The Impact of Economic Recession Essay - 2475 Words

The Impact of Economic Recession on the Customer Loyalty to Banks in the UK (Research Proposal Sample) Content: ProposalTHE IMPACT OF ECONOMIC RECESSION ON THE CUSTOMER LOYALTY TO BANKS IN THE UKStudent nameInstitutionDateIntroduction and BackgroundCustomer loyalty can be defined as the faithfulness of customers to a company. Even if the company is making mistakes and not performing extremely well, loyal customers will not be keen to leave. Recently, companies and businesses in general have experienced difficulties in terms of maintenance their customers especially after the crisis in the entire world and specifically in the United Kingdom. The UKà ¢Ã¢â€š ¬s economy is one of the major economies worldwide and considered in the top five economies and therefore, it has been affected by the financial crisis. The effects were evidently shown in the changes in many areas such as customerà ¢Ã¢â€š ¬s preferences, the decline in the income regarding to the increase in the prices and the increased in the unemployment rate. It is interesting after raising those issues to examine whethe r the loyalty of customer has actually changed during the recession or remained as it used to be before the crisis. In particular, customer loyalty within the banking industry, which is the main player in economy today, especially, that the recession left a dreadful impact on banks.This research will provide an insight into the bank business in the UK in terms of customer loyalty during the crisis. It will provide the data with the help of a quantitative and qualitative research, which will be explained at a later stage of this proposal.Literature reviewIn the early 90s the term customer loyalty became important to identify, therefore some research in business and market has carried out to determine the essential elements which can affect the loyalty of customer, which were mainly due to the changing market and the competition -environments, however at the present business, the reasons behind changing the customers preferences have changed due to the increasing of rivalry level and the spread of the globalizations (Cahill, 2007).(Kincaid, 2003, 10) demonstrates the customer loyalty as the following à ¢Ã¢â€š ¬Ã‹Å"is a behavior, built on positive experiences and value. This behavior is buying our products, even when that may not appear to be the most rational decisionà ¢Ã¢â€š ¬. Additionally, in order to produce an accurate understanding of customer loyalty, this perception has to be divided into two parts, (Peppers and Roggers, 2004) illustrate that there are two different direction of loyalty, attitudinal and behavioral, both of these directions are actually valid when using it individually and they have absolutely different implications for business. Business, in order to improve customer loyalty has to rely on both these definition. So it is vital to consider both the behavior of customer and their attitude.The financial crisis, on the other hand had begun in the 2007, the main reason for this crisis was due to the bursting of a housing bubble in the Unite d State in late 2006 (William et al, 2012). According to William et al (2012) the financial crisis led to dramatic decline in the market value of the subprime mortgage as well as a huge drop in the capital and liquidity of many banks and other financial institutions. The financial crisis actually, spread over firstly from sector to other and then worldwide and has affected mostly the entire word also caused a series of financial problem.Fleckenstein (2008) asserts that the financial crisis created the largest speculative bubble ever witnessed in the American economy, which after a while has spread worldwide regarding to link between the banks internationally.William et al (2012) state and list the main multiple areas which have been affected by the financial crisis and the ones of utmost important are: the collapse of US and European, fall down of the international stock market, collapse of the global financial system and financial markets.This financial bubble has flourish over wor ld and has hit the UK banks. Regarding to William et al (2012) the failure of so many British banks during the recession crisis has highlighted the importance of corporate governance issue, and can partly be explained to the blind trust people had in the self-regulative nature of the market.Despite the fact that, not many studies on the effect of the economic crisis and the customer loyalty have been carried out and it seems to barely existing, still some evidence is available. For instance, in the past few years there was an attempt to collect a primary data in the USA, Williams and Naumann (2011) were the first who tried collecting and investigating in those primary data, their approach was based on analyzed companies from the Fortune 100 in order to identify the problem of customer loyalty and the changes regarding to the financial crisis, by using a series of surveys in regard with the customer attitude in relation with the company performance, the findings were basically locat ed between moderate to strong relationship with the customer loyalty and the company performance, according to Williams and Naumann (2011) the significant vital elements which have affected the customer loyalty in the time of the recession are the financial performance of companies and their ability to meet maturing obligations once they come due.On the other hand, Stone et al. (2000) argues the elements which customer loyalty rely on and he deduced that, this elements are related to the company itself rather than the company business, also divided into categories such as age, gender and etc.In China some primary researches have conducted on the retail stores to investigate the changes in the customer loyalty in the time of recession, furthermore these research were based on surveys and interviews Chung et al. (2011). Moreover, in order to collect the data, high number of retail stores from China, have participated in this surveys which made it credible, and more than 20 managers h ave been interviewed, apparently, candidates for the interview have to be customers not manager especially when it is come to customer loyalty, the significant result which was found by Chung et al. (2011) it is basically similar to the finding of Uncles et al. (2003), both researchers have come to conclusion that customer loyalty affected by two factors, individual and external factors.Chung et al (2011), in addition discover that the changes in environmental economic in the recession, have had a harmful impact on the customer loyalty, hence