Exploring Relationship Marketing and Marketing Performance Success

Exploring Relationship Marketing and Marketing Performance Success: An Empirical Investigation in the Insurance Services Sector from aManagement perspectiveDr. Ishraq Al Mousa & Dr. Faiz H. ZoubiAbstractIn this research, the authors investigate the influence of factors contributing to relationship marketing on marketing performance success of the Jordanian insurance sector. The literature reveals that there is an extensive body of research that addresses relationship marketing in general but there is less emphasis on the insurance sector. Moreover, evidence on the impact of the proposed factors that contribute to relationship marketing (RM) on marketing performance success in insurance industry is limited. In order to explore this issue, a triangulation method was used to collect primary data through a questionnaire, which was administered in the insurance companies in Amman and, via pilot interviews with company managers and experts in the insurance in Jordan. All working insurance companies were targeted in this research rather than a representative sample of these companies. A purposive sampling strategy was used to choose the participants in this research. In total, 120 senior managers (relationship marketing manager, administrative and/or public relationship manager, marketing manager, technical managers, Motor department manager, Marine manager, Health insurance manager, Fire and general accident managers) participated in this study. The results confirm significant differences in the influence of factors contributing to RM on marketing performance success. They also reveal that the components of RM have varied significant and insignificant influence on marketing performance success, which demonstrates that the insurance company’s performance phenomenon is complicated and multi-dimensional in nature. Furthermore, the results exhibit insurance com y managers might benefit more by placing more emphasis on relationship marketing strategies and recognizing the importance of achieving competitive advantage and customer satisfaction. The results also highlight several implications for future research in financial service sector in general and the insurance sector in specific, and fills in several gaps in the existing literature of relationship marketing in the financial service sector. This research contributes to the academic and practical knowledge as being one of the first attempts to propose a model and then investigate empirically the impact of the factors contributing to relationship marketing on marketing performance success.1 Introduction:For the last decade there has been a lot of debate in marketing literature about marketing definition in the contemporary business environment. Obviously the marketing mix approach has been dominating the field for more than 40 years, but this orientation is gradually changing with the contribution of many factors like Globalization, customer retention, and the importance of customer relationship economies rather than economies of scales. Consequently there was some controversy and criticism about the sufficiency of the current definition and practices of the marketing mix or 4Ps Paradigm in marketing, and a suggestedshift from the 4Ps traditional, and transactional marketing perspective in new relational paradigm was needed. One of the main reasons laying behind relationship marketing is; transactional cost saving, if companies don’t extend the single transaction with customers each time, then, they will find themselves obliged to incur transactional cost each time the customer shows up (Osarenkhoe and Bennani, 2007).Jordanian economy faced great difficulties after World War II. Insurance at that time was not commonly used, except for the insurance of importation credits which required marine or road transportation insurance. The Ottoman Bank used to insure these credits with Eagle Star Company in London for a commission of 0%. The year 1946 was the beginnings of insurance market in Jordan when Mr. Ra’o Abu Jaber established an insurance agency affiliated to the Egyptian Orient Insurance Company which was established in 1921 at Cairo with a joint Egyptian-French Capital. During the fifties period, Jordan was forced to discharge goods at Aqaba port which created the need for a strong sector of cars’ transportation. As a result a need of providing coverage in these fields, insurance companies were established; Jordan’s Insurance Company was established as the first Jordanian insurance company. During the sixties period, Jordanian market witnessed an increase in the number of insurance companies when Middle East insurance Company was established with a capital of 200 thousands Dinars, followed by National Insurance Sharing Company. During the seventies and mid eighties period, the sector’s status remained the same where the number of companies increased to become (33) company, agency and branch, (23) of them are local and the rest were branches for foreign companies. As a result of the economic recess in late eighties as well as the random competition in a small market, In addition to the decrease of insurance prices below the technical level, many insurance companies faced losses, which made the Government Issue the (Insurance Practice Monitoring Act) No. 30 for the year 1984. All that led to the decrease of the total number of companies to (17) local company and (1) foreign company in the year 1987. The situation was comparatively stable until 1995 when new law was issued That opened the opportunity once again to establish new insurance companies. As a result, (8) new insurance