- Title
- Examining the effect of cost orientation on RMO adoption in the hospitality industry
- Creator
- Lee, Howard C. W.
- Resource Type
- thesis
- Date
- 2017
- Description
- Professional Doctorate - Doctor of Business Administration (DBA)
- Description
- Relationship marketing (RM) is alleged to be widely adopted in the hotel industry worldwide, involving relational activities such as customer relationship management, designed to establish and foster customers’ loyalty to a hotel. The fundamental reason for the adoption is that implementation of relational exchange activities by a hotel can enhance existing customers’ perceived value and continued satisfaction, thus fostering their allegiance to the hotel. Satisfied and loyal customers might then assist the hotel’s acquisition of new customers as a result of their positive word of mouth, leading to mutually beneficial hotel-customer relationships that might result in long-term profit, ultimately creating the conditions required for sustainable competitive advantage. Congruent with RM’s focus on long-term customer profitability, and without questioning the need for operational efficiency, hotels pursue a relationship marketing orientation (RMO) by making relational investments, underpinned by assessments of the customer lifetime value to the hotel. While the hotel industry is commonly identified in the literature as an exemplary case for the deployment of relational strategies, the links between the inherent adoption and implementation of RMO and both enhanced hotel revenue and sustainable competitive advantage are questioned by real world cases of unsatisfactory business performance in the industry, hence requiring further scholarly enquiry. One possible interpretation for poor performance is that the perceived efficacy of costly relational activities can be undermined under specific contexts. Accordingly, hotel managers might question the efficacy of the continued implementation of relational marketing activities at times of high competitive pressure combined with lower profit margins. This could justify that hotels might subsequently retreat from the continued implementation of relational long-term customer value creation activities, rather favoring a rationalization of operational activities, at least temporarily, to defend the hotels bottom line. This being the case, relational practices might succumb to price/cost based competitive pressures, such that short-term or/and intermittent focus on cost reduction might weigh down a hotel's relational focus on service quality and customer satisfaction. It is recognized that sustainable competitive advantage requires operational efficiency, but the rationale of the above interpretation is not straightforward. White it is well known that businesses may adopt a continuum of transactional and relational strategies that recognizes the attributes of different consumer segments, alternating relational and transactional strategies targeting the same segment is not examined in the literature. That is, the interpretation seems to overlook the long-term perspective that underpins RMO, suggesting that the inherent relational activities of the good times can be put on hold, or become secondary to cost reduction objectives, when times are tough. The suggestion here is that, in certain contexts and at certain times, cost orientation might become a primary concern, if not a substitute for a continued relational investment. This justifies examining the moderating impact of cost orientation (CO) on RMO adoption, and its impact on business importance (BP). This research examines the moderating impact of CO on hotel manager's perceived efficacy of RMO adoption, for enhanced BP. Congruent with this objective, a critical review of the literature identified gaps that led to the development of the research question for this study, articulated as: 'What is the effect of CO on the link between the adoption of RMO and BP in the hotel industry? The critical review of the literature also guided the research in the identification of the theoretical framework to examine the research question, and in the development of seven related hypothesis. Adopting a positivist quantitative research method with a cross-sectional design, a self-administered electronic survey instrument was developed supporting the operationalization of measurements of CO's impact on manager's perceptions of perceived efficacy of RMO adoption through an internet portal of hospitality professionals. Validated item-scale measurements were drawn from extant scholarly research, ensuring the conceptual soundness of the survey instrument. The electronic survey was distributed in the internet platform of eHotelier.com and a non-probability convenience sample with 222 usable responses from hotelier members 222 was collected. The hypotheses were tested using Partial-least Square Structural Equation Modelling (PLS-SEM). The initial analysis indicated that all seven hypotheses were not supported, not until further conduction of subgroup analyses in which hotel managers demonstrated empirically significant heterogeneity on perceived efficacy of RMO adoption for enhanced BP varying with high and low CO moderation. The study findings should help researchers and marketing managers to better understand the moderation role of CO on the interaction between the adoption of a RMO and business performance. From a theoretical perspective, the research enhances understanding of the short-term and recurring attention given by business to CO adoption, and how this makes it extremely difficult to uncover the impact of CO on RMO-BP nexus, particularly given the adoption of a cross-sectional research design. From a managerial perspective, the research highlights the importance of understanding the possible tradeoff between relational and transactional strategies, assisting managers in making more informed decisions regarding the development of more consistent and effective RMO strategies, less vulnerable to the influence by competitive pressure on price/cost.
- Subject
- relationship marketing orientation; cost orientation; RMO
- Identifier
- http://hdl.handle.net/1959.13/1341719
- Identifier
- uon:28799
- Rights
- Copyright 2017 Howard C. W. Lee
- Language
- eng
- Full Text
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