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Social Marketing Quarterly

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Role of Relationship Management and Value Co-Creation in Social Marketing


Darshan Desai
Social Marketing Quarterly 2009 15: 112
DOI: 10.1080/15245000903304619

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Role of Relationship
Management and Value
Co-Creation in Social
Marketing
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BY DARSHAN DESAI

ABSTRACT

This article addresses deep-seated problems in applying traditional relationship


marketing and customer relationship management concepts in the context of social
marketing. Further, it points out the recent changes in interactive technologies,
culture, lifestyle, and the marketing logic and discusses the ‘‘makeover’’ of the con-
cept and practices of the customer relationship management. It describes how the
revised logic of marketing is more accommodative of social marketing and how the
new avatar of customer relationship management 2.0 is more relevant for social
marketers. It explains how the concepts and practices of customer relationship
management 2.0, which are rooted in service logic, can be applied in the context
of social marketing to co-create value. It explores the role of social marketers
and their customers as active relationship partners and describes their interactions
as a locus of value co-creations. Through these interactions, customers engage with
social marketers to co-create different aspects of the market offerings, and social
marketers engage in customers’ value-generating processes to co-create better
value-in-use. The key building blocks described in the article enable the value
co-creations. The article concludes with implications in terms of how social
marketers can use these insights to make the world a better place.

Introduction
In the business management literature, scholars have shifted their emphasis away
from isolated transactions to focus on longer term relationships. This paradigm
shift (Gronroos, 1994) in business management literature has largely been
ignored by the social marketers, which is a surprising oversight (Hastings,

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THEORY AND REVIEW

2003; Wood, 2008). Recently, in the context of social marketing, the scholars
have highlighted the importance of relational paradigms (Hastings; Lee, 2007).
The relational paradigms seem to have a lot to offer to social marketing; however,
the path of applying concepts of the relational paradigm in the social marketing
contexts has not been smooth. Social marketers have faced a few obstacles in
applying relationship marketing and customer relationship management concepts
and could not accept these concepts wholeheartedly.
In response to changing culture, lifestyle, and technology, there has been a
change in the concepts of marketing and customer relationship management.
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In the marketing literature, goods-dominant logic of past is being replaced by


service-dominant logic and service logic (Gronroos, 2008; Vargo & Lusch, 2008),
and the traditional concept of customer relationship management is being replaced
by the concept of customer relationship management 2.0 (Greenberg, 2008). New
service-dominant logic of marketing is more accommodative and potentially foun-
dational to social marketing (Vargo & Lusch, 2008). Changed concepts of customer
relationship management are also more relevant to social marketing. A few obstacles
in the path of applying relational paradigms in social marketing contexts are
melting. Now, social marketers have ample opportunities for being active relation-
ship partners to co-create value. This article discusses how recent changes make the
customer relationship management more applicable for social marketers and how
social marketers act as active relationship partners and co-create value.

Customer Relationship Management for Social Marketing: Why Not


In the relationship marketing literature, scholars shift focus from a single
exchange transaction to an exchange relationship. Different types of exchange
relationships vary in their relational complexity. Relational complexity refers to
number of people involved in an exchange; to their interdependence, intensity,
and nature of interaction; and to the potential temporal contingencies in the
relationship (Mollar & Halinen, 2000). Relational complexity depends on its
context. Earlier, for a marketer, it was difficult to foster a high level of mutual
understanding with a large number of customers in the market-like situations.
Hence, Mollar and Halinen (p. 43) noted ‘‘complex exchange relationship gener-
ally takes place in network context, whereas less complex relationships are char-
acterized by a market like context.’’ Based on the assumption of low relational
complexity in market-like situations, while discussing customer relationship man-
agement concepts, scholars (AMA, 2004; Boulding, Staelin, Ehret, & Johnson,
2005) emphasized management of a firm’s customer base. The major challenge
was to treat the large numbers of customers individually but still profitably.

