ADDIS ABEBA MEDICAL AND BUSINESS COLLEGE

THE IMPORTANT CUSTOMER RELATIONSHIP MARKETING

CUSTOMER SATISFACTION THE CASE OF COMMERCIAL BANK OF
ETHIOPIA

By;

ASEFA ADMASU

July 29, 2023

Suluta, Oromia, Ethiopia

THE IMPORTANT CUSTOMER RELATIONSHIP MARKETING
CUSTOMER SATISFACTION THE CASE OF COMMERCIAL BANK OF
ETHIOPIA

By

ASEFA ADMASU

A PROPOSAL THESIS SUBMITTED TO ADDIS ABEBA MEDICAL AND BUSINESS

COLLEGE, SCHOOL OF GRAUDATE STUDIES IN PARTIAL FULFILMENT OF THE
REQUIRMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION

July 29, 2023

Suluta, Oromia, Ethiopia

THE IMPORTANT CUSTOMER RELATIONSHIP MARKETING
CUSTOMER SATISFACTION THE CASE OF COMMERCIAL BANK OF
ETHIOPIA

BY;

ASEFA ADMASU

APPROVED BY BOARD OF EXAMINERS

_______________________ _________________
Dean, Graduate Studies Signature

_______________________ _________________
Advisor Signature

July 29, 2023

Suluta, Oromia, Ethiopia

Contents
ACKNOWLEDGEMENTS...............................................................................................................................iii
LIST OF ACRONYM......................................................................................................................................iv
ABSTRACT................................................................................................................................................v
1. INTRODUCTION...................................................................................................................................1
1.1 Background of study..........................................................................................................................1
1.2statement of problem..........................................................................................................................3
1.3 research questons.............................................................................................................................4
1.4 Research objectves.....................................................................................................................4
1.4.1 General objectve........................................................................................................................4
1.4.2 Specifc objectve........................................................................................................................4
1.5 signifcance of study..........................................................................................................................5
2. Literature review.................................................................................................................................6
2.1 Introduction to relationship marketing...............................................................................................6
2.2 Concepts of Customer Relationship Marketing.................................................................................7
2.3 Benefts of Customer Relatonship Marketng...................................................................................8
2.4 The Importance of Relationship Marketing in Banks........................................................................8
2.5 Customer satisfaction........................................................................................................................9
2.5.1 Factors that affect customer satisfaction...................................................................................10
2.5.2 Factors that cause Customer Satisfaction..................................................................................10
2.6 Customer satisfaction and relationship marketing...........................................................................11
3. Research methodology..........................................................................................................................12
3.1 Research Design...............................................................................................................................12
3.2 Populaton of the Study...................................................................................................................12
3.3 Sampling and Sampling Procedure..................................................................................................12
3.3.1 Sample Size Determinaton.......................................................................................................13
3.3.2 Sampling techniques.................................................................................................................13
3.4 Source of Data.................................................................................................................................14
3.5 Unit Analysis....................................................................................................................................14
3.6 Data Collecton Methods.................................................................................................................14

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 3.7 Method of Data Analysis..................................................................................................................14
3.8 Validity and Reliability.....................................................................................................................15
3.8.1 Reliability Testng......................................................................................................................15
3.8.2 Validity......................................................................................................................................15
3.9 MultiCo linearity Testng................................................................................................................15
3.10 Ethical Consideraton.....................................................................................................................15
Action plan................................................................................................................................................16
Reference..................................................................................................................................................17

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ACKNOWLEDGEMENTS
First and foremost, I wish to thank the almighty God for the strength, guidance and the abundant
grace he gave me throughout the course and the completion of this porosal. The completion of
this study would have not been realized without the help of others and I would like to take this
opportunity to thank everyone who helped me with this thesis. First I would like to express my
thanks and appreciation to my principal advisor Dr Meshesha

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LIST OF ACRONYM
CBE commercial bank of Ethiopia

CRM customer relationship management

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ABSTRACT
This research will conducted to investigate the important of customer relationship marketing on
customer satisfaction. . It is casual research type. Data will collected through the five point’s
likert scales of questionnaires and used mixed research approach. The questionnaire will
physically distributed to 322 customers and four interview questions to branch managers of those
selected branches.. Descriptive analysis tools such as frequency, percentage, mean and standard
deviation to present results statistical analysis tools such as correlation coefficient was worked
out and used to explore the relationships between variables.
Estimated beget; overall cost will 6500 Ethiopian birr

Keywords: customer satisfaction, Customer Relationship Marketing, commercial bank of Ethiopia

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1. INTRODUCTION
1.1 Background of study
Today businesses follow different marketing strategies to survive in the highly in the competitive
world by identifying, Acquiring and Retaining most economically important customers and
developing ongoing and long-lasting relationship with them(Gilaninia, Shahi et al. 2011).

