Improving customer relations through relationship marketing - case Dam Vac Golf & Country Club

vietnam national university, HANOI school of business Nguyen Thi Khanh Linh IMPROVING CUSTOMER RELATIONS THROUGH RELATIONSHIP MARKETING - CASE DAM VAC GOLF & COUNTRY CLUB master of bu

vietnam national university, HANOI

school of business

Nguyen Thi Khanh Linh

IMPROVING CUSTOMER RELATIONS THROUGH

RELATIONSHIP MARKETING

- CASE DAM VAC GOLF & COUNTRY CLUB

master of business administration thesis

Hanoi - 2007

vietnam national university, HANOI

school of business

Nguyen Thi Khanh Linh

IMPROVING CUSTOMER RELATIONS THROUGH

RELATIONSHIP MARKETING

- CASE DAM VAC GOLF & COUNTRY CLUB

Major: Business Administration

Code : 60 34 05

Master of business administration thesis

Supervisors: dr Vu huy thong

TABLE OF CONTENTS

ACKNOWLEDGEMENTS i

ABSTRACT ii

TÓM TẮT iv

TABLE OF CONTENTS vi

LIST OF ABBREVIATIONS ix

LIST OF FIGURES x

LIST OF TABLES xi

APPENDIX xi

INTRODUCTION 2

1 Research Problems 2

2 Objectives and Purpose 3

3 Research Questions 4

4 Scope of works 5

5 Data and process 5

6 Method/Approaches 6

7 Significances 6

8 Limitations 6

9 Expected results 7

10 Follow – up (potential) 7

11 Short introductions 7

11.1 Introduction 7

11.2 Chapter 1: Theoretical foundation 8

11.3 Chapter 2: Improving customer relationship in Dam Vac Golf & Country Club 8 11.4 Chapter 3: Recommendations 8

CHAPTER 1: THEORETICAL FOUNDATION 2

1.1 Relationship Marketing Overview 2

1.1.1 Relationship marketing Defined 2

1.1.2 The evolution of Relationship Marketing 4

1.1.3 Benefits of relationship marketing 6

1.2 Key constructs for relationship success 8

1.2.1 Customer Value 9

1.2.2 Customer satisfaction 10

1.2.3 Trust 11

1.2.4 Commitment 12

1.3 Relationship Management Chain 14

1.4 Some Relationship Marketing Instruments 17

1.4.1 Product and/or services 18

1.4.2 Communications 18

1.4.3 Pricing 19

1.4.4 Distribution 19

1.4.5 Integrative instruments 20

1.5 Relationship marketing strategies 20

1.5.1 Core Service Strategy 20

1.5.2 Customizing the relationship 21

1.5.3 Service Augmentation 21

1.5.4 Relationship Pricing 21

1.5.5 Internal marketing 21

1.6 Importance of management 22

1.7 Relationship Marketing in Golf Course Industry 23

CHAPTER 2: IMPROVING CUSTOMER RELATIONSHIP 25

IN DAM VAC GOLF & COUNTRY CLUB 25

2.1 Case Study Introduction 25

2.1.1 Vietnam Golf Course Industry 25

2.1.2 The Case Company - Dam Vac Golf & Country Club 26

2.2 Research Methodology 28

2.2.1 Research Method 28

2.2.2 Research Approach 29

2.2.3 Collecting Data 29

2.2.4 Quality of the design 31

2.2.5 Linkages 32

2.3 Data Analysis 34

2.3.1 Macro Environment Analysis 34

2.3.2 Data Analysis - Industry Analysis 37

2.3.2.1 Porters‘ Five Forces Model Analysis 37

2.3.2.2 Product Life Cycle 39

2.3.2.3 Strategic Group Analysis 40

2.3.2.4 Market Trends 41

2.3.3 Data Analysis – Competitors 44

2.3.3.1 Strategy 44

2.3.3.2 Benchmarking 46

2.3.4 Data Analysis - Dam Vac Golf & Country Club 48

2.3.4.1 Competitive strategies 49

2.3.4.2 Relationships management chain 53

2.3.4.3 Strengths & weakness 58

2.3.4.3 Critical Success Factors 63

2.3.5 Data analysis - Customers 63

2.3.5.1 Analysis of Questionnaires with current Customers 63

2.3.5.2 Analysis of Interviews with potential customers 65

2.4 Conclusions 66

2.4.1 Linkages to our objectives 66

2.4.2 Competitive Strategy 69

2.4.2 Relationships management chain 71

CHAPTER 3: RECOMMENDATIONS 74

3.1 Relationship management solution 74

3.3.1 Defining again value of Dam Vac Golf & Country Club 74

3.1.2 Re-identify segmentation of Dam Vac 77

3.2.3 Design a suitable operation delivery system 78

3.3.4 Having a good measurement and feedback system 80

3.1.5 Managing internal market 81

3.1.6 Managing external market 82

3.2 Marketing Strategy 83

3.2.1 Product 83

3.2.3 Price 84

3.2.3 Advertising and Promotion 85

3.2.4 Action Plan 91

CONCLUSIONS 93

REFERENCES 95

APPENDIX 2

Appendix 1: QUESTIONNAIRES 2

Appendix 2: QUESTIONNAIRES 2

LIST OF ABBREVIATIONS

RM: Relationship Marketing

DVGolf: Dam Vac Golf

DVGolf & CClub: Dam Vac Golf & Country Club

CUD: Construction Urban Development, JSC

CR: Customer Relationship

DV: Dam Vac

BOD: Board of Directors

LIST OF FIGURES

Figure 1.1: The transition of relationship marketing – Payne 1998 5

Figure 1.2: Identifies the target variables within the complex relationship marketing system 8

Figure 1.3: Value chain Model of Michael Porter 14

Figure 1.4: Relationship Management Chain 16

Figure 2.1: Strategic Group Analysis for Dam Vac Golf & Country Club in the relationship with industry 40

Figure 2.2: Vietnam Gold Market Structure 42

Figure 2.3: Dam Vac golfer Community Percentage of Development 2004 -2007) 43 Figure 2.4: Dam Vac Gold members Structure 43