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In this view of customer relationship management, firms are seen as active


value creators who sustain relationships with customers for profit maximization,
while customers seem passive. This view has been rooted in the goods logic, in
which goods are embedded with value, produced away from the market, and sold
through marketing decisions that maximize a firm’s profit (Gronroos, 2008;
Vargo & Lusch, 2008). Instead of maximizing the profit from each marketing
transaction through customer relationship management, firms have focused on
maximizing profits over the lifetime of customer relationships. However, the
relational complexity has assumed to be low, and the focus has been on a firm’s
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profits. This goods logic is not accommodative to marketing of intangibles and


social marketing (Vargo & Lusch, 2008).
The assumptions of low relational complexity and passive roles of customers do
not suit many of the social marketing contexts. The exchange relationships found in
the social marketing contexts (Bagozzi, 1975) are comparatively more complex even
in market-like situations and involve more parties (Wood, 2008). With the empha-
sis on customers’ voluntary behavior change, social marketers’ value creation could
not be disconnected from the market and customers, and one could neither assume
customers to be passive nor the lower levels of relational complexity.
Another fundamental difference between social marketing and commercial
marketing is related to the flow of benefit: commercial marketing has the bottom
line requirement of direct benefit to the organization, and social marketing uti-
lizes indirect benefit to the organization through direct benefit to the target adop-
ter and society (Dann, 2008). In the customer relationship management, firms
have given importance to customer satisfaction and loyalty as tools for achieving
increased profitability that is direct benefit for firms. Social marketers do not seek
all those direct benefits, which have been highlighted in the customer relationship
management promises; they seek indirect benefits. These benefits are indirect as
the funders and the customers are different entities, and this fact reduces the
importance given to customer satisfaction and relationships (Hastings, 2003).
Because of these problems, social marketers could not be very enthusiastic about
getting close to the customer relationship management.

Customer Relationship Management: Is It Getting Closer to Social


Marketing Now?
Recent changes in lifestyle, culture, and technology induce changes in the
concepts and practices of marketing and customer relationship management. In
the marketing literature, the prevailing view that value is embedded in the market
offering (goods or services) has been challenged by an alternative view that value

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THEORY AND REVIEW

for customers emerges in the customers’ sphere in their value-generating pro-


cesses as value-in-use (Vargo & Lusch, 2004). Hence, in service-dominant logic,
customers have been viewed as co-creators of value (Vargo & Lusch, 2004, 2008).
Gronroos (2008) further argues that customers use the market offerings and add
other resources and skills held by them, and create value-in-use. And as value-in-
use is the foundational value creation concept, customers are the value creators
(not only co-creators); firms can get involved in the customers’ value-generating
processes through interactive contacts and can be ‘‘co-creators’’ of value-in-use.
Now, with the enhanced focus on the service logic (Gronroos, 2008), there are
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changes in the concepts and practices of customer relationship management,


which made them more compatible with social marketing.
Due to wide spread acceptance of interactive technologies, the assumption of
low relational complexity in the market-like contexts is no longer valid in
commercial marketing. In today’s markets, the exchange relationships are more
complex and enabled by networks. Firms’ market offerings include customer-firm
and=or customer-customer interactions, in which ‘‘customer participate as co-
producer’’ to co-create customized offerings (Gronroos, 2008, p. 307), and custo-
mers play an active role in managing relationships. Customers are no longer
objects for relationships, and they are now the subjects, who voluntarily collabor-
ate with firms, build relations, and participate in value co-creations. The differ-
ence between market-like context and network-like context is blurring. In
response to these changes, the concept and practices of customer relationship
management are upgraded to include customer relationship management 2.0 or
social customer relationship management (Greenberg, 2008). This new avatar
of customer relationship management in commercial marketing, which is rooted
in service logic and focuses on co-creation of value-in-use, is more relevant,
approachable, and accessible for social marketers.
Through customer relationship management, firms have focused on cus-
tomer-firm relationship, specifically on ‘‘dual value creation’’ for firms and custo-
mers (Boulding et al., 2005, p. 157); firms have created the value and managed
the relationships, while customers have been the objects for relationships. Now,
through customer relationship management 2.0, firms strategically utilize web
2.0 tools like blogs, wikis, social networks, and communities to focus on cus-
tomer-firm or customer-customer interactions and value co-creations. Through
these interactive contacts, customers collaborate with firms; they are the subjects,
who build the relations (Greenberg, 2008); firms focus on all the internal and
external relationships and networks among the firms, partners, and customers.
Firms provide tools and services to all the parties and enable them to sculpt their

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personalized experiences; firms also engage in value-generating processes of all


the parties involved to co-create better value-in-use. Now, firms integrate
processes ‘‘across many areas of the firm and across the network of firms,’’ and in
the end create value for customers (Boulding et al., p. 157) but the customers
and the associated social networks are also the crucial part of this value chain
(Greenberg, 2008), who co-create market offerings. Hence, customer relationship
management 2.0 facilitates firms and customers to co-create value; application of
this concept has a lot of potential to contribute to the social marketing success.
However, to apply this concept, it is crucial to build a base by understanding
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the role of social marketers as active relationship partners in value co-creations.

