“EXAMINATION OF A NEW PARADIGM”

WHAT IS RELATIONSHIP MARKETING?

Relationship Marketing is an integrated effort to identity,
maintain and build a network with individual customers and
to continuously strengthen the network for the benefit of
both the sides.
DEFINITIONS:
Relationship marketing is defined as the process of
attracting, maintaining and ,in multi-service organizations,
enhancing customer relationships. (BERRY,1983).

VAVRA(1992) defines it as a customer retention program

in which a variety of after marketing tactics are used for
customer bonding or staying in touch after the sale is
 Some factors that led to the rapid development of relationship marketing
are:-

SOPHISTICATED TECHNOLOGY like computers and

telecommunications that allow the producers to interact with the
customers.

TOTAL QUALITY MOVEMENT DRIVE among the companies has led to

the enhancement of relationship marketing.

WHAT IS THE DIFFERENCE BETWEEN

TRADITIONAL AND RELATIONSHIP MARKETING?
 THE MARKETING STRATEGY CONTINUUM-SOME
IMPLICATIONS
The Strategy continuum
Time perspective
Dominating Marketing Function
Price Elasticity
Dominating quality dimension
Measurement of customer
satisfaction
Customer Information system
Interdependency between
marketing, operations and
personnel
The role of Internal marketing
The product continuum
Transaction Marketing
Short term focus
Marketing Mix
Customers tends to be more
sensitive to price
Quality of output( technical
quality dimension is dominant)
Monitoring market
share(Indirect approach)
Adhoc customer satisfaction
surveys
Interface of no or limited
strategic importance
Internal marktg of no or limited
importance to success
Consumer packaged Goods  Consumer durables
industrial Goods Services
Relationship Marketing
Long term focus
Interactive marketing Supported
by marketing mix activities)
Less sensitive
Quality of
interactions(Functional quality
dimension )grows in importance
and may become dominant.
Managing the customer
base(Direct approach)
Real-time customer feedback
system
Interface of substantial strategic
importance
Internal marktg of substantial
strategic importance to success
Key Elements in Relationship Marketing
•To identify and build a database of the current and potential customers
,which incorporates the information regarding the demographic ,lifestyle
and purchase behavior of the customers.
•To deliver the right messages to the right target customers at the right
time through proper communication channels.
•To keep track of each and every relationship and monitoring the cost
of acquiring the consumers and their lifetime value.
•The emphasis on the interaction between suppliers and customers is
shifting from a transaction to a relationship focus.
• The relationship marketing focuses on maximizing the lifetime
value of desirable customers and customer segments.

• Quality ,customer service and marketing are closely related

,but most of the time they are managed separately. The
relationship marketing makes these elements coherent.

• Delivering differentiated messages to theses people through

established and new media channels based on the consumers
characteristics and preferences.
PURPOSE OF RELATIONSHIP
MARKETING
CUSTOMER RETENTION IS THE ONLY PURPOSE
Relationship marketing attempts to involve and integrate customers
,suppliers and other infrastructural partners into a firm’s developmental
and marketing activities .Such involvement results in close interactive
relationships with suppliers, customers or other value chain partners of
the firm.
Thus RM reflects interdependence rather than independence of
choice among the parties and emphasizes cooperation rather than
competition and consequent conflict among the marketing actors.
So development of relationship marketing points a significant shift in
the axioms of marketing competition :
COMPETITION AND CONFLICT TO MUTUAL COOPERATION.
CHOICE INDEPENDENCE TO MUTUAL INTERDEPENDENCE.
 AXIOMS OF TRANSACTIONAL AND RELATIONSHIP
MARKETING
RELATIONSHIP
MUTUAL MARKETING
INTERDEPENDENCE

COMPETITION AND CONFLICT MUTUAL COOPERATION

TRANSACTIONAL INDEPENDENCE AND CHOICE

MARKETING
 SIX MARKET FRAMEWORK OF
RELATIONSHIP MARKETING
Markets are also important as it reflects the competitive
aspects of relationships.

Thus it says that in order to build and sustain customer

value it is important to recognize that relationships must
be built with a number of constituencies.

The framework thus ,represents the groups of

components that are critical to building and maintaining
relationships.
 INTERNAL
MARKETS

SUPPLIER
&
ALLIANCE
MARKETS REFERRAL
MARKETS
CUSTOMER
MARKETS

INFLUENCE
RECRUITMENT
MARKETS
MARKETS
 The essence of this framework is that although customer markets are
at the center of the figure it is not the only market of importance in
terms of relationship marketing; the other markets are as influential
as customer markets depending on the situation and context.

CONSUMER MARKETS
Many organizations market to trade customers (Intermediaries,
distributors or retailers) and consumers (end purchasers ,user and
consumer), but their relative power within the supply chain is likely to
determine which relationships are in focus and which are not.

REFERRAL MARKETS (WOM)

Referrals are characterized by their credibility towards the
environment of the relationships or as endorsers of one of the parties
involved .Referrals can be decisive as they posses a high credibility
factor. They aren’t gained from publishing their point of view.
INTERNAL MARKETS
Each and every employee of an organization is responsible for creating
and distributing value to the customers. According to BERRY
(1984),employees are an organizations first customers.
RECRUITMENT MARKETS
Recruiting right employees for the right post in an organization is a very
important factor in the overall performance of the organization. Recruitment
has slowly become a marketing related task. The potential employee will
search for internal qualitative factors that go far beyond its products and
services.
INFLUENCE MARKETS
Influence Markets are the markets that may or may not influence a
relationship ;however they share the potential to influence relationships
regardless of whether they are internal or external.
SUPPLIER MARKETS
In the marketing system ,suppliers should be included as relationship
partners. In SCM(supply chain management), the whole marketing system is
considered the unit of analysis. This is in synchronization with the six market
framework.
RELATIONSHIP MARKETING PROGRAMS
By observations of the corporate practices ,there are three types of
relationship marketing programs
•Continuity marketing
•One- to – marketing
•Partnering programs

They take different forms depending upon whether they are

meant for end-customer, distributor customers ,or business –to-
business customers.

Marketers use a combination of one or more types of theses

to build closer and mutually beneficial relationships with their
customers.
VARIOUS TYPES OF RELATIONSHIP MARKETING PROGRAMS
PREVALENT AMONG DIFFERENT TYPES OF CUSTOMERS

CUSTOMER TYPES
PROGRAM Individual Distributors/Re Institutional
TYPES customers sellers Buyers (B2B)

Continuity Loyalty Continuous Special supply

marketing programs Replenishment arrangements
E.g.-JIT,MRP
Individual Data Customer Key account
marketing warehousing business management
and data development and co-
mining development
Co-marketing/ Co-branding Co-operative Joint marketing
Partnering marketing and co-
development
FOR INSTANCE …
TELECOMMUNICATION
SECTOR..
CHALLENGES FOR RELATIONSHIP MARKETING

Once the strategy of RM is established, implementing RM requires application

of a range of skills and resources from the initial database and product to
fulfillment capabilities and feedback mechanisms.
Some of the challenges faced by RM marketers are:
Gaining access to the appropriate systems and executional capabilities.

Developing the right organizational structure.

Budgeting for lifetime customer value.

Managing an integrated communication program.

Building alliances between manufacturers and retailers.

CONCULSION
To conclude,relationship marketing emerged as a result of
shift from customer acquisition to customer interactions.
RM provides advertisers with a richer set of
tools for building brand image and awareness and
spending promotional money more effectively. Advertisers
who fail to master the techniques of RM will find
themselves outplayed by the smarter competitors .
The important question to be answered now
is to decide whether to deploy RM or not and to
determine how and when to do so.