Customer relationship marketing is to establish long-lasting relationship with the most important
customer and generate increased customer satisfaction, retention, loyalty. Therefore, developing
a better understanding of existing customer allows companies to collaborate and respond more
effectively to significantly improve retention rate(Mishra and Li 2008).Currently; various
companies begin to establish their network to new as well as existing customer to increase
ongoing loge-term customer satisfaction by implementing the principle of relationship marketing
via strategic and technology-based customer relationship management application. Customer
relationship marketing is important element of organization help them assess customer
satisfaction, retention, loyalty and profitability in terms of repeat purchases, money spent, and
longevity(Chen and Popovich 2003).

The aforementioned authors also emphasize that 5 percent decrease in defection can lead to 85
percent increase in profits for banking sphere industry : the goal of CRM is to create as affective
customer relationships as possible and develop future competences within the company although
satisfied opinions make it easier to continuously improve the competences of company .The
above mentioned is not enough to meet the purpose of CRM , but in addition , the company
should detect the unexpressed needs and primarily the future needs However the worst situation
that the company might face when using feedback ,the company realizes that it expected to bring
improvements into their relationships(Storbacka and Lehtinen 2001).

Marketing theorists underscore the importance of customer satisfaction for a business’s success
(Muyeed 2012). Thus, customer satisfaction is the central target of business organizations which
leads organizations to gain loyalty and achieve the desired objectives. Therefore, it is essential
for organizations to satisfy their customers promptly(Akhtar 2011).

Today customers need any service including banking to be ease, reliability and faster service to
satisfy their demand. has defined customer satisfaction as a measure of how organizations total
products perform in relation to a set of customer requirements, even though surely the customers
view of organizations performance will be a perception, customer satisfaction is up To the
customers‟ mind and it may or may not conform with the reality of the situation. A more general
definition of customers‟ satisfaction is given by(HABTE 2019); he explains as a function of
perceived performance and expectations. If the performances fall short of expectation the
customer is dissatisfied. If the performance matches the expectation the customer is satisfied,
when the performance exceeds the expectation the customer is highly delighted.
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Customer satisfaction is a representation of the customer’s reaction to the value received from a
particular product or service offering and it is tied to the customer’s perception and expectation
of service performance.

Customer satisfactions are very important concepts, which must understand by companies that
want to grow while keeping their competitive edge. In the modern competitive environments,
delivering high service quality is the key for a sustainable competitive advantage. Customer
satisfaction has a positive effect on the organization profitability (Mikyas, 2019). All the service
sectors depend on customer and their satisfaction and the banks are no exception. One of the
ways for achieving high customer satisfaction and gaining the loyalty of customers is for banks
to offer high quality services (Mekides, 2019).

(Walsh, Gilmore et al. 2004) viewed that relationship marketing as a strategy to attract, maintain
and enhance customer relationships in order to acquiring new customers and retaining existing
customers. It is a core strategy used by firms to establish, maintain and enhance profitable
relationships with clients, while ensuring benefits for both the firm and its clients. Based on the
empirical literature evidences, the fundamental customer relationship marketing variables that
can possibly influence customer loyalty and retention include bonding, competency, social and
financial bonding, empowerment, conflict handling mechanisms, trust, commitment, ethical
behavior and technology. Each of these variables comprises organizational activities, actions and
methods that are necessary to establish and maintain organization–client relationships and thus
possibly ensure long-term relationships and higher customer retention levels.

The ultimate goal of the organizations effort is customer satisfaction. Customer interests are
expected to be put first in all situations, even (in some views, especially) where these appear to
conflict with other business opportunities. The roles played in the service encounter by service
personnel and consumers contribute to satisfaction. In the same way that totally satisfied
customers are hard to find, the totally dissatisfied customer is also an elusive creature. While one
should understand the extent of customer satisfaction (i.e. how much customers are satisfied), it
is perhaps more important to understand the underlying cause of the satisfaction/dissatisfaction.
In general, the response to a satisfactory experience will contain both emotional and behavioral
elements. So customer satisfaction will result in positive emotional states. These, in turn, mediate
the response between customer satisfaction and behavioral responses – positive word of mouth,
no complaint behavior and repeat purchase(Mudie and Pirrie 2012).

