Order from us for quality, customized work in due time of your choice.
Background
In the 21st century, competition is becoming a challenge within the business environment due to an increment in the rate of globalization. This is affecting operation of firms in different economic sectors. The insurance industry has not been shielded from this challenge. A large number of investors are venturing into the industry due to its profitability potential. These firms are offering different insurance products. This has culminated into an increment in the degree of saturation within the insurance industry ( Hong Kong insurance industry , 2010, para. 1-5). In addition, growth in Information Communication Technology (ICT) has resulted into knowledge explosion. Customer awareness in relation to different products has been enhanced. As a result, firms are not only focusing on price and quality as the only elements to enable their success, instead, development of customer relationship has become paramount (Kuusik, 2007, p. 4). Romano and Fjermestad assert that firms are becoming more customer centric (2006, p.128).
Increment in the level of competition has made it difficult for insurance companies to retain their customers. Problem in retaining the customers is likely to thrive into the future considering the increase in the level of competition. This is due to the fact that there will be a large number of insurance companies from which the customers can select from. In addition, the customers are becoming more complex in consumption of insurance products. This results from complexity and dynamic nature of the various risks facing individual and institutional customers. For firms in this industry to survive in the industry as going concern entities, it is paramount that they attain a high competitive advantage. This will entail formulation and implementation of effective operational strategies (Kindurys, 2009, p.5).
One of the strategies that can enhance the firms competitive advantage is cultivation of customer loyalty. Customer loyalty refers to the general behavior that is exhibited by clients through repeat purchase of a given brand or purchasing a product from a particular firm. Over the past few years, firms in different economic sectors are increasing their interest in integrating customer loyalty in their operation. Kuusik (2007, p.4) asserts that attracting new customers while at the same time retaining the existing loyal customers is a key element for organizations long-term success. Management team of firms in different companies should integrate the concept of customer loyalty in developing their business model. This means that firms should make customer care a key element of their business strategy (IOD, 2009, p. 2).
Various theories in relation to customer loyalty have been advanced by a number of scholars. Kuusik (2007, p.5) asserts that one of these theories relate to behavioral loyalty. This theory asserts that customer loyalty is a direct function of the total purchases, buying pattern and frequency or probability. Behavioral theory considered customer loyalty to be an element of brand loyalty by considering repeat purchase behavior. Improvement of this theory resulted into integration of behavioral aspect with attitudinal aspect. This resulted into integration of psychological aspect of customer loyalty (Kuusik, 2007, p.5). Through these approaches, it has become possible for firms to evaluate customer loyalty either on emotional or behavioral aspects (Cater & Cater, 2009, pp.1151-1169).
Objectives
The aim of the study will be divided into overall objective which is further divided into a number of specific objectives for comprehensive analysis.
Main objective
The core objective of the study will be to determine how firms in Hong Kong insurance industry can cultivate customer loyalty to develop competitive advantage.
Specific objective
-
To determine the factors that affect customer loyalty in insurance industry.
-
To evaluate the extent to which firms in Hong Kong insurance industry have integrated customer loyalty in developing their business strategy.
-
To evaluate the strategies that insurance companies have integrated in cultivating customer loyalty.
-
To determine the factors that customers consider in purchasing insurance products from insurance companies.
Research questions
-
What key factors should insurance companies integrate to develop a high customer loyalty?
-
Has the concept of customer loyalty been effectively integrated by firms in Hong Kong insurance industry?
-
What are the factors considered by individual and institutional customers in purchasing insurance products?
-
How does customer loyalty affect the success of insurance companies?
-
How can insurance companies attract and retain customers in its operation?
Rationale and justification
Hong Kong insurance industry has witnessed rampant growth over the past few years. This has resulted from the liberal nature of the market. This has made the country to be an epicenter of insurance in Asia. For instance, the country has attracted a large number of the top insurance companies (Insurance in Hong Kong, 2010, para.8).
Considering the intensity of competition, development of customer loyalty by firms in this industry is paramount. In conducting the study, both approaches to customer loyalty will be analyzed. Insurance companies are faced with a challenge to cultivating customer loyalty in their operation. Cultivation of customer loyalty by firms in this industry is being conducted in an unsystematic manner. For instance, one of the major strategies that insurance companies have integrated over the years to integrate customer loyalty is financial motivations. However, these strategies have not been effective in the process of insurance companies developing competitive advantage.
Research method
The study will specifically focus on Hong Kong insurance industry. The research will be conducted by integrating both qualitative and quantitative research designs. Lisa and Axinn assert that integrating the two methods results into an improvement in the effectiveness of research (2006, p.29). Creswell (2003, p.205) defines a research design as a framework which assists the researcher in collecting the necessary data to conduct a study regarding a certain phenomenon. Qualitative research will enable ease in evaluating descriptive characteristic of customer loyalty. In addition, qualitative research design will be used since the research will mostly be exploratory. Quantitative research design will make it possible for the qualitative data to be expressed in quantitative terms. As a result, it will be easy to condense the data for easier analysis.
Random sampling method will be used in selecting the study sample from the entire population. This will eliminate bias by ensuring that all the firms have the same probability of being selected (Saunders, Lewis & Adrian, 2003, p. 35). Primary and secondary methods of data collection will be used. The primary methods to be used include use of questionnaires and interviews. On the other hand, secondary methods of data collection will entail studying published reports which have been posted on the companies website and from firms that develop business reports.
Reference List
Axinn, W. & Pearce, L. 2006. Mixed method of data collection strategies. New York: Cambridge University Press. 2006.
Cater, Barbara & Cater, Tomaz. 2009. Emotional and rational motivations for customerloyalty in business to business professional services. Vol. 29, issue 8, pp. 1159-1169.Slovenia: University of Ljubljana. Web.
Creswell, J.2003. Research design: qualitative, quantitative and mixed method approaches. Newbury Park, CA: Sage Publishers.
Economy Watch. 2010. Hong Kong insurance industry. Web.
IOD. 2009. Building customer loyalty. Web.
Kindurys, V. 2009. Theoritical and methodological aspects of insurance customer loyalty and its cultivation. Lithunia: Vilnuis University. Web.
Kuusik, A.2007. Affecting customer loyalty: do different factors have various influences in different loyalty levels? Tartu: University of Tartu. Web.
Romano, N. & Fjermestad, E.2006. Electronic customer relationship management. New York: ME Sharp Publishers.
Saunders, Mark, Lewis, Philip & Thornhill, Adrian.2003. Research methods for business students.. New York: Pearson Education Limited/ Prentice Hall.
TheLowtax.com. 2010. Insurance in Hong Kong. Web.
Order from us for quality, customized work in due time of your choice.