Establishing Profitable Customer Loyalty for Multinational Companies in the Emerging Economies: A Conceptual Framework

Abstract

It has been observed that some firms succeed in their attempts to achieve business goals in emerging economies, whereas others fail. To understand the reasons for this phenomenon, the authors conduct a qualitative study where they interview 42 managers of multinational companies from the United States, Canada, Europe, Asia, and Australia. From the insights gleaned from these interviews and the available literature, they propose a conceptual framework that identifies the possible factors that would drive the creation of both a profitable and a loyal customer base (termed “profitable customer loyalty” in this study) in the emerging economies. The influencing factors are categorized as customer-specific variables, marketing-mix variables, and firm-specific variables. From these factors, the authors advance research propositions that discuss the potential relationships with profitable customer loyalty. One of this study's key contributions is the proposal that multinational companies monitor the suggested factors and assess a degree of comfort before formulating strategies in the emerging economies. Further research can focus on the empirical validation of the proposed framework.

Drivers of Customer Satisfaction and Loyalty in Service Industries

“…Notwithstanding the critiques outlined above, numerous empirical studies have confirmed a positive link between customer satisfaction and loyalty (e.g., Türkyılmaz, Özkan 2007;Faullant et al 2008;Aksoy et al 2013). The study by Kumar et al (2013) indicates that in emerging economies, satisfaction is even more strongly linked to profitable customer loyalty than in developed economies. Based on this background, we propose: H5: Customer satisfaction has a positive impact on customer loyalty.…”

“…point out that firms should consider the impact of competition on the satisfaction -loyalty link. In a recent study, Kumar et al (2013) included market structure as one of the moderators in their framework for establishing "profitable customer loyalty". The concept refers to those customers who exhibit both behavioural and attitudinal loyalty and provide profits for the firm.…”

Moderating effect of government regulations on the determinants of customer loyalty for cellular service providers in Pakistan

“…However, this study did not empirically test the moderating role of government regulations on the loyalty of cellular consumers in Pakistan. Furthermore, Kumar et al (2013) using interviews from the United States, Canada, Europe, Asia, and Australia proposed a conceptual framework to study the moderating effect of government regulations in the relationship between perceived service quality, sales promotion, and customer-specific attitudinal variables to achieve customer loyalty. They highlighted the need to empirically examine the moderating role of government regulations for nurturing customer loyalty in the emerging economies of Asia.…”

“…Though the government has improved the existing regulations governing service quality, sales promotions and corporate social responsibility, there is a lack of empirical studies to address the impact of these government regulations on cellular consumers' behaviour, particularly on customer loyalty (Kumar, Sharma, Shah, & Rajan, 2013). In summary, the objective of this study is to address the lack of empirical evidence on the moderating role of government regulations for the linkages between perceived service quality and customer loyalty, between sales promotions and customer loyalty, and between perceived corporate social responsibility (CSR) and customer loyalty in the cellular sector of Pakistan.…”

Model for Measuring Customer Loyalty Towards a Service Provider

“…Customer loyalty is determined by a wide spectrum of drivers (Calin 2013;Kumar et al 2013;Narteh 2013;Yong-Jae et al 2013), but a set of those determining customer loyalty are differentiated by loyalty participants, and the impact the drivers have on loyalty is lacking. Even a partial identification of the drivers determining customer loyalty would help organisations to solve the problems of customer turnover more efficiently thus creating reasonable and appropriate solutions for loyalty development.…”