licensed 2 -5 star hotels situated within Accra and 
Tema metropolis were obtained from the Ghana Tourist Board to constitute the sampling 
frame. This means that 2-5 star hotel firms which were not registered with the Ghana 
Tourist Board as at the end of2007 did not form part of the sampling frame. Even though 
previous researches are of the view that relationship marketing is practiced more in five-
star hotels than the other rated hotels (Kim and Chao 2002), as at the time of this study, 
there was only one five star hotel in Accra and Ghana as a whole which compelled the 
researcher to add 4, 3, and 2 star hotels. It was also aimed at determining the extent of 
relationship marketing practices and customer loyalty in the various classes of hotels. 
3.3.1 Determination of sample size 
Ten hotels comprising 3 two star hotels, 3 three star hotels, 3 four star hotels and only 1 
five star hotel were sampled from the sampling frame to constitute the sample from 
which 500 current customers' were purposively selected to constitute a final sample size 
for the current study. The sampling technique used to determine the final ten licensed 
rated hotels was the stratified random sampling technique. One very important factor in 
determining sample size is whether the random sample can be stratified, for example 
according to sector, size, or technology level (Attewell & Rule, 1991). In using stratified 
sampling however, it is necessary to increase the sample size (Salant & Dillman, 1994). 
With the sample frame clearly defined, the researcher grouped the various rated hotels 
within Accra and Tema Metropolis into four different strata, namely two star, three star, 
four star and five star hotels. The variables used in determining the elements of each 
stratum included homogeneity, relatedness, and heterogeneity and thus satisfying the 
assertion that the elements within a stratum should be as homogeneous as possible, but 
the elements in different strata should be as heterogeneous as possible and must be 
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closely related to the characteristic of interest (Malhotra and Birks, 2007). Each licensed, 
2-5 star hotel was then assigned to one stratum based on their homogeneity, relatedness 
and heterogeneity. Thus. two star hotels (total of 70 hotels) in stratwn one, three star 
hotels (total of 14 hotels) in stratwn two, four star hotels (total of 4 hotels) in stratwn 
three and five star hotel (total of 1 hotel) in stratum four. Each of the elements in each 
stratum was then assigned a unique number for the purposes of identification. Three 
elements each were then conveniently selected from each stratwn except stratum four 
(which had only one element) to make up the final sample. As at 2007, there was only 
one licensed five star hotel in Greater Accra and this was automatically selected to be 
part of the final sample. 
It must be mentioned that selecting customers from two (2) to five (5) star hotels is 
justifiable for several reasons. Clients of these selected hotels were selected because of 
the fact that, these hotels are usually the first in terms of ample resources to train their 
employees in the field of effective implementation of relationship marketing 
programmes. Secondly, they represent hotels' in good standing by the Ghana Tourist 
Board. Hence the hotels appear to have well-structured facilities, finance and personnel to 
enhance quality relationship marketing. Thirdly, the hotels usually have the largest 
number of clients in the country presently, and therefore give a fair representation of 
sample population. Moreover, there is a variation in the rating of the hotels (2 to 5 star 
hotels) and definitely not all have the same well developed structures, facilities and the 
personnel needed to deliver high quality relationship marketing. This helped the 
researcher in indentifying the critical determinants of relationship marketing that will 
influence clients' expectations and experiences as well as how clients perceive 
relationship marketing among these different categories of hotels. 
The details of the hotels and their corresponding number of customers surveyed are 
provided in table 3.1 below. 
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Table 3.1 SaaapIe detaiIII oIB'" 
RATING NUMBER OF HOTEL 
CUSTOMERS 
LABADI BEACH HOTEL 5 STAR 50 Customers 
GOLDEN TULIP HOTEL 4 STAR 50 Customers 
LA PALM ROYAL BEACH 4 STAR 50 Customers 
HOTEL 
FIESTA ROYALE HOTEL 4 STAR 50 Customers 
ALISAHOTEL 3 STAR 50 Customers 
ERATAHOTEL 3 STAR 50 Customers 
MIKLIN HOTEL 3 STAR 50 Customers 
SORIANA HOTEL 1 STAR 50 Customers 
HOTEL MAJORIE 1 STAR 50 Customers 
HOTEL ANGELICA 1 STAR 50 Customers 
In all a total of 500 customers were purposively selected from the ten sampled hotels. 
Fifty (50) customers from each of the hotels were purposively selected as respondents for 
the study. A review of some previous research carried out on relationship marketing in 
the hospitality industry indicates that researchers used large sample sizes ranging from 
about 200 to 1000 respondents. (Burns, 2000), advises novice researchers to use large 
sample sizes as much as possible for the following reasons. First it maximizes the 
possibility that the mean, percentages and other statistics reflects the true estimates of the 
population. Again large sample sizes give the effects of randomness the chance to work 
(Malhotra and Birks, 2007). Finally, the chances of errors are reduced as the sample size 
increases. Thus to achieve accuracy, it is important to use a large sample size in a survey 
study and this issue is captured in this current research. 
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3.4 Method of data eoDeetioD (Questioaaaire desip) 
The researcher designed only one set of questionnaire for customers of the sampled 
hotels in the Accra-Tema metropolis. The questionnaire consisted of both open-ended 
and close-ended questions. The questions sought to establish the relationships between 
relationship marketing. customer satisfaction, and customer loyalty, and also to identify 
the factors that may impact on customers' expectations, experiences and perceptions of 
the quality of relationship delivered by Ghanaian hotels. The close-ended questions were 
developed on a five point Likert scales ranging from 5 (strongly agree) to 1 (strongly 
disagree). 
The questionnaire was divided into two main sections. Section one was subdivided into 
eight parts and focused on questions relating to the various practices of relationship 
marketing as depicted by the conceptual framework in the hospitality industry namely 
commitment (three positive statements), conflict handling (four positive statements), 
communications (five positive statements), relational bonds (social and financial) (seven 
positive statements), competence (four questions) and trust (five positive statements). 
Part seven of section one sought to find out how relationship marketing practices in 
section one impact on customers' decision to be loyal to their service providers and 
comprised six positive statements. The eighth part of section one sought to measure how 
satisfied customers were with the relationship marketing practices of their service 
providers and whether satisfaction is a major determinant of their decision to be loyal to 
their service providers. 
Section two solicited for information on the characteristics of target respondents and 
other demographic features such as age, gender, nationality, number of years spent with 
the hotel, and occupations. Background information was relegated to the bottom of the 
questionnaire due to its sensitiveness and also to avoid potential respondents losing 
interest in answering the questionnaire which will lead to low response rate. As argued by 
Malhotra and Birks, (2007), that sensitive questions may be embarrassing to respondents 
especially when it begins a survey instrument and may also create dissatisfaction and 
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disinterest. The entire questionnaire covered a total of folD' pages. In line with Malhotra 
and Birks, (2007), the wording and language used in the questionnaire was kept as simple 
as possible. 
It must be emphasized that written questionnaires were used to collect data from 
customers rather than personal (face -to -face) interviews. The basic difference between a 
written questionnaire and a face- to -face interview is the presence of the interviewer and 
interviewee d1D'ing face- to -face interviews. The advantages of written questionnaires are 
enormous and include the fact that it is likely to be less expensive in terms of time spent 
in collecting data. Secondly, written questionnaires can be distributed to a large number 
of respondents simultaneously in a large geographical area at a relatively low cost. 
Another advantage is that questions in written questionnaires are standardized and are 
therefore not susceptible to changes in emphasis as in the case of verbal interviews. And 
also based on the literature available on Relationship marketing, it was realized that most 
authors (example, Morgan and Hunt, 1994; Liang and Wang, 2004; Wong, 2004; Wang 
et a1., 2006), have used this method to study large samples. 
The researcher was however mindful of the disadvantages associated with written 
questionnaires. There is the possibility that written questionnaires will be misunderstood 
and interpreted differently by different people. To overcome this problem, the researcher 
carried out an initial pre-testing of questionnaires to evaluate respondents understanding 
of the research area To further minimize the errors associated with written 
questionnaires, respondents were given the opportunity to request for any further 
explanations regarding the questionnaire. This was helpful in achieving content validity; 
a self-evident measure which relies on the assurance that the researcher demonstrat~~ ?" 
adequate coverage of the known field, after critically reviewing the literature and 
constructing questions or instruments to cover the known content represented in the 
literature (Malhotra and Birks, 2007). 
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3.4.1 Unit of Analysis 
The unit of analysis for the study is the individual customer. That is, the client being the 
direct recipient of services delivered by hotels. Most research works on relationship 
marketing in the hospitality industry have used customers as the unit of analysis (Olsen, 
1995. The present study agrees with the conceptualization in the literature that 
relationship marketing is best viewed from the viewpoint of the clients and that, it is 
usually the clients of services that are able to tell as to whether or not the relationship 
with service providers is positive or nol Therefore, using customers as the unit of 
analysis is considered appropriate, since their expectations and perceptions of 
relationship marketing and services rendered by the hotels could be captured. 
3.4.1 Data eoUeetioD 
One major phase of the survey process is the execution. or use, of the survey instrumenl 
The Semi-structured questionnaires designed were purposively distributed among 
customers of the sampled hotels. Purposive used here refers to "selecting certain 
respondents for participation in the study presumably because they are representative of 
the population of interest and/or meet the specific needs of the research study" (Dillon et 
al.I993). 
After permission had been sought from hotel management, the questionnaires were left 
with the front desk officers of the selected hotels, who distributed the questionnaires to 
customers as they checked into the various selected hotels. For the purpose of this study, 
only customers who have stayed in the hotel three times or more within the last one year 
or more were given questionnaires to fill. When questionnaires were filled, they were 
then returned to the front desk officer and picked up by the researcher later. The 
researcher used this mode of data collection due to the fact that, it was easy for staff of 
the hotels to convince and encourage guests to complete the questionnaires as sited by 
Zikmund (2003) and also it was easy for hotel guests to be approached by staff of the 
hotels. 
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It must however be mentioned that a lot of preliminary activities preceded the actual data 
collection targeted at getting the support of respondents. The first step towards this was to 
obtain a letter of introduction from the University of Ghana Business School (VGBS), 
specifically the Marketing Department. This letter was addressed to the heads of the 
various hotels making up the sample. The letter was meant to request the permission of 
the various hotel managers to allow the researcher access to their hotel premises and to 
assist the researcher to administer the questionnaires. The introductory letter further 
explained the aims and objectives of the study and how beneficial the results of the study 
will be to the hotels. The letter further assured the hotels of the willingness on the part of 
the researcher to keep information gathered very confidential and not for any other 
purpose other than the intended study. 
The researcher was happy when all eight hotels gave their approval and even went further 
to request for copies of the final work on completion. As such, the hotels were very much 
interested in participating in the study. Based on the 'clear' signal, the researcher 
immediately obtained a cover letter signed by the supervisor and attached to all 500 
questionnaires which were administered to the respondents. This letter was meant to 
communicate the willingness of the researcher to keep all information as confidential as 
possible and to demonstrate the genuineness and credibility of the researcher as to the 
usage of the information gathered for academic purposes only. This is in line with Salant 
and Dillman (1994), who stressed the importance of maintaining the confidentiality of 
individual responses and reporting survey results only in the aggregate whilst considering 
and recognizing ethical issues requiring the researcher to only encourage participation 
without undue pressure or coercion of the participants. 
The researcher was able to retrieve three hundred and thirty 330 out of the 500 
questionnaires administered to the customers of the sampled hotels giving a 66% 
(percent) response rate. On the whole, data collection lasted a total of six (6) weeks 
(between March and April 2009). Data collection was originally meant to last for four 
weeks, but since the period between March and April is not considered a peak period, the 
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researcher bad to extend the time by extra two (2) weeks in order to obtain a larger 
sample. Of the three hundred and thirty (330) questionnaires received, 30 questionnaires 
were incomplete and thus were not included in the analysis. The rest of the questionnaires 
were not returned at all At the end of the editing, 300 questionnaires were successfully 
processed for the analysis. 
Qualitative data on the other band was collected through in-depth interviews with sales 
managers of the various hotels. Qualitative data was collected purposely to answer the 
fourth objective which sought to examine the major challenges faced by the various 
hotels as they tried to implement relationship marketing in their operations. The interview 
was designed to solicit the views of sales executives, sales managers and marketing 
managers of the sampled hotels on the practical challenges they encountered as they 
implemented relationship marketing in their operations. This proved quite successful 
since out of the ten (10) hotels visited, three (3) sales managers, one (I) marketing 
manager and three (3) sales executives responded favourably. It must be stated however 
that three sales managers who were unable to speak directly with the researcher 
nominated their sales executives to respond to the question which they gladly did. 
