Relationship Marketing- a paradigm of 21st century


By

Sumanta Dutta
Faculty Member
ICFAI National College
Garia, Kolkata
 


"Marketing disciplines in and of themselves are not relationships marketing only when orchestrated in alignment with a company's strategic objectives do they represent true relationship marketing."-Jim Ryan, President and CEO, CARLSON MARKETING GROUP

Knowing the customer requirements and to appreciate customer needs, particularly individual customer needs and building through tangible access will help the organization to leverage the power of loyalty program in creating successful relationship marketing.

In todays marketing environment where sustainability of the consumer life time value with a particular organization may not have any validated assurance. In such a scenario the most important tool available with the firms is to make the customers happy. Such concepts gives birth to "relationship marketing".

What it is?

Relationship marketing is the much-discussed issue in the marketing literature. Supplying the product based on the market based demand –supply parity is no longer adequate in the era of mass customization. It is the time to honour our customer by finding out their need and building mutually satisfying relation with them

Wikipedia defines Relationship marketing, as 'it is that form of marketing…in which emphasis is placed on building longer term relationships with customers rather than on individual transactions'

Berry (1983) defined 'it is the process of attracting maintaining and in multi service organizations, enhancing customer relationships'

The underlying concept is that is to keep the loyal customer retained within the company and to honor their long-term perference. It can be said that defensive marketing is easier than offensive marketing, defensive marketing attempts to reduce customer turnover and increase customer loyalty. (Fornell and Wernerfet, 1987).

Shani and Chalsani (1992) viewed relationship marketing as 'an integrated effort to identify, maintain and build up a network with individual customers and to continuously strengthen the network for mutual benefits of both the sides, through interactive, individualized and value added contracts over a long period of time'

To avoid the misconception that ' customer care in our country begins—and ends—with providing a toll free number' [Vipin V Nair—the hindu business line—http://www.the hindu business line.com/ew/2005/09.05'/stories]. It is necessary to shift marketing from a "transaction—orientation" to 'relationship orientation'. Peppers, Roger and Dart (one to one relationship marketing, a corporate strategy for CRM, SAS Institute, 2001) suggest four steps for one to one marketing program to work.

1) Identifying customers
2) Differentiating among them
3) Interacting with them
4) Customizing the products or services to fit each individual customer needs.


Source: Relationship marketing creating shareholder value: Christopher, Payne, Ballantyne; (2002).

 

Transactional marketing

Relationship marketing

Time

Short term focus

Long term focus

Price sensitivity

Customers are more sensitive to price

Customers tends to be less sensitive to price

Role of marketing function

Appropriate marketing mix programme

Interactive marketing

Measuring of customer satisfaction

Monitoring market share

Managing the customer

Customer related service

Little emphasis on customer related service

Strong emphasis on customer related service

Quality dimension

Quality is the sole responsibility of production

Quality  is concern for every one


Source: Gronroos, 1994
              Dr. N K Sehgal, 2007.

Genesis of Relationship Marketing:

 Year

Evolution of marketing to arriving at relationship marketing

1960's

Direct mail becomes an increasingly part of marketing mix. Many new direct mail association were born to provide mail order and direct mail to customers,

1970's

Direct response advertising is used in order to create sales leads. It used direct mail, tele- marketing and one to one marketing techniques for better interaction.

Late1970's

Direct marketing was done in order to blend the above two transactional techniques.

Early 1980's

Database marketing-at this phase marketers began to use computer technology for information gathering and systematic processing of such data for making the activity directed to satisfy customers.

Late 1980's

One to one marketing-Marketers began to use more affordable technology to communicate with customers' individually.

Early 1990's

Loyalty Marketing-here marketers realized that by keeping the faith or trust they could retain they're existing customers and extend their life as a customer.

Late 1990's

Relationship Marketing- it help marketer to recognized that a person was a customer, they were not necessarily loyal. It shows a transitory relationship among them.


However today relationship marketing gets a wide makeover to take "Holistic marketing" view (Kotler and Keller, 2006) to achieve customer attraction as well as retention by a mutual exchange and fulfillment of promises. (Gringos, 1990)

Why relationship marketing?

1) Emphasis on relationship rather than a transactional approach to marketing.

2) Projecting a positive image of the organization among the consumers.

3) Extend the principles of relationship marketing in order to enter into diverse market domain.

4) Build goodwill in the market.

5) Improve customer satisfaction.

6) Enhance brand equity through customer retention and loyalty.

7) Maintain parity between internal market within the organization as well as with external relationship variables like customers, suppliers, referral sources etc.

8) Create a co-operative and collaborative activities that aimed at enhance mutual economic value of both marketer and customer at reduced cost. (Parvatiyar, 1996 )

9) Positive word of mouth (N.K.Sehgal, 2007)

Scenario in India:

There is orthodox philosophy to retain our business objectives based on transactional marketing. Marketer today rapidly replaced the old system by customer oriented relationship marketing. Major Indian companies like HLL, Planet M, Tata Indicom, and HP India are some of them. Such one to one communication cost much more favorable than any other methods. Tal Aams, Chief strategy Officer, RMG Connect (Worldwide) rightly said " to acquire customers and generate loyalty depending upon the brand communication one seeks"
 


Sumanta Dutta
Faculty Member
ICFAI National College
Garia, Kolkata
 

Source: E-mail April 14, 2007

       

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