companies entered into the market and the number of working companies increased to (25) local company and foreign company in addition to one company under establishment. The number in the year 2000 became (27) insurance companies, all of them working in a relatively small market in all levels if compared with other developing and developed countries, they are now a total of 26 companies. Furthermore, the share of life insurances in 2005 amount for 10.4% in the market while it is 50% in the modern countries,and this percentage affects very much the formation of savings’ volume that characterize this branch of insurance specifically.Although marketing academics and practitioners have been examining relationship marketing for more than a decade, most of the studies on relationship marketing were criticized as overly simplistic because of their use of a uni-dimensional perspective. Moreover, there is little tested the underlying assumption upon which much of literatures of relationship marketing based (Ward and Dagger, 2007). Furthermore, despite the pivotal importance of marketing-oriented boundary for successful relationship development, only few studies have investigated the influence of these boundaries on relationship outcomes and business performance. To fill this gap in the literature, the objectives of his study are to theoretically build and then empirically test a multidimensional model of factors contributing to Relationship Marketing and their effect on marketing performance success. Although many of the Variables suggested in the model were discussed as a dimension in other literatures before, but never proposed or empirically tested in such a model that combines all the possible factors that might contribute relationship marketing and then marketing success. So the originality and uniqueness of this study came from the proposed model that will empirically find the sufficiency of factors contributing to RM and their effect on marketing success, as well as determining the most important variables. Moreover, most of the past discussions on relationship marketing were mainly in the context of western culture. Seldom has this concept been discussed in eastern culture, a context where a relationship is always considered to be an essential factor in business operations. Therefore, this study will be conducted in Jordan. The researcher believes that this study will Provide additional insight into existing literature on relationship marketing; and contribute to very other few empirical researches in the RM field.2. Research Objectives:This research aims at achieving the following objectives:1.Examining factors contributing to relationship marketing in financial services sector inJordan.2.Examining marketing performance success factors resulting from relationship marketing inthe financial sector in Jordan.3.To find if there is any relationship between factors contributing to relationship marketingcollectively, and marketing performance success in the financial services sector in Jordan.4.Examining the most influential factors that affect relationship marketing in the financialservices sector in Jordan3. Literature Review3.1 Relationship Marketing Paradigm.3.1.1 From 4Ps to RMThe purpose of this section is to explore exist literature relating to relationship marketing components included in the research. This objective was achieved through reviewing relevant literature in both RM and insurance service context for research purposes. The marketing mix management paradigm has been dominating marketing literatures for about 40 years (Gronroos, 1993), this paradigm faced a lot of criticism, and many scholars in marketing argue that this view of marketing based on the 4Ps approach, is outdated, and represent only specific types of firms, this outdated view is as the AMA defined it 1985: ‘The process of planning and executing the conception, icing, promotion, and distribution of ideas, goods, and services to create exchange, and satisfy individual and organizational objectives’.On the other hand Constant ides (2006) Proposed that the marketing mix paradigm has some major drawbacks that major RM scholars emphasized those are: Product orientation rather than customer orientation and focus. The explicit focus of the Mix on internal processes undermines the elements of customer feedback and interaction as basis of building up relationships retention. In the context of relationship building the Mix fails to address the individual customer needs.3.2 Relationship Marketing Rationales:Why do firms and consumers enter into relationships with other firms and consumers? That is, what motivates the relational exchanges in relationship marketing? In the following point, two perspectives will be discussed;3.2.1. Customer’s PerspectiveCustomers enter a relationship for many reasons, one of the most important factor is commitment which characterizes the customer who engage in a relational exchange, moreover, customers are looking for a trusted partner in the relationship, which leads to lower risk perception for customers, and this trust is shaped by partner’s integrity, reliability, and competence. Another thing that customers are looking for partners who shares common valueabout what is true or not, what is important and not…etc. (Hunt et al., 2006). Customers want to receive customized offer that satisfy their needs and wants, and this is something can be achieved by engaging in a relational exchange (Vargo and Lusch, 2004). According to (Hunt et al .2006), customers engage in a relational exchange in general if they perceive the benefits associated with the relationship to be more than the costs incurred.3.2.2. Firm’s