3.5 Data Analysis Techniques 
A significant number of the studies on relationship marketing in the hospitality industry 
have made use of structured questionnaires. Thus, these research studies have employed 
purely quantitative research techniques in their data analysis. It is however, important to 
note that, in recent times, several researchers have recognized the need to integrate both 
quantitative and qualitative methods in their data analysis (Burke and Onwuegbuzie, 
2004). This integrated approach which employs a semi-structured research format is more 
convenient when dealing with respondents who have busy schedules and limited time at 
their disposal. The analytical instrument for this study is the Statistical Package for Social 
Science (SPSS) version 16.0 using multiple linear regression model and descriptive 
statistics. This software has been widely used by researchers as a data analysis technique 
(Zikmund, 2003). 
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3.6 Research Li
Bitatie
ts uti Practical CIuIIIeDges 
The research has the following limitations: 
• Geographicallimitation 
• Time limitation 
• Industry limitation 
There are currently about 1432 hotels (both rated and nonrated) spread throughout the 
country. However, this thesis examined hotels in Greater Accra Region with regards to 
relationship marketing. In this light, the scope of the study is limited geographically since 
findings are applicable to hotels in Greater Accra, though the results are to be generalized 
to include hotels throughout the country. The study is also limited in terms of time at the 
disposal of the researcher. Though a cross-sectional study, the researcher could not have 
enough time to visit all the hotels in the other regions of the country. Finally, the study is 
limited in terms of industry scope. The study was restricted to hotels alone in the broad 
industry of hospitality. As a result, the genera1izability of its fmdings may be limited to 
only hotels in the Ghanaian hospitality sector. One major practical challenge faced by the 
researcher was in the area of finance. Bulk of this coming from follow-ups on 
questionnaires and location of the hotels which were not easily accessible by public 
transport hence the use of taxi cabs for most of the visits. Another factor contributing to 
this was the huge cost of printing the questionnaires as well as the provision of incentives 
to some of the front desk officers who assisted in the data collection. One main challenge 
faced was convincing the sales managers to grant the researcher the interview. It took a 
lot of effort and persuasion on the part of the researcher to get the attention of these sales 
managers since most of them doubted the real intentions of the researcher to use the 
information for only academic purposes. 
3.6.1 Ethical considerations 
One very important consideration a researcher must not overlook is the issue of ethics in 
research (Malhotra and Birks 2007). The researcher in accordance with this took steps to 
make sure that no respondent or any participant in this research work was harmed in any 
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-.y. YD'Sl of" the .....e her II'¥Oidc:d COIIdIIctiDg Je&puudeuts on the blind side of the 
aervice providers. The ~ made sure tIIat permission was sought aud the aims and 
objectives of the study ... known to the service p!OYiders as well as the respondents 
1hrough imroductory ktters and cover letters respectively. Both service providers and 
respondents were also assured of the &ct 1bat the study is only for the purposes of 
academics and not for any other dubious use. Participants were also not forced but rather 
e.oeouraged to voluntarily participate. The researcher also made sure that personal or 
demographic information were kept confidential. 
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CIIAP'I'ER :rotJIt 
PRESENTATION AND DISCUSSION OF RESULTS 
4.1 ltdnNIadioa 
The previous chapter provided details of the research methodology adopted for this study. 
This chapter reports on the empirical evidence from the field. This chapter however 
begins with a short overview of the hospitality industry in Ghana in order to provide 
readers with the context for the study and then continue with findings from. the three 
hundred (300) customers. 
4.1.1 The Hospitality '" Accoaunodatioa ladustry ia Ghaaa 
The Hospitality Industry which is under the supervision of the Ghana Tourist Board is 
classified UDder accommodation and covers all lodging facilities from budget through 
guest houses to S-star hotels. The industry has played a significant role in the 
development of tourism and by extension the economy. The categorization of hotels is 
done on the basis of the number of rooms, room sizes and facilities such as toilets, baths 
etc, per room. Those that share facilities such as toilet and kitchen are known as Budget 
hotels whilst guest houses are accommodation facilities with between 4 and 9 rooms 
having their own complimentary facilities. The breakdown of these facilities per region is 
indicated in the table below 4.1 below. 
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Table 4.1: Summary of ntettaeeommodatioD Establiahmeats as at December :Z007 
REGION 5-8TAR 4-STAR 3-STAR l-STAR I-STAR 
Greater 1 4 14 70 68 
Accra 
Asbaoti 5 26 20 
Eastern 1 8 14 
Western 3 14 16 
Cen1Jal 5 9 18 
Volta 2 4 10 
BrongAbafo 2 7 
Northern 5 7 
Upper East 5 
TOTAL 1 4 30 138 169 
(Source: Gha"a Tourist Board, 2007f act shed) 
As may be seen from the table, the industry is skewed in favour of the southern part of 
the country justi1Ying the researcher's decision to include only two to five star hotels in 
the greater Accra region. In general over the years from 2001, there has been an increase 
in the number of hotels being established in the country. In 2002, the number of hotels 
(including non-rated hotels) increased by 11% from 1,053 in 2001. It further increased by 
7% to 1,250 in 2003 and by 5% to 1,315 in 2004 and grew by 7% between 2005, 2006 
and 2007. The pattern in terms of siting of hotels has been two-way, that is, locating the 
hotel in areas that may attract tourists and guests to patronise it or the presence of tourist 
attractions serving as a drawing factor to the setting up of a hotel within the vicinity. In 
terms of occupancy, 4-Star hotels seem to have enjoyed the highest patronage over a five 
year period from 2000 to 2007 as per the data provided by the Ghana Tourist Board. The 
occupancy rates for 2 to 5 star categories of hotels are indicated in table 4.2 below. 
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Table 4.2: Hotel oeapaaey rates between 1 __ lO86 for l- 5 star hotels 
IIOTEL CATEGORY ROOM OCCUPANCY 
1_ 1001 lMtl l883 lOO4 1005 1006 
5-Star 77.8% 72.1% 73.4% 74.2% 74.00.4 79.0 80.5 
4-Star 71.40/0 76.0% 80.6% 76.1% 78.5% 81.3 78.7 
3-Star 64.1% 62.4% 65.00Al 63.1% 66.5% 68.2% 70.6% 
2-Star 6O.00Al 55.8% 64.00Al 62.4% 64.5% 78.00Al 81.0% 
Source: Ghana Tourists Board 2007 fact sheet) 
4.1.2 Regulatory Framework: The "New Harmonized ECOWAS Standards" 
The government of Ghana and the Ghana Tourist Board has begun an initiative to 
harmonize hotel standards within the ECOWA S sub-region. This has led to the 
development of new standards for the hotel industry. The Ghana Tourist Board is 
currently working on classifying and 'grading' by these standards which came to full 
effect in 2006. These standards define the categories as follows: 
A: comprising Hotels, Resorts and Motels and are subject to international classifications 
B: comprising catering rest houses, guest houses, and game lodges. 
C: comprising hostels and home stays. 
D: comprising tourist homes, serviced flats, and holiday apartments 
E: comprising tourist campsites 
4.1.3 Market ADalysis and Overview 
Ghana's hospitality industry is at an early stage of development. As a result, business, 
official, and educational visits accounts for a larger proportion of the international hotel 
clientele in the country. In 2007, total international arrivals reached a high of 586,612 
with total receipts of US$ 1,172,000,000, an improvement from 497,129 arrivals with 
total receipts USS 986,800,000 (Ghana Tourist Board Directory, 2007) 
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-'AatIIf* 
The demand for hoteIlICCOJDID.()daton in Ghana is generally derived &om sources such 
as: i.ntematioual and domestic tourists and holiday makers, corporate bodies, n=searchers. 
youth traveDers, conferences, events, International business executives and local 
traveDers. Over the years however, a ~ part of the demand has come &om 
intemational tourists and executives visiting the country for business purposes and 
indications are that this trend is expected to continue. It has also been projected that total 
aonual international tourist arrivals wiD increase from only 286,000 in 1995 to as much 
as 1,062,000 by year 2010 (Ghana Tourists Board Fact Sheet, 2007). This is due to 
general improvement in Ghana's economy investment climate thereby attracting more 
foreign business and tourist visits. Some other attractions that wiD serve to increase the 
future demand for hospitality services in Ghana include the diverse range of tourist 
attractions such as rainforests, wetlands, and sanctuaries including butterfly and monkey 
sanctuaries. 
Trends in international tourism are shifting from the sunshine and beaches in the 
Caribbean to the natural environment offered in Ghana in addition to the sunshine and 
beaches. Ghana has a lot of tourism potentials which are not tapped and there are 
currently efforts underway to market these attractions. The relative peace in Ghana 
compared to its neighbouring countries also increases its potential. In terms of distance, 
Ghana is closer to most of the major tourist sites. The location of Ghana on the 
Greenwich meridian also means that traveDers and tourists coming into the country are 
not faced with dramatic time changes. The climate of Ghana tends to be favourable, not 
too violent nor too hot for tourists. The government has also developed an initiative 
called the Joseph Project, which is a strategic project aimed at making Ghana the gateway 
to the homeland for the over 40 million Africans in the Diaspora. This is expected to 
contribute to increasing the number of international tourist arrivals into the country hence 
increased demand for accommodation. 
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c.e..er N. ... AlI mt 
An uadersIanc:IiDg of 1he needs of 1he customer and their preferences is essentiilin 
cIeve10ping an appropria1e marketirJg strategy and targetiDg a niche in the market. 
Researoh by the Ghana Tourists Board showed that short-stay foreign guests such as 
tourists, researebers, business men, students. and youth travellers which make up the 
greatest part of the Hotel's business, pn:ferred the following: a comfortable basic room 
with running water at a low price; a clean, hygienic environment; easy access to 
taDsportation; access to the internet, satellite television; air-conditioning and the 
availability ofhealthy food 
4.1.6 Sapply Analysis 
According to the Ghana Tourists Board, there were in 2007, about 1,432 establishments 
in Ghana providing hotel and other short stay aeeommodation facilities with a total of 
20,788 rooms and 26,057 beds available. This included 342 rated hotels. The table 4.3 
below shows the total nmnber of hotels (both rated and non-rated), rooms and beds in the 
country between 2002 and 2007. 
Table 4.3: Na. .b er of Hotels, Roo. .s  & Beds 2002-2007 
YEAR HOTELS ROOMS BEDS 
lIOl 1,169 16,180 21,442 
_3 I,lSO 17,352 22,909 
lt04 1,315 18,079 23,538 
2105 1345 18632 23915 
2806 1,427 21835 27839 
lI06 1,432 20,788 26,057 
(SlJlUCI!: CltlllUl Tourist Board FIICt Slteet, 2007) 
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Apart from the Greater Accra Region, hotels in other regions have been largely 
developed as part of some tourist attractions. Facilities and services provided by these 
hotels are in line with their various classifications but generally most hotels offer 
restaurant and bar services in addition to rooms. and these tend to be the main income 
generators. For the 2 to 5 star hotels. they also tend to offer conference rooms and other 
support services that are targeted at corporate bodies and event organizers. With this 
overview of the Ghanaian hospitality (accommodation) industry, the need for this 
research is never in doubt. 
4.l Presentation of Findings 
The results have been presented using frequencies and percentages of current trends in 
the hotels of the surveyed customers. 300 valid responses out of 500 sampled customers 
were used to ascertain the impact of relationship marketing on customer loyalty. 
The variables on relationship marketing (competence, communication, conflict handling, 
commitment, social/financial bonds, and trust), customer loyalty and customer 
satisfaction were coded using a scale (5-1), where 5=strongly agree and 1= strongly 
disagree. Based on the empirical data collected from the field, the four research questions 
are answered, but this is preceded by the demographic characteristics of the respondents 
who were surveyed. The first research question relates to the current state of relationship 
marketing in the hospitality industry. Secondly, it is proposed that relationship marketing 
practices lead to customer loyalty. Thirdly, it is also assumed that relationship marketing 
practices lead to customer satisfaction, and subsequently leading to customer loyalty. 
Here, the research is to determine whether customer satisfaction leads to customer loyalty 
and as to whether or not all loyal customers are equally satisfied. Finally, the last research 
question relating to the challenges posed to hotel service providers in the event of 
practicing effective relationship marketing is also discussed. 
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4.3 BACKGROUND INFORMATION 
This section provides the results on the profiles of the customers who participated in the 
survey. The section specifically discusses the sex of customers, their various occupations, 
their age categories, countries of origin, the names of the hotels they patronize, and the 
number of years these customers have been patronizing the services of the hotel in 
question. 
4.3.1 Sex of customers: 
Majority (86%) of the customers interviewed were males and the rest (14%) were 
females. See Figure 4.1. 
Figure 4.1: Sex of customers 
Sex of customer 
• Male 
• Female 
4.3.2 Occupation of customers: 
The customers were mainly businessmen and women, public servants (including 
politicians), Bankers, Lawyers, Medical Doctors, Lecturersffeachers, Tourists, 
Seamen/Sailors and Flight attendants. Most of the customers representing (approximately 
44.7%) were businessmen and women. This was followed by public servants 
(approximately 26.7%), flight attendants (approximately 8.3%), lawyers (approximately 
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6.7%) and fD1Irists (approximately 5.3%). The rest are bakers (approximately 3.3%), 
medical doctors (2.0%), seameulsailors (appJOSimately 1.']OA.), and diplomats 
(approximately 1.3%). See Table 4.4 for detailecJ IaUlts. 
