CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Reputation is seen by many commentators as an important asset which could be used as a competitive advantage and a source of financial performance. A “good” reputation is identified as an intangible resource which may provide the organisation with a basis for sustaining competitive advantage given its valuable and hard to imitate characteristics (Hall, 2003; Barney 2001). Corporate reputation is not a newborn issue neither in academic world nor practice. The term has evolved with the passage of time to become a strategic and intangible corporate asset and it has been used in daily life, business, and politics, etc. for a very long time. Reputation matters and it explain why customers choose company product or service in preference to competitors offering.
These major forces have created new behaviors and challenges. Kotler (2000) argues that customers increasingly expect high quality, service and some customization. They perceive fewer real product differences and show less brand loyalty. They can obtain extensive product information from the internet and other sources, permitting them to shop more intelligently. They are showing greater price sensitivity in their search for value. Brand manufacturers are facing intense competition from the domestic and foreign brands, which is resulting in rising promotion costs and shrinking profit margins. Small alcoholic beverages are succumbing to the growing power of giant alcoholic beverages and the Category Killers. It is important therefore to note that, Retail Sector is constantly changing so fast that those who do not innovate with time will ultimately lose substantially. It is an evolving industry which must cope with the various changes taking place. Jaworski and Kohli (2003) concluded that the ability of a firm to respond to identified changes in the market or customer behavior is an important feature exhibited by successful firms.
Kotler (2001) argued that today’s consumers are able to access objective information on competing brands,including costs, prices, features, and quality without relying on individual manufacturers or alcoholic beverages distributors. In many cases they will be able to specify the customized services they want. They will be able to specify the prices they are willing to pay, and wait for the most eager sellers to respond. The result is the dramatic shift of economic power from alcoholic beverages to consumers. Sternquist (2009)argues that alcoholic beverages have been forced to engage in international expansion for a variety of reasons. Key among them are; the desire to reach beyond a mature home market with low growth potential, a need to diversify the investment, intense competition locally and the economic down turn. Marketers are therefore changing their philosophies, concepts and tools in order to survive during this competitive era. From focusing on transactions to building long term profitable customer relationships,from making profit from each sale to making profits by managing customer lifetime value, from a focus of gaining market share to a focus on building customer share i.e. by offering the best firm to selling the same offer in the same way to individualizing, customizing messages and offers. Companies will be able to design their own product features on the company’s web page. From heavy reliance on one communication tool to such as advertising or sales force blending several tools to deliver on a consistent brand image to customers at every brand contact. From treating intermediaries as customers to treating them as partners in delivering value to final customers. From thinking that marketing is done only by marketing, sales, and customer support personnel to recognizing that every employee must be customer focused, Kotler (2000).
Ansoff (2009) conceptualized the effects of environmental changes on the firms strategy and capability. He stated that for a given environment an organization must come up with a suitable strategy. He suggested that there must be a fit between the existing strategy and the prevailing environment for the organization to remain successful which must be supported by company’s internal capability.Benefits of a good reputation are seen as including higher customer retention rates and associated increased sales and product selling prices (Shapiro, 2003), and reduced operating costs (Podony, 2003). Notwithstanding these potential benefits, questions continue to be raised about the adequacy of the reputation construct (Gotsi and Wilson, 2001), how the benefits of corporate reputation are realised financially (Eberl and Schwaiger, 2005) and the direction of the reputation-performance relationship.
Following the approach adopted by Rose and Thomsen (2004), this study examines Australian data to ascertain any relationship between reputation and organisational performance. The paper commences with a review of the extant literature on reputation, its definition, measurement and association with financial performance. We then describe the method and data sources used in the study, followed by an analysis and summary of the results. This is followed by a discussion of the findings and a brief review of two industry-based cases which illustrate points of the discussion. We conclude by discussing the implications of the research.
1.2 Statement of the Problem
Alcoholic beverage companies have played a role in the country’s economic growth. They generate revenue to the government through taxes; create employment to the locals in the product manufacturing,packaging and distribution to the retail outlets. The alcoholic beverages companies have significantly grown in Port Harcourt. The effect of this has been a reduction in market share, declining profitability and stiff competition. As a result companies have been forced to craft strategies in order to sustain or grow their market share, expand to new territories or markets,acquire new technologies, develop brand or line extensions, reduce costs and risks (Oliver, 2005). Alcoholic beverage companies in Port Harcourt need to adopt distribution strategies that ensure they reach their markets efficiently. According to Ramamurthy (2007) consumers expect that alcoholic beverages will offer the right match in terms of right product offering, quantities, place, time, and price by the right appeal. Retailing in Port Harcourt has gone through a significant change in the last couple of years with a complete shift in shopper’s expectations and experiences. While the shoppers have remained the same everything has changed and gone mega, ranging from the size of the outlets to the layout, the ambience, the experience, the service, the loyalty, Incentives to the way promotions are done (Hasty and Reardon, 2007).