Similarly, customer satisfaction is crucial in the banking sector because of the special nature of
the financial services which are characterized by intensive contacts with customers who have
different needs and require customized solutions(Kanyurhi 2013). Customer satisfaction is
known to be one of the most important and serious issues towards success in today’s competitive
business environment, as it affects company market shares and customer retention(Malasi 2012).

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1.2statement of problem
As can be seen from above mentioned facts, relationship marketing develops Bank’s productivity
and generates mutual values for both customer and company through growing marketing
effectiveness. As a result, it can be witnessed that no organization can function properly or reach
to its goal without a proper and effective system of relationship marketing within it customers.
Many empirical studies have provided evidences that relationship marketing tactics have positive
impact on behavioral loyalty which affects customer satisfactions. To compete in such
overcrowded and interactive marketplace, marketers are forced to look beyond the traditional
4Ps of marketing strategy, which are no longer enough to be implemented for achieving
competitive advantage.

As a result, relationship marketing has become an alternative means for organizations to build
strong, ongoing associations with their customers. As it was observed from the commercial bank
of Ethiopia the bank’s customers are relatively declining from time to time it is because of there
are many competitor banks available in Ethiopia and the bank is also incapable of constructing a
better relationship marketing strategy with the current customers and focusing to the new
customers. Therefore, awareness of the target consumers and building good relationship with
them is the most significant issue.

Customer relationship marketing is a contemporary issue and to create long-term relationships

with customers and the key to stability in an increasingly dynamic market. Customer relationship
marketing has become the main strategy to retain customers for companies

In today‘s marketplace business compete for customers; customer satisfaction is a key

differentiator. Customer satisfaction provides a metric to business owners and marketers which
can use it to improve their business. Satisfied customers are not only likely to purchase again but
also have the potential to become brand advocates and share their great experiences with others.
Customer satisfaction will be highly dependent on what happens in "real time," including actions
of employees and the interactions between employees and customers. While one should
understand the extent of customer satisfaction (i.e. how much customers are satisfied), it is
perhaps more important to understand the underlying cause of the
satisfaction/dissatisfaction(Mudie and Pirrie 2012).

Satisfying customers is the first major mission and purpose of any business organization. It is
when customers are satisfied the organizations achieves higher sales, profit and market share and
vice versa. Customer satisfaction also leads organizations to gain loyalty and achieve the desired
objectives. Therefore, it is essential for organizations to satisfy their customers promptly so that
they can achieve what they plan. Banks as a business organization should provide great care for
its customers’ to attract, retain and gain their loyalty. Many firms including banking industries
begin to track their customers’ satisfaction through measuring their level of service quality
perceived by their customers Nevertheless; banks found in our country (Ethiopia) have little care
about their customers.

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The likely hood of banks meeting customer's satisfaction is highly related to the service
providing capability and excellence of the bank. A bank with the perfect service providing
capability and experience is highly likely to satisfy the customer and maintain the customer‟s
loyalty. On the contrary a bank which is less efficient in service is highly likely to lose customer
satisfaction and hence customer loyalty(Aldlaigan and Buttle 2002). However, nowadays many
of commercial banks delivery of quality service affected by several challenges such as, lack of
qualified and well trained human resources, traditional structure and outdated technology, lack of
supervisory monitoring and evaluating system, lack of effective compliant handling system and
inadequate employee(Zeleke 2007).

Customer satisfaction started to get a serious attention from professionals as a well-known sector
of scholarly study and is an essential means employed by firms for improving client loyalty and
finally company performance. The advantage of satisfied customer is impossible to be ignored
since satisfied clients are like promotion at free of cost. Many people do have awareness of
today’s scenario for a firm to be customer-oriented, in other word they need to keep the clients at
the top of their based on strategies, actions and processes. For many of them, previous facts till
today remain nice, like it will be simple and also highly profitable to serve existing clients than
to search potential buyer. Practically, companies are continually designing strategies to follow up
and guarantee buyers’ retention, and ordering their employees to be highly oriented and customer
centered.