Table 4.4: Oeeupation of eustomen 
PotitioD Freqnency Pen:eat Cmanlative Pereent 
Medial Doeton 6 2.0 2.0 
8aDken 10 3.3 5.3 
Busiaeumea and 
134 44.7 SO.O 
Women 
Flight 
25 8.3 58.3 
Attendants 
Lawyen 20 6.7 65.0 
Ton. .... 16 5.3 70.3 
Publie Servants 80 26.7 97.0 
Diplomats 4 1.3 98.3 
SeameulSaiIon 5 1.7 100.0 
Total 300 100.0 
0.3 Age of customen 
Most of the respondents representing 47.3% are between 50 and 70 years. 45.7% of them 
are between 31 and 50 years. 5.7% oftbem are between 18 and 30 years and the rest 
(1.3%) are above 70 years. See Table 4.5. 
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T. ...4 .S:~f11 I .. 
At!e - :raa.t 
18-31 17 5.7 
31-58 137 45.7 
51-78 142 47.3 
Aitove 
70 4 1.3 
T. ... 3fJO 108.0 
43.4 Country of origin of respondents 
MJgority (37.3%) of the customers are Ghanaians. Some of the customers are from U.S.A 
(2.3%), Nigeria (2.0%), Egypt (1.3%), UK (1.3%), China (1.()oAI), and South Korea 
(0.7%). The rest representing 5.4% collectively are customers from some African and 
Asian countries. See Table 4.6 for details. 
Table 4.6: Co_try of Origin of respondents 
CoufrY Frequeney Percent 
China 3 1.0 
Cote D'von 2 .7 
Egypt 4 1.3 
Ghana 262 87.3 
Liberia 2 .7 
Libya 2 .7 
Malaysia 1 .3 
MaD 1 .3 
N.Korea 1 .3 
Nigeria 6 2.0 
S.Korea 2 .7 
South Africa 1 .3 
Top 2 .7 
U.s.A 7 2.3 
UK 4 1.3 
Total 300 100.0 
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4.3.5 Type of hotel: 
l?GAt of the respondents are customers ofLabadi Beach Hotel (A 5-Star hotel). 33% of the 
respondents are customers of La Palm Royal Beach Hotel. Golden Tulip hotel and Fiesta 
Royale Hotel (4-Star hotels). Another 33% of the respondents are customers of Mildin 
hotel, Erata hotel and AJisa hotel (3-Star hotels). The rest (17%) of the respondents are 
customers of Hotel Majorie, Soriania hotel and Hotel Angelica (2-Star hotels). See Figure 
4.2. 
Figure 4.2: Type of hotel and their corresponding number of respondents 
Type of hotel 
35% 
30% - I 25% 20% 
15% IrJIIi I 10% l I I ~ I 5% 1 I I I 
0% 
2-Star 3-Star 4-Star 5-Star 
4.3.6 How long respondents have been using the services of the hotels 
Most (56%) of the respondents have been using the services of the hotels for 4 years or 
more. 35% of them have been using the services of the hotels for 3 years. The rest (9%) 
of the customers have been using the services of the hotels for 2 years. See Figure 4.3. 
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Fipre 4.3: How 10. . relpoa_ts have beea usiag the servieel of the hotels 
How IonI have you been usinc the servtces of this hotel? 
• 2 years 
• 3 years 
• More than 4 years 
RESEARCH QUESTION 1: 
Wlrat is the extent ofr eilltionship marketing practice among Ghanaian hotels? 
This section aims to answer research question one: what is the extent of Relationship 
Marketing practice among Ghanaian hotels? The researcher used test of means and 
cronbach alpha values based on the practices of relationship marketing as indicated in 
Chapter Two. This is done in order to ascertain how well Ghanaian hotels are embracing 
and implementing the various practices of relationship marketing. This was done from 
the customer's point of view. The details of the empirical data are discussed below. 
4.4 The exte.t of relationship marketing practice in the hotel industry 
Responses obtained on relationship marketing were found to be very reliable. 
Competence, Communication, Conflict Handling, Commitment, Social and Financial 
Bonds and Trust all obtained cronbach alpha values of at least 0.70. A mean score of 
approximately 5 was obtained for Trust. This means on the average the respondents 
strongly agree that amongst the relationship marketing practices, hotels in Ghana rely 
heavily on building of Trust in winning their customer's loyalty. This means that, 
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Ghanaian hotels are very concerned with security for their customer's transaetions, hotels 
are keeping their promises and hence very reliable, hotels are relying more on fulfillment 
of their obligations to customers. showing respect to customers and building confidence 
in their services to win customer loyalty. 
A mean score of approximately 4 was obtained for competence, communication, conflict 
handling and commitment. This means on the average, the customers agree that 
competence, communication, conflict handling and commitment are mainly factored in 
the relationship marketing practices of the surveyed hotels. A mean score of 
approximately 3 was obtained for social and financial bonds. This means on the average, 
the respondents are not as sure as to whether social and financial bonds are factored into 
the relationship marketing practices of the hotels. By this, it appears, hotels in Ghana are 
not doing enough when it comes to building strong relational bonds with their customers. 
This could be attributed to the many challenges the hotels are facing; most especially 
when building strong relational bonds require a substantial amount of a company's 
financial resources. 
Amongst all the practices, the least standard deviation of 0.40 was obtained for Trust. 
This means the customers (irrespective of the type of hotel) have the most similar views 
as far as Trust is concerned as a component of relationship marketing used by the 
sampled hotels. The highest standard deviation of 0.70 was obtained for commitment. 
This means the customers have diverse views when it comes to the issue of commitment. 
This could mean that the various hotels sampled show different levels of commitment to 
their customers. (It therefore appears that commitment depends on the type of hotel). 
It is therefore reasonable to conclude that the extent of relationship marketing practice 
amongst Ghanaian hotels is high. Comparatively, the hotels pay the biggest attention to 
Trust in their relationship marketing practices. This is followed by Competence, Conflict 
Handling, Communication, Commitment and relational bonds (Social and financial) 
respectively. See Table 4.7. 
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........ 
'itt CnUIda ........ stet. Muai• • Mea J)eriation N 
-311 1M 1.18 s. 4.3888 .54991 • - .."  2._ 5• • 4.2687 .44847 ... - 1.77 3.11 5.80 4.2675 .48591 . ............ - 0.70 I. 5.80 4.1356 .70792 0.70 1.80 5.80 3.3594 .57052 :~; . T ..... -300 o.ao 3 •• 5.00 4.6600 .40283 V"N 
RESEARCH QUESTION 2: 
Wlttll utile m.tID_1Iip IJc!twea ReilltltHulliIJ MtIrteIbtg ""d CII.fItnIIe, 1Aytl/ly1 
The researcher proposes here that an effective implem.en1ation of relationship marketing 
p.raetices will inevitably lead to customer loyalty. In order to ascertain if this assertion is 
true, a ~gRSSion analysis was first conducted on the various types of hotels studied to 
determine if there is a signifieant difference between the loyalty levels of the customers 
of the various hotels. Secondly, an ovemll F-statistic is conducted on relationship 
marketing and customer loyalty, and this is followed by a multi-variate regression 
analysis on the various constructs of relationship marketing to determine their individual 
signific:ance as intluencers of customer loyalty. 
4.5 RELATIONSHIP MARKETING AND CUSTOMER LOYALTY 
To assess direct and indirect relationships among the relationship marketing variables, the 
researcher followed descriptive analysis and regression equation modeling. This study 
proposed to tat the ovemll significance of the regression model: 
Let: Customer leyalty=YI t CompeteDee=X., Communieation=X:z, Conflict 
1IaJatIIiar~ ...mn_t=x., sodal and finaneial bond= Xs, Trust="" and Error 
term=E 
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Where: B = coefficients which show the direction of relation between dependent 
and independent variables 
X = mean scores of the various variables of relationship marketing 
The study found a significant relationship between relationship marketing and customer 
loyalty (F=l6.4l2, p<O.OS) (see Table 4.8 for details). This means competence, 
communication, conflict handling, commitment, social/financial bonds and trust jointly 
determine customer loyalty. An R-Square of 0.351 shows that competence; 
communication, conflict handling, commitment, social/financial bonds and trust jointly 
determine 35.1% of customer loyalty. Thus, a per unit increase in the variables of 
relationship marketing, will together lead to a corresponding increase in customer loyalty 
by 35.1%. . This is shown by table 4.8 below. 
Table 4.8: Customer loyalty with lI~nlS to nlationship marketinll, {ANOVA  
Sum of Mean 
Model I .S quans Df Squan F P 
1 Regression 861.868 6 143.645 26.422 0.000 
Residual 1587.477 291 5.437 
Total 2449.344 298 
R-Square= 0.351, Adjusted R-Squan =0.339, S.E. =2.33 
However, when tested separately, it was found that not all the individual variables affect 
customer loyalty by the same magnitude. This implies that some of the variables have a 
higher effect on customer loyalty, whilst some independent variables were even found to 
have an inverse relationship with the dependent variable (customer loyalty), (see Table 
4.9). Comparatively, the biggest determinant of customer loyalty as revealed by the 
analysis is competence (37.2%). This is followed by commitment (28.3%), trust (23.9010), 
with relational bonds (social and financial) yielding (20.5%). Communication and 
conflict handling were found to be inversely related to customer loyalty. These two 
constructs were found to inversely affect customer loyalty by 4% and 1.1 % respectively 
which the researcher considers insignificant. This is because at the stipulated 5% level of 
significance, these variables were found to be insignificantly related to customer loyalty. 
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.1lIus, their ~ __ ....... 8.05, theIeb7 JeBdering them iasipifieaDt (see 
Tab1e4.9). 
Among the dete• ••• . .... which Bl!e pesitiweIy related to customer loyalty, the study road 
tbat all of them (competence. social and financial bonds, commitment and trust) have 
sipificaot effects on customer loyalty (p<O.OS) (see Table 4.9). Therefore 
oommunication and conflict handling could be dropped from the model. We can therefore 
condude that an increase in competmt.ee, social and financial bonds, commitment and 
trust jointly detennine an increase in customer loyalty. Specifically, an improvement in 
COIIlJ'CIeIlCe, social and financial bonds, commitment and trust will lead to an increased 
customer loyalty. See Table 4.9 for details. 
Table 4.9: Customer loyalty with regards to relationship marketing (Coefficients) 
Unstandanlized Standardized 
Model Coeftieients CoefIieients t p 
Sad. 
B Error Beta 
1 (Constant) 5.411 1.864 1.908 .004 
Competence .37l .069 .185 5.353 .000 
COIIUIIunieation -.040 .071 -.031 -.563 .574 
ConOiet -.011 .081 -.007 -.136 .891 
handling 
Commitment .183 .063 .133 4.514 .000 
Social and .1OS .045 .145 4.593 .000 
Jiinaneial Bonds 
Trust .139 .078 .168 3.074 .001 
As stated earlier in the model that, Customer loyalty = Y t, Competence = X\, 
CoImmmication = Xl, Conflict handling = X3, commitment = Xi. relational bonds (social 
and tinancial) = Xs, Trust = ~, and Error term = E, it implies from Table 4.9 that 
Yt=5.42+e.37X. ....8 40XrO.OllXpe.l8X.+ 0.1IXs+O.14~E. 
The next section discusses these individual co-efficients and their (in)significance. 
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ReadUtg throusb the Htenture, competence bas been found to be a major relationship 
~ praetiee that positiYeJy iDt1ueDces customer loyalty. The resemeher assumes 
1hat 1he competence exhibited by Ghanaian botels will have a positive effect on customer 
loyalty. That is, bow would the c.ompetr:nce of hotels eo-vary with their customers 
becoming loyal to them? This suggests that a strong positive relationship between the two 
variables would mean that, a positive change in the hotels' level of competence would 
lead to a positive change in the oveml1 customers' loyalty. Thus, the two variables 
(competence and customer loyalty) will co-vary at aD)' point in time or will rise and fall 
together perfectly. A regression analysis was used to test for the relationship between the 
two variables because of its parametric strmgth. The results of the study are summarized 
in Table 4.9.1 below. 
Table 4.'.1: C ...p eteDee ad Customer lAy"", 
U .........r dized Standardized 
Model Codlideats CoeffideDta 
Std. 
B Error Beta t Sig. 
(C. .......)  5.421 1.864 2._ .004 
C~ .372 .06, .285 5.353 .-
It can be seen:&om the results of the Table 4.9.1 above (t = 5.35, P = 0.000 < 0.05) that 
the positive unstandardized coefficient (0.372) means a statistically strong significant 
relationship between a hotels' competence and how it affects customer loyalty. This 
appears to suggest that customers of hotels in Ghana consider the competence levels of 
their service pnwiders as a very important factor in deciding whether to be loyal or not. 