Figure 2.5: Dam vac Golf Course Value Chain 55

Figure 2.6: Dam Vac Golf Course Value Chain 75

Figure 3.1: Dam Vac Golf Course Value Chain 75

Figure 3.2: Golf operation structure Models 79

Figure 3.3: Golf course construction and maintenance structure 79

Figure 3.4: Golf course executive structure Models 79

LIST OF TABLES

Table 1.1: Key differences between the concepts of relationship marketing and

transactional marketing 6

Table 1.2: Outcomes of Commitment and Trust 13

Table 1.3: Commitment and Trust vs Customer Satisfaction 13

Table 2.1: Objectives and linkages of Dam Vac 32

Table 2.2: Shows STEP analysis for the garden nursery industry as a whole 34

Table 2.3: Dam Vac Golf & Country Club Competitors Analysis 45

Table 2.4: Dam Vac golf Membership Fee 51

Table 2.5: Comparison of Golf Courses Membership Fee 51

Table 2.6: SWOT analysis of Dam Vac Golf & Country Club 62

Table 2.7: Dam Vac Golf & Country Club Relationship management Chain 72

Table 3.1: Marketing action plan for Dam Vac golf 91

APPENDIX

Appendix 1: Questionnaires to current members of Dam Vac

Appendix 2: Questionnaires to potential customers of Dam Vac

 Golf course is a special industry where customers are all upper class people; they are smart and have high demanding, especially when the competition is higher, give them more choices So it is important for any golf course to have customers‘ satisfaction, trust & loyalty

 Vietnam as well as other golf course is now having the same competition pressure from the market that is getting higher and higher Moreover, Dam Vac is new golf course, and still waiting for construction completed, it doesn‘t have pioneer advantages

 The construction work of Dam Vac hasn‘t finished, but they have sold membership since beginning The number of the club members now up

to 240 members, however during 2006, Dam Vac suffered from finance crisis, as the result they had to resize the company, and cut down many activities, construction was also delayed As the result it caused a lot of

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doubt and rumors from current members as well as golf communities in all over Vietnam Not only is the relationship between the company and its customers becoming worse, but the image of golf is also getting tarnished Sales decreased sharply since 2006 At the beginning of 2007 Dam Vac has new shareholders, a new Board of Management (BOD), new Chairman Financial issue is not a problem to Dam Vac anymore, but the impression from customers and the image of golf have not yet changed Dam Vac realizes this attitude must change

 Dam Vac marketing activities have been always modest Few events, several advisements on golf magazine and membership sales mainly reply on direct marketing to bring in new customers However, as the industry grows, management feels that there is a need to re-evaluate the marketing strategy and establish a new strategy that is deliberately planned and intended with specific attention to the customer Addressing this issue is the objective of this research

2 Objectives and Purpose

The purpose of this thesis is to establish a relationship marketing strategy for Dam Vac Golf & Country Club, helping to change the poor image

of customer about golf course, and create a competitive advantage over competing firms in the golf market In order to achieve this, we will aim to meet the following objectives:

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1 To establish what relationship marketing is, and why a company that is focused to the needs of its customers (and that maintains close personal relationships with them) can be increasingly more successful

2 To identify and assess the methods of relationship marketing which the owners of the company would feel effective to them in the market To identify possible improvements which could be made within the company, to attract new customers from the wide market for their products & services

3 To determine the marketing strategy of competitors to Dam Vac Golf, their services and benefits for customer, and whether their existence compromises Dam Vac Golf

4 To analyze the external environment of Dam Vac Golf in order to find opportunities for future profitability and success for the company

5 To analyze the current competitive strategy is now applying in Dam Vac, and how they manage all the relationship

6 To determine the views of customers, both current and potential about Dam Vac, to determine their needs for golf and how Dam Vac Golf could satisfy those needs

7 To segment and critically analyze the customer base of the company and decide which of these segments the company should priority for the customer relationship marketing plan

8 To establish a focused customer relationship recommendation plan for the company, from which they can implement the recommendations into their business

3 Research Questions

This thesis will focus on the following questions

1 What is relationship marketing? How relationship marketing work and bring benefit for the enterprise in the new trend of economy

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2 What is the solution for Dam Vac golf course to improve poor image and relationship with customers to create competitive advantages for golf course?

3 How can apply relationship marketing on other golf courses

4 Scope of works

• The study will be about the case of Dam Vac Golf & country Club only as a sample for golf course industry So the business will be represented by Dam Vac Golf & Country‘s owner which is Construction & Urbanize Development., J.S.C (CUD., JSC)

• The period of time that study will focus on will be from setting up (2004) up to now

• The focus will be on local golf courses

• The focus will be on the creation of a customer relationship marketing plan for Dam Vac specifically and all golf courses in Vietnam in general

5 Data and process

Data and material for this study will be taken from many sources as following:

• Primary Data sources

+ Dam Vac Golf & Country Club management offices: One head office

in Vinh Yen, Vinh Phuc, and representative office in Hanoi

+ Information from visiting 5 golf courses around Hanoi: Tam Dao golf course and Resort, Chi Linh Start Golf, Dong Mo King Valley golf course, Hanoi golf Club, Van tri Golf Club

+ All information related to Dam Vac Golf & Country Club and all

other golf courses searched in Internet, newspapers,

• Secondary Data

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+ Findings in available research studies such as “Relationship

Marketing for comparative advantages: Winning and Keeping Customers‖,

Adrian Payne, Martin Christopher, Helen Peck, Moira Clark, 1998,

“Relationship Marketing: Gaining Competitive Advantage through Customer Satisfaction and Customer Retention”, Hennig-Thurau, Ursula Hansen, 2000,

+ Data will be processed mainly by excel: chart to summary, compare and analyze

Documents/reports or information from internet and some magazines which specialize on relationship marketing, Vietnam golf course industry

Information from survey/interviews more than 20 current customers and 30 potential customer of Dam Vac Golf & country Club, as well as over 20 employees working in Representative office of Dam Vac in Hanoi

7 Significances

The research will introduce clearly the theory of relationship marketing This theory would bring good references which can be applied to build a new critical marketing strategy for any enterprise

On the practice, it gives Dam Vac a long term strategy to help Dam Vac

to settle its problems, create long term customer relationship and competitive advantages for Dam Vac This would be a good sample for others golf course

8 Limitations

This research is just mainly focus one case is DV Golf & CClub,

The time of the study from 2004-2007 is another limitation

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Customers in surveys is mainly personal not consist of enterprises

