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ACHIEVING HAIR SALON COMPETITIVENESS THROUGH
RELATIONSHIP MARKETING MODEL: A CASE OF HAIR
SALONS IN THE FREE STATE PROVINCE IN SOUTH
AFRICA
Dr Francis Okyere
Department of Business and Management Development
National University of Lesotho
Dr Edmund Owusu Amoakoh
Department of Business Management
Central University of Technology, Free State Province, South Africa
Abstract
This paper is based on research on growing competition within hair salons. The study found
evidence of such competition and identified relationship marketing (RM) as a tool to support
competitive strategy. Hair salons are regarded as emerging small, medium and micro
enterprises (SMMEs) – a status achieved due to participation in competitive social-economic
activities. This paper presents a RM model compatible with the requirements of emerging
SMMEs. It is hoped that this model will promote hair salons’ competitive strategy, thus
contributing to South African socio-economic mantra. There is a perceived lack of
relationship marketing by SMMEs, particularly for emerging SMMEs like the hair salons.
This perception amplifies the importance of strategic tools to support competitive strategy for
successful competition. A survey data collection method was used to collect quantitative and
qualitative data from 145 respondents, randomly selected owner/managers of hair salons and
customers. These responses were supported with personal interviews to improve
generalizability. The evidence of lack of awareness and the importance of RM activities was
found. This finding supports the need for RM model presentation and hair salon
competitiveness and emphasises the requirements for hair salons as emerging SMMEs.
Keywords: Relationship marketing, Competitiveness, Competitive strategy, Free State
Province, Relationship management, SMMEs
Introduction
The growing competition within hair salons in the Free State, a province of South Africa, has
necessitated the identification of relationship marketing (RM) as a tool to support competitive
strategy. Hair salons are seen to be emerging small and medium enterprises (SMEs) in the
province – a status achieved due to participation in competitive socio.-economic activities.
Currently the problem of unemployment facing the youth and the low-cost start-ups has led to
the proliferation of hair salons, creating fierce completion among them. Thus, they are
uncompetitive, which has caused many of them to fold. Therefore, a RM model has been
suggested as a marketing strategy that should be used to build, develop, and maintain a
successful relational exchange for competitiveness (Po-Tsang Chen and Hsin-Hui Hu, 2010).
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It can be assumed that with an increased consumer appetite for service quality and pressure of
increased profit and market share, hair salons would benefit from the application of RM to
build a customer base. This assumption relates to the domain of both RM strategies and the
services hair salons provide to achieve favourable interaction with customers. With
determination, the interactions should enable hair salons to engage, network, and collaborate
with customers for improved services.
Previous study by Che, Binti, and Jamil (2009) on RM suggests that the primary focus of
interaction is to understand customer preference, taste and lifestyle and use this
understanding to build closer relationships for competitiveness. The authors argue that to
achieve a sustained competitiveness, the quality of interaction with the understanding of
customer’s taste, preference and lifestyle is vital for customized service, customer attraction
and retention. This argument is supported and expanded by Cosic and Djuric (2010) who
include business development strategy through network-interaction concepts. In the context
of the hair salon industry the network-interaction concept is related to the achievement of a
RM strategy that is highly competitive. It is suggested that success of the model would be
realised by the utilization of relational exchange theory which is a source of business
partnerships; based on buyer-seller relationships (Kanagal, 2010).
Theoretical and conceptual frameworks
This study was underpinned by relational exchange theory, which relates to a long-term
relationship between the business and customers. According to Jham and Khan (2008),
building relationships requires customer satisfaction as a pre-requisite to meeting customers’
expectations. Khan (2012) also states that the continuity of the business relations between the
customer and the business is dependent on customer retention. Therefore, the study considers
customer satisfaction and retention as critical to relationship building between the customer
and the business.
Conceptually, it was assumed in this study that the application of RM components such as
trust/confidence, communication, responsiveness, tangibility, complaints handling and
empathy ((Deng, Wei and Zhang, 2010; Anabila, Narteh and Tweneboah-Kodua, 2012;
Rezvani et al., 2011; Kassim and Abdulla, 2010; Pournaserani, and Mousavian, 2011) serve
as independent variables and could lead to service quality, customer satisfaction and retention
as dependent variables for a business to achieve competitiveness and growth. This could
make RM theoretically appealing for hair salons.