This also means that customers pay much attention to the competence displayed by 
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~ 01 .... ill IIIBkin8 • c:IJoiae ef. hoed. 11ms. if customerS' perceive the 
competence of a hotel to be good and satisfactorY, they wiD definitely pattooize that hotel 
and hence expect to naive the same or betk:r service either &om the same or a different 
hotel with similar competence level in a future encounter and vice versa. It can also be 
deduced from this result that, the future ~ of customers could be influenced by 
how they perceive competence levels in their hotels. This establishes the view that the 
extent to which customers perceive the competence of a hotel has a strong impact on the 
likelihood of the customers becoming loyal to that particular service provider. This result 
conoborate earlier findings by Cha and Ndubisi, 2004; Ndubisi, 2007 who also found 
that, competence played a major role in determiniDg customer loyalty in Malaysian 
Banks. 
4.5.l eo.m.llication and Cutomer Loyalty 
The researcher assumes that keeping in touch with valued customers, providing timely 
and trustworthy information on service and service changes (Anderson and Narus, 1990) 
by hotels wiD have a positive effect on customer loyalty. That is, customers' loyalty to 
their various hotels would vary according to the communication efforts of these hotels. A 
strong positive relationship would mean that a unit change in the communication efforts 
of the hotels would attract a significant change in loyalty as far as customers are 
concerned. A regression analysis was used to establish the strength of the effect of hotels' 
communication efforts on the probability of their customers becoming loyal to them. This 
statistical tool was used to test for the significance of the relationship between 
communication at the instance of hotels, and loyalty at the instance of customers, as 
SUIJlOlIIIized in Table 4.9.2 below. 
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~. .. 1''''4.'.2: c• • __. ..'. o ...... c...........,..., 
u..e-a... .. ~ 
Medel C. ...... CedIIciaD 
sa.L 
B Ernr Beta 1t ._ s. . 
(C. ......)  5.411 1.164 .... 
c..-ieatieII -..... .071 -.031 -.563 .574 
The results of table 4.9.2 above (t=-O.S6, P = 0.S74 > O.OS) indicate that there is rather a 
negative coefficient (-0.40) between communication and customer loyalty, meaning that 
communication is inversely related to customer loyalty. However, the strength of the 
relationship judging fiom the qression coefficient and p-value indicates that though the 
relationship is negative, it is not statistically significant (P > O.OS) stipulated S% level of 
significance This means that though both communication and customer loyalty affect 
each other (inversely), the existing relationship has been found to be insignificant. 
The nature of the insignificant statistical relationship indicates that the two variables rise 
and fall though iDdirectly. Customers therefore did not view the provision of timely 
information, information on new products, discussions on ways to improve services and 
the approachability of hotel staff as enough reasons to be loyal to the hotels. This finding 
thus shows that Ghanaian customers' loyalty to their hotels is not strongly dependent on 
how their service providers communicate to them. The reason for this could be that either 
all hotels are communicating so well with their customers and so customers do not pay 
particular attention to communications, or this could that even though Ghanaian hotels 
are COJDJD\1Dicatin with their customers, they are not communicating effectively hence 
its iDability to impact on customer loyalty within the Ghanaian hotel industry. Thus 
although a customer may experience poor communication in an encounter, bis/her initial 
pc:meptions oft he service provider may still remain high. 
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4.5.3 C. .... haatlliag ad Cnsto.er Loyalty 
Regarding conflict bandling, Ndubisi (2007), found a strong link between effective 
conflict handling and customer loyalty within the banking industry. In the light of this 
finding by Ndubisi, (2007) and many scholars who agree with this assertion, the study 
assumed that there is a strong positive relationship between conflict handling by hotel 
relationship managers and the loyalty of their customers. In other words, to what extent 
does the effective handling of conflict by hotels impact on their customers being loyal to 
them? In simple terms as the customer perceives conflict handling to be high, his/her 
loyalty to that particular institution is likely to be high. A regression analysis was used as 
the statistical tool to test for the relationship between conflict handling and customer 
loyalty of Ghanaian hotels. This regression analysis was found appropriate because of its 
parametric strength in data analysis. The results are summarized in the Table 4.9.3 below. 
Table 4.9.3: Confliet handling and Customer Loyalty 
Unstandardized Standardized 
Model Coefficients Coefficients 
Std. 
B Error Beta T Sig. 
(Constant) 5.421 1.864 2.908 .004 
Conflict laandling -.011 .081 -.007 -.136 .892 
Contrary to the expectation of the researcher, the results of Table 4.9.3 above 
(t = -0.136, P = 0.892>0.05) indicate that there is a negative coefficient (-0.011) between 
the two variables. The results though indicating a negative relative relationship, is still 
insignificant at the 5% level of significance (P = 0.892>0.05). This shows that the current 
finding disconfirms earlier findings by Ndubisi, (2007) that there is a strong relationship 
between conflict handling and customer loyalty. Thus, the loyalty of customers to their 
botels is not affected by bow effectively these botels handle conflicts with their 
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customers. However, this could be arising from the different contexts in which both 
studies were conducted. The finding thus suggests that there are hotels in Ghana that have 
built a positive and favourable conflict handling machinery because their services 
delivered to customers are supposed to be of high quality. The statistical results however 
indicate that most customers consider conflict handling to be not so relevant to their 
loyalty to their respective institutions. In short, avoiding potential conflicts, solving 
manifest problems before they arise, openly and promptly discussing solutions when 
problems arises, and listening to customers grievances do not provide concrete grounds 
for the customer to decide whether to become loyal or not to a hotel within the Ghanaian 
settings. 
4.5.4 Commitment and Customer Loyalty 
A review of current literature has shown that commitment is one of the major relationship 
practices that have a very high potential to influence customer loyalty (see Morgan and 
Hunt, 1994; Gronroos, 1994,). Flowing from this argument, the researcher expected that 
commitment of hotel service providers to satisfying the needs of their customers win 
have a positive effect on their customers becoming loyal to them. That is, customers' 
loyalty to their hotels in the country would increase and decrease according to how 
committed their service providers are to the satisfaction of their needs. Strong positive 
relationship would mean that a unit change in commitment could be directly linked to 
customer loyalty. Commitment and customer loyalty will co-vary simultaneously at any 
time. Again a regression analysis was used as the statistical tool to test for the strength of 
relationship between commitment and customer loyalty in Ghanaian hotels. The results of 
the regression coefficients are summarized in the Table 4.9.4 below. 
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Table 4.9.4: CollllDibDeDt ... C ....... Loyalty 
u. .. taJutarcIized Studardized 
Model CoeffieieDts CoefIieieDts 
Std. 
B Error Beta T Sig. 
5.411 1.864 1.908 ..004 (CODStaDt) COlDlDimeat .l83 .063 .133 4.514 -
The results in the Table 4.9.4 above (t = 4.514, P = 0.000 < 0.05) indicates that the 
positive regression coefficient (0.283) shows a statistically strong significant (P < 0.05) 
relationship between commitment and customer loyalty such that the higher the 
commitment of hotels towards the satisfaction of the needs of their customers, the higher 
the probability that these customers are going to become loyal to the hotels. The strength 
of the relationship judging from the interpretation of the regression coefficient is very 
strong and this means customers' loyalty to their hotels is largely informed by the level of 
commitment that their hotels leverage towards the satisfaction of their needs. In the light 
of this results, where hotels continuously make adjustments to suite customer needs, offer 
personalized services to meet customers' personal needs and show flexibility in serving 
customer needs, they are sure that customers will value their relationships with service 
providers and consequently become loyal to the hotel. 
The results of the present study suggest that customers expect their service providers to 
be committed to ensure that they (customers) are really satisfied when transacting with 
them. The finding is therefore in agreement with the research findings of some leading 
researchers who describe customer loyalty as a function of commitment at the instance of 
their service providers (see Gronroos, 1994, Morgan and Hunt, 1994, Ndubisi, 2007) 
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4.5.5 Relational Boads (SoeW ..... J'iuDdaI bonds) ami Customer Loyalty 
It bas been argued that customers who are treated personally should have stronger 
reasons not to switch companies (Berry and Parasuraman. 1991; Liang and Wang. 2005). 
The researcher thus presupposed that relational bonds (social and financial) will have a 
positive effect on customer loyalty. That is, how does relational bonds (social and 
financial) that hotels build with their customers rise and fall with their customers 
becoming loyal to them? The study assumed a strong positive relationship between the 
two variables which implied that, a positive change in the way hotels' build relational 
bonds with their customers would attract a positive change in the overall customers' 
loyalty. Thus, the two variables relational bonds and customer loyalty will co-vary 
perfectly. In a similar way a regression analysis was used to test for the relationship 
between the two variables and to test how significant relational bonds as relationship 
marketing construct, on customer loyalty because of its parametric strength. The results 
of the current study are summarized in Table 4.9.5 below. 
Table 4.9.5: Social and Finaneial Bonds and Customer Loyalty 
Standardize 
Model Unstandardized d 
Coeffieients Coefficients 
B Std. Error Beta t Sig. 
(Constant) 5.421 1.864 2.908 .004 
Sodal and Finandal .295 .045 .245 4.593 .000 
Bonds 
The results of table 4.9.5 above (t = 4.59, P = 0.000 < 0.05) indicates that the positive 
unstandardized coefficient (0.205) indicates a statistically strong significant relationship 
between hotels' relational bonds and how it affects customer loyalty. This appears to 
suggest that hotels' customers in Ghana consider relational bonds built between 
themselves as customers and their service providers as a very important factor in deciding 
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... be .,.. CiiIIIII!Iioc:I to ........ 1'hua""'" checkiDc OIl ctJ8fOI!DeIS, SCDding them 
sifts 0Il1pCCia1 occaioas, iDvolviDg customers in the hotel's functions, p:oviding special 
discounts to CI8t1mas, tIaItiag customers as fiicDds and not just customers. spoDIIOIiDs 
fully paid packages for customers and going the extra mile to even participate in 
customer's family events, can greatly influence customer loyalty. Thus, the future 
expectations of customers could be influenced by how they ~ve social and financial 
bond levels in their hotels. FindiDp that agree with this current findinss include 
Sbammout, 2007; Ndubisi, 2007). 
4.5.6 T ....t  aDd c...tomer Loyalty 
The researcher included trust as a major relationship marketing construct due to it widely 
being accepted by relationship marketing scholars as a ~or influencer of customer 
loyalty. That is, customers' loyalty to their hotels should vary according to how 
trustworthy their service providers are to the satisfaction of their needs. Strong positive 
relationship would mean that a unit change in trust could be directly linked to customer 
loyalty. The regression analysis was used as the statistical tool to test for the strength of 
relationship between trust and customer loyalty of hotels in the Ghanaian hospitality 
(hotel) industry. The results of the regression coefficient are summarized in the Table 
4.9.6 below. 
Table 4.9.6: T ..... ad Customer Loyalty 
U. ....d anlized StaDdanlized 
Model CoeffideDts CoefIieieDts 
Stet. 
B Error Beta t Sig. 
(Colllfaat) 5.421 1.864 2.908 .004 
T ...... .239 .078 .168 3.074 .002 
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The results in Table 4.9.6 above (t = 3.074, P = 0.002 < 0.05) indicates that the positive 
regression coefficient (0.239) imply a statistically strong and significant (P < 0.05) 
relationship exist between trust and customer loyalty such that the higher the 
trustworthiness of hotels towards the needs of their customers, the higher the probability 
that these customers are going to become loyal to the hotels. The strong regression 
coefficient of 0.239 at a significance level of 0.05 obtained therefore could be interpreted 
to mean when hotels show great concern for the security of customer transactions, 
provide reliable and consistent promises, showing respect to customers, fulfilling its 
obligations to its customers and building absolute confidence in the hotel's services, it 
will be rewarded with customer's loyalty. The strength of the relationship judging from 
the interpretation of the regression coefficient is very strong and this means customers 
expect their service providers to be trustworthy to ensure that they (customers) become 
loyal to them. This current finding is consistent with the research findings of some 
leading researchers who describe customer loyalty as a function of trust at the instance of 
customers' service providers (see Leverin and Liljander, 2006; Bitner, 1995; Moorman et 
al., 1993; Reichheld and Sasser, 1990). 
4.5.7 CUSTOMER LOYALTY AND HOTEL TYPE 
The results shows that there is a significant difference between the loyalty levels of the 
customers of the various hotels surveyed (F=9.3, p<0.05). Three (3)-Star hotels were 
found to have the most loyal customers (with a mean score of 24.78). This is followed by 
four (4)-Star hotels (with a mean score of 24.38), five (5)-Star hotels (with a mean score 
of 23.58) and two (2)-Star hotels (with a mean score of 22.40) respectively. See table 
4.10. 