Satisfaction of clients has a great contribution for corporate operators since it is impossible to
have a business without satisfied and loyal clients. One dissatisfied client shift higher business a
company than 10 delighted clients. Long term business can be achieved by giving the highest
priority for satisfaction of customer and retention. It is better to focus on clients’ satisfaction
programs irrespective of the size of the company. The hard fact says that referrals come from a
satisfied customer.

1.3 research questions

1. How customer relationship marketing important on customer satisfaction in Commercial
Bank of Ethiopia?

1.4 Research objectives

1.4.1 General objective
 The general objective of this study is to assess customers satisfaction case of CBE.
1.4.2 Specific objective
The specific objectives include:-
 To assess level of customers satisfaction of the bank?
 To assess the important of customer relationship marketing on customer satisfaction
of the bank

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1.5 significance of study
This research will have a great deal of significance for the managers of the studied branches of
CBE. The study will help them to know whether the company is delivering its promise to the
customers and also it will provide them insight about the gap between customer‟s perception and
expectation of service and ways to improve them. Finding ofthis studywill help the company
marketing department to see and align their marketing strategy ifthere is a needfor adjustment
regading the banks‟s service quality performance and it will further addvalue for the department
to see the dimensions of service quality. Furthermore, this study would serve as an input and
basis for other researches, academicians, consultants and some associations who conduct further
researches on related fields.

The research findings have practical importance for the management and staff of CBE to know
their areas of strength and weakness regarding their customer oriented behavior. It also presents
effective suggestions and alternative solutions for management to help them take all the
necessary measures to overcome problems of their respective branches. It may also be used as a
base for future research.

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 2. Literature review
2.1 Introduction to relationship marketing
As described by(Keshvari and Zare 2012), the term relationship marketing was popularized in
the 1980s when the focus of marketers started to switch from customer acquisition to customer
retention. The objective of a relationship is to build customer loyalty by creating and maintaining
a positive attitude toward the company. When a bank claims to be practicing relationship
marketing, it signifies that they have undertaken an organization wide strategy to manage and
nurture their interaction with clients and sales prospects.

Relationship marketing is not only at the customer service point or at relationship manager level
but at every point in the organization. As described by(Velnampy and Sivesan 2012), customer
relationship marketing is one of the best contemporary marketing strategies for all companies to
satisfy their customer needs and wants. In customer point of view, trust, commitment, mutuality
and long- term relationship with customer which are very essential factors to satisfy their
customer needs and wants.

The way banking institutions understand and succeed to refer the products and services to the
customers are conditions for the importance they play in the economy. The marketing could offer
new solutions, if the banks shift the focus of their orientation and activities from transaction
marketing toward the banking relationship marketing. The relationship marketing tries to
establish an “intimacy” that is individualized links with customers, via strong personal appeal
and continuing commitment. For loyalty and relationship to flourish there should be trust,
commitment and communication between the interested parties(Danciu 2009).

Customer relationship marketing also concerns attracting, developing, and retaining customer
relationship. Customer relationship marketing goal is to provide increased value to the customer
and results in a lifetime value for the service provider. Trust has been defined as “a willingness
to rely on an exchange partner in whom one has confidence”. In addition trust provides the basis
for loyalty, relationship enhancement (decreased perception of risk), and yet is mediated by
customer perceived value of the relationship (i.e., perceived net benefits)(Velnampy and Sivesan
2012).

Customer relationship marketing also offers new opportunities for banks, since it is loyalty
marketing, within the framework of a partnership. This means that this kind of marketing aims to
create, maintain and improve the customer long-term loyalty. Such a goal means that a bank
should find a balance between the customer satisfaction and the profit of the bank. The change of

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focus toward customer satisfaction and loyalty is especially needed, as the banking system in
Romania is still too “industrialized” and “standardized”. At the sometime, the customers of
Romanian banks ask for more customized services and expect greater attention(Danciu 2009).

2.2 Concepts of Customer Relationship Marketing

Relationship marketing refers to all marketing activities directed toward establishing,

developing, and maintaining successful relationship exchanges(Mishra and Li 2008).Customer
relationship marketing is one of the best contemporary marketing strategies for all companies to
satisfy their customer needs and wants. In customer point of view, trust, commitment, mutuality
and long-term relationship with customer which are very essential factors to satisfy their
customer needs and wants.