METHODOLOGY
Research design
The research design was exploratory research. The study was exploratory because it
investigated how RM can be used and what impact it has on hair salon competitiveness,
which is a virgin area. The importance of hair salon competitiveness provided the rationale
for the development of the RM model. The exploratory design is selected for its quantitative
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relevance to contextual interplay of data collection and analysis. It employs both descriptive
and quantitative research approaches
Population and sampling
The target population for this study were the owners and customers of the hair salons in the
Free State. With the population size of 550, a sample of 200 was considered adequate for this
study through a pilot study which was conducted to identify the salons suitable for this
specific study aimed at quality improvement effort and data reliability. A probability
sampling method was adopted for the following reasons: there was a large sample comprising
550 hair salons in the region, which allowed for representativeness; there was a need to
generalize the results of the study; and the population was well defined.
Data collection
A lack of suitable previous research on the subject necessitated the construction of a custom-
made questionnaire. A pilot study using 20 respondents was conducted in the Mangaung area
of Bloemfontein to improve readability and clarity of the questions. The questionnaires were
administered personally. Thirty eight itemized Likert-type questions were used to collect the
primary data for analysis. According to Cooper and Schindler (2011), Likert-type scales
consist of statements that express either a favourable or an unfavourable (agree or disagree)
attitude toward the object of interest. Thirty eight itemized questions were used to prevent the
respondents from guessing about a choice. They needed to indicate specifically the type of
information that was required by the researcher. The structured questionnaire was made up of
two sections, the first one dealing with the drivers for service quality, customer satisfaction,
and retention, and the second requiring the respondents to answer questions on the elements
of RM practices such as confidence/trust, communication, responsiveness, tangibility,
empathy, and complaints handling.
Data analysis
Data collected was analysed using the SPSS statistical computer software package proven to
produce reliable inferential and descriptive statistics. The data was statistically analysed using
frequency counts and percentages. Cronbach’s Alpha coefficient statistic for reliability
analysis, correlation and regression models was also used for relationships.
Credibility and reliability of constructs
The Cronbach’s Alpha statistic is the main tool used to measure reliability of the various
constructs in the study. Cronbach’s Alpha co-efficient of around 0.70 is deemed acceptable
for internal consistency of a measuring instrument (Lai et al., 2010; Field 2012; Khan et al.,
2012).
LITERATURE REVIEW
This literature review discusses the main concepts on which this study focused, namely RM
and its elements and the dependent variables.
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Relationship marketing defined
According to Gilaninia, Danish, and Shahmohammadi (2012), RM is a strategy to attract,
retain, and promote customer relations, while Cosic and Djuric (2010) define RM as
paradigm change, which shifts the focus of business from transaction to relationship.
Alrubaiee and Al-Nazer (2010) state that RM involves the directing of all marketing activities
toward building loyalty (keeping and winning customers) by providing value to all the parties
involved in relational exchanges. These authors further maintain that the main theme in
customer RM is to acquire and retain customers.
Kanagal (2009) describes RM as the identification, establishment, maintenance,
enhancement, modification and termination of relationships with customers to create value
for customers and profit for the organisation through a series of relational exchanges that
have both a history and a future. According to Alqahtani (2011), RM is seen as a core
business activity directed towards setting up, improving, and maintaining successful
relational exchanges with customers, suppliers and even other businesses.
Implicit in the above definitions is that RM involves activities aimed at developing long-term
cost-effective links between an organization and its customers for their mutual benefit.
Organizations can maintain and enhance relationships by treating customers fairly and
offering. better service. For the service provider, a valued relationship is one that is
financially profitable in the long term.
Conceptualisation of the independent variables
Trust
Trust is viewed as an essential ingredient and a mainstay of a successful relationship (Jiun-
Sheng Chris Lin & Chung-Yuen, Wu, 2011). Sohail (2012) argues that trust is the willingness
to rely on an exchange partner in whom one has confidence, and this builds relationships.