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Table 4.10: ~ .. ralty wida ..... 10 IIeteI type 
Type of Stet. 
hotel Mean N Deriatioa F P 
2 Star 22.4008 SO 3.55711 
3 Star 24.7800 108 2.59206 9.314 0.000 
4 Star 24.3800 108 2.56936 
5 Star 23.5800 SO 2.47510 
Total 24.0SOO 308 2.86266 
RESEARCH QUESTION 3: 
What u the relotionship between Relotionship Marketing prtu:tices, customer 
satisfaction, and /oyfIIty in the Ghanaian hospitlllily industry? 
In order to find out if there is a functional relationship between relationship marketing 
and customer satisfaction. and eventually leading to customer loyalty, a one-way 
ANOVA  was first of all used to test the overall significance between relationship 
marketing and customer satisfaction. Next, another one-way ANOVA  was performed to 
ascertain if there is a significant difference between the satisfaction levels of the 
customers of the various hotels, followed by a multi-variate analysis of the various 
constructs of relationship marketing and customer loyalty to test for their individual 
significance. Finally, a one-way ANOVA  is conducted on customer satisfaction and 
customer loyalty to see if there is an overall significance between the two. 
4.6 RELATIONSmr MARKETING AND CUSTOMER SATISFACTION 
To assess direct and indirect relationships among the relationship marketing variables on 
customer satisfaction. the researcher followed descriptive analysis and regression 
equation modeling. This study proposed to test the overall significance of the regression 
model: 
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Let: CIIItomer s.tidIetioF"Y2t C. .p eteaerX., C ....u ieatioD=X2, Coaflid 
budliDg=~ COIIlIUBIeat=x., Sodal and FiDanciai bonds= X~ Tnalt=~ and 
Error tenn=E 
Then: Yz =CoDltant+BtXt+BzX:z+B.lX.1+B~+ BsXs +~E 
Where: B = coefficients which show the direction of relation between dependent and 
independent variables. 
X = mean scores of the various variables of relationship marketing 
The study found a significant relationship between relationship marketing and customer 
satisfaction (F=9.2, p<O.05). This means competence, communication, conflict handling, 
commitment, social/financial bonds and trust jointly detennine customer satisfaction. See 
Table 4.11 for details. An R-Square of 0.159 shows that competence, communication, 
conflict bandling, commitment, social/financial bonds and trust jointly determine 15.91'10 
of customer satisfaction. 
T able 4.11: Custo. .e r samfamon with regards to relationship marketin2 (ANO VA) 
I Sum of Mean Model Squares Of Square F P 
1 Regreuiou 22.301 (; 3.717 9.186 0.000 
Residual 118.147 292 .405 
Total 140.448 298 
R-Square= 0.159, Adjusted R-Square =0.141, S.B. =0.63 
Comparatively, the biggest determinant of customer satisfaction is competence (8.4%). 
This is followed by trust (3.5%), commitment (2.1%), conflict handling (2.1%), social 
and financial bonds (1.1%), and communication (0.6%) respectively. Among the six 
determinants only competence bas a significant effect on customer satisfaction (p<0.05). 
Therefore trust, commitment, conflict handling, social and financial bonds, and 
communication could be dropped ftom the model. We can therefore conclude that 
competence determines customer satisfaction. Specifically, an improvement in 
competence will lead to an increase customer satisfaction. See Table 4.12 for details. 
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Tab le ••1 1: Cutoaaer ..t isfaetion witIa ..... to relation'" ..1 'keCiII& (Coeftidents 
Unstudarclized Standardized 
Model Coeftidents Ceeflieients T P 
Std. 
B Error Beta 
1 (Constant) 1.183 .588 1.523 .011 
Competence .084 .019 .168 4.410 .000 
Comm. .n ication .006 .019 .019 .300 .765 
ConOid 
.011 .011 .059 .946 .345 handling 
Commitment .011 .017 .071 1.116 .111 
Soeialand 
.011 .011 .056 .915 .361 Financial Bonds 
Trust .035 .011 .103 1.660 .098 
The regression (prediction) equation on the above model is as follows: 
Assuming: Customer Satisfaction=Y2, Competence=XJ. Communication=X2, Conflict 
bandling=X3, commitment=x., social and financial bond= Xs, Trust=~, and Error 
term=E, then it can be deduced from the above Table that: 
Y:z=I.18+O.084X.+O.OO6X2+O.011Xa+O.011Xt+ O.OIIXs +O.035~E. 
The next section discusses these co-efficients to depict their (in)significance. 
4.6.1 Competence and Customer Satisfaction 
Narteh, (2009), found that the competence displayed by Ghanaian banks led to improved 
customer satisfaction. This study thus assumed that competence will have a positive 
effect on customer satisfaction. That is, the competence displayed by hotels impact on 
their customers becoming satisfied. Thus will a positive change in the hotels' level of 
competence attract a positive change in the overall customers' satisfaction? Similarly, a 
regression analysis was used to test for the relationship between the two variables. This 
statistical tool was used to test for the relationship between the two variables because of 
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ita peaaoelric!IIaI&IIL 'I1Ir; ...... aldie cwraIlt 8IUdy aoe .....i 2Jed in Table 4.12.1 
below. 
Table 4.12.1: C ••,  I aee ad C ........ Sat• •• 
u. ............. Studantiad 
Medel CMtBc. ... C. ..... 
Std. 
B Ernr Beta t Sig. 
(C...a.t) 1.21.1 .518 2.523 ..01-1 CeJa.,.-n .084 .11' .168 4.GO 
The results, (table 4.12.1) above (t = 4.42, P = 0.000 < 0.05) indicates that the positive 
unstandardized coefficient of 0.084 denote a statistically strong significant relationship 
between hotels' competence and how it affects customer satisfaction. This appears to 
suggest that hotels' customers in Ghana consider the competence levels of their service 
providers as a very important factor in satisfying their customers. If customers' perceive 
the competence of a hotel to be good and satisfactory, they will definitely patronize that 
hotel and hence expect to receive the same or better service either from the same or a 
different hotel with similar competence level in a future encoWlter and vice versa. Thus, 
the future expeetations of customers could be influenced by how they perceive 
competence levels in their hotels. This result thus confirms Narteh (2009)'s findings in 
the GbaMian banking sector that competence determines customer satisfaction. 
4.6.2 Comm.Dieatioa aad Customer Satisfactioa 
Ndubisi and Cha, (200S) fOWld that effective commwtications by marketers with their 
customers will have a positive effect on the customers to become satisfied. That is, 
customers' satisfaction will be impacted by the commwtication efforts of these hotels. 
Thus the asswnption was made that a strong positive relationship would mean that a Wlit 
change in the commwtication efforts of the hotels would attract a significant change in 
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i· IiIIis6oaioe as fir as ""*-IS 1ft cwacaMd. Using a zqression aMIysis to establish the 
SIrength of the effect of hotels' commuoication efforts on the probability of their 
customers beeomiag satisfied, tbe table (4.12.2) below was obtaiDed. 
Table 4.lZ.l: C. .._ ..atioa ud c.toIIIer Satisfaction 
u. ............ Studanlized 
C~ CoefIieieats 
SId. 
Model B Ernr Beta T Sig. 
(C. ......)  1.l83 .588 %.523 .olZ 
c.....matie. .- .819 .819 .300 .765 
The results of tile Table 4.12.2 above (t=-O.30, P = 0.77> 0.05) indicate that there is a 
positive coefficient (0.006) between communication and customer satisfaction. However, 
the relationship is not statistically significant (P > 0.05) at the stipulated 5% level of 
significance. The strength of the relationship judging from the regression coefficient and 
p-vaIue indicates that though the relationship is positive, it is not statistically significant. 
This means that though both communication and customer satisfaction affect each other, 
the e.xatmg relationship bas been found to be insignificant. 
This finding shows that customers' satisfaction is not strongly dependent on how their 
serviee providers communicate to them. Thus although a customer may experience poor 
communication in an encounter, bis/her initial perceptions of the service encounter will 
remain high. This finding also confirms earlier ones by Ndubisi and Cha, (2005) and 
Narteh, (2009), even though the latter, found communication to be significant in the 
banking sector. 
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U.3 Cedid ~ ad c.sao.er s.dIfIIetiea 
As regards the relationship between conflict bandling and customer satisfaction. the 
research framework assumed that effective conflict handling by hotels will have a 
positive effect on customers' level of satisfaction. Thus, how would customer satisfaction 
be affected by the hotel's ability to resolve contlicts? Again a strong positive relationship 
would mean that a unit change in the contlict handling efforts of the hotels would attract 
a significant change in satisfaction as far as customers are concerned. A regression model 
was used to test for the significance of contlict handling at the instance of hotels, on 
satisfaction at the instance of customers. The results are summarized in Table 4.12.3 
below. 
Table 4.12.3: Confliet handliDg and Customer Satisfaction 
Unstudardized Standardized 
Model Coefficients Coefficients 
Std. 
B Error Beta T Sig. 
(Constant) 1.283 .508 2.523 .012 
Conflict handling .021 .022 .059 .946 .345 
The results of table 4.12.3 above (t=O.946, P = 0.35> 0.05) indicate that the coefficient 
(0.021) between conflict handling and customer satisfaction is positive. However, the 
relationship is not statistically significant (P > 0.05) at the stipulated 5% level of 
significance. The strength of the relationship judging from the regression coefficient and 
p-value indicates that though the relationship is positive, it is not statistically significant. 
This means that though effective conflict handling impacts positively on customer 
satisfaction. its impact is not momentous. Thus, the avoidance of conflicts; solving 
manifest problems; openly and promptly discussing solutions when problems arise; 
listening well and understanding customer grievances will not significantly improve 
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customer loyalty espeeiaDy widIia GhImaiaa boIeIs. Thus a COIJlI*IY's iDabi1ity to solve 
manifest conflicts may still leave the customer indifferent as far as satisfaction is 
coneemed. 
UA Commitment and Customer Satisfaction 
An observation made by Wilson (1995), suggested that commitment is the most common 
dependent variable used in buyer-seller relationship studies. The framework therefore 
describes customer satisfaction as the result of effective commi1ment by hotels to 
customer needs. That is, how customers perceive the hotel's commi1ment to satisfying 
their needs will positively increase their satisfaction levels. A unit change in the 
commi1ment levels of the hotels would therefore attract a significant change in 
satisfaction as far as customers are concerned. After using a regression analysis to test for 
the significant relationship between commi1ment on the part of hotels, and customer 
satisfaction, the following results were obtained as shown in table 4.12.4 below. 
Table 4.11.4: Commitment and Customer Satisfaction 
UDJtandardized Standardized 
Model CoefIieients Coefficients 
Std. 
B Error Beta t Sig. 
(C. .......)  1.283 .508 2.523 .011 
Co_itment .021 .017 .072 1.226 .221 
The results above (t=1.23, P = 0.22 > 0.05) indicate that there is a positive coefficient 
(0.021) between commi1ment and customer satisfaction. However, the relationship is not 
statistically significant (P > 0.05) at the stipulated 5% level of significance. The strength 
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of the relationship judging from the regression coefficient and ~value indicates that 
though both commitment and customer satisfaction affect each other, the existing 
relationship between the two is insignificanL Therefore in Ghanaian hotels, no matter 
how committed employees are to customer's needs, if the hotel is perceived to be 
incompetent, satisfadion levels of customers will not be enhanced any bigger. 
However, the findings agree with Morgan and Hunt, (1994) and Leverin and Liljander, 
(2006) who also found that commitment positively influences customer satisfaction. 
Recently, too Narteh, (2009), also confirmed this finding in Ghana however within the 
banking sector. 
4.6.5 Social and Financial Bonds and CUlltomer Satisfaction 
The framework based on current literature, sought to argue that where hotels maintain 
stronger relational bonds (social and financial) with their customers, customers' level of 
satisfaction will increase. Thus, a strong positive relationship would mean that a unit 
change in the way hotels relate socially and financially with their customers would lead 
to a significant change in satisfaction as far as customers are concerned. The regression 
analysis used to ascertain the impact of relational bonds on customer satisfaction revealed 
the table below. 
Table 4.12.5: Social and Financial Bonds and CUlltomer Satisfaction 
Unstandardized Standardized 
Model Coefficients Coefficients 
Std. 
B Error Beta t Sig. 
(Ce. ....t ) 1.283 .508 2.513 .012 
Relational bonds (Social .011 .012 .056 .915 .361 
... Fiaancial\ 
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The results of table 4.12.5 above (t=-O.92, P = 0.36 > 0.05) indicates a positive 
coefficient (0.011) for relational bond as influencer of customer satisfaction. However, 
the relationship is not statistically sipificant (P > 0.05) at the stipulated 5% level of 
significance. The strength of the relationship judging from the regression coefficient and 
p-value is not strong enough to cause any sipificant change. This finding shows that 
customers' satisfaction is not strongly dependent on how their service providers build 
social and financial bonds with them. From the data gathered for this study, a lot of 
customers said their levels of satisfaction would not necessarily improve just because of 
good relationships they may have with the service provider. They believed more in 
providing competence services if their satisfaction levels were to increase significantly. 