Relationship marketing is a new approach in the banking industry to build close and long-term
relationships with its customers in order to provide an understanding of the customer and their
satisfaction considering the increasing competition. The variety of goods and products causes
that our customers are faced with many choices (Tahmasbi, Ashtiani, Noroozi, 2007).

Relationship marketing contains all steps that company takes to identify and provide better
services to our valuable customers. The relationship marketing is the process to identify and
create new value for customers, in which the mutual benefit has been considered. This benefit is
shared with customer during his life. Indicated that relationship marketing was mainly to match
the customers‘needs and the service promise, so that the customer loyalty would
increase(Taleghani, Biabani et al. 2011).

Defined that the relationship marketing is attracting, maintaining and enhancing relationships
with customers. Customer is the only profitability source of companies in the present and future.
However a good customer that makes the greater benefit it is possible to lost, the competition
over access to customers is intense. Companies should emphasis to maintaining current
customers and create long-term and profitable relationship(Abera 2016).

Relationship marketing theory states that successful relationship marketing is characterized by

successful relational exchanges. The theory focuses on trust, reciprocity, empathy, bonding, and
responsiveness. (Mudie and Pirrie 2012) defined relationship marketing as Relationship
Marketing is a philosophy of doing business, strategic orientation that focuses on keeping and
improving current customers rather than acquiring new customers. relationship marketing is "the
business of attracting and enhancing long-term client relationships".

(Mishra and Li 2008) views Relationship marketing as “all marketing activities directed toward
establishing, developing, and maintaining successful relationship exchanges”. illustrated
relationship marketing as "Relationship marketing involves creating, maintaining, and enhancing
strong relationships with customers and other stakeholders. Most of relationship marketing
definitions emphasize longer term perspective, focusing on keeping customers rather than getting
customers. In a general sense, relation marketing is about identifying, establishing, maintaining,
enhancing and, when necessary, terminating relationships with customers, so that the objectives

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of both parties are met. Fundamental to the notion of relationship marketing is the concept of
relational exchange It is associated with attempts by firms to develop long-term profitable
relationships with customers.

2.3 Benefits of Customer Relationship Marketing

Relationship marketing strategy helps in understanding customers’ needs, and can also lead to
customer loyalty and cost reduction. Research has shown that the cost of serving one loyal
customer is significantly less than the cost of attracting and serving one new customer (Ndubisi,
2004). Rashid (2003) reported that conclude that relationship marketing could bring customers
like, Confidence reduce anxiety, faith in a product or service provider, and a feeling of trust
worthiness towards the provider.

Social Benefits personal recognition by employees, customers feeling familiar with employees,
the development of friendship with employees. Special Treatment extra services, special prices,
higher priority than other customers. With respect to relationship marketing advantages from the
perspective of the organizations, it allows organizations not only to retain customers, but to also
improve profitably and decrease costs of acquisition. Some of the motives behind organizational
investment in customer relationship building include access to privileged information on
customer needs and wants (Ndubisi, 2004).

Relationship marketing enables organizations to expand their business, if implemented

successfully. Loyal customers' word-of-mouth can be very influential in terms of gathering new
business and helping to attract new customers, because satisfied customers convey positive
messages about the company's service and personal recommendations are often taken most
seriously in consumers' purchase decisions. Stone et al. (2000) reported that satisfied customers
can become powerful advocates for a company.

2.4 The Importance of Relationship Marketing in Banks

According to private banks activation, competition development and communication and

information development at international level, today absorption and maintenance of customers
in the country banking industry has been complicated by many degrees that itself led to reduction
of banks interest(Gilaninia, Shahi et al. 2011).

Today's banks should see their function in the customer reflection and try to understand wants
and desires of customers to attract customer satisfaction. Today, in marketing, the cost of losing
a customer is equal to the loss of benefits which the bank obtains from the customer service and
this is an alarm for a bank. In addition, benefit of services that could gain from new clients will
be losing. Therefore, customer orientation is a very sensitive element that we need to consider.

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For banks, to maintain customers and constant communication with customer is essential to the
different forms. This connection can be through the head or each employee of office. All banks
try to attract customers through advertising and other means of communication. When the
customer of bank faces with a problem in a branch of the hurdles, tries to provide the needs in
other bank. Therefore, regarding to the intense competition in banking, a bank that can provide
customer satisfaction, will be more successful(Abera 2016).

