Ethics and Customer Loyalty: Some Insights into Online Retailing

Services

Presented at 4th Biennial International Business

Banking & Finance Conference

June 23, 2011

Hilton Trinidad & Conference Centre

Trinidad & Tobago

Meena Rambocas & Professor Surendra Arjoon

Department of Management Studies, U.W.I. St. Augustine

INTRODUCTION

• The Internet : A viable retail channel

• The Internet: An environment for unethical behaviour

• Ethical Retailing

AN EXAMPLE OF AN ETHICAL DILEMMA

ETHICAL ISSUES

• Privacy • Security• Deception• Reliability • Trust• Customer exploitation

CUSTOMER LOYALTY

• What is Customer Loyalty

• Customer Loyalty – A strategic tool

• Customer Loyalty- association with quality, customer satisfaction, trust, brand affect and brand value

RESEARCH QUESTIONS

(1) What factors contribute to Customers Perception

of Online Retailers Ethics?

(2) Does Customers Perception of Online Retailers

Ethics have any effect on Loyalty?

RESEARCH METHODOLOGY

• Sampling Technique: Convenience sample

• Sample Size: 200

• Sample Selection Criterion: Purchase at least 1

item online over the last 3 months

• Survey Instrument: Self-Administered

Questionnaire

• Survey Scale:– The Ethics scale : CPEOR scale

– The Loyalty scale: SERVLOYAL scale

DATA ANALYSIS: DESCRIPTION OF SAMPLE

Gender Sample

Male 38 %

Female 62 %

Age SampleUnder 20 14

20-29 6630- 39 11

40 and Over 9

Education level %

Undergradate 61

Post Graduate 34

Post Graduate PhD 5

DATA ANALYSIS: EXPLORATORY FACTOR ANALYSIS

• Reason for EFA

• Items retained for further analysis met the following criteria:

– All inter-correlation coefficients were statistically significant at a 95% level of testing

– Items did not load on more than two factors.

ROTATED FACTOR MATRIX

11

Security & Reliability

Product Availability

Misleading Tactics

Advantage of customer

Trust

Ethics Customer Loyalty

.71

.17

.32

.71

.73

.59

Re-Specification of the CPEOR Model

.94

.74

.61 .67

.35

.53

.51

.87

.55

Customer perception of Online Retailers Ethics

Model

Chi Sq = 48.395DF = 40GFI = .958AGFI = .930NFI = .940

.82

Privacy Policy

Security Features

DISCUSSION AND CONCLUSIONS

• Positive relationship between CPEOR ethics and Customer Loyalty

• T&T’s CPEOR ethics dependent on :

– Security and Reliability– Trust

13

DISCUSSION AND CONCLUSIONS (Con’t)

Security and Reliability

• Privacy Policy

•Security Features

• Product Availability

Trust

•Misleading Claims

•Perceptions of being exploited

SIGNIFICANCE OF STUDY

• Provide insights for online retailers targeting Caribbean Customers.

• Identify key indicators Caribbean Customers consider essential for online sites

• Provide an understanding of indicators that contribute to Customers Perception of Online Retailers Ethical Practices

LIMITATIONS & OPPORTUNITIES FOR FUTURE RESEARCH

• Sampling technique

• CPEOR model and key performance

• Can ethical perceptions vary by demographical and geographical consumer characteristics?

THANK YOU