This therefore means that, regular checks on customers, sending gifts to customers on 
special occasions, providing sponsorship packages, discounts, treating customers as 
mends and involving employees in family events of customers alone, will not lead to any 
significant increase in customer satisfaction though its impact will still be. This finding 
agree with earlier findings of Lin et at., 2003; and Hsieh et al., 2005; Ndubisi and Cha, 
2005 and Narteh, 2009. 
4.6.6 Trust and Customer Satisfaction 
As said in the literature, trust has frequently been mentioned as one of the most important 
underpinnings of relationship marketing (Morgan and Hunt, 1994; Bitner, 1995; 
Reichheld and Sasser, 1990). Based on the literature, the conceptual framework assumes 
that the level of trustworthiness on the part of the hotels as perceived by a customer, 
would determine the satisfaction levels of customers. That is, how does trust as a single 
relationship marketing construct affect customer satisfaction? As such would a positive 
relationship mean that a unit change in the trustworthiness of the hotels would attract a 
significant change in satisfaction as far as customers are concerned? To answer this, a 
regression analysis was used to establish the effect of trust as influencer of customer 
satisfaction. The statistical tool was used to test for the significance of the strength of 
trust in determining customer satisfaction. The result is summarized in Table 4.12.6 
below. 
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Ta" 4.t:Z.6: Tnllt .... c.tomer Satidaetioa 
u~ StaDdardized 
Model CoefIieieIIts Coeffieieats 
SUI. 
B Error Beta T Silo 
(Co. ......, ) 1.283 .508 1.513 .Oll 
Trolt .035 .021 .103 1.660 .098 
The results of the Table 4.12.6 above (t=1.66, P = 0.098> 0.05) indicate that there is a 
positive coefficient (0.035) for trust, meaning trust positively affects customer 
satisfaction. However, the strength of relationship judging from the regression coefficient 
and p-value is not statistically significant (P > 0.05) at the stipulated 5% level of 
significance. This finding shows that customers' satisfaction is not strongly dependent on 
how trustworthy their service providers are to them. For instance, some customers who 
responded to the questionnaire said even though some experiences have led them not to 
trust their hotels, such experiences did not have any effect on their overall satisfaction 
levels. The researcher thus takes this to mean hotels showing concern for the security of 
customers' transactions, promising and delivering on time, showing respect to customers, 
fulfillment of obligations, and building absolute confidence in your services alone 
without being competent, will not achieve any high results in terms of making the 
customer satisfied. This finding in spite of its insignificance still confirms that, trust 
impacts positively on customer loyalty. (see Morgan and Hunt, 1994; Gronroos, 1994) 
4.6.7 CUSTOMER SATISFACTION AND HOTEL TYPE 
There is a significant difference between the satisfaction levels of the customers of the 
various hotels (F=9.3, p<O.05). 5-Star hotels have the most satisfied customers (with a 
mean score of 4.74). This is followed by 4-Star hotels (with a mean score of 4.62), 3-Star 
hotels (with a mean score of 4.54) and 2-Star hotels respectively (with a mean score of 
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4.14). This means the ...... the Ie¥eI of boeel, the higher the satisfaction level of the 
customer. See Table 4.13. 
T able 4.13: c........ .... Ii ... wida ....... hotel tJ'.,e 
Type.f Std. 
hotel , Mea N DeriIItioa P 
1 Star 4.1_ 51 • .-16 
3 Star .u. 1M .55814 8.1 0.000 
4 Star 4.6_ 100 .56461 
5 Star 4.7. 51 .44309 
Total 45333 388 .68590 
4.7 CUSTOMER SATISFACTION AND CUSTOMER LOYALTY 
To assess direct and/or indirect relationships between customer satisfaction and customer 
loyalty, the researcher followed descriptive analysis and regression equation modeling. It 
was found that there is a significant relationship between customer loyalty and customer 
satisfaction (F=S6.3, p<O.05). This means customer satisfaction determines customer 
loyalty. See Table 4.14 for details. The R-Square (0.159) shows that customer satisfaction 
detennines 15.9OA. of customer loyalty. 
Table 4.14: Cuteaer loyalty with reprds to C ••t omer satisfaetien (ANOV A 
Sum of Mean 
Modell Squares Df Square F P 
1 Repasion 389.261 1 389.261 56.283 0.000 
Residul 2060.989 298 6.916 
Total 2451.251 299 
R-Square= 0.159, Adjusted R-Square =0.156, S.E. =2.63 
4.7.1 Leyal eutomen who are not satisfied 
h can be deduced that relationship marketing bas a more significant effect on customer 
loyalty than it does on customer satisfaction (ANOVA and R-Square results). The 
preceding section reveals that customer satisfaction determines just about 15.9OA. of 
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customer loyalty whereas Relationship Marketing determines 35.1% of customer loyalty. 
This implies that there may be loyal customers who are not necessarily satisfied. 
Therefore, an independent question asked about loyal customers who are not satisfied 
revealed that there were a total of 11 (3.7%) customers who are loyal but are not satisfied 
with the overall performance of their hotels. This is due to the fact that 97.3% of the 
customers have either average or high loyalty towards the hotels but only 93.7% of them 
either have an average or high satisfaction. 
With respect to the individual classes of hotels, it was found that 2-Star hotels have a 
significant percentage (22%) of the respondents who are loyal but not satisfied with the 
overall services offered by the hotels. 3-Star hotels and 5-Star hotels have no loyal 
customers who are not satisfied with the overall services offered by the hotels. Only 2% 
of the customers of 4-star hotels are loyal but not satisfied with the overall services 
offered by the hotels. (See Figure 4.4) Therefore, it can be concluded that although there 
may be some loyal customers who are not necessarily satisfied, in most cases however, 
customers who are loyal are also satisfied with the services provided by their hotels. This 
means that it is not all loyal customers who are necessarily satisfied customers. These 
findings therefore confirms the findings of Bennett and Rundle-Thiele, (2004) who also 
argued that it is not all satisfied customers who are loyal customers. 
aI customers who are Dot Deeasa' satisfied 
I am loyal to the hotel but not satisfied with their overall services 
100% 
90% 
80% 
70% I 
.St'onlllv ... I1' .... 
60% I•  i•  ••  ·Aer. ... SO% • • • Neutral 40% I .Olr.aerec W% I I • St,onllv di ...S '. ... 10% 10% 
0% 
2-5"', 3-5la, 4-Star S-Sta, 
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RI!SetU'Ch qIIDIiM folll' 
What Me the 1IUIjo, practiclll chalk"ges ftJCt!fl by Gha"aian hotels as tIIey attempt to 
implement tire concept of reltltimuhip IIfIU'keting as a ..,.,. of w;"";,,g cllSlOlIU!' 
loyalty? 
The final motivation for undertaking this study was to bring to the fore the main 
challenges Ghanaian hotels, in their quest to implement relationship marketing as a 
loyalty drive, face. This section therefore addresses these factors which act as constraints 
to Ghanaian hotels as they take steps to win the loyalty of their customers through 
relationship marketing. Loyal customers do not only require less information themselves, 
they also serve as an information source for other customers. Yet building customer 
loyalty is one of the biggest challenges for the hotel industry (Yesawich, 1997). 
In finding out what practical challenges Ghanaian hotels faced in the implementation of 
relationship marketing, the researcher used a qualitative method of data collection 
specifically in-depth interviews with sales managers and executives of seven out of the 
10 hotels surveyed. Three of the targeted respondents refused to grant an interview to the 
researcher with the explanation that, it was against their hotel's policies. The challenges 
as discussed in this section are therefore responses of these seven managers and 
executives who participated in the interviews. 
4.8 PRACTICAL CHALLENGES FACING GHANAIAN HOTELS 
The findings revealed that Ghanaian hotels are faced with a number of challenges in their 
attempt to implement relationship marketing as a strategy towards achieving customer 
loyalty. Apart from the features of the industry which generally constrain the operations 
of hotels, such as the perishability (where rooms left unsold on any given night can never 
be resold), the fixed nature of supply, such that, additional rooms to a hotel cannot be 
done overnight, and the inability to change location although the characteristics of a 
location can change, the study found that there were some specific challenges peculiar to 
the Ghanaian hotels as they implement the relationship marketing concept. These 
findings are discussed below. 
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U.l llipeoetof .........t io. .... 
All participants of the in-depth interview cited high cost of building relationships as one 
of the major challenges of the effective implementation of relationship marketing. They 
further revealed that. the long-term maintenance of these relationships meant investing 
huge amounts of company resources such as high telephone bills. high fuel costs, as well 
as increased depreciation of equipments such as company vehicles. For instance two of 
the participants are quoted as saying 
"M.rUtillg wants to do more to retllill ad 1fUIintllin ad retllin clients, but there lire 
6erWU COIUIrIIiIIb slIeh lIS jimutcilll lind bllllgetillg lI"d ytHI bow that rellllioMllip 
lIfIIinte"lInce also involves mo"ey" 
"As yo" bow r"""ing II hotel D both cllpitlllll"d lllbo"r intelUWe lI"d lIS such the 
bllllgetl or marUtillg if "ever s"fflCient" 
The interviews also revealed that, the multiplicity of taxes faced by Ghanaian hotels such 
as income tax, corporate tax, value added tax, permits and yearly allowances to relevant 
district assemblies among others makes it difficult for monies needed for the 
enhancement of relationships with customers to be allocated to marketing. This challenge 
was found to be common to all the surveyed hotels thus agreeing with Sharland, (1997). 
who argued that relationship marketing is expensive and costly to implement in spite of 
its numerous benefits. 
4.8.2 Low level of management support 
The second most common challenge raised by all the respondents to the interview is the 
issue of lack of management support for the effective implementation of relationship 
marketing as a strategy to winning customer loyalty. They explained that, management 
was only interested in short-term profitability and not long-tenn relationships with 
customers whose future commitment to the hotel was not easily predictable. For example: 
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..... "",.if. a ,._,. ." ., .... * ... _ff" __ IIIyfII~; 
IIIq __ "" y8 ... I IDt I1wat .. -- ..-y "". """."'g iIHtg-tmII 
~,. 
"0", Itolel ., tluft key c~ IB ralllt of 6IIJslts """",,,,6 bllllgm wlliell 
~ ... /ffHII q{ectlNly eIfIttMciItg 0fIr ,..".It". willi dIerIt. We'" tile". 10 
0", cItJ8e riwII beallU IItqI tdI we/J lrt!IIIed by 0", ctJlIIpditor" 
~ proeetllUa 11M ~ ill tile OIpIfi:Jlllorl ~ deItIy 0", 
410'* IIJ bllild Itmg-temt rellltiorultips willi 0", cIieIIts" 
The interview revealed that, hotel managers preferred "quick businesses" than investiDg 
so much money in long-term relationships with customers thereby limiting the resources 
available to relationship managers for effectively implementing the concept of 
relationship marketing. 
u.3 Mapewer or Relevant Skilled PenoDHI 
The interviewees mentioned the lack of manpower as a major challenge facing the hotel 
industry. Even in hotels where manpower was not a problem, personnel were found to 
lack the requisite skills and expertise needed for the effective implementation of 
relationship marketing. They complained about management's lack of interest in 
strengthening the manpower base of the marketing department which impacts negatively 
on the outcome of practicing relationship marketing since the practice becomes 
inconsistent. This is because the few relationship marketing personnel manage several 
relationships with several customers thereby having only limited time to spend with each 
customer. 
"lor rellJtilmsltip IfItIrketiltg IIJ effectively Ietul IIJ ClI$tomer Ioytllty, tile rellltlolUltlp 
"."" be ctJUistellt ad reglliar, but in ollr clISe it is IIOt so. This is became wllilst 
~ _1IIwttp iItcmu"'g, tllen tII'el ewer penollMlIIJ lItIIIIage tltae clielltr" 
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Fo1D' of the interviewees maiDIy &om two and three star hotels were very much 
concerned with the rate at which their skilled relationship managers were poached by 
higher rated hotels. They described this as one of their major challenges. This is because 
after investing huge amounts of money in training programmes for marketing personnel, 
they only end up leaving the job for better paid ones in higher rated hotels. For example: 
"I've illSt lost two of my best perfonrtiltg sllles aeclltives to a top "otel ;n t"is country 
after yean of "";,,;,,g aIUl ;lffIHICIiItg ;" them the skills ;"voIved ;" effective 
rdIIIiollS"ip build;"g" 
4.8.4 Lack of Adeqaate Database 
Five participants in the in-depth interview agreed that data mining and warehousing as 
important as they may be have not been given the full attention by their hotels. The 
challenge was mainly the lack of personnel to constantly upgrade information about 
current customers. They identified poor addressing systems in Ghana, frequent changes 
in telephone numbers of clients, relocation of some clients without prior notice to their 
service providers as the main cause of this challenge. This problem was common to three 
and two star hotels. Even though the three interviewees from the four and five star hotels 
did not face much of a challenge with data capture, they did with data maintenance citing 
the same reasons as in above. All respondents however agreed that customers sometimes 
refuse to give the right information or simply do not provide any information at all. This 
makes it difficult for effective tracking of customers' activities and relationship building. 
