Customer Information Management and Firm Competitive Advantage: The Application of Partial Least Square

Abstract

ABSTRACT This study investigated the relationship between database marketing, or simply customer information management, and competitive advantage of the firms in tourism industry in Tanzania. The study used monthly data from July 1, 2016 to April 30, 2018. Customer information management initiatives investigated in this study were database marketing infrastructure, database marketing human resources capability, and the actual application of the techniques to achieve competitive advantage. Data for the study was collected in the cities of Arusha and Kilimanjaro as the two cities are regarded as main tourism destinations in the northern circuit. Data were collected from 215 tour operators and used Structural Equation Modeling (SEM) to analyze the collected data. It was found out that, there is a link between database marketing application and firm's competitive advantage by looking at the basic model fit and the indicator variables such as AGFI (Adjusted Goodness of Fit Index), GFI (Goodness of Fit Index), CFI (Comparative Fitness Index), RMSEA (Root Mean Square Error of Approximation) and CMIN/DF were all passed the criteria for best fit. This is to say firms that apply database marketing techniques stand a better chance to achieve competitive advantage than those firms which invest largely on demand generation through advertising and sales promotion.