Numbers of customers to interview and survey is not large

9 Expected results

The study expects to show the following findings

Bring some fundamental knowledge about Relationship marketing

Build an efficient marketing strategy for Dam Vac Golf which can help Dam Vac Golf improve recent customer relationship and create competitive advantages

Apply relationship marketing successfully the case of Dam Vac Case

10 Follow – up (potential)

Further study will be taken on building and developing a detail marketing plan based on the model of relationship marketing plan for Dam Vac Golf Or anther study can be account for is the importance of relationship marketing in golf course the importance of customer retaining to Dam Vac Golf particularly and all over golf courses in Vietnam in generally These studies will

be an information channel and reference source and propose a model of new marketing strategy for all golf courses in Vietnam when they want to have a new idea how to improve customer relations or an effective marketing strategy for their golf course

11 Short introductions

With objective is building an applicable and affective marketing strategy for Dam Vac to help DV regaining customer trust and commitments, therefore, this study concentrates on studying marketing relationship market and analysis problems in Dam Vac Case The result of study will examine marketing difficulties and show solutions for Dam Vac Due to the standardized thesis format and for the sake of clarity, this thesis will be divided into four clearly defined parts and chapters as follows:

11.1 Introduction

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This part presents the topic and the research question to the reader It seeks to build interest in the topic and help the reader understand the motivation for choosing the subject

11.2 Chapter 1: Theoretical foundation

This chapter presents to the reader what other authors have written on the chosen subjects, which cover mainly marketing, relationship marketing The chapter seeks to give the topic depth and perspective, and further establish

a basis on which the analysis is built This chapter also brings the theoretical foundation and different understanding of marketing relationship in general

11.3 Chapter 2: Improving customer relationship in Dam Vac Golf &

Country Club

This chapter bases on the results of the survey and study in relation to research question and the literature presented in chapter one and two Hence, this chapter will present the ―essence‖ of the thesis as well as show the solutions and strategy for Dam Vac

11.4 Chapter 3: Recommendations

This part will summarize the findings of the study and present applications for them Furthermore, through comparison between theory and practical understanding this study gives out recommendations for further implementation of building and developing marketing relationship in Vietnamese golf companies

CHAPTER 1: THEORETICAL FOUNDATION

In this section we would like to introduce the most basic theories and concepts about Relationship marketing which is the background information to analyse for the case of Dam Vac Golf & Country Club in next part, helping to complete the relationship marketing strategy proposals

1.1 Relationship Marketing Overview

Now it is almost being accepted now by the whole world that customer is the King The little-guy-the-customer is the person who has unique interests, needs, attitude, preferences, issues and opportunities, and most importantly the authority to spend the money at the offerings of the company Customers are treated as the eyeball of all major companies in the world Moreover, the world is changing everyday with the effect of globalization, technology evolution, and invasion of Internet worldwide, customers become wiser & wiser, competition between companies becomes tougher and tougher These make traditional approach of marketing has been increasingly questioned with a lot of limitations It‘s is no more appropriate for industrial and services marketing, where establishing longer-term relationship with customer is critical to organizational success (Adrian Payne et al, 1998) It requires having a modern marketing theory that is more applicable, and can improve on traditional marketing approach Responding to this criticism, relationship marketing was founded

1.1.1 Relationship marketing Defined

The first relationship marketing paradigm was researched and built by Barry

in 1983 He saw relationship marketing as a new strategic approach to customer, and keep customers by ―attracting, maintaining and in multi-service organization enhancing customer relationship‖ (Berry, 1983) After Berry, relationship marketing was continuously discussed by many others when describing long term approach marketing For example, Gronroos 1990 added several dimensions to relationship marketing, writing that its purpose was to establish, maintain and enhance

relationship with customers and other partners, at a profit, so that objectives of parties involved are met This is achieved by a mutual exchange and fulfillment of promise Morgan and Hunt (1994) defined relationship marketing as ―all marketing activities directed toward establishing, developing, and maintaining successful relational exchanges‖ In later work Hunt (1997) said that relationship marketing can be seen as a means of gaining competitive advantage especially through the acquisition of intangible assets Primary findings indicate a regular positive response to literature of relationship marketing and its abilities in the business world But perhaps one of the most sufficient definitions about relationship marketing must be the one presented by Gronroos (1994) who refined his initial

definition the relationship marketing is: “identify and establish, maintain and

enhance and, when necessary, terminate relationships with customer and other stakeholders, at a profit so that the objectives of all parties involved are met, and this is done by mutual exchange and fulfillment of promises” This definition was

referred to be ― elegant and succinct and represented what most researchers believed was the essence of relationship marketing‖, by Harker 1999) when conduction a review of relationship marketing definitions and then it‘s is commonly accepted in the literature, with Egan (2004) settling on it after long discussion of definition

For more detail Christopher, Payne, Ballantyne has suggested another approach of relationship marketing theory based on a broader perspective than earlier contributions The key elements of this view are:

 The emphasis in the interaction between enterprises and customers is shifting from a transaction to a relationship focus

 The relationship marketing approach focuses on maximizing the life time value of desirable customers and customer segments

 Relationship marketing strategies are concerned with the development and enhancement of relationship with a number of key ―markets‖ It is concerned

with the ―internal market‖ within the organization as well as building substantial external relationships with customers, suppliers, referral sources, influence markets and recruitments markets

 Quality, customer service and marketing are closely related However, frequently they are managed separately A relationship marketing approach brings customers into a much closer coherence

This approach of relationship marketing will be used in this thesis for its purpose

1.1.2 The evolution of Relationship Marketing

Marketing literature provides a useful guide to the way marketing theory and practice has been developing Traditional marketing was known since 1950s‘ when the frameworks were formulated to manipulate and exploit market demand, and the most enduring of these was the idea of the ―marketing mix‖ supposed to be traditional marketing, with 4Ps which is short for product, price, promotion and place These were the levers that, if pulled appropriately, it would lead to increased demand for company offer Marketing mix aimed to devise strategies that would optimize expenditure to increase demand for company‘s offer and maximize sales (Arian Payne, 1998)

The fundamental concept of the marketing mix still applies until now, in the sense that organization needs to understand and manage the influences on demand, but during the closing years, some of these basic tenets of this marketing approach were increasingly being questioned According to Christopher, Payne, Ballantyne