"becallSe cllSlomen' are unwilling to provide full ;"fomullion about themselves, we 
fbuI it very diJTlCuit to even segment our customers based on ;"comes, occupation, area 
one 1it1es and RrIhIs for t"e purposes ofp roper plllnn;"g and targeting" 
"even t"oug" we are wi/l;"g to effectively communicate with and contact our clients on 
a dIIUy basis, we are unable to do so because customers want to gam confulence ;n us 
before relells;"g any detailed ;nfomullion about t"emselves or t"eir bllS;"esses. So you 
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CIUt ~ • ribItIIitJIf IiU tIuIL HtIW CtIII we ",.."., eJfediN m.t#ollSlliptl wilt 
tIIe",7" 
4.8.5 Reeent Cats • Government expenditnre 
Four participating hotels mainly three, four and five star hotels, attested to the fact that 
recent announcement by government of its intention to cut down budget expenditure on 
conferences by ministries, agencies and departments is having a strong effect on 
marketing activities in the hotels. This is because most of these hotels depend largely on 
revenues from these governmental agencies. As a result of these reductions in 
expenditure by governmental agencies, revenues accruing to hotels have been hit badly. 
This is making it impossible for marketing to meet its targets due to further cuts in 
marketing budget. Even though two respondents from two star hotels did not mention this 
as a major challenge, they agree that it had minor effects on their marketing plan since 
most of their loyal customers were mostly private individuals and not necessarily public 
servants. 
4.8.6 Low level of customer trust for relational bonds 
Six out of the seven respondents to the interview, raised the low level of customer 
involvement and interest in the process of relationship marketing as one of the main 
challenges they currently faced especially with Ghanaian customers. Three of them 
explained that, many of their loyal clients did not want to be disturbed by constant 
telephone calls and messaging. This was supported by all the other participants. They 
attributed this to the fact that most of their customers lacked appreciation for long-term 
relationships and rather viewed the marketer's attempt to build and maintain relationships 
with them (customers) as being forced to patronise their services even when they were 
not ready to do so. They thus do not consider buying hotel services as an impulsive 
decision. For example: 
"Most of OIU clients simply lIIcked trust for the relationship we try to build with tIIem; 
they tII;"l we want to exploit tIIem for their monies" 
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-OM o:f,.., ,.,., t:Ii6ItItI .", ". • ~ .Ida. ". ", .." ".. pl"ClSlII'e OIl 
him udt Iud ~ he W4f 1WItIy", J1Ilb'tIIfI.w o",lIoII!I, '" _1dIJ 111/0l7Il me" 
In summary, the findings of this study revealed that relaticmsbip marketing is a strong 
determinant of customer loyalty. It also shows that Ghanaian hotels rely heavily on 
.relationship marketing as a tool to winning customer loyalty. The study further revealed 
that not aU loyal customers are equally satisfied customers. Finally the work exposes 
many of the practical challenges facing the Ghanaian hoteliers in their attempt to 
implement relationship marketing strategy. 
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CIIAI'I'D nvE 
CONCLUSIONS, IMPLICATIONS AND RECOMMENDATIONS 
5.1 IJdrodaetiea 
The previous chapter presented the findings of the study. This chapter concludes the 
study. It begins by restating the objectives of the research aDd the methodology that was 
employed in the data collection process. The chapter continues with the key findings of 
the research as well as the theoretical and practical implications or possible 
recommendations to hoteliers in Ghana. The chapter ends by giving its conclusions and 
suggestions for further studies. 
The major goal of this study was to examine the relationship between Relationship 
Marketing and Customer Loyalty. Specifically, the study was meant to explore the impact 
of relationship marketing on customer's decision to remain loyal to their service 
providers. Thus does the practice of relationship marketing strategy lead to increased 
customer loyalty in the Ghanaian hospitality industry as have been found in other 
countries? The research also sought to find out whether any relationship exists between 
Relationship marketing practices, customer satisfaction and customer loyalty. In other 
words, does the fact that customers are satisfied with the relationship strength means they 
will automatically become loyal to the hotel; and are all loyal customers satisfied? The 
study also sought to examine the extent of relationship marketing practice amongst 
Ghanaian hotels. The theses thus developed and empirically tested a model that leads to a 
better uoderstanding of relationships between relationship marketing practices, customer 
satisfaction, and customer loyalty in rated hotels in Ghana. In order to answer the 
resean:h questions posed in chapter one, the study extended relational practices to include 
relational bonds and competence in addition to the common relationship constructs such 
as commitment, trust, conflict handling and communications. 
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A survey methodology was adopted and questionnaires were used as the major data 
collection tool. Three hundred (300) out of five hundred (500) customers of rated hotels 
(2 to 5 star hotels) responded to the questionnaire. In addition. in-depth interviews were 
also conducted with marketing, sales managers and sales executives of seven (7) hotels 
on the challenges and constraints they faced as they implemented the relationship 
marketing strategy. 
Sol Findings 
The findings are discussed in relation to the objectives of the study. 
ReselU'Ch Objective One 
rhe extent ofr ellltionship "",rketing prflCtice amongst Ghanaian hotels 
All sampled hotels admitted that, there is increasing competition within the hospitality 
industry and subsequently revealed that they relied heavily on long-term relationship 
building in maintaining their customers. With this in mind, the researcher sought to 
examine the extent of relationship marketing practices from the customers' point of view 
based on the degree to which customers agreed with the positive statements on the 
relationship practices of their hotels as presented in the questionnaire. 
Responses obtained showed that the practice of the various relationship marketing 
constructs tested in this study were at an appreciable level. Thus hotels in Ghana appear 
to be relying heavily on the use of relationship marketing to achieve competitive 
advantage and subsequently customer loyalty. This confirms earlier revelations made by 
the sales managers and executives to the fact that they rely more on relationship 
marketing as a marketing strategy in the face of increased competition. The responses 
showed that competence, communication, conflict handling, commitment, social and 
financial bonds and trust all obtained a mean score of between approximately 4 and 5. 
This means that hotels in Ghana show high levels of competence, communicate more 
often with their customers, avoid conflicts and resolve any conflicts that may arise fairly, 
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are committed to the needs of their customers. relates exceptionally well with their 
customers and maintain a high level of trust between themselves (hotels) and their 
customers. Amongst all the practices however, the responses obtained clearly showed 
that hotels pay the biggest attention to trust in their relationship marketing practices 
which is closely followed by competence, conflict handling, communication. 
commibnent and social and financial bonds respectively. 
Research objective two 
The relatiollShip between rdIItiollShip IIUIrketiltg and customer loyalty ill the Ghanaian 
HO$JIittdity (/IotI!l) ;"dll.ftry 
This main objective of this study was to find out whether there is a positive relationship 
between relationship marketing and customer loyalty. A regression model was computed 
to determine how the six relationship marketing practices impact on customers' decision 
to remain loyal to their service providers. In other words, which of the practices of 
relationship marketing has a stronger effect on customer loyalty within Ghanaian hotels? 
The results showed that there is a significant relationship between relationship marketing 
and customer loyalty (F=26.4, p<O.OS). This means competence, communication. conflict 
handling, commibnent, relational bonds (social and financial), and trust jointly determine 
customer loyalty. An R-Square of 0.3S1 was obtained indicating that all six relationship 
marketing practices jointly determine 3S.1% of customer loyalty. An attempt made to 
estimate how the individual variables contribute to customer loyalty revealed that 
amongst all the six practices of relationship marketing, competence is the biggest 
determinant of customer loyalty, closely followed by relational bonds, commitment, trust, 
conflict handling and communication respectively. The findings also revealed that 
competence, commitment, trust and relational bonds have significant effects on customer 
loyalty (p<O.OS). Communication and conflict handling appeared not to exert too much 
significance in determining customer loyalty in the Ghanaian hotel industry. 
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Ilnu,d~"~ 
The rellllitHu"ip bdwee" relIItiollSllip IIfIU'ketiIIg, clIS~r Slllis/tIdiD" ""d clIStomn 
Ioylllty 
The above research objective sought to clearly establish the relationship between 
relationship marketing. customer satisfaction and customer loyalty. The work depicted a 
situation where relationship marketing could have two outcomes. The assumption is that 
relationship marketing can make customers loyal. Similarly. relationship marketing can 
lead to customer satisfaction before making customers loyal. A closely related question 
that was also addressed is "are all loyal customers satisfied with the overall performance 
of their hotels" or "does satisfaction automatically lead to customer loyalty?" these 
research questions were answered in two forms. First a link was drawn between 
relationship marketing and customer satisfaction and subsequently a link was drawn 
between customer satisfaction and customer loyalty. 
RelflliollSllip IlUUketiIIg and clI$tomer satisfaction 
A one way ANOVA  was performed using relationship marketing as the independent 
variable and customer satisfaction as the dependent variable. With a significance level 
0.000 or P<O.05. an F-statistics value of 9.2 was obtained meaning there is a significant 
relationship between relationship marketing and customer satisfaction. This means 
competence, communication, conflict handling. commitment, relational bonds, and trust 
jointly determine customer satisfaction. Subsequently, an R-square of 0.159 showed that 
competence, communication, conflict handling, commitment, relational bonds and trust 
jointly determine 15.9% of customer satisfaction. The findings also revealed that 
comparatively, the biggest determinant of customer satisfaction is competence (.084). 
This is followed by trust (.035), commitment (.021), conflict handling (.021), relational 
bonds (.011) and communication (.006) respectively. Thus amongst all six determinants 
of customer satisfaction, only competence was found to have a significant effect on 
customer satisfaction (p<O.05). The study can therefore conclude that within the 
Ghanaian context, particularly the hospitality industry, relationship marketing practices 
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cletumioes IS.9% (pcn:eDt) of cusIDIDer satisfadion with competence having the greatest 
impact on customer satisfaction. 
The findings also revealed significant ditJerences between the satisfaction levels of the 
customers of the various sampled hotels (F=9.3, p<O.05). Thus, 5-star hotels have the 
most satisfied customers, followed by 4-star ho1els, 3-star hotels and 2-star hotels in that 
order. 
CIISIotIIn -*/1ICIiM ."tI clDttHlter IoytIIty 
This second part of this question sought to find out whether customer satisfaction is 
positively related to customer loyalty. In other words are all loyal customers satisfied 
with their service providers? The findings revealed that there is a significant relationship 
between customer satisfaction and customer loyalty (F=56.3, p<O.05). This means that 
customer satisfaction determines customer loyalty. An R - square value of 0.159 shows 
that customer satisfaction determines 15.90-" of customer loyalty. The findings also 
revealed that relationship marketing has a more significant effect on customer loyalty 
than it does on customer satisfaction (ANOVA and R - Square results). 
The findings also revealed that whereas relationship marketing detennines 35.1 % of 
customer loyalty, customer satisfaction determines only 15.90-" of customer loyalty. The 
study therefore shows that there may be some loyal customers who are not necessarily 
satisfied. The findings showed that, only 3.7% of respondents are loyal to their service 
providers but are not satisfied with the overall services offered by the hotels. The findings 
showed that a significant percentage (22%) of such customers came from the 2-star hotels 
and only 2% from 4-star hotels. However, 3-star and 5-star hotels were found to have no 
customers who are loyal and not satisfied with the overall services offered by the hotels. 
As such the study can conclude that not all loyal customers are satisfied customers. 
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Reuarcll ~ Fo., 
Challenges fllCed by GhtuUlilut Hotels tIS t/tey implemented NIIItiollSllip IIUIrketing in 
their operations. 
The marketing environment differs from one country to the other and as such businesses 
and consumers are likely to exhibit varying behaviours towards to each other. Because of 
these differences in marketing environments, this study sought to explore the practical 
challenges peculiarly faced by Ghanaian hotels as they implemented relationship 
marketing in their operations. The findings revealed that the extent of relationship 
marketing practice amongst Ghanaian hotels is high however an in-depth interview with 
seven (7) sales executives, marketing and sales managers revealed that a number of 
factors impede the efforts of Ghanaian hotels to implement relationship marketing. These 
practical challenges included high costs involved in building and maintaining long-term 
valuable relationships with their customers, low level of management support, lack of 
manpower and relevant skilled personnel, difficulty in tracking, capturing and 
continuously updating customer data due to poor technological facilities in the hotels, the 
massive cuts in government's expenditure and low level of customer trust for relational 
bonds. 