Complaints handling
According to Komunda, Kibeera, Munyoku and Byyarugaba (2015), customers’ complaints
are the responses triggered by perceived dissatisfaction due to inadequate integrity,
reliability, responsiveness and functionality. Therefore, complaints management must be one
of the marketing tools used to bring two parties together to foster relationships.
Communication
Anabila, Nartey and Tweneboah-Kodua (2012) argue that communication has a positive
effect on customer acquisition and retention, and that the frequency of communication
between parties indicates the strength of the relationship, which has a positive effect on
customer loyalty.
Responsiveness
In their study, of Ladhari, Ladhari and Morales (2011) refer to responsiveness as the
willingness to help customers and provide prompt service. Thus, understanding customer
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requirements and developing the service based on responsive feedback enhances service
satisfaction and relationship building.
Tangibility
According to Jaya and Manhalingam (2011), tangibles of services are the equipment, signage,
appearance of employees and man-made physical environment surrounding the service,
which are commonly known as the servicescape – the aesthetic and visual appeal of the
business in the eyes of the customer. The visuals benefit the business by providing what the
customers need in the form of service quality and satisfaction.
Empathy
Kassim and Abdullah (2010) argue that empathy is the service dimension that focuses on
individualised attention or care, easy access, good communication and customer
understanding which leads to relationship building.
Conceptualisation of service quality, customer satisfaction and customer retention and
their influence on relationship marketing
Service quality
Service quality is seen as having an impact on customer satisfaction, customer loyalty,
profitability and business performance (Santouridis & Trivellas, 2010). Thus, it leads to
customer retention and effective RM.
Customer satisfaction
According to Ganiyu, Uche and Adeoti (2012), customer satisfaction is the heart of
marketing. These authors contend that it is an antecedent to customer loyalty and retention
which mediate between RM and business competitiveness and growth.
Customer retention
Khan (2012) defines customer retention as the continuity of the business relations between
the customer and the business. Satisfying customers in order to retain them results in
customer retention (Jawaria, Immran, Khashif, Ayse, Nadeem and Hassan, 2010).Customer
retention is similar to satisfaction in that they are the most important indicators of customer
satisfaction: the more satisfied customers are, the greater their retention, and the greater the
RM.
GAPS IN THE EMPIRICAL ANALYSIS
Table 1 shows the overall varieties of gaps in the empirical analysis. These gaps relate to RM
elements not fully practised in the salons’ operations, namely trust/confidence, handling of
complaints, communication, responsiveness and empathy. These gaps were used to develop
the RM model presented in Figure 1.
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Table 1: Gaps in the empirical evidence
Assumed practice of elements of
relationship marketing in salons
(100%)
Gaps not found in the practice of
relationship marketing in the
salons
Empirical evidence of practice of
the elements of relationship
marketing in salons (average %)
Trust
14.3%
85.7%
Handling of complaints/queries
17.6%
82.04%
Communication
32.6%
67.4%
Responsiveness
9.7%
90.3%
Empathy
34%
66%
Explanations of the gaps
Trust
As can be seen in Table 1, about 14.3% of the salons do not consider and do not show trust
towards their customers. It means some owners of the salons do not demonstrate high levels
of integrity such as consistency, honesty, fairness, helpfulness and responsibility which go
with trust within the business. Thus, the absence of these aspects may reduce the level of
commitment in a relationship between the salon and the customers. This is consistent with
Sohail’s view (2012) that trust is higher among buyers who believe they receive more value
from a relationship, and that it is another important determinant of customer loyalty.
Therefore, the absence of trust within some of the salons is a crucial concern to be addressed
if they want to win more customers.
Handling of complaints or queries
Customers’ complaints are usually related to their queries or problems and if they are
satisfactorily resolved, the customer’s loyalty towards the organisation is enhanced. It follows
that poorly managed queries in the salon business – as in any other organisation – would
interfere with relationships. A 17.6% gap for this marketing practice means a great loss of
customers to those salons; therefore, complaints handling is a huge investment in time,
productivity gains and relationship building for a business.