1998, ―many instances consumers and customers became more sophisticated and less responsive to the traditional marketing pressures – particularly advertising‖ The reasons were that there were greater choices, and partly as a result of globalization of market and new sources of competition And many markets had matured, in the sense that growth was low or non-existent As the result brand loyal

is weaker and it used to be, simplistic 4Ps marketing is unlikely to win or retain customer Having the same way of thinking, Gamble, Stone (2005) stated the world

has been changing everyday with 3 major trends: a) the rise of the savvy consumer: b) the rise of extreme competition and the rise of remote customer make the relationship marketing more important than ever before

Figure 1.1: The transition of relationship marketing – Payne 1998

(Source: Relationship Marketing - Creating Stakeholder Value by

Christopher, Payne, Ballantyne, 2002, P4)

The main differences of the concept have been illustrated by several authors through a comparison of relationship marketing with the competitive concept of transactional marketing Table 1 presents a compilation of key differences between the two concepts (Hansen & Bode 1999, 294-296)

In general, marketing is about identifying, anticipating, and satisfying customer‘s need While most of the traditional marketing approaches are used to build awareness about company‘s offering and attracts more customers, then relationship marketing‘s purpose is to build and maintain strong relationship between the company and the customers (Kandampully) To ensure the survival of firms in the face of turbulent market conditions usually demands that organizations learn how to exploit specialist knowledge as a basis for building stronger relationships with customers (Webster, 1992) In the business environment emerging today with a growing number of cluttered markets and relationship marketing is becoming necessary for organizational survival (Gronroos, 1996)

Relationship Marketing

Transactional Marketing

Functionally-Cross-functionally marketing

Table 1.1: Key differences between the concepts of relationship marketing and transactional marketing

Maintenance of existing relationships

All phases focus on sales decisions and action High

High important

Mass customization

Single transaction Action-related Static

Decision-oriented Generally takes a short-term perspective

Acquisition of new customers

Pre-sales activities

Low Generally low

Monitoring market share (indirect approach) Quality of output

production

No or limited importance Low

Mass production

(Source: Relationship Marketing: Gaining Competitive Advantage through

Customer Satisfaction and Customer Retention, Hennig-Thurau, 2000, P5)

1.1.3 Benefits of relationship marketing

It‘s clear in definition that relationship marketing purpose is to create, maintain and enhance relationship with customer and various other stakeholders to

sustain in competitive environment and get competitive advantage But to answer clearer for the question what benefits of relationship are, Gronroos stated relationship marketing focus on developing and maintaining satisfactory customer relationship that can help to reduce perceived risk reduce transaction costs, increase customer loyalty and customer retention and thus impact on organization performance (1995) The research of Belch & Belch in 1998 shown that by sustaining relationship with profitable customers and reducing customer defection

by 5 percent, a company can increase future profit by as much as 30-90 percent

Based on previous research and study, in 1998, Day et all summarized all the benefits of relationship marketing would bring to a enterprise These were once again repeated by Paul R Gamble and his co-authors in their book 2005

 Bring closer relationships with customers Overtime, company develops link with customers through technology, knowledge, information or social ties This not only brings company closer to customer, but also in turn customers share more information with company about themselves

 Customer retention There is a dialogue between the company and the customer that enables the company to ensure that customer satisfaction is maintained This dialogue enables the company to tailor products and services very closely to individual customer needs and to develop new products and services to meet changing needs or even emerging needs The more satisfied customers are, the greater is their retention Satisfied customers are more positive towards the organization and therefore are more committed and likely to be the loyal customers

 Financial benefits ensue As customer‘s loyalty retention will be increased, customer stay longer with company, buy more and buy more often Moreover, company can reduce the costs from recruiting customers

Hennig Thurau, 2000 summarize some key target variables for the success of relationship leading to the success of marketing as the figure followings

Figure 1.2: Identifies the target variables within the complex relationship marketing system

(Source: Relationship Marketing: Gaining Competitive Advantage through Customer

Satisfaction and Customer Retention, Hennig-Thurau, 2000, P12)

In general, relationship wants to aim to creating long term relation with customer and other stake holders for sustainable profit and development of enterprises

1.2 Key constructs for relationship success

Obviously relationship can bring a lot of benefits to companies but what are the features that distinguish successful relationships from unsuccessful ones? And what are key constructs for successful ones? To give answer to these questions, there have been many research studied on this issue, and several different determining variables have been proposed According to Mohr and Spekham‘s idea (1994) the following areas are needed for successful relationships: commitment, coordination and trust, communication quality and participation, and conflict resolution through joint problem solving This idea was also supported by Hennig Thurau, 2000 who agreed that there are several constructs determining customer retention or loyalty, but Hennig Thurau specially focus on three main dimension variables of relationship quality are: Customer satisfaction (or service quality), trust and commitment This almost accepted by among authors have studied about

relationship marketing, however some other author like Rott (2000), Gluck and Poter, Payne and Christopher (1998) added one more variables for successful relationship is customer value, because ―business process as a sequence of event where by value is created, and cost occurred, so marketing should be viewed as a wide business process which has the goal of creating superior customer value‖ Here after, we are going to go further on these four main variables to make it clear how each of these variable contribute to relationship success

1.2.1 Customer Value

Previously, customer value have been identified in terms of quality and price, but due to changing nature of business, customers‘ trends, in recent times, perceptions about customer value also changed For example, Kotler (1997) argued that customer value could be understood in terms of product value, service value, employee value and image value Or Sheth et al (1991) suggested five dimensions

of value from the customer perspective- social value, emotional value, functional, epistemic and conditional value

Woodruff (1997) defined customer value as a customer perceived preference for, and evaluation of product attributes, attributes performance and consequences in term of the customer goals and purposes Monroe (1991) defines customer perceived value as ―the ratio between perceived benefits and perceived sacrifice‖ Day (1990) proposes similar definition and stated that the perceived customer value represents the difference between ―customer‘s perceived benefits‖ and ―customers perceived costs‖ Meanwhile Payne defined value as perceived benefit that customer believe they receive from ownership or consumption of a product or service This perceived value can be translated as the maximum price (in total life cost term) that a customer will pay, so customer value can best be defined in terms of impact that the supplier‘s offer has on the customer‘s own value chain (Adrian Et al, 1998)