PerspectiveThe logic behind entering in a relationship from firm’ perspective has many justifications, one of the most crucial one’s: is to better compete in the market, hence; relationship marketing is a strategic approach (Hunt et al., 2006). So relationships become crucial to the competitiveness of the firm, when it contribute to deliver a value offer to the customers.3.3 Factors Contributing to Relationship MarketingNow the theoretical framework is proposed variables in the model, those suggested variable were based on a comprehensive literature review. In an attempt to validate them, here is a theoretical framework for related literature.3.3.1 Interpersonal Characteristics:The relational variable view suggests that many dimensions will affect the successful relational exchange; Thus, the relational factors view of relationship marketing has tended to focus on the attributes of successful relational exchange, trust, relationship commitment, and communication3.3.1.1 TrustAs conceptualized by (Morgan and Hunt 1994) “trust is existed when one party has confidence in an exchange partner's reliability and integrity”. It is also defined as the firm’s willingness to rely on exchange partner whose behavior is not under its control. Customers may find out whether their counterpart is trust worthy or not by recognizing the following characteristics as proposed by Haidar and Birly (1998). Anderson and Narus(1990) focus on the perceived outcomes of trust when they define it as "the firm's belief that another company will perform actions that will result in positive outcomes for the firm as ell as not take unexpected actions that result in negative outcomes." certainly, such outcomes are from a partner on whose integrity one can rely upon confidently.3.3.1.2 CommitmentRelationship commitment according to Morgan and Hunt 1994 is an exchange partner believing that an ongoing relationship is so important as to warrant maximum efforts at maintaining it; that is, the committed party believes the relationship is worth working on to ensure that it endures indefinitely. Their "valued relationship" corresponds with Morgan and Hunt’s (1994) belief that relationship commitment exists only when the relationship is considered important.3.3.1.3 CommunicationCan be defined broadly “as the formal as well as informal sharing of meaningful and timely information between firms" also communication can be described as the glue that holds together a channel of distribution. Morgan and Hunt (1994), proposes that a partner's perception that past communications from another party have been frequent and of high quality— that is relevant, timely, and reliable—this will result in greater trust Consequently, the integrated management of marketing communications activities, regardless of the source of communication messages, is required in relationship marketing. Not all activities are directly two-way communication, but all communication efforts should lead to a response that maintains and enhances the relationship (Gronroos 2004).3.3.2 The Value Proposition:An interesting issue from relationship marketing; is how to define the value proposition or what so called market offering? Traditional approaches describing the firm’s total offering as a core product supported by surrounding services or goods (Kotler,& Armstrong 2004).3.3.2.1 Quality:Quality has it’s close relationship to marketing in a very simple way, if customers perceive the service quality to be unsatisfactory, they’ll probably take their business away, and the company will be viewed to have competitive disadvantage, moreover, while many service firms struggle in enhancing their service quality and it’s supporting services, many customers do not see the difference between their company’s quality and other competitors, which considered to be a key issue for marketing management (lovelock, 2004). However, This undermines the importance of for two main points: (1) quality firm – customer relationship can help a firm to sense and serve customer needs more satisfactorily; and (2) customers who have good relationship with the firm are likely to remain loyal (Ndubisi, 2006). A model wasbuild for identifying and measuring service quality, which later has become to be called the SERVQUAL Model that constitutes of five dimensions (Zeithmal et al., 2006): 1). Reliability 2). Responsiveness 3). Tangibles 4). Empathy 5). Assurance3.3.2.2 InnovativenessThe innovation process has been defines as “sequence of information processing activities” product innovation and technology strategy is a strategic master plan to guide your business product efforts, Innovativeness refers to a market offering’s perceived newness, originality, uniqueness, it was also defined comprehensively by Olsen, etal (2005) as “"the business is not only open to, but seeks out new ideas in both its technical and administrative domains. It encourages risk taking and enhances the likelihood of developing radically new products. However, businesses must be aware of the possibility that an innovation orientation may not allow for the follow-through that is necessary to fully reap the benefits of earlier innovations", another definition is proposed by Tajeddini (2006):“The willingness and ability to adopt, imitate or implement new technologies processes, and ideas and commercialize them in order to offer new, unique product and services before most competitors. This willingness is based on a firm's culture in terms of values and beliefs in the organization.".3.3.2.3 Brand Equity:Aaker (1991. p. 15) defines brand equity as "a set of brand assets and liabilities linked to a brand, its name and symbol that