CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND TO THE STUDY

According to Oyedijo, Idris and Aliu (2012), governments world-wide have come to realize that Small BusinessEnterprises (SBEs) contribute enormously to the growth and development of a nation’s economy. Small Business Enterprises (SBE's) play a major role in the world economy, and their contribution to economic and employment growth is widely recognized. Small Business Enterprises (SBE's) do play a major role in the world economy, and they are recognized as one of the main contributors to economic, development and employment growth.

Small Business Enterprises in conjunction with the medium enterprises are known to employ over 60%of Nigeria’s workforce (World Bank, 1995 cited in Adelaja, 2004).

According to Ojo (2004 as cited in Oyedijo, 2012), in the case of Nigeria, we have witnessed an upsurge in Small Business Enterprise developmentefforts by successive governments due to multifarious reasons such as, the failure of past industrial policies hitherto anchored on large and capital intensiveindustries, the discovery that vibrant small business enterprises and medium enterprises cancontribute to achieving many of the objectives of Nigeria’s development plans, an increase in emphasis now placed on self-reliance as an approach to development, a world-wide acknowledgement of the successes recorded in economies such asMalaysia, Indonesia and India where small and medium enterprises development havebeen used to accelerate industrial transformation and the significance of small and medium enterprises in the Poverty Eradication Programme(PEP) of Nigeria’s President Olusegun Obasanjo regime during the period 1999 to 2007and even beyond.

Small scale business constitutes the real fabric of a nation’s economic development. Globalization has madebusiness system to have undergone a number of changes in recent years. These changes are accompanied bygrowth both in size and magnitude. To cope with these changes, modern marketing techniques are used incontemporary business environment. One of such techniques is relationship marketing. Relationship Marketing is a marketing strategy whose objective is to establish and maintain a profitable, long-term relationship with a customer, which goes beyond the initial contact (Dauda et al, 2010).

Relationship marketing is a form of marketing that evolved from direct response marketing; it places emphasis on building longer-term relationships with customers rather than on individual transactions. Relationship marketing involves an understanding of customers' needs and wants through their lifecycle and providing a range of products or services accordingly (Adewunmi, 2007).

Ogunleye (2004) buttressed that due to the rise in the number of competitors as well as the buying options in front of consumers, relationship marketing has been on the rise. Relationship marketing involves making strong and deep relationship with the consumers (whether they be individuals or organizations), such that the consumer does not shift a brand and has a long term and satisfying relationship with the brand.

Relationship marketing need not be used only with your end customers. Your stakeholders are equally important. That is why one of the key goals of marketing activities today is to build strong relationships with customers and stakeholders. Thus in all, the various entities involved in relationship marketing are

1.    Customers

2.    Employees

3.    Channel partners (Distributors, suppliers etc)

4.    Financial partners (Shareholders, investors etc)

A firm needs to build a strong relationship with all these entities to be in the front. Imagine having a high defection rate, or having a high attrition in the organization. Defection rate is the rate of a customer leaving its brands, whereas attrition rate is the rate at which an employee leaves a company which has hired him. You do not want a high defection or attrition rate. And hence the use of relationship marketing (Oyedijo, et al., 2012)

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