This study specifically focused on how CSI affected consumer loyalty at the bottom of the pyramid. To my employer, Absa, and specifically Ina Steyn, you made this process so much easier for me.
INTRODUCTION
- RESEARCH TITLE
- RESEARCH PROBLEM
- CORPORATE SOCIAL INVESTMENT
- BOTTOM OF THE PYRAMID
- SIGNIFICANCE OF THE STUDY
- RESEARCH OBJECTIVES
- SCOPE OF THE RESEARCH
As a result of this and in support of the transformation agenda referred to in the Broad-Based Black Economic Empowerment (BBBEE) Act 53 of 2003, the Department of Trade and Industry published in February 2007 the Black Economic Empowerment (BEE) Good Practice Rules . and a BEE scorecard (Erhvervsministeriet, 2007). The scope of this research is limited to exploring the relationship between CSI and loyalty in relation to bank customers at the bottom of the pyramid.
LITERATURE REVIEW
INTRODUCTION
CORPORATE SOCIAL INVESTMENT
- DEFINITIONS OF CSR AND CSI
- CSI MOTIVATION – WHY DO COMPANIES ENGAGE IN CSI?
- OUTCOMES OF CSI
- BANKING AND CSI
Therefore, they suggested relying on the company's activities as published on its website. They therefore suggested that further research looking at how customers rank CSI activities is needed.
BOTTOM OF THE PYRAMID
- WHY FOCUS ON THE BOTTOM OF THE PYRAMID?
- DEMOGRAPHICS AT THE BoP
- SERVICE QUALITY
Hess, Ganesan, and Klein (2003) suggested that the strength of the customer–organization relationship may also influence customer responses to failures. For customers at BP, service quality may be the only variable against which they can evaluate the company since they have not had an opportunity to develop a relationship.
LOYALTY
- UNDERSTANDING THE CONCEPT OF LOYALTY
- OUTCOMES OF LOYALTY
It also links with some of the literature on relationship marketing which suggests that customers are likely to overlook the odd service lapse once they have an ongoing relationship with the company (Hess, Ganesan and Klein, 2003). Luo and Bhattacharya (2006) studied the relationship between CSR and the market value of the company.
CONCLUSION
In a study by Beerli et al. 2004), they found that although customers may be satisfied with the quality of service they receive, they were not happy to make an economic sacrifice to receive that service and this could subsequently cause. They identified that the relationship between CSR—customer satisfaction—and the market value chain suggested that a company's CSR helps build a satisfied customer base and ultimately loyalty, and this partially mediates financial returns. They also found that financial returns from CSR are increased where companies have higher product quality.
Based on the literature, the following variables were included in this study to investigate whether CSI was a driver of BOP customer loyalty. Loyalty in terms of the model comprises the consumer's commitment to the company as well as the willingness to continue using the company. Behavioral response to loyalty is measured by the consumer's willingness to recommend the bank, open other accounts with the bank and finally disregard the offers of other banks.
Due to the literature also suggesting that service quality leads to loyalty and knowing that service quality is important to those at the BoP, the dimension of service quality was also included in this model.
HYPOTHESES
CSI has an impact on reputation, which in turn affects loyalty and leads to more repeat purchases by customers. CSI has an impact on reputation, which in turn affects loyalty and leads to reduced customer consideration of other offerings. CSI influences trust, which in turn influences loyalty and leads to more customer recommendations of the CSI brand to others.
CSI affects trust, which in turn affects loyalty and leads to more repeat business among customers. CSI impacts trust, which in turn affects loyalty and leads to reduced customer consideration of other offerings. Service has an impact on reputation, which in turn affects loyalty and leads to more customer recommendations of the CSI brand to others.
Service delivery has an impact on reputation which in turn affects loyalty and leads to greater repeat purchases from customers. Service delivery impacts reputation which in turn affects loyalty and leads to reduced customer consideration of other offerings.
RESEARCH METHODOLOGY
- RESEARCH CLASSIFICATION
- RESEARCH DESIGN
- DATA COLLECTION METHOD
- QUESTIONNAIRE DESIGN
- SCALE
- POPULATION
- BOTTOM OF THE PYRAMID
- SAMPLE
- SAMPLE SIZE
- SAMPLING TECHNIQUE AND FRAMEWORK
- STATISTICAL ANALYSIS
- DESCRIPTIVE STATISTICS
- INFERENTIAL STATISTICS
- ETHICAL CONSIDERATIONS
In addition, this research was conducted by an employee of one of the four banks targeted in this study. The accuracy of the questionnaire is determined by ensuring that it is reliable and valid. Scale items and terms used in the questionnaire were also translated by the interviewers into the relevant languages of the respondents to ensure that the respondents understood the questions.