Communication
Another gap emanates from ineffective communication systems among the salons. It seems,
for any particular organisation to be known and heard by its customers, it should consistently
communicate with its customers rather than only produce and price its products. As shown in
Table 1, 32.6% of the salons do not practise this element of RM or they may find it difficult
to inform, remind, persuade and differentiate offerings from competitors. Anabila, Narteh,
and Tweneboah-Kodua (2012) argue that communication has a positive effect on customer
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acquisition and retention, and that the frequency of communication among the parties
indicates the strength of the relationship marketing.
Responsiveness
Also included among the gaps is responsiveness as an element of RM which is not well
adhered to by some of the hair salons. It denotes speed and timeliness of service delivery.
Table 1 shows that 9.7% of the salons do not practise this element as a driver for customer
satisfaction and retention – and for that matter, RM. This suggests that these salons have a
negative attitude towards this relationship element. Kassim and Abdulla (2010) allude to this
aspect and describe responsiveness as a company’s ability and willingness to provide prompt
service when customers have questions or problems. Thus, understanding customer
requirements and developing the service based on responsive feedback enhances service
satisfaction, loyalty and relationship building.
Empathy
Empathy as an element of RM is another driver for building the customer-provider
relationship. It reflects personal attention, preferences, understanding and caring of the
customer. Empathy pre-supposes that owners of businesses are expected to implement
customer-oriented strategies whereby businesses must show sincere interest in solving
clients’ problems and requirements. Table 1 shows that 34% of the salons do not practise
empathy within their businesses. This means that these salons do not personalise services and
generally do not demonstrate caring behaviour in all of their interpersonal dealings with
customers – these represent a gap in the literature to be addressed.
Therefore, the issue that stands out from all these gaps is that there is a critical need to
address them if RM can succeed within the hair salons.
THE RELATIONSHIP MARKETING MODEL
The graphical representation of the RM model presented in Figure 1 here is based on the
conclusion derived from the gaps in the empirical data analysis (see Table 1). It is hoped that
this framework will support and promote RM success in small businesses, particularly hair
salons, through the application of RM elements identified to be effective in influencing
service quality, customer retention, and satisfaction.
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Figure 1: Proposed relationship marketing model for hair salons
Discussion of the relationship marketing model
The key variables of the model were extracted from some of the gaps found in the empirical
analysis which are: trust/commitment, communication, handling of complaints/queries,
responsiveness, and empathy as independent variables. The mediating variables are customer
satisfaction, service quality and customer retention. It is assumed that if these gaps or
perceptions are addressed and the business addresses them, it would be able to provide
quality service, customer satisfaction, and retention, which would ultimately lead to
competitiveness, profit/market share, and relationship building.
Application of the relationship marketing model
The model can be used to influence customer perceptions that have to do with the way in
which customers view and react to the products and services that are available to them
especially when the product or service is a novelty. The management strategies in the model
could be applied to the operations of marketers. For example, marketers in their campaigns to
get customers’ attention by convincing them to purchase a specific product or service use
marketing communication strategy. The purpose of this model is to ensure that management
functions are aligned with service quality strategies, cutting across the marketing activities,
determining customer satisfaction and retention of the adoption process. It supports the
challenges that management of the hair salons face that have become imperative with the
increase of, for example, new demands of customers for service quality, current fashionable
hairstyles and even current hair chemicals within the industry context.
With increased competition, changes in customers’ taste for current hairstyles and lifestyles
in the context of hair salons, this model can be used to communicate differentiated features of
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services and products offerings. By so doing, hair salons’ competitive abilities would benefit
from the application of the model.
Application of the model to relationship management
Since the customer is the central block of RM building, one of the benefits of the model is the
fostering of long-term customer relationships. It is noteworthy that long-term customer
relationships build mutual rewards that benefit both the firm and the customer, while the
organization can also gain quality sources of marketing intelligence for better planning of the
marketing strategies (Jesri et al., 2013:56). In addition, this RM model allows flexible access
and interaction of a business with customers as opposed to traditional marketing practices
where customers were passive partners.