almost all the businesses had to change their strategies toward the customer, in order enhance the level of the loyalty, for instance, changes in the disruption channels were made, however Chung et al (2011). It is significant to mention that this research was not able at the end to give an appropriate solution and recommendation on how a company can improve their customer loyalty.Some other studies have been conducted also in China but this attempt was completed by Lee et al. (2011). In regard with this study, it was found that in the period of the recession the customer loyalty has noticeably decreased in parallelism with the decreased in the number of advertisements which are published by banks, that was due to pursue a policy of austerity by banks and focus on reducing the cost.Although, the advertisement is used to improve the companyà ¢Ã¢â€š ¬s image, during the recession the number of the advertisement decreased due to the reasons which mentioned above (Lee et al, 2011).Contradictory, it was found by Baumann et al (2011) that the main explanation beyond the changes in the customer loyalty is due to the seeking of diversity, which might give a better chance to protect their business, and resisting the changes, especially in the case of loyalty toward banks.ObjectivesThe main purpose behind this study is being able to identify the impact of the financial crisis on the customer loyalty in the UK in terms of banking industry, therefore in order to do meet those objectives following questions will be addressed: * What are the main changes in the financial industry have occurred during the time of recession? * How the customer loyalty toward the banking industry has changed during the recession? * Provide a reliable recommendation on the possible ways for banks to improve and enhance their customerà ¢Ã¢â€š ¬s loyalty.The consequence will be reached by analyzing the results which will be collected from primary and secondary data, in order to be able to produce a conclusion showing to which extent the loyalty of customer to their bank has changed during the financial crisis.Methodology and data collectionIn this section, it will be clarified how the research will be carried out in order to investigate and explore customer loyalty in the banking sector purposely in the UK and the changes of loyalty during the period of recession. As it has been found in previous literature, this work is likely to draw the conclusion that customer loyalty has dropped in the banking industry during the recession. Therefore, the research approach is of deductive nature and undergoes the five sequential stages as stated by Robson (2002) as: (1) Deducing a hypothesis from the theory(2) Expressing the hypothesis in operational terms, which propose a relationship between two specific concepts or variables(3) Testing this operational hypothesis(4) Examining the specific outcome of the inquiry(5) If necessary, modifying the theory in the light of the findings.In order to identify, in what ways customer loyalty has changed within the times of the economic crisis, key assumptions will be formulated. In order to gather data about the influences on these assumptions, this work plans to use qualitative and quantitative data. Qualitative data will be gathered by researching the contemporary literature and taking a ... The Impact of Economic Recession Essay - 2475 Words The Impact of Economic Recession on the Customer Loyalty to Banks in the UK (Research Proposal Sample) Content: ProposalTHE IMPACT OF ECONOMIC RECESSION ON THE CUSTOMER LOYALTY TO BANKS IN THE UKStudent nameInstitutionDateIntroduction and BackgroundCustomer loyalty can be defined as the faithfulness of customers to a company. Even if the company is making mistakes and not performing extremely well, loyal customers will not be keen to leave. Recently, companies and businesses in general have experienced difficulties in terms of maintenance their customers especially after the crisis in the entire world and specifically in the United Kingdom. The UKà ¢Ã¢â€š ¬s economy is one of the major economies worldwide and considered in the top five economies and therefore, it has been affected by the financial crisis. The effects were evidently shown in the changes in many areas such as customerà ¢Ã¢â€š ¬s preferences, the decline in the income regarding to the increase in the prices and the increased in the unemployment rate. It is interesting after raising those issues to examine whethe r the loyalty of customer has actually changed during the recession or remained as it used to be before the crisis. In particular, customer loyalty within the banking industry, which is the main player in economy today, especially, that the recession left a dreadful impact on banks.This research will provide an insight into the bank business in the UK in terms of customer loyalty during the crisis. It will provide the data with the help of a quantitative and qualitative research, which will be explained at a later stage of this proposal.Literature reviewIn the early 90s the term customer loyalty became important to identify, therefore some research in business and market has carried out to determine the essential elements which can affect the loyalty of customer, which were mainly due to the changing market and the competition -environments, however at the present business, the reasons behind changing the customers preferences have changed due to the increasing of rivalry level and the spread of the globalizations (Cahill, 2007).(Kincaid, 2003, 10) demonstrates the customer loyalty as the following à ¢Ã¢â€š ¬Ã‹Å"is a behavior, built on positive experiences and value. This behavior is buying our products, even when that may not appear to be the most rational decisionà ¢Ã¢â€š ¬. Additionally, in order to produce an accurate understanding of customer loyalty, this perception has to be divided into two parts, (Peppers and Roggers, 2004) illustrate that there are two different direction of loyalty, attitudinal and behavioral, both of these directions are actually valid when using it individually and they have absolutely different implications for business. Business, in order to improve customer loyalty has to rely on both these definition. So it is vital to consider both the behavior of customer and their attitude.The financial crisis, on the other hand had begun in the 2007, the main reason for this crisis was due to the bursting of a housing bubble in the Unite d State in late 2006 (William et al, 2012). According to William et al (2012) the financial crisis led to dramatic decline in the market value of the subprime mortgage as well as a huge drop in the capital