2.5 Customer satisfaction

Customer satisfaction has traditionally been regarded as a fundamental determinant of long –

term consumer behaviour. Satisfied customers are valuable assets for every organization to gain
the customer loyalty and retention. Customer satisfaction and its related research is not merely a
tool that measures the attitudes of customers but can be used by relationship marketers as a tool
to manage the relationships with the customers. Satisfaction and quality research “have evolved
along parallel tracks”(Velnampy and Sivesan 2012).

As mentioned in(Shah 2012), customer Loyalty and satisfaction go hand in hand. Customer
satisfaction is a judgment by the customer after the purchase or the service provided has taken
place. Satisfaction is the consumer’s contentment response. It is a considered opinion that either
a product or service feature, or the product or service itself, endows with a pleasurable level of
consumption-related fulfillment.

As mentioned by(ESHETU 2014) customer satisfaction management includes the comparison

between the expected delivered value and the actual delivered value as well as the image of the
company, the readiness to reaction, the dependability and the product attributes also conclude
that customer satisfaction is totally dependent of the customer expectation and how the
customer's actual perception of the products and service delivery performance matches the
expectations. If the performance matches or exceeds the expectations, the customer will be
satisfied and as a result loyal, but if the performance falls short of the expectation, the customer
will be dissatisfied and will find another bank service and products.

It is a well-researched fact that investments in customer satisfaction, customer relationships and

service quality leads to profitability and market share. Put differently, customer satisfaction leads
to customer loyalty and this also leads to profitability. If customers are satisfied with a particular
high quality service offering after its use, then they can be expected to engage in repeat purchase
and even try line extensions and thus market share can be improved and loyalty will become long
term(Shah 2012).

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Finally, customer satisfaction is very important concept and also has been extremely analyzed
subject in the marketing research for customer loyalty and retention. In recent time, customer
satisfaction has gained attention within the context of the paradigm shift from transaction
marketing to relationship marketing(Velnampy and Sivesan 2012).

2.5.1 Factors that affect customer satisfaction

, went a step forward to classify factors that affect customers’ satisfaction into three factor
structures;

1. these are the minimum requirements Basic factors: that are required in a product to prevent the
customer from being dissatisfied. They do not necessarily cause satisfaction but lead to
dissatisfaction if absent. These are those factors that lead to the fulfillment of the basic
requirement for which the product is produced. These constitute the basic attributes of the
product or service. They thus have a low impact on satisfaction even though they are a
prerequisite for satisfaction.

2. Performance factors: these are the factors that lead to satisfaction if fulfilled and can lead to
dissatisfaction if not fulfilled. These include reliability and friendliness.

3. Excitement factors: these are factors that increase customers’ satisfaction if fulfilled but does
not cause dissatisfaction if not fulfilled which include project management.

2.5.2 Factors that cause Customer Satisfaction

Customer satisfaction is an ambiguous and abstract concept. The actual manifestation of the state
of satisfaction will vary from person to person, product to product and service to service. The
state of satisfaction depends on a number of factors, which consolidate as psychological,
economic and physical factors.

The quality of service is one of the major determinants of customer satisfaction, which can be
enhanced by using ICT available to survive(ESHETU 2014). Several factors affect customer
satisfaction. The kinds of products that banks offer to their customers can cause customer
satisfaction or dissatisfaction. Consumers do not buy a product or service for its own sake. They
buy to acquire benefits that the product offers. They buy to satisfy a need. Products, therefore,
exist for what they fulfill in terms of consumer needs.

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2.6 Customer satisfaction and relationship marketing

As stated by (Kheng, Mahamad et al. 2010), loyalty is developed over a period of time from a
consistent record of meeting, and sometimes even exceeding customer expectations. Some
researchers showed that the cost of attracting a new customer may be five times the cost of
keeping a current customer happy. Customer satisfaction is also defined as the degree to which a
customer exhibits repeat purchasing behavior from a service provider, possesses a positive
attitudinal disposition toward the provider, and considers using only this provider when a need
for this service exists.

It might be much mistaken if organizations only use the customers purchasing records to tailor
the loyalty of consumers thereby to monitor relationship marketing with them. It is also points
out companies often delude themselves into thinking that they have a relationship with customers
if those customers buy their products and services regularly.

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3. Research methodology
3.1 Research Design
According to Chopra et al. (2012), research design is the conceptual structure within which
Research will conduct. They specifically indicated that a research designs will the arrangement
of condition for collecting and analysis of data in a manner that aims to combine relevance to the
research purpose with economy in procedure. Research designs will the arrangement for a
precise statement of goals and justification.