Social Marketer as Active Relationship Partner


As active relationship partners, social marketers engage consumers to co-create
the offerings (products or services, interactions, relationships and networks, pro-
motional messages, places, and price); social marketers also get involved with cus-
tomers, when they consume the offerings, add other resources and skills held by
them to co-create the experience, change the behaviors, and generate the benefits.
Interactive technology increases importance of the social marketers’ role as active
relationship partners in value co-creations (Lefebvre, 2007). For being active
relationship partners in value co-creations, social marketers’ relationships must
meet two important criteria. These relationships need to be based on reciprocity
and interdependence; and trust and commitment.

Reciprocity and interdependence


When a relationship truly exists, interdependence between partners must be evi-
dent; that is, the partners must collectively define and redefine the relationship
(Hinde, 1979). In the social marketing context, reciprocity and interdependence
among relationship partners is not as simple and evident as it is in buyer-seller rela-
tionships in commercial marketing. Social marketers’ success generally depends on
voluntary changes in the behaviors of the target audience (Andreasen, 1995). For a
social marketer, building relationships with the target audience members is
important for influencing their behaviors, which are often high involvement,
multifaceted, and based on mutual trust and respect (Hastings, 2003). However,
it is more crucial and complex to answer why a customer should build relationship
with a social marketer and change his or her behaviors. The benefits offered by the
social marketer have not necessarily been understood, or in some cases do not
directly apply to the target audience so much as to society. Hence in the social

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marketing context, reciprocity may be more complex and interdependence may not
be evident.
Customers’ perceptions of benefits that they will receive through a behavioral
change (perceived value-in-use) are the key motivations for changing behaviors.
In absence of interactive contacts, if a social marketer assumes the perceived
value-in-use, then consumers may be too passive, and the reciprocity and interde-
pendence may not be evident. Today, social marketers’ customers are no longer a
target audience, they directly communicate about their perceptions of the benefits
and co-create better offerings (Lefebvre, 2007). Due to empowerment of the cus-
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tomers, they gain abilities to be active relationship partners and participate in co-
creations. However, these customers will not participate, if a social marketer does
not reciprocate. Instead of hammering the offerings on consumers, social market-
ers also take active interests in knowing customers’ perceived benefits and get
engaged with customers to co-create the expected benefits.
New media facilitate social marketers and customers to co-create value; how-
ever, it is not essential. Without the use of new media, many social marketers are
reciprocating partners and empower, encourage, and support people to make
them reciprocating partners. For being an active relationship partner, the most
important task for a social marketer is to nourish reciprocity in the relationships.

Trust and commitment


Reciprocity expectations may be created by the perceptions of trustworthiness
(Tanis & Postmes, 2005). The need for trust arises in the relationship that is
characterized by a high degree of risk and uncertainty (Mayer, Davis, &
Schoorman, 1995). Trust is particularly important in social marketing, where risk
and uncertainty are increased to the extent that the client is unable to examine the
implications of the alternative behavior until its adoption. Individuals are asked to
engage in certain desirable behaviors; in return, they receive benefits of the desir-
able behaviors. These benefits may be fairly intangible, especially with respect to
the more immediate benefits they might receive for engaging in undesirable beha-
viors (Keller, 1998). In such situations, consumers’ trust in the social marketer is
important in forming their perception about cost of undesirable behaviors and
benefits of desirable behaviors. For example, when someone is trying to give up
smoking, how much better to interact with him or her regularly through a trusted
helpline of experts, rather than fire off ad hoc messages (Hastings, 2003).
When social marketers’ consumers are active relationship partners, their
trusted relationships in their social networks are also important. Consumers’
trusted relationships enhance their abilities and confidence to actively participate

