1.2 Definition of Relationship Marketing 7
ring of time and place boundaries. For example, Procter & Gamble has assigned twenty
of its employees to live and work at Wal-Mart’s headquarters to improve the speed of delivery and reduce the cost of supplying P&G goods to Wal-Mart’s branch outlets (Kotler,
1994). It is therefore hard to distinguish the elements as well as the time of occurrence of
exchange. In RM, organisational boundaries are hard to distinguish as companies are
more likely to be involved in shared relationship with their stakeholders. Some of these
activities relate to joint planning, co-production, co-marketing, co-branding, co-creation,
co-invention etc. where the parties in the relationship bring their resources together for
creating a greater market value.
In summary, we observe that a relational orientation to marketing existed until the early
years of industrial development. It was only when mass production led to an oversupply
of goods that marketers became transaction oriented. However, this transaction orientation in marketing is giving way to the return of relationship orientation. This re-emergence of RM has the potential for a new ‘General Theory of Marketing’ (Sheth, Gardener
and Garrett, 1988), as its fundamental axioms better explain marketing practice.
1.2 Definition of Relationship Marketing
Although a clearer picture of RM is becoming evident in the framework of the above
mentioned evolution of the concept we would like to determine, more specifically, what
is meant by the term.
Despite considerable academic research and management interest, RM may still be regarded more as an ‘umbrella philosophy’ with several relational variations rather than
as a wholly unified concept with strongly developed objectives. There are numerous
published definitions on the concept and further other terms have been frequently used
either as substitutes for RM, or to describe similar concepts. These include direct marketing, customer relationship management, micromarketing, one-to-one marketing, loyalty marketing and interactive marketing, to name but a few. In general, however, the
major characteristic of these techniques are more transactional than relational in nature
(Egan, 2008).
As stated above RM is not an independent philosophy but draws on conventional marketing principles (Gordon, 1998). This view implies that the basic focus upon customer
needs still applies but that it is the way marketing is practiced that requires change. As
RM is a descendant of traditional marketing a good starting point in developing a definition is to look at how marketing has traditionally been perceived. This view might be
summed up using the Chartered Institute of Marketing’s definition of marketing:
Marketing can be defined as the management process of identifying, anticipating and
satisfying customer requirements profitably (CIM, 2005).
This definition of traditional marketing and others of similar nature emphasize above
all the functional and process nature of traditional marketing and make no explicit recognition of the long-term value of the customer.
Berry was among the first to introduce the term ‘relationship marketing’ as a modern
concept in marketing and suggested it to be defined as attracting, maintaining and enhancing consumer relationships (Berry, 1983). While recognizing that customer acquisition was, and would still remain, part of marketer’s responsibilities this viewpoint
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1. Fundamentals of Relationship Marketing8
emphasized that a relationship view of marketing implied that maintenance and development were of equal or perhaps even greater importance to the company in the long
run than customer acquisition. Due to the fact that customer retention is much more
important than attracting new customers, companies pursuing RM principles design
strategies to develop close and lifelong relationships with the most beneficial customers.
By differentiating between customer types the RM concept further suggests, that not all
customers or potential customers should be treated in the same way. RM, in contrast,
saw the need to communicate in different ways dependent on customer’s status and
value.
This view of marketing also implied that suppliers were not alone in creating or benefiting from the value created by the corporation. Rather RM can be seen as an ongoing process of identifying and creating new value with individual consumers and then
sharing the value benefits with them over the lifetime of the association (Gordon, 1988).
This is due the fact that a higher customer value will raise customer satisfaction; thereby
customer loyalty will be instilling, which, in turn, creates higher profit due to increased
volume resulting from positive word-of-mouth and repeat purchases.
Thus the overall objective of RM is to facilitate and maintain long-term customer relationships, which leads to changed focal points and modifications of the marketing management process. The familiar superior objectives of all strategies are enduring unique
relationships with customers, which cannot be imitated by competitors and therefore
provide sustainable competitive advantages.
Most of the concepts, ideas and developments discussed briefly above are present in
the following refined definition which describes the objectives of RM as to identify and
establish, maintain and enhance and, when necessary, terminate relationships with customers and other stakeholders, at a profit so that the objectives of all parties involved are
met; and this is done by mutual exchange and fulfilment of promises (Grönroos, 1994).
The growing interest in RM suggests a shift in the nature of marketplace transactions
from discrete to relational exchanges, from exchanges between parties with no past history and future prospects to interactions between parties with a history and plans for
upcoming interaction.
As Doyle noted, practitioners and marketers often made the mistake of seeing marketing as a functional discipline rather than an integrated business process (Doyle, 1995).
In the following chapters and throughout the book relationship management ideas, concepts and perceptions will be explained and we will establish the importance of RM as
an integrated management approach.
1.3 Relationship Economics
It is almost impossible to discuss RM without discussion the concept of loyalty as it is
frequently seen as an expected outcome of RM and the phrase ‘loyalty marketing’ is
often used interchangeably with RM (Palmatier et al., 2006).
The frequent assumption is that, from whatever sources the loyalty is derived, it translates into an unspecified number of repeat purchases from the same supplier over a
specific period. A comprehensive definition of loyalty in this context is: ‘The biased (i.e.
non-random) behavioural (i.e. re-visit), expressed over time, by some decision-making
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References
Zusammenfassung
Marketing – A Relationship Perspective
Moderne Grundlange zum Marketing
Das Lehrbuch behandelt eines der wichtigsten und aktuellsten Themenfelder des modernen Marketings. Der Ansatz verbindet dabei den klassischen Ansatz der strategischen Marketingplanung und seiner Instrumente mit dem neuen Ansatz des Relationship Marketing. Der ganzheitliche Ansatz des Buches umfasst dabei die aktuellen Marketing-Grundlagen, Praxisbeispiele sowie anwendungsorientierte Fallstudien und eignet sich somit ideal sowohl für Manager und Entscheidungsträger im Marketing-Bereich, Studenten in Bachelor- und Materstudiengängen sowie Dozenten und Trainer.