Ch. 11: Relationship Marketing & Customer Relationship Management (CRM)

transaction-based marketing
buyer & seller exchanges characterized by limited communication and little or no ongoing relationship btw the parties
relationship marketing
development, growth, & maintenance of long-term, cost-effective relationships w/ individual customers, suppliers, employees, & other partners for mutual benefit
– views customers as equal partners in transactions
– encourages long-term relationships, repeat purchases, & multiple brand purchases from the firm
– emphasizes retaining customers over making a sale
– ranks customer service as a high priority
– fosters customer commitment w/ the firm
– bases customer interactions on cooperation & trust
***4 ways that firms build long-term relationships
***1. Gather info about their customers
2. Analyze the data & use it to modify the marketing mix
3. Monitor interactions w/ customers
4. Use customers’ preferences & knowledge
external customers
people or organizations that buy or use a firm’s goods or services
internal customers
employees or departments within the organization whose success depends on the work of other employees or departments
3 levels of relationship marketing
1. focus on price (financial)
2. social interactions (social)
3. interdependent partnership (structural)
1st level of relationship marketing: focus on price
– most superficial level, least likely to lead to long-term relationships
– marketers rely on pricing to motivate customers
– competitors can easily duplicate pricing benefits
2nd level of relationship marketing: social interactions
– customer service & communication are key factors
– ex: a wine shop holding a wine-tasting reception
3rd level of relationship marketing: interdependent partnerships
– relationship transformed into structural changes that ensure partnership & interdependence btw buyer & seller
customer churn
customer turnover
frequency marketing
frequent-buyer or frequent-user marketing programs that reward customers
affinity marketing
solicits responses from individuals who share common interests & activities
customer relationship management (CRM)
– combination of strategies & tools that drive customer relationship programs
– leverages technology to manage customer relationships
– integrates all stakeholders into a company’s product design & development
benefits of CRM
– software systems can make sense of huge amounts of data
– simplifies complex business processes
– CRM can be used at 2 different levels: on-demand & on-premises
problems with CRM
– requires companywide commitment & knowledge to use the CRM system
– failure to effectively reorganize firm’s people & processes to take advantage of benefits a CRM system offers
customer win-back
process of rejuvenating lost relationships with customers
business-to-business marketing
organizational sales & purchases of goods & services to support production of other products
partnership
affiliation of 2 or more companies that help each other achieve common goals
types of partnerships
1. buyer partnership
2. seller partnership
3. internal partnership
4. lateral partnership
buyer partnership
firm purchases goods & services from one or more providers
seller partnership
long-term exchanges of goods & services in return for cash or other consideration
internal partnership
relationship involving customers within an organization
lateral partnership
strategic relationship that extends to external entities but involves no direct buyer-seller interactions
cobranding
cooperative arrangement in which 2 or more businesses team up to closely link their names on a single product
comarketing
cooperative arrangement in which 2 businesses jointly market each other’s products
national account selling
promotional effort in which a dedicated sales team is assigned to a firm’s major customers
supply chain
sequence of suppliers that contribute to the creation & delivery of a product
strategic alliance
partnership formed to create a competitive advantage
– improve supply chain relationships & enhance operating flexibility