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in the behavioral change and are also important for developing social capital
(Nahapiet & Ghoshal, 1998): collective value of all social networks and the incli-
nation that arises from these networks to do things for each other. The social
capital facilitates mutually supportive relations and, therefore, is a valuable means
of achieving consumers’ active participation in socially desirable behaviors and
relationships. For example, a person’s decision to quit smoking is strongly affected
by whether other people in their social network quit–even people they do not
know. And, surprisingly, entire networks of smokers appear to quit virtually sim-
ultaneously (Christakis & Fowler, 2008). Therefore, many social marketers have
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co-created communities or social networks to support their consumers to quit


smoking.
Besides trust, researchers recognize commitment as a central ingredient of
establishing and maintaining long-term relationships (Tellefsen & Thomas,
2005). Commitment implies the importance of the relationship to the relation-
ship partners and their desire to maintain the relationship in the future (Wilson,
1995). Consumers are more likely to actively participate in value co-creation, if
their relationships with social marketers and within the related social networks
are important. For example, the decision to quit smoking appeared to be highly
influenced by whether someone close to them stopped (Christakis & Fowler,
2008). Despite reciprocity and trust, if the relationships are not important to
the consumers, it is difficult for social marketers to get actively involved in
customers’ consumptions and gain active participation of consumers in value
co-creation.

Value Co-Creation in Social Marketing


When consumers and social marketers are active relationship partners, the
consumer-social marketer interactions become locus of value co-creations.
Prahalad and Ramaswami (2004) describe four key building blocks of value co-
creations: dialogue, access, risk assessment, and transparency. When social
marketers experiment with different building blocks in different relationships
upstream and downstream, and combine the four building blocks of value
co-creations in different ways, they can create new and important capabilities.
Dialogue implies interactivity, engagement, and a propensity to act on both
sides (Prahalad & Ramaswami, 2004). Dialogue needs shared learning and com-
munication between two equal problem solvers. Dialogue encourages not just
knowledge sharing, but even more important, qualitatively new levels of under-
standing between social marketers and customers. However, for all social market-
ers, it is not feasible or advisable to engage in dialogues to reach their goals.

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The dialogues involved in co-creations focus on the issues of mutual interests of


customers and social marketers and requires a forum in which dialog can occur. In
absence of such forum or mutual interests, it will not be possible for social
marketers to engage in interactive dialogues.
Dialogues allow consumers to interject their views of value into social mar-
keters’ value creating systems. For example, through interactive dialogues, the
VERBTM Campaign engaged children aged 9–13 (tweens) to co-create value
and portrayed physical activity as a cool way to have fun with friends (Huhman,
2008). Tweens could find places to be active in their area and co-created the
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‘‘places,’’ created their own games with interactive game generator and co-created
the ‘‘products.’’ Tweens interacted with the campaign website, recorded their
physical activities in ‘‘MyVERB recorder,’’ earned rewards, and co-created the
‘‘price.’’ VERB Yellowball incorporated digital technology with a separate website
that encouraged tweens to play with 1 of the 500,000 Yellowballs distributed
throughout the United States; tweens passed the ball to another tween and then
bloged about how they had played with the ball and co-created promotion.
Dialogues during the consumption also allow social marketers to engage in
consumers’ value-generating processes. For example, a number of nongovernmen-
tal organizations (NGOs) in India get involved in customers’ value-generating
processes while promoting self-help groups. Self-help groups are village-based
financial intermediaries usually composed of 10–15 local women. Members of
such groups voluntarily come together to save regular small sums of money; they
mutually agree to contribute to a common fund to meet their emergency needs on
the basis of mutual help. The group members use collective wisdom and peer
pressure to ensure proper use of credit and timely repayment. NGOs do not just
assist changing behaviors in terms of formation of the self-help groups, but
through dialogues and conversations, they engage with these groups of women
to co-create their personalized value-in-use. NGOs support the groups by trans-
mitting a sense of purpose, helping them functioning smoothly, developing the
required capabilities, and facilitating them to obtain microcredit.
Access includes information and tools that enables behavioral change. Scho-
lars and social marketers have already recognized the importance of access in
social marketing and behavioral change (Kotler & Lee, 2008). With the focus
on access, social marketers distributed insecticide-treated mosquito nets and suc-
cessfully reduced childhood deaths from malaria in endemic countries (Nathan
et al., 2004). Due to poverty, many consumers in developing countries do not
have access to numbers of health products. To enhance the access and equity,
many social marketers in developing countries sell socially marketed health

