Chapter 9 – Relationship marketing

History of Relationship marketing
– During the industrial era, mass manufacturing or standardized goods gave birth to mass marketing and mass distribution. Since the 1970’s the exchange of value for example physical products for money has been considered the core phenomenon in marketing

– The mass marketing approach is now less effective and less profitable. More and more markets are mature and oversupplied. New customers are more and more difficult to find.

Why did Relationship marketing emerge in the first place?
– A low price may keep the customer for some time, but in the long run sales and marketing geared towards making the customer interested in more exchanges will not be very effective

– Keeping existing customers may have a positive profitability impact in situations where it is difficult and or expensive to find new customers to replace the profitable ones who have been lost

How is the present view ?
– Singular transactions are not as seen as most important in marketing; rather, relationships that are considered to facilitate and support exchanges or transactions are most important.
What is the problem of transaction marketing?
– Focus on acquiring new customers

– Value is created by the firm and embedded in their products which are then distributed to customers = Value in Exchange

– Therefore less (or no) attention to existing customers

What is relationship marketing about?
– Focus on taking care of existing customers.

– Value is created throughout the relationship by the customers, in interaction with the service provider

– Value emerges when customers use products/services = Value in Use

What is the focus of marketing according to the “relationship perspective?”
– the focus of marketing is value creation or value formation, rather than value distribution, and the facilitation and support of a value creating process rather than simply distributing “ready made” value to customers
Differences between relationship marketing and transaction marketing?
– While cooperation is the driving force in Relationship marketing, there is rather competition in “transaction marketing”, the customer is seen as someone the marketer does something to, instead of does something for.

– In transaction marketing situations customers, are exposed to a number of competing products and they are supposed to make independent choices from among the available options.

– In relationship marketing where interactions and cooperation exist at some level, the customer and the supplier are not totally isolated from each other. There is an interdependence between the two parties.

Definition of Relationship marketing
– Relationship marketing is interaction in networks of relationships
What is not relationship marketing?
1. Firm says it has a relationship with the customer but the customer does not think so

2. Customer is forced to buy from the firm because they have no other option

3. Customer and company do not genuinely interact

What are the steps of the loyalty ladder?
– When someone is interested they become a prospect. Task of a company is to push customers up the ladder

– A prospect becomes a customer when they purchase a product or service.

– Clients are those who come back to the business and make ongoing purchases

– Supporter means that you like the companys things but you are not really active in helping them marketing

– Advocate/fan, customers who are really loyal and tell others about the firm.

What are the properties of relationships?
Collaboration vs competition

Power Symmetry/asymmetry = Power in a relationship is only rarely symmetrical, meaning that each party has the same amount of power. To use one’s position to the extreme is detrimental (schädlich) to sustaining a relationship; a certain amount of goodwill and helpfulness is demanded from all parties.

Longevity

Commitment, dependency and importance = If a relationship is important, we are dependent on it and we must then commit ourselves to making it work.

True, risk and uncertainty = Often we only know partially what we are buying – we do it on trust. This ignorance creates uncertainty and therefore also a risk.

Frequency, regularity and intensity

Adaptation = In long term relationships the parties must adapt to one another. For example for Online banking you need a pc, and internet subscription.

Attraction = in the marriage metaphor of long term relationships, attraction between the parties is a dominant factor. For Firms it means that business and partners should convey an image through their brands.

Closeness and remoteness

Formality, informality and transparency

Routinization

Content = economic exchange (knowledge and information, or money and goods)

Personal and social properties = These are age, gender, profession, education, ethnicity, personality type, geographical and social mobility, as well as person traits such as lust for power, or an ability to create trust and confidence.

What does Customer Relationship Marketing consist of?
What does Customer Relationship Marketing consist of?