Future managers need a systematized body of knowledge about how it works and how changing environmental factors will affect their present and future strategies. Presenting such knowledge is a challenge considering the complexity of human behavior, the highly competitive nature of the retail business and the large number of environmental factors such as weather, government regulation, supply availability,economic conditions, technological change, and the vagaries of fashion, changing consumer habits and expectations, social change and the squeeze on space. Companies have therefore been forced to build organizations that consistently deliver the best customer offers. This has been made possible by adopting the best retail strategies which identifies the needs and wants of a market place and customizing marketing efforts at the store and the individual level allowing the alcoholic beverages capitalize on differences in the consumer and competition (Hasty and Reardon, 2007). Randal(2001) argues that by adopting the best retail strategies, most companies have managed to get a clear path to beat competition, succeed in difficult markets, increase their sales and profits, but above all increase your customer’s satisfaction and loyalty.
1.3 Purpose of the Study
The purpose of this study is to investigate Corporate Reputation and Marketing Performance of the Alcoholic Beverage industry in Port Harcourt. The objectives of the study are;
1. To investigate the relationship between Corporate Image and Marketing Performance of the Alcoholic Beverage Industry in Port Harcourt.
2. To establish the extent to which Customer Orientation and Marketing Performance of the Alcoholic Beverage Industry in Port Harcourt.
3. To examine extent to which Quality of the Management and Marketing Performance of the Alcoholic Beverage Industry in Port Harcourt.
1.4 Research Questions
i) To what extent does Corporate Image enhance Marketing Performance of the Alcoholic Beverage Industry?
ii) To what extent does Customer Orientation enhance Marketing Performance of the Alcoholic Beverage Industry?
iii) To what extent does Quality of the Management enhance Marketing Performance of the Alcoholic Beverage Industry?
1.5 Research Hypotheses
The following null hypotheses are formulated from the above specific objectives:
H01: There is no significant relationship between Corporate Image and Market Share in Alcoholic Beverage Industry in Port Harcourt.
H02: There is no significant relationship between Corporate Image and Service Quality in Alcoholic Beverage Industry in Port Harcourt.
H03: There is no significant relationship between customer Orientation and Market Share in Alcoholic Beverage Industry in Port Harcourt.
H04: There is no significant relationship between customer Orientation and Service Quality in Alcoholic Beverage Industry in Port Harcourt.
H05: There is no significant relationship between Quality of the Management and Market Share in Alcoholic Beverage Industry in Port Harcourt.
H06: There is no significant relationship between Quality of the Management and Market Share in Alcoholic Beverage Industry in Port Harcourt.
1.6 Significance of the Study
It is anticipated that the study will be of benefit to the alcoholic beverages companies, its managers will be able to articulate the retail marketing strategies aimed at winning and retaining retail customers. The study will help customers or alcoholic beverages understand the interventions companies should implement in addressing the challenges that affect them from both the internal and external environment.Other companies would benefit from the findings of the study especially when bench marking themselves with other players in the same industry line or different industry dealing with alcoholic beverages in their distribution chain or in the area of strategic responses. The study will also add value to the existing body of knowledge in the area of marketing, strategic responses companies should adopt in order to gain a competitive advantage. It will also set foundation for scholars and researchers who wish to further understand the strategies that have been adopted by the different companies in Port Harcourt.
1.7 Scope of the Study
The general scope of this study covers Corporate Reputation and Marketing Performance. The geographical scope is Rivers State of Nigeria. The units of analysis covers randomly Managers, Staff and customers of Alcoholic Beverage Industry in Port Harcourt.
1.8 Limitation of the Study
The researcher was faced with the following constraints in carrying out this study:
Time: The time within the researcher is too short to carry on the detail study on this topic. Resources: Another constraint of the researcher is financial resources to carry on the detail study of this topic.
Data: Another limitation to this study will be lack of data to make valid study on the research problem.
1.9 Definition of Terms
Corporate Reputation:The collective assessments of a corporation’s past actions and the ability of the company to deliver improving business results to multiple stockholders over time. For example, many businesses assess corporate reputations using financial soundness, quality of management, products and services and market competitiveness as the criteria for ranking.
Managerial Reputation: Activities performed by individual or organization which attempt to maintain or create a certain frame of mind regarding themselves in the public eye.
Market share: A percentage of total sales volume in a market captured by a brand, product, or company.
Service quality: An assessment of how well a delivered service conforms to the client’s expectations. Service business operators often assess the service quality provided to their customers in order to improve their service, to quickly identify problems, and to better assess client satisfaction.