An empirical test of the service-profit chain at the bottom of the pyramid

Abstract

The research project investigated the applicability of the Service-Profit Chain model in the context where there are bottom of the pyramid customers who service bottom of the pyramid consumers in a middle income country. All businesses are concerned about creating value for themselves. In the past a lot of initiatives have focused on internal restructuring measures as well driving one of the most valuable assets they have their brands. However, there is now a growing realisation by businesses driven by a number of factors that a the management of customer relations is one of the most effective tools to manage and increase profitability. In view of the increasing emphasis that is being placed on the role of customers in creating value for businesses the service-profit chain is an appropriate response to how businesses can go about managing customer profitability. The research project was done using a quantitative research method with customers of one of the leading softdrinks beverage companies in the country. Prior to this a thorough literature review was conducted which showed the relevance of the service-profit chain model in managing customer profitability. The main finding from the research is that the service-profit chain does not apply to the context described above and in the study. This is mainly because there was no relationship found between customer loyalty and customer profitability. However, the last chapter proposes a model to help with establishing this relationship.