add or subtract from the value provided by a product to a firm and/or that firm's customers”, while Kotler and Keller (2006) defined it as “the added value endowed to a product or service, this value may be reflected in how customers think, feel, and act with respect to a certain brand, as well as the prices, market share, and profitability that the brand commands for the firm, it is an important intangible asset that has physiological and financial value to the firm”. The need to tangiblize is inversely related to the level of intangibility of a service. Brand names add symbols used by firms to add tangible aspects to the product help reduce the search costs of consumers,3.3.3 Internal Marketing:Internal marketing is a management initiative that applies the same exchange logic that applies on the organization external customers, this logic believes that applies effective exchange on it’s internal customers; this will lead to an effective exchange with its external customers, internal marketing focuses on making effective internal relationships within alllevels, through the creation of customer and service oriented environment, it is like a culture transforming program that change the mindset of the employees into more customer and quality oriented one (Kelemen and Doukakis 2004).3.3.4. Information Technology:The research from the contemporary marketing practice (CMP) group has identified a number of factors that are causing the change in the nature of marketing practice (Brodie et al., 2000):1. The increasing emphasis on services and service aspects of products,2. The focus on financial accountability, loyalty and value management,3. The shifts in power and control within marketing systems and4. The increased role of IT-based interactivity.3.3.5 Organizational Resources:Resources are defined as any tangible or intangible entity available to the firm that enables it to produce efficiently and/or effectively a market offering that increases value for some market segment(s), firm’s resources include all assets capabilities, organizational processes, firm attributes, information, knowledge etc. They can be classified into three categories as: 1) Physical capital resources, 2) Human capital resources: training, experience, intelligence and relationships between and among individuals, 3) Organizational capital resources.3.4 Marketing Performance Success3.4.1 Customer Satisfaction:Customer satisfaction is widely accepted among researchers as a strong predictor for behavioral variables such as repurchase intentions, word-of-mouth, or loyalty. If the product’s performance exceeds expectations, the customer is very satisfied (positively disconfirming), if it remains below expectations, the customer will be dissatisfied (negatively disconfirming).satisfaction arises from a cognitive process comparing perceived performance against some comparison standards, On the other hand, the feeling of satisfaction essentially represents an affective state of mind( Ulaga and Eggart 2006). Customer satisfaction has been found to have a positive effect on a company’s relationship with its customers (Bolton, et al 2004). Furthermore, there is substantial evidence to suggest that the strength of a firm’s customer relationships is an important indicator of firm performance (Rust, et al 2004). The market orientation literature also finds that companies that have a stronger market orientation(Pralahad and Krishnan 1999) and view customers as a priority as part of the company culture exhibit superior performance.3.4.2 Competitive Advantage (CA):Retaining customers has become increasingly difficult with the proliferation of competition combined with reduced switching costs for customers. However, recently, further suggesting that the construction of competitive advantage is that competitive advantage is built on relationships and that “relationships with constituents are not just exchanges but sustained social interactions in which past impressions affect future behaviors”, While Tzokas and Saren (2004) suggested that relationship marketing and specifically knowledge is what leads to competitive advantage, moreover they argue that relationships help create unique, difficult to imitate knowledge for firms , to support their view Tzokas and Saren (2004) link the relationship marketing theory with knowledge to ultimately achieve competitive a advantage; before going on with supporting one approach4. Research MethodologyIt refers to an overall approach that involves research objective, theoretical development, analytical models, research questions and hypotheses. Business research there is no right or wrong research methodology which can be employed in the research project to achieve the research aims and objectives (Creswell, 2003).4.1 The Research Model:Organizational ResourcesBased on the previous comprehensive literatures review, the following research model is adopted for this study. .Fig 4.1 The Research Model Adopted4.2 Research Hypotheses:Based on a comprehensive examination of the relationship marketing literature review and to achieve the research objectives, a number of main and sub-hypotheses were developed in the null hypotheses shape as follows:H1: Factors contributing to relationship marketing (interpersonal characteristics, value proposition, information technology, internal marketing and organizational resources) don’t have a significant effect on marketing performance success.H2: Factors contributing to relationship marketing (interpersonal characteristics, value proposition, information technology, internal marketing and organizational resources) don’t have a significant effect on competitive advantage (CA).H2.1 Interpersonal characteristics don’t have a significant effect on competitive advantage.H2.2 Value proposition doesn’t have a significant effect on competitive advantage.H2.3 Information technology doesn’t have a significant effect on competitive advantage.H2.4 Internal marketing doesn’t have a significant effect on competitive advantage.H2.5 Organizational resources don’t have a significant effect on competitive advantage.H3: Factors contributing to relationship marketing (interpersonal characteristics, value proposition, information technology, internal marketing and organizational resources) don’t have a significant effect on customer satisfaction.H3.1 Interpersonal characteristics don’t have a significant on affect customer satisfaction.H3.2 Value proposition doesn’t have a significant effect on customer satisfaction.H3.3 Information technology doesn’t have a significant effect on customer satisfaction.H3.4 Internal marketing doesn’t have a significant effect on customer satisfaction.H3.5 Organizational resources don’t have a significant effect on customer satisfaction.H4: Factors contributing to relationship marketing (interpersonal characteristics, value proposition, information technology, internal marketing and organizational resources) don’t have a significant effect on marketing performance success in the presence of organizational variables (company’s experience, size of the company, type of the company).H4.1 Factors contributing to relationship marketing (interpersonal characteristics, value proposition, information technology, internal marketing and organizational resources) don’t have a significant effect on marketing performance success according to the company’s experience.H4.2 Factors contributing to relationship marketing (interpersonal characteristics, value proposition, information technology, internal marketing and organizational resources) don’t have a significant effect on marketing performance success according to the company size.H4.3 Factors contributing to relationship marketing (interpersonal characteristics, value proposition, information technology, internal marketing and organizational resources) don’t have a significant effect on marketing performance success according to the company type.4.4 Population and Sample The research population included all insurance companies operating in Jordan. The research subjects were marketing managers, relationship managers, technical managers, marine department managers, motor department managers, health insurance department managers, fire and general accident and upper class management who get involved in customer relationships in insurance companiesThere are 26 insurance companies operating in Jordan and have a membership at the Jordan insurance federation. The research sample was identified as all the previously mentioned managers working in Amman Municipality. The researchers chose this area for two reasons: first, the biggest insurance operations are run in Amman. Second, other limitations such astime, costs and cooperation restrictions. Accordingly 182 questionnaires were distributed, 140 were returned back, and 20 questionnaires were excluded from the analysis. A total of 120 questionnaires were included in the analysis.5. Results5.1 Descriptive Statistics5.1.1 General Demographics:GenderGiven the study population, the sample was biased towards the males in a percentage of 81.3%, with the frequency of 98 out of 120. However, females are less in there frequency taken the value of 22, and the percentage of 18.3% (Table 5.1); and this is probably due to the sample chosen which was all managers; and hence the number of female managers in the insurance sector is quite few.EducationTable 5.2 shows that 66.7% of managers in the insurance Jordanian private sector hold a four-year university degree, the table also shows that next higher ratio was for diploma holders the percentage was 23.3%; the next was for high school certificate holders, with the percent of 6.7; finally the least ratio was for master degree holders with the percent of3.3%, while non of the respondents has a PhD this may be referred to that PhD holders usually goes to academic institutions. This previous results can be justified by the rareness of academic institutions that grant a degree in insurance; add to this that there is professional certificate in insurance granted by institution in Bahrain, usually insurance companies send their employees to be certified; in insurance sector it is considered to be more important than higher education certificates; this is was supported by professionals in insurance sector.AgeTable 5.3 shows that the higher percentage of the respondent’s age lay between 30-39years old with the value of 52%, the next higher value lies between 40-49 years with the value of 26%, most managers of departments in insurance companies mostly are in this age, the least percentage was for 50 or above with the value of 14.2% this is can be justified by that most of managers in this age move to higher rank in the organizational structure like vice president or General Manager.5.1.2 The Moderating VariablesSize of the Company in Terms of CapitalThe following table shows the respondents answers’ regarding their company’s size. As table 5.5 shows that 50% of the respondents confirmed that their companies have a capital of 5 millions or less; other 37.5% have a capital ranges from 6-10 millions, the next higher percentage of 7.5% are companies have capital ranges from 16-20 millions, after that only 4.2% of the companies hold capital from 21-26 million, finally companies with capital between 11-15 holds the minimum percentage of 0.8%.。