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CHAPTER ONE

INTRODUCTION

1.1       Background of the study

Today’s business environments have been faced with intense competition coupled with sophisticated technology and globalization. In view of this, customers have become more sensitive by the day and this has made most organizations to place utmost priority and concern on their customers as they are the vital elements and the central of all their marketing strategy (Karakostas; Kardaras and Papathanassiou, 2015). Consumers’ needs and expectations are continuously changing. Hence, customer relationship management (CRM) has become a priority for firms’ business strategy (Karakostas, 2015). Academics and practitioners opined that a relationship is necessary for firms to survive and be successful in contemporary business environments (Heinrich, 2015) (Gefen and Ridings, 2012; Ngai, 2015) reported that when organizations improve relationships with their consumers, employees and the environment it leads to improved customer loyalty and also increase profitability. (Karakostas, 2015) states that Customer Relationship Management is the management approach that seeks to create, develop, and enhance relationships with carefully targeted customers in order to maximize customer value and corporate profitability. Kuo-Chung and Chin (2012) stated that Customer relationship management (CRM) is becoming an important issue in organizations in order to gain customer loyalty, improve customer retention rates as well as increase profits.

The success of airlines depends majorly on the ability to identify customers’ wants and needs, and factor it in the quality service that would meet customers’ satisfaction. Air transport is the transportation of passengers and cargo by aircraft and helicopters.

Aviation Industry is an important transportation industry or sector in Nigeria. The industry promotes economic development and contributes greatly to the success of transportation system in Nigeria. The industry for instance employed workers and helps in reducing the level of employment in the country. When an industry like Aviation Industry has in mind to satisfy its customers always, such industry can withstand turbulent business challenges and will gain competitive advantage over others (Vilare et al., 2011). According to Kotler and Keller (2019), when customers are satisfied, they develop brand loyalty, refer other customers to patronize the brand and services.  With respect to the Aviation Industry, the satisfied customer will encourage others to travel with the Airline which they derived satisfaction. As this referring process continues, the customers will develop customer loyalty and emotive commitment.

The vital area which Aviation Industry has not identify as the basic mechanism for satisfying customers lies in adopting value creation concept (Nirmali, Tajid & Azam, 2011; Ramaswamy & Ozcam, 2014). In fact, many scholars or authors have also not extensively study value creation concept as a determinant for customer satisfaction. When the study of value creation is approached as a major means of satisfying customers, the Aviation Industry and other business organizations will see the need to invite customers in creation of values for goods and services. Still on value creation, personal Interaction is developed as customers becomes friendly with the organization. They also develop trust and respect for each other; they share their views and experiences. What comes out due to personal interaction between both parties will pave way for the success of value creation since the firm (Airline) will engage such a customer in value creation initiative (Lee et al., 2012). Another important dimension is engagement platform which serves as a market or channel where customers and a firm meet to decide on how the nature and quality of products and services should be produced to meet customers’ needs (Srinivasan, & Hanssens, 2019).

It is quite obvious that many authors and researchers have conducted studies on value cocreation over the years (Spreng et al., 2021; Payne et al., 2018; Ramaswamy and Goüllart; 2020) but most of the researchers focused on manufacturing firms with no regards to the Aviation Industry which is a critical sector that needs value cocreation on services provided. Additionally, those researchers and their studies were carried out in foreign environment of which their culture may be different from firms in the domestic environment like Nigeria. Hence, the present is carried out to examine the relationship between value creation in Aviation Industry in Nigeria with the aim to fill this knowledge gap.

 

1.2       Statement of the Problem

Aviation industry has made a significant contribution to Nigeria’s and the world’s economic and tourism development. As a result of the rapid entry and exit of goods and services, the Nigerian aviation industry generates more revenue and contributes to the economy, ensures promotion and improvement of people’s quality of life and living standards across the country. However, it appears that the performance of Nigeria’s aviation industry is deteriorating. This is evidenced in frequent complaints by customers with respect to quality of services delivery Organization that involved customers in value creation increases their level of satisfaction but reverse is the case with Aviation Industry in Nigeria. The Industry failed in this aspect and failure to make available and necessary services inevitably lead to customer dissatisfaction. The dissatisfaction of customers was observed in frequent complaints by customers about poor service delivery, lack of provisions of adequate security and safety measures.  The use of obsolete equipments and poor infrastructure is another problem. The use of second handed transport Airplanes or Aircrafts have resulted in disaster or crashed and takes many lives (e.g. Sosoliso Airline crashed). Other Airlines are no longer in operations (e.g. Changangi, ADC, Okada Airlines etc).

Poor development of skills and manpower unavailability including high cost of booking tickets were also observed. Additionally, it was noted that the Industry exhibits poor maintenance culture which is evidenced in poor lighting on Run-ways; couple with internet service failures; poor Car Hiring services and its environment; poor pharmacy/First Aid facilities and services; poor convenience facilities and poor customers and employee relationships. All of these are problems causing customers dissatisfaction in Aviation industry in Nigeria. Similar problems were identified in the foreign environment by Payne et al. (2018) that lack of value creation affects organizational growth. However, in Aviation industry in Nigeria, it was observed that these problems stemmed from lack of involving customers in value creation practice.

The manifestations of customer dissatisfaction have affected the Aviation Industry in terms of growth, sales volume, profitability, customer relationship development and technological advancement. Hence, seen Aviation Industry as an important sector for economic viability in Nigeria, any encroachment on its performance will exert a strong negative result on the economy as well. This has necessitated the present study to examine the relationship between impact of value creation and satisfaction in Aviation Industry in Nigeria to provide solutions to this problem.

 

 

1.3       Aim and Objective of the Study 

The aim of this study was to examine the impact of value creation and satisfaction in aviation industry in Nigeria, while the study objectives are:

1. To examine the personal interaction, relate to customer loyalty in Aviation Industry in Nigeria.
2. TO find out how personal interaction relate to emotive commitment in Aviation Industry in Nigeria.
3. To examine the relationship between engagement platform and customer loyalty in Aviation Industry in Nigeria.
4. To find out the ways engagement platform relates to emotive commitment in Aviation Industry in Nigeria.

 

1.4                   Research Questions

The following research questions guided the study

1. How does personal interaction relate to customer loyalty in Aviation Industry in Nigeria?
2. How does personal interaction relate to emotive commitment in Aviation Industry in Nigeria?
3. What is the relationship between engagement platform and customer loyalty in Aviation Industry in Nigeria?
4. In what ways does engagement platform relates to emotive commitment in Aviation Industry in Nigeria?

 

1.5       Research Hypotheses

The following research hypotheses were formed to guide the study:

Ho1:	There is no significant relationship between personal interaction and customer loyalty in Aviation Industry in Nigeria.
Ho2:	There is no significant relationship between personal interaction and emotive commitment in Aviation Industry in Nigeria.
Ho3:	There is no significant relationship between engagement platform and customer loyalty in Aviation Industry in Nigeria.
Ho4:	There is no significant relationship between engagement platform and emotive commitment in Aviation Industry in Nigeria.