Ravland and Gronroos (1996) studied the value concept in relationship marketing settings and argued that the benefits that enhance customer perceived

value are not only the major components in long-term relationship Rather ―safety‖,

―credibility‖, and ―security‖, are very important and lead to reduction of customer sacrifice and are essential to customers These variables of ―reduction of customer sacrifices‖ are very important to build trust that leads to increased customer loyalty Wang, Chi and Yang (2004) also argue the importance of customer value in building and sustaining competitive advantage through customer relationship marketing They have empirically investigated the key dimensions of customer value in the Chinese context In their study they have identified four customer value and these are: functional value, social value, emotional value and perceived sacrifices The first three values creating products benefits are consistent with Sheth

et al (1991) value dimension Their findings conclude that all value dimensions have significant effect on customer satisfaction, although no direct effect on brand loyalty but they have asserted that there is indirect effect on brand loyalty

Thus, all the above definitions and various studies indicate that, although there are numerous dissimilarities among various definitions and findings, customer value can create trust between sellers and buyers This in turn can positively create brand loyalty or store loyalty in this case, and customer satisfaction that leads to long-term customer retention

1.2.2 Customer satisfaction

Customer satisfaction can be defined in many ways, one of which is ―a person‘s feeling of pleasure or disappointment from comparing a product‘s perceived performance (or outcome) in relation to his or her expectations (Kotler, 2000) ―High satisfaction may create an emotional affinity with the brand, not just a rational preference and this creates high brand loyalty‖ (Kotler, 1994) Even if the customer is not highly satisfied, still from behavioral aspect of brand loyalty, the customer can be brand loyal This can occur if no other alternative is available or may be alternatives are of a higher price, which the consumers can not afford, or if the customer‘s purchase power is limited

However, Heskett (2002) suggests that customer satisfaction is the lowest

level from the five level-hierarchies of customer behaviors Others customer behaviors are: mere loyalty (repeat purchase), commitment (willingness to refer others to a product or service), apostle-like behavior (willingness to convince others

to use a product or service) and ownership His model indicates that service quality influences relative attitude and satisfaction A satisfied customer is always committed towards the organization and a committed customer is not only loyal but demonstrates that loyalty by telling others (Heskett, 2002) Further researcher pointed out that fostering favorable relative attitude and getting customers to recommend the product or service holds key to fostering store loyalty A satisfied customers repurchase intention will be increased which leads to store loyalty

Their findings indicate that service quality directly affects both relative attitude and satisfaction and that satisfaction affects relative attitude Both relative attitude and satisfaction influence the likelihood of recommending but only satisfaction plays a part in influencing repurchase Study further indicates that there is

no direct relationship between relative attitude and repurchase and both relative attitude and satisfaction have no direct impact on loyalty Thus, it appears that relative attitude and satisfaction, which is influenced by service quality, can influence customer recommendation which leads to both customers repurchase and loyalty Sivadas and Baker-Prewitt (2000) study support Oliver‘s model of loyalty in a store loyalty context

1.2.3 Trust

Trust is described as ―the willingness to rely on an exchange partner in whom one has confidence‖ (Moorman, Deshpande and Zaltman 1993), however trust will exist if a customer believes a service provider to be reliable and to have a high degree

of integrity (Morgan & Hunt 1994) Bejou et al (1998) studied the role of trust, ethics and knowledge in buyer-seller relationship They have developed a model of relationship satisfaction to address the impact of perceive characteristics of sales people Buyers-sellers relationship will depend on the quality of knowledge and interaction of sales people with customer, and their ability to understand customer

needs and wants Their model of relationship consisted of seven factors: length of relationship, sales orientation, customer orientation, satisfaction, trust, expertise and ethics Study confirmed that trust is very crucial to the development of relationship

Doney and Cannon (1997) also developed a similar approach to studying trust

in the buyer-seller relationship They define trust as perceived credibility and benevolence The antecedents of trust identified by them are: salesperson expertise, likeability and similarity to the buyer Nevertheless, in commitment-trust theory of relationship marketing, Morgan and Hunt (1994) stated that ―the presence of relationship commitment and trust is central to successful relationship marketing, not power and its ability to condition others‖ They conceptualize trust as existing when one party has confidence in an exchange partners reliability and integrity The model includes precursors and outcomes of relationship commitment and trust Five major precursors are: relationship termination costs, relationship benefits, shared values; communication and opportunistic behavior, all have direct effect on trust Outcomes

of relationship commitment and trust are acquiescence and propensity to leave, cooperation, functional conflict and uncertainty In their study they found a positive relationship between trust and commitment and suggested that for cooperative relationship these factors are key mediators

Kumar (1996) suggests that trust is the antithesis of power and that it is trust in

a manufacturer-retailers relationship that leads to cooperation In his paper the power

of trust in manufacturer-retailer relationship have identified numerous benefits of trust For example, they found that the retailers that trusted manufacturers were 12% more committed to the relationship and 22% less likely to develop alternative sources

of supply and further more he stated that ―high level of trust in the manufacturer generated 78% more sales than those with a low level

1.2.4 Commitment

Commitment is very important to create customer relationship Morgan and Hunt (1994) stated that ―the presence of relationship commitment and trust is central

to successful relationship marketing‖ and therefore defined relationship commitment

as ―an exchange partner believing that an ongoing relationship with another 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` This definition is fundamentally found consistent with the definition of Moorman, Zaltman and Deshpande (1992) According to them, ―commitment to the relationship is defined as an enduring desire to maintain a valued relationship‖ Endure desire comply that both parties must have desire to build relationship and that

is possible when relationship can be viewed as central and very important Thus create valued relationship That valued relationship will create values for both parties

so therefore it can last longer-term or even indefinite period

However, Berry and Parasuraman (1991) stated that ―relationships are built on the foundation of mutual commitment‖ Without commitment there is no relationship,

if any that can not be cemented for longer time Here are some comparisons about customer satisfaction, trust and commitment concluded by Rob Morgan

Table 1.2: Outcomes of Commitment and Trust

 New Product Adoption

[Source: Relationship Marketing by Rob Morgan]

Table 1.3: Commitment and Trust vs Customer Satisfaction

Commitment & Trust Customer Satisfaction

 Very stable

 Good predictors of outcomes

 Very unstable

 A poor predictor of outcomes

[Source: Relationship Marketing by Rob Morgan]