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products at reasonably low costs or almost free. Many times such ownership
transfer of socially desirable products is important; however, Prahalad and
Ramaswami (2004) challenge the notion that ownership of the products is the
only way for consumers to access and experience value. By focusing on access
to value, as opposed to simply promoting ownership of products, social marketers
can broaden consumers’ view of opportunities and alternatives. With focus on
access, social marketers may enhance the consumers’ abilities to access and partici-
pate in co-creations and can also think of empowering the consumers in develop-
ing countries by helping them engage in business, become barefoot entrepreneurs,
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and earn a profit so that they can spend some of that profit on the health care and
health products (Lefebvre, 2008).
For better co-creation of value-in-use, consumers need and demand more
information about potential risks; but they may also bear more responsibility
for dealing with those risks (Prahalad & Ramaswami, 2004). Whenever social
marketers’ offerings have some probability of harm, an active dialogue on risks
and benefits involved in using the ‘‘socially desirable’’ market offerings can create
a new level of trust between consumers and social marketers. For example, recent
studies are divided on the benefits and risks of breast cancer screening through
mammography. A study of more than 90,000 Canadian women suggested that
women in their forties reap no real benefits from mammography, but they greatly
suffer from unnecessary treatments (Prahalad & Ramaswami). Such issues put a
premium on discussing the evidence concerning risks and benefits to consumers
to help them make informed risk-benefit trade-offs. Risk in the context of social
marketing not only refers to probability of harm due to social marketers’ offerings,
but it also refers to the probability of harm due to undesirable behavior.
To co-create better value-in-use, social marketers can provide tools, support
structure, and appropriate methodologies that help customers in understanding
the personal and societal risk associated with a range of behaviors and practices.
For example, Sustainable Table, a program of the nonprofit organization,
GRACE, provides tools and support structure to consumers for understanding
personal and societal risks associated with factory farming, sparks discussion in
communities about related issues, and offers potential solutions.
Social marketers’ role as a promotor of desirable behavior among the targer
audience arises from the information asymmetry between the consumer and the
social marketer. Here, social marketers assume that the target audiences have
undesirable behaviors and lack information and awareness about more socially
desirable behaviors. Hence, they try to change the voluntory behaviors of the tar-
get audiences. That asymmetry is rapidly disappearing. Hence, ‘‘if you will not tell

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THEORY AND REVIEW

the truth, someone else will.’’ As information becomes more accessible, creating
new levels of transparency becomes increasingly desirable. Transparency refers
to accessibility of the processes involved in decision-making, in addition to the
outcome and to information itself. Social marketers need to choose an appropirate
level of transparency to be honest and trustworthy peers and can not cheat.
For example, Taiwan Biobank project aimed to analyze the connection of the
genotype of Taiwanese people and certain diseases and sought to collect 200,000
blood samples from Taiwanese people in three counties. The project lacked an
appropriate level of transparency in the pilot phase; without informed consent,
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3,000 blood samples were taken during free health checks. In absence of required
transparency, people distrusted the project. In later phases, with transparent risks
communication, along with information disclosure and decision-making trans-
parency, it could be possible to rebuild the trust on mutual benefits, which was
important for co-creations (Niu, 2007).
For understanding value co-creation in the context of social marketing, along
with social marketer-consumer interactions, it is also important to focus on con-
sumer-consumer interactions, which have enormous potentials for value co-
creation. For example, a social marketer Douwe Egberts (DE) Foundation aims
at providing a tool to (small scale) farmers in the developing world that allows
them to gain insight in to their management of crops and produce. They also
can learn from comparing their performance with that of colleague farmers. This
kind of interaction among the farmers (customers for DE foundation) can help
them become entrepreneurs and to gain=keep market access.