As this study will established causal relationship between variables it is causal research type,
causal research to explain the relationship between the dependent and independent variables.
Questioners will analysis using statistics and interview was conducted with branch managers
therefore it is mixed research approach.

3.2 Population of the Study

Target population will define as the entire group a researcher is interested in. According to
(zikmund, 2003) the definition of population will an identifiable total set of elements of interest
being investigated by a researcher. Therefore, the target populations for the study will customers
and branch managers of the commercial bank of Ethiopia in Suluta sub city.

3.3 Sampling and Sampling Procedure

According to Douglas et al (2006), a sample will a tool to infer something about a population or
sample will a portion or part of the population of interest. The Reasons to Sample when studying
characteristics of a population, there are many practical reasons why we prefer to select portions
or samples of a population to observe and measure. Some of the reasons for sampling are: the
time to contact the whole population may be prohibitive, the cost of studying all the items in a
population may be prohibitive, and the physical impossibility of checking all items in the
population, the destructive nature of some tests and the sample results are adequate. Even if
funds are available, it is doubtful the additional accuracy of a 100 percent sample-that is,
studying the entire population. When selecting a sample, researchers or analysts must be very
careful that the sample is a fair representation of the population. In other words, the sample must
be unbiased since ethical side of statistics always requires unbiased sampling and objective
reporting of results.

When a population can be clearly divided into groups and then stratified random sampling can be
used to guarantee that each group is represented in the sample and the basis of stratification of
the study will district customers of commercial bank of Ethiopia. The groups are also called
strata; north, south, west and east. Once the strata are defined, we can apply simple random
sampling within each group or strata to collect the sample or stratified random sample a
population will divided into subgroups, called strata, and a sample is randomly selected from
each stratum.

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3.3.1 Sample Size Determination
In addition to the purpose of the study and the population size, five criteria will needed to be
specified to determine the appropriate sample size Population variability (approximated p),the
maximum allowed error (E),and confidence interval(Z),the probability of the population not to
be occurred(q).due to large number of customers in branches of commercial bank of Ethiopia in
suluta sub city, the sample size of the population that are large and determined through the
equation developed by .

n = (Z2*p*q)/e2

Where n the total number of sample required

Z=the critical table value of the confidence level (z=1.96)

p=the population variability (p=0.3)

q=the probability of the population not to be occurred (q=1-p=0.7)

e =the maximum allowed error i.e. (e =0.05)

Therefore, the researcher will take the maximum allowed error as 5% at a confidence interval
level of 95% and the moderate population variability interval is 0.3(p=0.3) because this allows
the researcher a largest sample size and the minimum error(q=0.7).

n= (1.962*.3*.7)/0.052 which is approximated 322

On the other hand, some research findings of relationship marketing in banking industry used
large sample sizes ranging between 200-1000 respondents. Furthermore suggest those
investigators to use a large sample as much as possible. Since the large sample size have the
probability of minimizing the population parameters and increases likelihood of the sample to be
true representative of the population. This reduces chance errors.

3.3.2 Sampling techniques

The key tools for data collection are questionnaires that will administered through the help of
customers of selected commercial bank of Ethiopia in Addis Ababa city districts. The researcher
used stratified sampling technique to select district of CBE branches from where the sample
respondents or 322 were chosen. The data‘s are collected by using stratified sampling technique
method from the four districts of CBE i.e. north, south, west and east suluta sub city. 19
customers were selected from every selected branch‘s in four districts through purposive
sampling techniques, as mentioned on the table 3.1 and the data was collected from only grade
four and grade three branches; since this branches have relatively most of the corporate
customers of the bank and large number of customer served comparing to grade 1 and grade 2
branches, in addition to the questionnaires. Rather than generalizing the result based on the

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response of the customers‘ only, interview method were employed simultaneously from 5 branch
managers of the selected branches in four districts that were used to collect the responses of the
customers. This was done to strengthen the data that were collected from customers, so that
consolidating the response of the managers and customers has made the finding of the study
concrete.