The main antecedents of relationship marketing are: Trust, Commitment, satisfaction Customer value can create trust that leads to positive customer commitment towards the products and services Because various customer value creation components (i.e functional, social and emotional value) reduce customer sacrifices while increase benefits Thus customer value has direct relationship to create trust, commitment and satisfaction Also the degree of commitment will depend on degree of customer satisfaction and trust on products and services A satisfied and committed customer with degree of trust will enter into a long term relationship with sellers A long term buyer-seller relationship is very important to create longer term customer retention

1.3 Relationship Management Chain

Porter with the Value chain Model used to states that competitive advantage grows out of the way as firms organize and perform discrete activities, and these activities contribute to buyer value Hence, firms create value for their buyers through such activities The ultimate value a firm creates is measured by the amount buyers are willing to pay for the product or service offered The activities performed when competing in a particular industry can be grouped into categories, as these activities can be divided broadly into primary activities and support activities (Figure 1.3: Michael‘s Potter Value chain Model)

Figure 1.3: Value chain Model of Michael Porter

[Source: http://www.ukeducation.org.uk]

With the same idea when stating that Customer value can be translated as the maximum price (in total life cost term) that a customer will pay, so customer value can best be defined in terms of impact that the supplier‘s offer has on the customer‘s own value chain (Adrian Et al, 1998) Relationship chain model was also built based on the first idea of Gluck and Porter who was the first recognized the importance of business processes as sequence of events whereby value is created and cost incurred This simple idea has many implications, not the least for pointing the way in which added-value could be enhanced at less cost through process re-engineering, so marketing should be viewed as a business-wide process – a process that has the goal of creating superior customer-value (Payne, Christopher, 1998) To achieve this goal will often require the integration of elements that are dispersed across different functions of the business The elements include research and development, value engineering, in-bound logistics, order fulfillment and customer service (including after-sale service) Payne stated ―the successful management of these interrelated processes requires a fundamentally different approach to planning and execution It is through the continuing delivery of superior customer value that enduring customer relationships are built

To maximize the customer value at the least cost to the business will frequently require a rearrangement of sequence in which tasks are performed In some case these tasks will be eliminated or combine with other tasks, or performed

in parallel The basic for this re-engineered sequence of events is called relationship chain because it begins with the basic proposition that the purpose of all business process is to create and sustain mutually advantageous relationships through the chain, culminating in enhanced customer value (Figure 1.4: The relationship management)

Owing to construct an effective relationship chain within the organization will require upon a number of critical issues which have a logical sequence

Figure 3: Relationship management chain, Adrian Payne, p.7

Figure 1.4: Relationship Management Chain

(Source: Relationship Marketing for comparative advantages: Winning & Keeping

Customers - Payne, Christopher, Peck, Clark, 1998, P7)

Defining the value proposition

The starting point of any relationship marketing program should be the clear definition and specification of the precise nature of the value to be delivered, market segment by market segment or even customer by customer

Identifying appropriate customer value segments

Because customer value requirements and perceptions will differ between customers, this provides the marketer with a powerful means of market segmentation

Designing value delivery systems

Delivery system are referred not only physical delivery of products or the presentation of service but also to the marketing channels employed, the flexibility

of response, the linking of buyer/ supplier logistic and information systems and so

on The means by which value is ―delivered‖ to customer is in itself a potential contributor to relationship building In other words, we view the design of the

MANAGING INTERNAL MARKETS

 Marketing Planning-internal

 Culture, climate and employee retention

Define the value

proposition

 Understand the customer

value chain

 Where and how do we

intend to create value?

 Competitive

benchmarking

Segmentation, Targeting & positioning

 Identify customer value preferences

 Segment prodigality analysis

 Configure the value package

Operations and delivery systems

 Mass customization

 Partnering (value added partnerships)

 Process re-engineering

Measurement & feedback

 Service process monitoring

 Customer satisfaction studies

 Employee satisfaction studies

value delivery system as a critical means of engineering stronger linkages between the customer‘s value chain and our own Because of the increasing fragmentation

of the marketplace in many industries, which has led to a demand by customers for a greater variety in the format of products or services, there is a consequent need to the engineer more flexibility into our delivery systems

Managing and maintaining delivered satisfaction

Because the quality and strength of customer relationship is so critical to the survival and profitability of any business, it‘s essential to monitor the processes that deliver satisfaction, as well as the customer‘s perceptions of performance In the same way that it is now widely accepted that the quality of physical products is dependent upon the control of the process that manufactures them, so the quality of customer service is determined by the extent to which the delivery process is under control Service process monitoring should be continuous and in particular, all potential ―failure‖ should be identified and if they can not be made fail-safe, should be carefully controlled Employee satisfaction studies as well as customer satisfaction studies should form an integral part of the management of the service delivery process

Managing External & Internal Markets

It was earlier that one of the distinguishing features of the relationship marketing paradigm was its concern with the definition of ―market‖ In particular, it was suggested that there are internal as well as external markets Internal markets comprise the people who work within the organization and whose attitude and motivation will have a direct or indirect impact upon customer relationships External markets include not only the final customer market but also suppliers, referral sources, influencers and the recruitment market

1.4 Some Relationship Marketing Instruments

Although relationship marketing is clearly a strategic concept, its implementation requires the informed use of powerful instruments This

instrumental dimension of relationship marketing was largely neglected in the early academic discussion of the concept, but has received increasing attention in recent years Grönroos (1994) claims that relationship marketing offers an alternative to the traditional 4P classification of marketing instruments Nevertheless, most scholars do use this classic paradigmatic framework when identifying adequate marketing instruments for building and maintaining relationships with customers In addition, new instruments have been developed which integrate two or more of the

Ps 2000 Hennig Thurau summarized some major instruments for building and maintaining relationship with customers in relationship marketing Some of them are classical marketing instruments (i.e product and/or services, communication, pricing, and distribution), and some integrative tools