The population had to be both banked and part of the bottom of the pyramid (BoP) to be included in the study. Analysis of the AMPS 2008B data allowed the bank population to also be matched by living standard measures (LSM), as well as by race. The width of the confidence interval gives an idea about the uncertainty of the unknown parameter (Albright et al, 2006).
This was also important given the fact that banks have different CSI programs. Based on the above criteria and the characteristics of the population, the quotas presented in table 4.2 were obtained.
RESULTS
INTRODUCTION
QUESTIONNAIRE DESIGN RESULTS
Further analyzes were conducted on the reputation and trust dimensions to determine what impact it would have on the Cronbach alpha if any variable within that dimension was deleted. They indicate that deleting any of the variables did not improve the results for the Cronbach alpha.
DEMOGRAPHICS
RESULTS
- HYPOTHESIS 1
- HYPOTHESIS 2 TO HYPOTHESIS 6
The analysis confirmed that the majority of consumers were aware of CSI activities, that the means of the level of awareness were the same, and that even those who were knowledgeable did not claim to receive any benefit. The analysis confirmed that the majority of consumers were aware of CSI activities (65%), that the means of the level of awareness were the same, and that even those who were knowledgeable did not claim to receive any benefit. Considering the hypotheses, Hypothesis 2 aimed to measure whether consumers with knowledge of CSI activities had a greater positive attitude towards reputation and whether knowledge of CSI activities led to greater trust in the brand.
Looking at the above model and considering hypothesis 2a–2c, the results of the study are shown in Table 5.10. Academically, however, the impact score of 0.11 shown in Table 5.10 is not significant due to the p-value. The results relevant to trust showed that CSI has no significant impact on trust, but service quality has a highly significant impact on trust – it has five times the impact of CSI, as shown in Table 5.12.
Considering hypotheses 5 and 6, the results confirmed that service quality significantly affects both reputation and trust (Table 5.15 and Table 5.16). Finally, Table 5.18 confirms the significant correlation between loyalty variables and customers' willingness to recommend, open other accounts, and ignore other banks' offers.
CONCLUSION
DISCUSSION OF RESULTS
INTRODUCTION
DISCUSSION
- HYPOTHESIS 1
- HYPOTHESES 2 TO 4
- HYPOTHESES 5 AND 6
- SUMMARY
As consumers did not personally benefit from the CSI activity, it is likely that this influenced the non-significant impact on loyalty (Pomering and Dolnicar, 2006). This probably explains why the results did not show such a large impact on loyalty. Considering the impact of CSI on reputation, the study found that although CSI awareness has a small impact on reputation (0.11), it is still not significant in an academic sense.
It is possible that CSI has no direct influence on loyalty, as its influence is indirect through the brand. When it came to the element of trust, being aware of CSI activities had a non-significant effect on trust. The literature as well as the evidence suggested that CSI has an impact on image, reputation and credibility with little or no discussion of the impact of CSI on trust.
However, the element of reputation has a significant impact on loyalty and in turn on the behavior of the consumer. This hypothesis dealt with CSI's impact on trust, its subsequent impact on loyalty and the customer's behavioral responses in the form of recommending the CSI brand to others, increased purchases as well as reduced customer consideration of other offers.
CONCLUSIONS
KEY FINDINGS
RECOMMENDATIONS
Initially, companies' CSI was attributed to the Good Practice Code which was a voluntary scheme through which companies could get a maximum of three points for investing in KMI activities. Now with King III, the investment by companies in CSI is legislation and boards are being asked to play a more active role in ensuring that their companies are responsible citizens. With this changing landscape, the playing field is being leveled and the competitive advantage of the past that could be gained by CSI is quickly waning.
This research specifically focused on whether CSI led to loyalty in the balance of payments and also considered the impact of service quality on loyalty. As the research showed, service quality has a direct positive impact on loyalty and will enable companies to attract customers in the short term. CSI, through its brand influence, can ensure that the company is recognizable and in the first place.
Based on the findings of this research, however, if companies want to target the BoP specifically, they would do well to ensure that they engage in activities that benefit individuals and not society. Finally, while companies can engage in CSI activities, and while benefits accrue, they cannot ignore the fact that getting the basics right, such as service delivery, is critical to building loyalty.
IMPLICATIONS FOR FUTURE RESEARCH
LIMITATIONS OF THE RESEARCH
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