The model can be used to encourage hair salon businesses to develop a competitive plan by
fostering intense, difficult-to-duplicate marketing relationships with customers, employees
and even competitors as partners. For example, this could be done by the management
developing special treatment such as extra services, special prices, coupons, free hair
products and higher priority over other customers, or providing fast and flexible salon
services or product information to customers.
The model assumes that the management steps up the marketing management process to
manage all the marketing activities with commitment, trust, empathy and responsiveness.
Management’s commitment is essential in promoting the concept of customer relationship
management within and outside of the business. It is necessary to institute frequent changes
in marketing activities and introduce support structures such as trained staff that are required
to make the model a success because RM is a partnership in nature.
RESULTS AND DISCUSSION
Response rate
The questionnaires were administered to a sample of 200 hair salons out of which 145 were
completed and returned. This represents a response rate of 72.5%. All the returned
questionnaires were correctly completed.
PERCEIVED RELATIONSHIP MARKETING AWARENESS AND PRACTICES
An overall measure of perceived awareness and elements of RM practices were calculated,
using frequency distribution and percentages.
The information in Table 2 shows the average percentages of the items of the questions under
each construct as summaries.
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2: Summary of the statistics of the perceived RM awareness and practices
Constructs
No. of
Respondents
No. of items
Agree
/strongly
agree
Average %
Comments:
Perceived
relationship
marketing
practice
Awareness of
relationship
marketing
145
5
63.7
Not very much
Service quality
145
7
97.0
Practice
Customer
satisfaction
145
6
94.4
Practice
Customer retention
145
4
88.4
Practice
Confidence/trust
145
4
85.7
Practice
Complaints
handling
145
5
82.04
Practice
Communication
145
4
67.4
Not very much
Responsiveness
145
3
90.3
Practice
Tangibility
145
3
90.6
Practice
Empathy
145
2
66.2
Not very much
All 10
constructs
43
CONCLUSIONS
The conclusions that follow are based on the literature review and the empirical findings. It
was found that some of the salons needed to address certain gaps in practising some of the
RM variables. The majority of the respondents strongly agreed that it is very good to practise
the elements of the RM in the salons. Therefore, these findings support the need for an RM
model for hair salon competitiveness and growth.
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RECOMMENDATIONS
Formalization of the hair salon industry
The study revealed that most of the hair salons in the industry are not formalized and not
registered. Efforts must be made by the Free State government, in partnership with small-
business-oriented NGOs to formalize these informal hair salons into economically viable
ventures by registering them to be sustainable commercial industry. The financial implication
for the formalization would make them get provincial guarantees enabling them to access
financial credit facilities from the banks and other financial institutions. With this financial
back-up, hair salons would be able to finance any marketing practices such as RM
management, which may be costly to undertake.
Development of hair salon academies
The study shows that already hair salon academies are spreading across in some major cities
of the country illustrating the importance, financial, job creation, and self-employment
potential of the business, which seems to be limited in the Free State. It is suggested that such
training centres be established in the various cities of the province. There must be a
curriculum blend of both hair care and marketing practices such as RM and other business
skills to stimulate growth in this market. In order to boost its potential for novelty and
growth, and in collaboration with the Skills Education and Training Authority (SETA), such
academies could be accredited. This step would draw more unemployed into the industry to
make it of value.
Development of skills training
It is recommended that basic training in business management and entrepreneurship be
incorporated in the academies mentioned earlier to assist salon owners to overcome skills
shortages. The aim is to prepare the students to run their own businesses with the knowledge
gained. The local municipalities and private collaborators could practise capacity training by
setting up development and training programmes for salon operators. In these programmes,
areas such as marketing management, marketing practices, simple financial management,
marketing research, and more importantly the knowledge of RM could be included, so that
the operators of these salons would gain mastery of RM management to enhance customer
relationships
RECOMMENDATIONS FOR FURTHER RESEARCH
The results of this empirical research necessitate further research on the following pertinent
issues:
Whether the findings of this study are applicable to other parts of South Africa by
replicating this research on a larger scale, preferably nation-wide;
Why RM is not practised by some hair salons to any appreciable extent in the Free
State province;
To validate the findings of this study to suggest that the RM framework influences
hair salon competitiveness, performance, and growth.
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