Complete 12 page APA formatted essay: LBSMK2004 SERVICES MARKETING.

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Introduction London Travel Agency is a privately owned company that arranges tours and accommodation for customers across Europe.&nbsp. The company’s head office is located in London, and it has small branches in various European cities like Berlin, Paris and Bern among others. The main operations of London Travel Agency consist of laisoning with carriers like road, rail and airlines for booking travel and networking with hotels across Europe for accommodation bookings. The company primarily organizes tours from the UK, but it also takes some direct bookings from its smaller branches in other cities. The main problem that the organization is currently facing is of customer retention or customer loyalty. This is partly due to the growing competition and aggressive marketing by other organizations, many of which are funded by large multi-nationals (Edmunds, 2002). However, London Travel Agency has also invested in advertising and in expanding to provide services to a larger number of locations. The company also provides discounts and additional facilities like redeemable points that can be exchanged for products in foreign cities. In spite of these efforts, the company’s sales are not increasing (even though the marketing department maintains that a large number of new customers are added yearly). The company identifies its main problem as lack of customer satisfaction which prevents the customers from maintaining a long term relationship with the company and also leads to a bad reputation or image for London Travel Agency. 2.&nbsp.&nbsp.&nbsp.&nbsp.&nbsp. Literature Review 2.1 Importance of Customer Loyalty Customer retention has been identified by researchers as a major contributor to the financial performance (Parasuraman and Grewal, 2000), and especially in the case of service marketing firms that can hope to see an increase spend from loyal customers over a period of time (Wong and Sohal, 2003). Customer loyalty has also been found to be linked with increased customer advocates who advertise the service provider’s offering through word-of-mouth and (Johnston and Michel, 2008). Customer retention also means that less marketing expenses are incurred as more efforts and costs are needed to attract new customers rather than to retain existing ones (Gounaris, 2005). The literature therefore highlights the fact that customer retention is essential for the financial prosperity of the organization as well as for building its image. &nbsp. 2.2 Customer Loyalty and Customer Satisfaction Customer satisfaction has been found to be a direct reflector of future intentions of the customers as regard the service provider. &nbsp.It is found that customers that are satisfied with the service provider would be more inclined to repeat their purchase or become long term customers (Johnston and Michel, 2008).&nbsp. Several studies have found that customer satisfaction affects relationship market and is a central determinant of customer retention (Hennig-Thurau and Klee, 1997). Other scholars have found that behavioural intention – or the positive attitude towards purchasing from the same supplier – is a direct correlate of customer satisfaction with the service quality (Cronin, Brady and Hult, 2000).

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