3.4 Source of Data

Both primary and secondary data will used in the research. Primary method of data collection
will made using 5 point likert scale questionnaire. Secondary data‘s will collected from the
books, publications, articles, journals and websites etc also will used

3.5 Unit Analysis

The individual customer will take as a unit of analysis for the study in which the customer that
directly receive bank services. Many research results on relationship marketing in the services
industry have used customer as the unit analysis (Olsen, 1995).though, relationship marketing is
analyzed from customer‘s attitude, experience in the banking service. Therefore, using
customer‘s as unit analysis is suitable because their expectation and perception of RM and
services provided by the bank are taken.

3.6 Data Collection Methods

The study depends on the primary data collected through standard questionnaires. Questionnaires
will apply usually for descriptive, which identify and describe the variability in different
phenomena or explanatory research, which examine and explain relationships between variables.
The questionnaire will prepare in line with the objectives of the study mentioned above and it
will organize in two sections. The first section will designed to obtain the demographic
information of the respondents and the overall the existing customer relationship marketing
practice in CBE.

The second section inquired how respondents perceive the relationship marketing components
relationship with customer retention and its impacts. A five – point likert scale questionnaire
were distributed to customers of commercial bank of Ethiopia and interview will made.

3.7 Method of Data Analysis

With regard to data analysis, the study will carries out using descriptive statistical analysis,
correlation and multiple regression analysis. The qualitative data will analyze by consolidating
the responses of the branch managers. Descriptive statistics will use mainly to organize and
summarize the demographic data of the respondent as well as the first research objective and
correlation coefficients will use to show the relationship between components of relationship
marketing and customer retention in the bank. On the other hand, multiple regression analysis
was carried out to

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measure the impact of customer relationship marketing on customer retention in the bank, one
sample t test used to compare the sample respondent with the population value and the result is
mentioned in the appendix .In general Data collected will analyze using both descriptive and
inferential analysis. The Statistical Package for Social Scientists (SPSS) 25.0 version was used in
data analysis.

3.8 Validity and Reliability

3.8.1 Reliability Testing
The level of reliability of the instrument that is the consistency of the variables will check with
the Cronbach‘s alpha statistics. Cronbach‘s alpha is an index of reliability associated with the
variation accounted for by the true score of the ―underlying construct). Cronbach‘s Alpha‘s can
only be measured for variables which have more than one measurement question. has stated that
0.5 is a sufficient value, while 0.7 is a more reasonable Cronbach‘s alpha. The results will extract
as Table 3.2 and according to this theory the result is more than 0.7.

3.8.2 Validity
Validity is defined as how much any measuring instrument measures what it is intended to
measure. Also suggested that the important issue of measurement validity relates to whether
measures of concepts really measure the concept. ―Validity refers to the issue of whether an
indicator (or set of indicators) that is devised to gauge a concept really measures that concept.
Several ways of establishing validity are: content validity; convergent validity concurrent;
predictive validity; construct validity; and convergent validity. The researcher used standardized
questionnaire ,so, the instrument is already valid and tested..

3.9 Multi-Co linearity Testing

Two major approaches will utilized in order to determine the presence of multi collinearity
among independent variables in this study. These methodologies involved calculation of both a
Tolerance test and Variance Inflation Factor –VIF and Tolerance level is < or equal to 0.1; and
all VIF is 1/Tolerance values are well

3.10 Ethical Consideration

The researcher maintained scientific objectivity throughout the study, recognizing the limitations
of his competence. Every person involved in the study will entitled to the right of privacy and
dignity of treatment, and no personal harm was caused to subjects in the research. Information
obtained was held in strict confidentiality by the researcher. All assistance, collaboration of
others and sources from which information was drawn is acknowledged.

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Action plan

THE IMPORTANT CUSTOMER RELATIONSHIP MARKETING CUSTOMER

SATISFACTION THE CASE OF COMMERCIAL BANK OF ETHIOPIA

The proposal should include the sequence of tasks to be performed, the anticipated length of time
required for its completion and the personnel required, The proposal may also include a material such
as computer and paper in addition need budget for each items
Implementation Action plan expects to conduct research
 data collection
 other direct cost
 Transportation cost

NO Description of Quantity Amount pay Time period Total cost

item by each

1 Data collector 2 1000 Require length 2000 Birr

of time

2 Photo i i Require length 3000 birr

copy&printing of time

3 Transport cost i i Require length 500 birr

of time

4 Over head cost i i Require length 1000 Birr

of time

total 6500 Birr

Note; this acton plan modifying tme from tme it necessary up to fnal of research

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