5.3 Theoretical and Practical Implications for Hotel Managers 
This study focused on relationship marketing and customer loyalty in the hotel industry 
which falls within the services sector. Amongst the thirty relationship types proposed by 
Gummerson (1999), this study focused mainly on the relationship between service 
providers (business) and customers, thus business-to-customer relationships. Customer 
loyalty and satisfaction in the hotel industry has become a central issue to both managers 
and researchers. The reason is that it costs more to attract new customers than retaining 
old customers (Uncles et al, 2002). The benefits of relationship marketing are enormous, 
such that it impacts heavily on customer's decision to be loyal, increase repeat purchases, 
and even lead to customers acting as agents of the service providers (Uncles et al., 
2002». The literature pertaining to customer loyalty has also shown that loyal customers 
increase the overall profitability of service providers (hotels) (Reicbheld and Sasser, 
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1990; Reichheld, 1996; Narteh. 20(9). In the light of this. this research provides 
managerial implications for hotel managers as well as relationship marketers. The 
theoretical implication of this research is that the study provides empirical evidence 
within the Ghanaian context that the six practices of relationship marketing namely: 
competence, trust. commitment, communication, relational bonds, and conflict handling 
altogether have impact on customer loyalty. This study thus adds value to the literature 
by empirically linking a broader list of relationship marketing practices to customer 
loyalty. It therefore builds on earlier works in the area of relationship marketing and 
customer loyalty (Ndubisi, 2007; Ndubisi, 2004; Lee-Kelley et al., 2003; Leverin and 
Liljander, 2006; Guenzi and Pelloni, 20(4) which linked an incomplete list of 
relationship marketing practices to customer loyalty and other researchers who have 
linked relationship marketing to customer satisfaction (example, Narteh. 2009) ignoring 
the ultimate goal of building customer loyalty. 
The findings showed that, if a hotel wants to achieve a high rate of customer loyalty, then 
relationship marketing should be relied upon as a major strategy. In other words hotels 
must make continuous efforts to effectively manage their relationships with their 
customers because the way they build and maintain these relationships could make a 
customer become loyal. Specifically, hotels must take the necessary steps to improve 
upon their competence. In this instance, managers must have a greater understanding of 
the needs of their guest and envisage a guest's experience as satisfying a need rather than 
just selling a service. By improving competence levels, managers should take the 
necessary steps to deploy knowledgeable staff that will be capable of providing accurate 
and timely services whilst being passionate about service quality. Therefore, intensive 
technical training programs are required to deliver services that are not only satisfactory 
but delightful. Training programs that are designed to give employees the skills to do 
their job must be made a minimum requirement. Continuous training and large 
investment in customer service as well as technical training are needed to ensure 
consistency in quality service delivery. Employees in tum must display a desire to 
provide first class service to its customers to win their confidence. These factors in 
combination lead to customer loyalty. For example: 
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"/ would advise 011 ~,.", in tlte service delivery of tlte hotel and I wouJd 
suggest thai people centered and proper training methods be odopted to meet the 
dynamic needs oft lte customers" 
"senice excellence must be taken seriously by the hotel if they want us to continue 
coming back to them. Marry service providers have not yet come to terms with this" 
"my suggestion is that the hotel needs to be more proactive and competent with their 
dealings with us. They should improve on their aging assets and leam how to sole 
conflicts more competently" 
Trust as revealed by the findings is an important determinant of customer loyalty in 
Ghanaian hotels. Managers must therefore put in place measures that will lead to 
customers building trust for them. Managers must thus make efforts to keep promises 
made to customers, protect customers' information, and providing quality service in such 
a way that they win the customers' confidence. 
"there should be enough customer coJifidentiality where I can discuss personal problems 
and issues with the aervice provider. This will boost my confidence in the relationship" 
Commitment also proved to be a strong determinant of the strength of relationship 
marketing and thus a useful construct for measuring customer loyalty. The practical 
implication to managers is that, managers must place a lot more emphasis on the building 
and maintaining of valued relationships. By this, hotels must be committed to the needs 
of the customers by making adjustments to suite customer's needs, offering personalized 
services to meet customers' persona1 needs, showing genuine commitment to customer 
relations, clearly understanding customer needs and flexibly serving them. For example: 
"the hotel'a response to customer needs must be swift and very prompt and must meet the 
exact need oft he customer. They must be willing to adjust to suite the customer's taste" 
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F~ if hotels waat 10 iIaeae CUIIIIoIDer loyalty, they must encourage die 
building of SIroog relational bonds in the form of social bonds between their employees 
and customers.. Employees must therefore regularly check on their customers, ... 
customers' special gifts on special occasions such as surprise birthday cards and flowers. 
Not only must hotels show concern for customer needs, they must take steps to also 
involve customers' in their social functions and treat them as real friends, not just 
customers. If possible, hotels should go the extra mile of even participating in family 
events of their customers. For example: 
"/ would forther suggest that bener relationships be established between the pests 
and hotel management in ways that would engender better loyalty. i. e. lots off ollow-
up visits and frequent face to face interactions not only telephone calls" 
"this hotel must create a lot more loyalty programmes like the frequent guest 
programmes and communicate more with us especially through the internet. TItq 
must keep us closer to them and get in touch regularly not only when we are in the 
hotels. They should stop pretending and be real" 
"my service provider should be more flexible when it comes to offering discounts on 
prices. / mean they should give more discounts" 
"the hotel should be contacting regular and frequent customers like us on a regular 
interval in order to keep us permanently and also they must show appreciation to us 
regular customers in very lcind manners like offering bigger discounts or gifts" 
"/ suggest that management should find out how my business is doing beCQU8e 
without my business, / will not lodge here in their hotel" 
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With respect to financial bonds, hotels must otTer more discounts to customers and design 
special financial packages for their customers such as club cards, frequent stay 
programmes and sponsored packages such as free trips to tourist sites and other 
interesting places. This is a sure way to achieving customer loyalty. 
5.4 Conclusions and Suggestions for future studies 
This research has clearly shown that relationship marketing practices jointly have a 
significant influence on customer loyalty within the Ghanaian hotel industry. This means 
that, marketers aiming at building and maintaining long term beneficiary relationships 
with their customers hoping to win their loyalty must pay attention particularly to 
competence, trust, relational bonds, and commitment. 
This study was limited to only 10 hotels within the Greater Accra region of Ghana even 
though there are more than one thousand hotel and accommodation facilities spread 
across the country. The researcher recommends that future research should include more 
hotels so that the findings could be more generalized across the hospitality (hotel) sector. 
The study again was only limited to the hospitality sector. However, future research 
could go beyond the hospitality sector to study other sectors such as the 
telecommunications industry, insurance sector as well as the banking sector. The 
researcher also recommends that further research be done to determine how relationship 
marketing practices impact on the various sexes' (male and females). This study assessed 
the impact of relationship marketing practices on customer loyalty in the hotel industry 
but within the Ghanaian context. Therefore future research could extend this study to 
cover other African countries in order to explore the extent of relationship marketing 
practice in their hotel industry and how it impacts on customer loyalty due to differences 
in macro-environmental factors and consumer behaviour. 
Overall, this research provides a useful and practical model that can be used by managers 
to develop relationship marketing strategies aimed at not only satisfying customers but 
also gaining customer loyalty within the hospitality (hotel) sector. 
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Webopa"y 
www.I!IBl!faiumsighl.com 
www.google.com 
www.biackweli.com 
www.myjoyonline.com 
www.sciencedirect.com 
www.ghanaweb.coIll 
www.g.hallawunslIl.guv.gll 
144 
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APPENDIX I 
QUESTIONNAIRE FOR LOYAL CUSTOMERS 
Topic: Relationship Marketing and Customer Loyalty in Ghanaian Hospitality fi 
nus questionnaire relates to a research project being conducted on the topic "Relationship Marketil 
_mer loyalty in the Ghanaian Hospitality industry". This research is aimed at investigating VI 
• practice of relationship marketing in Ghanaian hotels necessarily lead to customer loyalty and to e, 
• extent of appreciation of the concept of relationship marketing amongst Ghanaian hotels. 1be resc 
would therefore be grateful if you could provide answers to the questions below. The academic nature 
tidy naturally means that all your responses will be treated with the strictest confidence. 
Semon I 
Please read each one of the following and tick the slot that corresponds to the option that appropriately 
captures your level of agreement with each of the statements. Where 
Strongly Agree 5 
Agree 4 
Neutral 3 
rn~ 2 
Strongly Disagree I 
Strongly Agree Neutral Disagree StJ 
Agree Di 
5 4 3 2 
COMPETENCE 
I The hotel is excellent in service delivery 5 4 3 2 
2 The hotel's staff are very efficient in customer handling 5 4 3 2 
The hotel's staffhave excellent knowledge about their work 5 4 3 2 
4 The hotel's staffpossess excellent hotel management skills 5 4 3 2 
COMMUNICATION 
S The hotel provides timely and trustworthy information 5 4 3 2 
6 The hotel provides information when there is any new 
service 5 4 3 2 
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Strongly Agree Neutral Disagree St 
Agree Di 
7 The hotel discusses with me new ways of improving 
their services to my benefit 5 4 3 2 
8 The hotel provides accurate information always. 5 4 3 2 
9 The hotel's staff are easily approachable 5 4 3 2 
CONFLICT HANDLING: 
10 The hotel tries to avoid potential conflicts 5 4 3 2 
11 The hotel tries to solve manifest conflicts before 
they create problems S 4 3 2 
12 The hotel has the ability to openly and promptly 
discuss solutions when problems arise 5 4 3 2 
13 The hotel listens well and understands my grievances S 4 3 2 
COMMITMENT 
14 The hotel makes adjustments to suit my needs 5 4 3 2 
15 The hotel offers personalized services to meet 
my personal needs S 4 3 2 
16 The hotel understands my needs and is flexible 
in serving them. S 4 3 2 
SOCIAL AND FINANCIAL BONDS 
17 The hotel regularly checks on me 5 4 3 2 
18 The hotel sends me gifts on special occasions 5 4 3 2 
19 The hotel involves me in their social functions 5 4 3 2 
20 The hotel gives me special discounts on all purchases S 4 3 2 
21 The hotel offers me financial packages on regular basis 5 4 3 2 
22 The hotel treats me as a friend not just a customer 5 4 3 2 
23 The hotel participates in my family's social functions 5 4 3 2 
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Strongly Agree Neutral Disagree Str 
Agree Oi! 
raUST 
24 The hotel is very concerned with security 
for my transactions 5 4 3 2 
25 The hotel's promises are reliable and consistent 5 4 3 2 
26 Employees of the hotel show respect to customers 5 4 3 2 
27 The hotel fulfill its obligations to its customers 5 4 3 2 
28 I have absolute confidence in the hotel's services 5 4 3 2 
CUSTOMER LOYALTY 
29 I have never considered switching to another hotel 5 4 3 2 
30 I am a loyal customer to the hotel 5 4 3 2 
31 I would recommend the hotel to my friends and family 5 4 3 2 
32 I consider the hotel as first choice among other hotels 5 4 3 2 
33 I will always take the risk to try their new products 5 4 3 2 
34 Price increases will not affect my loyalty to the hotel 5 4 3 2 
SATISFACTION AND LOYALTY 
35 I am satisfied with the overall services provided by 
the hotel 5 4 3 2 
36 I am loyal to the hotel but not satisfied with their 
overall services 5 4 3 2 
SECflOND 
Background Information 
37 Sex 1. (Male) 2. (Female) 
38 Occupation 
39 Age (1) 18 - 30 (2) 31 - 50 (3) 51-70 (4) Above 70 
40 Country of origin 
41 Name of hotel 
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42 For how long have you been using the services of this hotel? 
(I) 1 year (2) 2 years (3) 3 years (4) More than 4 years 
AJ)DmONAL INFORMATION 
!fyour service provider should ask you ways of improving their relationship with you, w 
other ways would you suggest to them apart from the above options? 
, ......................................................................................................................... . 
............................................................................................................................ 
.......................................................................................................................... 
Thank You for your cooperation and for being part of this study 
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APPENDIX n INTR~croRY LETTER 
UGI",IBS 
University of Ghana Business School 
26TH March, 2009 
The Human Resource Manager 
Dear SirlMadam, 
LETTER OF INTRODUCTION: MR. GEORGE CUDJOE AGBEMABIESE 
This is to introduce to you Mr. George Cudjoe Agbemabiese, who is a final year MPhil studen1 
of the University of Ghana Business School (University of Ghana) Legon. As part of the 
graduation requirements, each student is expected to write a dissertation. The topic he has chosen 
is "Relationship Marketing and Customer Loyalty in the Ghanaian Hospitality Industry". The 
main focus of the study is that Relationship Marketing can lead to customer satisfaction anel 
increased customer loyalty in the hospitality (hotel) industry. 
He has selected your hotel to help in the empirical investigations. I shall be very grateful if ym: 
could give him all the necessary assistance he needs to enable him complete his study. I assurt 
you that the information that you provide will be kept confidential and will be used for onl) 
academic purposes. 
Thanks for your anticipated co-operation. 
Yours faithfully, 
Dr. Bedman Narteh (Supervisor) 
DeparDnentof~arketing 
P. O. Box LG 78, LegOD, Aeera, Ghana 
I Faesimlle: 233-21-5000241 Email 
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~,. ~ ,Un iversity of Ghana  http://ugspace.ug.edu.gh
;" 
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