Implications for Social Marketing


Scholars in social marketing (Hastings, 2003; Lee, 2007; Schwartz, 2007) discuss
the importance and implications of relationship marketing and customer relation-
ship management for social marketing. Wood (2008) takes a critical view of the
application of exchange and marketing mix concepts to social marketing
situations, and highlights the importance of understanding the implications of
growth in interactive and relationship marketing. Scholars find it surprising that,
despite the relevance, social marketers do not whole heartedly accept and adopt
practices of relationship marketing (Hastings, 2003). This article explores
deep-seated problems in applying traditional relationship marketing and cus-
tomer relationship management concepts in the context of social marketing. It
addresses the recent changes in the concepts and practices of marketing and cus-
tomer relationship management and explains how the service logic of marketing
and new avatar of customer relationship management is more relevant for social

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THEORY AND REVIEW

marketers. It provides important insights into how social marketers can leverage
new media technologies, find creative ways to deal with the obstacles in the path
of adopting relational paradigms, become active relationship partners, and co-cre-
ate value.
Despite the recognition of the importance of active borrowing from different
social science disciplines, social marketing has been highly influenced by market-
ing tools and techniques. Andreason (2003) notes that ‘‘the assumption that com-
mercial sector concepts and tools ought to migrate seamlessly to social marketing
is . . . just an assumption’’ (p. 299). Instead of relying solely on commercial
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marketing literature, this article draws on interpersonal relationship literature


to explore the criteria for being active relationship partners, who co-create value.
This discussion can help social marketers in overcoming barriers in the path of
becoming active relationship partners.
With the recent advancements of the field, which includes community-based
social marketing (Courtney, 2004; Monaghan et al., 2008) and growth of brand-
ing in social marketing (Harmatz, 2004; Long, Taubenbeim, Wayman, Temple,
& Ruoff, 2008), consumers’ active participation in the relationships has
improved). When social marketers and different types of upstream and down-
stream consumers become active relationship partners, their interactions can be
a locus of value co-creations that need to be built on critical building blocks of
value co-creations. Understanding the key building blocks of value co-creations
helps social marketers identify critical building blocks in different relationships.
With identification of critical building blocks, social marketers can determine
how interacting with different relationship partners fits with each partner’s mis-
sion and strategy, how to engage, and to co-create value. By understanding the
value co-creations, social change can be aimed at an appropriate phase in the pro-
cess, with more appropriate methods (Dann, 2008). When many social marketers
adopt social media tools and technologies, it is inevitable for them to gain insights
from concepts and ideologies of value co-creations. By understanding the
concepts and key building blocks of value co-creations, social marketers can access
the concept and practices of customer relationship managment 2.0 and use the
new media technologies to grasp the co-creation opportunities to make the world
a better place.

Conclusion
In the market-like contexts, the concepts of relationship marketing and customer
relationship management have been based on the assumption of low relational

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complexity and passive roles of customers. Due to high relational complexity of


the social marketing context, these concepts and practices of customer relation-
ship management have not been very widely accepted. With the recent changes,
when the assumption of low relational complexity is no longer valid in the
commercial markets, the concepts and practices of marketing and customer
relationships management are changing with a renewed focus on value co-
creations. In the marketing literature, the service logic is more accommodative
of social marketing, and customer relationship management 2.0, which facilitates
co-creations of value, is more relevant for social marketers. In applying the concepts
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and practices of the customer relationship management 2.0, social marketers and
their customers need to be active relationship partners; social marketers need to
nourish reciprocity, trust, and commitment in their relationships with different
kinds of customers. When social marketers and consumers are active relationship
partners, their interactions become a locus of value co-creations.
These value co-creations are implemented through four key building blocks:
dialogue, access, risk-benefit assessment, and transparency. Along with con-
sumer-social marketers interactions, consumer-consumer interactions are also
important for value co-creations and social change. This understanding about
consumers’ and social marketers’ active roles in relationships and value co-
creations builds a foundation for applying customer relationship management
2.0 and social media tools and technologies in the social marketing contexts.

About the Author


Darshan Desai, Ph.D., took her doctorate from the Institute of Management,
Nirma University, Ahmedabad, India, and M.B.A. from Gujarat University,
India. She has taught several undergraduate and graduate level courses in market-
ing, management, and management information systems. She used to work as a
project leader with a nongovernment organization in Gujarat, India and has
published a few research papers in international journals. Her current research
interests include social media, value co-creation, customer relationship manage-
ment, and change management.

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