Academic journal article Journal of International Business Research

Study of Satisfaction, Loyalty, and Market Share in Kuwait Banks Offering Mutual Fund Services

Academic journal article Journal of International Business Research

Study of Satisfaction, Loyalty, and Market Share in Kuwait Banks Offering Mutual Fund Services

Article excerpt

INTRODUCTION

Although attaining growth and profitability is of paramount importance to businesses, systematic sector analysis aimed at identifying the relationship among key marketing outcome variables is scant at best. According to the basic consumer model, improved value should enhance brand choice and generate favorable satisfaction judgments, resulting in repeat purchase (brand loyalty), and ultimately to overall firm performance (Cooil et al. 2007, Leverin & Liljander 2006, Story & Hess 2006, Reinartz, Werner & Kumar 2000, Pleshko & Cronin 1997, Rust & Zahoric 1993).

Expecting these general premises to hold for every industry or under every condition is generally met with justified skepticism. The marketing literature offers many examples showing that better product does not always translate into higher sales or larger market shares. Intervening variables such as poor marketing, poor relative value, or a variety of macro-firm factors can weaken the logical relationship between marketing effectiveness variables. Additionally, satisfaction with a service or a usage occasion is not sufficient to ensure customer loyalty or higher profitability even when satisfaction leads to improved market shares (Mitchell & Kiral 1998, Pleshko & Cronin 1997, Reichheld & Sasser 1990). Despite the positive effects of buyer loyalty on market share, loyalty is often found to be more prevalent in firms with smaller market shares (Ehrenberg & Goodhardt 2002, Knox & Denison 2000, Reichheld & Sasser 1990). Additional research is needed to verify the association between marketing effectiveness outcome variables.

This study investigates the interrelationships among consumer satisfaction, consumer loyalty, and market share in the mutual funds industry. Kuwaiti banks, local pioneers in offering mutual fund services, are considered to be concentrated yet operating in a monopolistically competitive industry (Al-Mutairi & Al-Omar 2009). Mutual funds are a unique service-type in that the investments themselves are potentially quite durable (lengthy) while still offering quick dissolution if necessary. Although banks have been the focus of a variety of studies, however investigations into the mutual funds service have been lacking.

CUSTOMER SATISFACTION

In general terms, satisfaction can be defined as the summary judgments formed after consumption. Although many models have been postulated to explain satisfaction, this study conceptualizes satisfaction to result from a comparison of mutual fund service and product expectations to the performance of the banks on these salient components (Al-Weqaiyan 1998, Churchill & Surprenant 1982). Meeting or exceeding initial expectations should lead to satisfaction whereas falling short of expected performance will generate dissatisfaction. User satisfaction judgments have been shown to impact various attitudinal and behavioral tendencies toward chosen brands (Breivik & Thorbjornsen 2008).

Customer satisfaction and buyer retention are generally considered among the most important long term objectives of firms (Cooil et al. 2007). Satisfied buyers should be more likely to repurchase again, or at least, consider repurchasing again than those with undesired service experiences (Kotler 1977, Keith 1960, Leavitt 1960). Importantly, satisfied buyers are known to provide important positive word-of-mouth communication (DeMatos & Rossi 2008). According to Reichheld and Sasser (1990), repeat customers can benefit a firm's cost structure through reduced costs per visit when compared to new customers. Additionally, maximizing customer retention rates and minimizing customer defections are primary strategic objectives for most firms emphasizing the maintenance of market share through customer relationship management (Ching et al. 2004, Verhoef 2003). Thus, previously satisfied buyers may result in both reduced marketing costs and more stable sales/share levels if a large enough proportion of those satisfied buyers are retained as customers. …

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