and liquidity of many banks and other financial institutions. The financial crisis actually, spread over firstly from sector to other and then worldwide and has affected mostly the entire word also caused a series of financial problem.Fleckenstein (2008) asserts that the financial crisis created the largest speculative bubble ever witnessed in the American economy, which after a while has spread worldwide regarding to link between the banks internationally.William et al (2012) state and list the main multiple areas which have been affected by the financial crisis and the ones of utmost important are: the collapse of US and European, fall down of the international stock market, collapse of the global financial system and financial markets.This financial bubble has flourish over wor ld and has hit the UK banks. Regarding to William et al (2012) the failure of so many British banks during the recession crisis has highlighted the importance of corporate governance issue, and can partly be explained to the blind trust people had in the self-regulative nature of the market.Despite the fact that, not many studies on the effect of the economic crisis and the customer loyalty have been carried out and it seems to barely existing, still some evidence is available. For instance, in the past few years there was an attempt to collect a primary data in the USA, Williams and Naumann (2011) were the first who tried collecting and investigating in those primary data, their approach was based on analyzed companies from the Fortune 100 in order to identify the problem of customer loyalty and the changes regarding to the financial crisis, by using a series of surveys in regard with the customer attitude in relation with the company performance, the findings were basically locat ed between moderate to strong relationship with the customer loyalty and the company performance, according to Williams and Naumann (2011) the significant vital elements which have affected the customer loyalty in the time of the recession are the financial performance of companies and their ability to meet maturing obligations once they come due.On the other hand, Stone et al. (2000) argues the elements which customer loyalty rely on and he deduced that, this elements are related to the company itself rather than the company business, also divided into categories such as age, gender and etc.In China some primary researches have conducted on the retail stores to investigate the changes in the customer loyalty in the time of recession, furthermore these research were based on surveys and interviews Chung et al. (2011). Moreover, in order to collect the data, high number of retail stores from China, have participated in this surveys which made it credible, and more than 20 managers h ave been interviewed, apparently, candidates for the interview have to be customers not manager especially when it is come to customer loyalty, the significant result which was found by Chung et al. (2011) it is basically similar to the finding of Uncles et al. (2003), both researchers have come to conclusion that customer loyalty affected by two factors, individual and external factors.Chung et al (2011), in addition discover that the changes in environmental economic in the recession, have had a harmful impact on the customer loyalty, hence almost all the businesses had to change their strategies toward the customer, in order enhance the level of the loyalty, for instance, changes in the disruption channels were made, however Chung et al (2011). It is significant to mention that this research was not able at the end to give an appropriate solution and recommendation on how a company can improve their customer loyalty.Some other studies have been conducted also in China but this attempt was completed by Lee et al. (2011). In regard with this study, it was found that in the period of the recession the customer loyalty has noticeably decreased in parallelism with the decreased in the number of advertisements which are published by banks, that was due to pursue a policy of austerity by banks and focus on reducing the cost.Although, the advertisement is used to improve the companyà ¢Ã¢â€š ¬s image, during the recession the number of the advertisement decreased due to the reasons which mentioned above (Lee et al, 2011).Contradictory, it was found by Baumann et al (2011) that the main explanation beyond the changes in the customer loyalty is due to the seeking of diversity, which might give a better chance to protect their business, and resisting the changes, especially in the case of loyalty toward banks.ObjectivesThe main purpose behind this study is being able to identify the impact of the financial crisis on the customer loyalty in the UK in terms of banking industry, therefore in order to do meet those objectives following questions will be addressed: * What are the main changes in the financial industry have occurred during the time of recession? * How the customer loyalty toward the banking industry has changed during the recession? * Provide a reliable recommendation on the possible ways for banks to improve and enhance their customerà ¢Ã¢â€š ¬s loyalty.The consequence will be reached by analyzing the results which will be collected from primary and secondary data, in order to be able to produce a conclusion showing to which extent the loyalty of customer to their bank has changed during the financial crisis.Methodology and data collectionIn this section, it will be clarified how the research will be carried out in order to investigate and explore customer loyalty in the banking sector purposely in the UK and the changes of loyalty during the period of recession. As it has been found in previous literature, this work is likely to draw the conclusion that customer loyalty has dropped in the banking industry during the recession. Therefore, the research approach is of deductive nature and undergoes the five sequential stages as stated by Robson (2002) as: (1) Deducing a hypothesis from the theory(2) Expressing the hypothesis in operational terms, which propose a relationship between two specific concepts or variables(3) Testing this operational hypothesis(4) Examining the specific outcome of the inquiry(5) If necessary, modifying the theory in the light of the findings.In order to identify, in what ways customer loyalty has changed within the times of the economic crisis, key assumptions will be formulated. In order to gather data about the influences on these assumptions, this work plans to use qualitative and quantitative data. Qualitative data will be gathered by researching the contemporary literature and taking a ...