1.4.1 Product and/or services

A key impact of relationship marketing on product policy is the integration

of customized elements in what were previously standardized products for mass markets Modern information technology allows firms to individualize their products and services according to the varying needs of their customers (Kotler 1989; Pine 1993) LEVI‘S and HALLMARK are good examples of such a mass customization approach With regard to the design of services, research has identified the crucial dimensions of service quality (Parasuraman, Zeithaml & Berry 1988) Particular emphasis has been given to social aspects of service quality (Goodwin & Gremler 1996) and the importance and difficulties of empowering service employees (Dahle, Liljander 2000)

1.4.2 Communications

Duncan and Moriarty (1998) have developed a communication-based model for managing relationships Their model gives special attention to two aspects; the need for integrated communication and the demand for interactive communication The need for integration stems from the assumption that ―everything a company does (and sometimes does not do) sends a message that can strengthen or weaken

relationships‖ and applies to different organizational actors as well as to different marketing activities Interactivity as ―a hallmark of the paradigm shift stresses that as well as talking to customers, you also need to listen to what they have to say‖ (Duncan & Moriarty 1998, 8) A complaint management system is considered one of the most powerful tools for listening to customers (Schulze & Bauersachs 2000) Customer satisfaction engendered through the appropriate treatment of complaints is known to lead to an increase in retention and positive word of mouth (Brown & Beltrani 1989) Other interactive communication tools include internet chat rooms, email correspondence and telephone hotlines (Diller 1998; Hansen & Jeschke 1992;

Vavra 1992)

1.4.3 Pricing

Relationship-oriented pricing is centered on the application of price differentiation strategies It has been proposed that pricing should correspond to customer lifetime values This proposal represents an attempt to estimate the net present value of the current and future potential of various customers or customer segments (Berger & Nasr 1998) A promising approach is to identify several price functions by taking the perspective of the customer as he or she goes through the various stages of the decision process (Diller 1997) Such an approach stresses the relevance of pricing for customer satisfaction and trust In relationship marketing practice, however, pricing is mostly used to promise customers ―immediate‖ benefits, e.g by offering discounts There is a considerable danger that such a pricing strategy leads to ―cold‖ loyalty, rather than true customer commitment This can work against a company‘s relationship-oriented efforts (Hennig-Thurau, Gwinner & Gremler 2000; Morgan, Crutchfield & Lacey 2000)

1.4.4 Distribution

The general message of relationship marketing for distribution is that it should get closer to the customer (Barnes 2000) Relationship marketing research has made various important contributions regarding the design of the service encounter environment (or ―services capes,‖ as named by Bitner 1992), the

integration of electronic shopping into distribution systems, and the prolongation of the value chain through disposal-related activities (e.g product recycling; Hansen & Jeschke 1992) Moreover, the need for individualized information in relationship marketing means that distribution system also needs to be used for collecting data (Vavra 1992)

1.4.5 Integrative instruments

Relationship marketing researchers and practitioners have also developed some new marketing instruments These instruments generally combine various elements from existing tools, as is the case with customer clubs and customer cards (Chojnacki 2000, Diller 1997) Customer clubs, for example, integrate communication, distribution, and price related activities and may thereby contribute positively to customer commitment, trust, and satisfaction (Diller 1997)

1.5 Relationship marketing strategies

When serving and selling existing customers is viewed to be just as important to long-term marketing success as acquiring customers, relationship marketing strategies also need to focus on the final target is attracting and keeping customer loyal with companies So what relationship marketing strategies can be carried out to be an example? The answer is there are a number of possible strategies can be considered in developing of a relationship marketing plan, however in this research I just introduced some relationship marketing strategies

which introduced by Payne, Christopher, Peck and Clark

1.5.1 Core Service Strategy

Designing and marketing of a ―core service‖ around which customer relationship can be established is said to be key strategy of relationship marketing The ideal core service is one that attracts new customers through its need-meeting character, cements the business through its quality, multiple parts, and long-term nature, and provides a base for the selling of additional services, over time Core services are directed toward central rather than peripheral target market needs

1.5.2 Customizing the relationship

The nature of the services affords many service firms the opportunity to customize the relationship By learning about the specific characteristics and requirements of individual customers and then capturing these data for use as needed, service firms can more precisely tailor service to the situation at hand In so doing, they provide their customers with an incentive to remain as customers rather than starting over with other suppliers The possibilities for relationship customization are considerable, especially when personal service capabilities are combined with electronic data processing capabilities

1.5.3 Service Augmentation

Another relationship marketing strategy introduced by Payne and his authors is service augmentation Service augmentation involves building ‗extras‘ into the service to differentiation to from competitive offerings For meaningful service differentiation to occur the extras must be genuine extras – that is, not readily available from competitors – that are valued by customers When this is the case, customer loyalty is encouraged ―Having been offered these extras, the customer finds them beneficial and therefore prefers doing business with the company that suppliers them‖

co-1.5.4 Relationship Pricing

And old marketing idea – a better price for better customers – forms the basic

of relationship pricing, another strategy option available to service companies pursuing customer loyalty Relationship pricing means pricing services to encourage relationships In effect, customers are given a price incentive to consolidate much or all of their business with one company As with the other relationship marketing strategies presented, relationship pricing can be implemented in various ways

1.5.5 Internal marketing

This is pivotal relationship marketing strategy for many services companies There are several forms of internal marketing What all forms have in common is

the customer is inside the organization, which means employees are considered as the customer and the job as the product The people who buy goods and services in the role of consumer are the same people who buy jobs What is known in marketing about selling and reselling them goods and services can also be used in selling and reselling them jobs The stress placed on customer satisfaction in external marketing is just as appropriate, just as necessary, in internal marketing

Internal marketing is relevant to virtually all organizations It is especially important, however, for labour-intensive service organization In these organizations, the quality of services sold is determined in large measure by the skill and work attitudes or personal producing the services To extent that labour-intensive service firms can use marketing to attract, keep and motivate quality personnel, they improve their capability to offer quality services Offering services that consistently meet the quality requirement or target markets is clearly an important factor in building strong customer relationships in many service industries

The processes one thinks of as marketing for example marketing research, market segmentation, product modification, and communications programming- are just relevant to internal marketing as to external marketing Just as marketing research procedures can be used to identify needs, wants and attitudes in the external marketplace, so can they be used for the same purpose in the internal market place?

