Research problem definition Paper Example | Topics and Well Written Essays - 1250 words

Problem definition - Research Paper ExampleThat is how loyalty marketing, non only in the hospitality industry but also in the whole business market, emerged as being necessary and ideal. Loyalty marketing is the management process of identifying best customers and utilizing customer data and cortical potential to create, retain and grow profitable relationships. (ICLPloyalty.com, 2011 p. 1). Loyalty marketing has force a key factor for supremacy in the service industry over the past years (Bolton, Kannan & Bramlett, 2000 Levey, 2005). In such a extremely competitive market, service providers in many industries have discovered the importance of customer retention (Shoemaker & Lewis, 1999). They have it off the fact that keeping their customers is just as important as creating them. Loyalty course of instructions have now become so common in the hospitality industry that it is hard to find a business that does non have such a program. It is known that loyal customers make mor e purchases than non-loyal customers do, and they are less promising to switch to a competitor brand just because of price and other special promotions (Shoemaker & Lewis, 1999). The most inherent theory of loyalty marketing is that a small ontogenesis in loyal customers house clear a significant plus in profitability to a business. Reichheld and Sasser (1990) found that a 5 % increase in customer retention resulted in up to a 125 % increase in clams in nine service industry groups they studied. Moreover, the Harvard Business Review discovered that a company can double its profits by retaining just 5% more of its customers (Maxted, 2005). In the changing global environment, it is non too much to say that all business firms are looking for innovative ways to increase customer loyalty, because customer loyalty has a very powerful impact on firms performance and it is considered as a major source of competitive advantages (Lam, Shanker, Erramilli, & Murthy, 2004). Loyalty marke ters are not just collecting customer data, but they are also analyzing their customers behavior in order to have a better understanding and to make improvements. They want to know what types of rewards the customers are redeeming, what kinds of partner offers appeal to customers, and even the customers lifestyle or preference. The fellowship that vendors gain from knowing their customers can be expected to bring a better chance of achievement (Capizzi et al., 2003). Overall, one of the most dominant trends of loyalty programs these days is the coalition model. Companies in different businesses are bind together in order to share the branding, operational costs, marketing expenses, data, and customers. These multi-merchant loyalty coalition programs offer blotto benefits to attract more customers by creating value (Capizzi et al., 2003). For example, hotels are partnering with other airlines, rental cars, restaurants, and even credit eyeshade companies and offering loyalty cus tomers more opportunity to earn points and benefits. One of the worlds most recognized hotel rewards program, the Marriott Rewards, has partnerships with Boston Coach, Chase, Hertz, Skymall, tenor Canada, British Airways, American Airlines, and numerous other airline companies. Members of the Marriott rewards can also earn additional points via the Marriott rewards endorse card issued by Bank One (Marriott International Inc., 2011). Another example of this type of loyalty program in the hotel industry is the Hilton HHonors offered by Hilton. Hilton HHonors has more than 55