These are five strategies suggested by Payne, Christopher, Peck and Clark in the book of Relationship Marketing for comparative advantages: Winning and Keeping Customers These strategies are not totally independent of one another and can be use in combination ―A firm can use all five simultaneously‖, Payne et al

1.6 Importance of management

Successful relationships begin with internal commitment to relationship performance and success (Wilson 2000) Successful implementation of the relationship strategy can be brought about by a commitment by the key functions

that support the delivery of value to the relationship In the case of Dam Vac golf & country Club this is the owners of the company,

Management has to allocate resources between different relationships in order to make sure each is successful Existing customers should be maintained, new ones should be added, and unprofitable ones should be fired, whilst assessing its customer portfolio in order to understand what customers are contributing and what they will contribute in the future It will then be easier for the company to see which valuable relationships are, and which unprofitable is (Ford 1998)

Rich (1998) stated management must not only accept the proposition of relationship marketing from an intellectual perspective, but should be willing to invest the necessary time, labor, and financial resources to make it an effective reality

1.7 Relationship Marketing in Golf Course Industry

Golf has history of development for more than 100 years Obviously there have been many marketing studies on golf business as well as golf industry Unfortunately, except for some studies in general sport relationship strategy literature, a few attentions has been paid to the specific golf course industry One of these a few researches can be mentioned is the one of Dr Falk Billion called

―Increasing the market Value of Golf Course by Improving Customer satisfaction‖

In his research he identified some very valuable points as followings

Golf courses customers

 Customers of golf courses are all upper-classed people who have money

to make the choice they want, they are time poor but cash rich

 They are representative for the new and modern customers, who are all smart and appliances of technology & internet empower them to make comparison more exactly before making the choice.

 They are the most demanding customer These customers expect to receive excellent services every time, therefore they willing to leave anytime if

they are not satisfied

Customer relationship in golf courses

 The value of golf course is not the cost to build the course, but income which can be earned from the operation in the future

 Potential income of a golf course is determined by 3 key factors which is location, product and management (organization, operation and finance)

 In the golf course industry, most operational expenditures are fixed cost (staff, maintenance etc…) so the higher income therefore results primarily from higher operational revenues

 Golf course revenues are strongly related to the utilization of capacities, the more rounds played, the more revenues are generated As the result golf course income largely depends on the number of rounds played by members or guests

 Utilization of capacities/ number of rounds played correlated to golf course quality and customer satisfaction and loyalty

 The number of round played depends on efficient marketing and customer satisfaction and loyalty, in which satisfaction depends a lot of ―technical‖ quality of the golf course and loyalty depends on the functional quality or the services of the golf course

This can be said to be one of important foundation to see the important of customer satisfaction, long term customer relationship in golf course industry However, in stead of identify an integrated marketing plan, he just showed out some ideas It is still lack of uptake of relationship marketing in the golf course industry

In spite of this, it gives the case company a chance of taking a first mover advantage This can be defined as when the initial occupant of a strategic position or niche gains access to resources and capabilities that a follower can not match (Rott 2000) A company can attain a first mover advantage by acquiring resources and capabilities in a new market before competitors do (Grant 1998)

CHAPTER 2: IMPROVING CUSTOMER RELATIONSHIP

IN DAM VAC GOLF & COUNTRY CLUB

Based on the literature theory introduced in previous part, this section will focus on analyzing the specific case of Dam Vac Golf & Country Club, according to the methodology discussed following

2.1 Case Study Introduction

2.1.1 Vietnam Golf Course Industry

Golf is one of sports which have the longest history of development It was first initiated in Scotland by 1400, and expanded to Great Britain and to almost development countries since more than one century ago From country to country golf becomes more and more popular There are about 23000 golf courses in America, 477 in small Ireland, and 204 golf courses in Malaysia, even our neighbor Thailand also has 250 golf courses or small island country like Singapore also has about 30 golf courses

Compare to this long history of golf in the world, the development golf in Vietnam is still at the beginning and very modest Although the first Golf Course of Vietnam had been built by Bao Dai King long time ago, in 1922, it was forgotten for a long time after the resignation of Bao Dai King Until 1991, Vung Tau Fairy golf Course & Resort was built and opened, initiated for the golf industry in Vietnam After Vung Tau Fairy, there are some more golf courses built in Vietnam For a long time, these first golf courses were suffered from loss because of too few golf players Until beginning of 2000 when economy of Vietnam started opening, and continuously achieved great growth, golf courses industry of Vietnam opened

to new waves of development More and more foreigners work and resident in Vietnam, more and more Vietnamese people become richer Golf turned out to be noble, fashionable sport in Vietnam In the market there were still only about 8 golf courses, 2 in the North and 6 in the South, these golf courses has it pioneer advantages They did not have to pay too much effort on marketing, but all the clubs

exceeded the members Even to some good golf courses, members had to buy the membership much higher than its original price

Golf courses promised a very profitable business, especially recently, Vietnam economy has always made prospective growth, average 8% per year, and Vietnam joining WTO has made the reputation and fame of Vietnam much broaden

to the world So many investors poured money in golf courses Up to date Vietnam already has 14 operating golf courses and 28 golf projects has been licensed, but tens of other projects are still being considered Compare with this modest number

of 5000 golf players, Dam Vac Golf & Country Club as well as all other golf course

is facing with tough competition It has gone to past the time when marketing was unnecessary and members have to queue up to buy membership It‘s time now for every golf course has serious marketing strategy to keep customer, and increase the number of round played

2.1.2 The Case Company - Dam Vac Golf & Country Club

Located in the centre of Vinh Yen town, Vinh Phuc province, Dam Vac Golf

& Country Club was one in two main part of the project ―Dam Vac Golf Course & Mau Lam Real Estate‖ which started to be built since 2004 by Construction & Urban development Join Stock Company (CUD.J.V.C The projects require the total investment up to US $ 40 billions, and 121 ha square CUD aims to build a unique family oriented community of accommodation, sport and entertainment with slogan

that ―Improve your lifestyle quality‖ Director Mac Anh Tuan once said that “We

will try our best to build up Dam Vac so that in the near future, people will know Dam Vac as one of the most well known place for living and entertainment It doesn’t matter if everyone doesn’t know who build it or who it is belong to”

Dam Vac Golf & Country Club was built when golf turned to be fashionable sport The market has opened wider; demand has increased higher & higher when Vietnam economy continuously grows, income becomes higher However, increased demand has leaded to market supply respond, therefore there is there is