CUSTOMER

RELATIONSHIP
MANAGEMENT
PGDM(CRM)
2007-09 BATCH
Apeejay School of Management
Relationship Marketing

‘Your most unhappy customers are

your greatest source of learning’
Bill Gates

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What is
?

The true business of

every company is to
make customers,
keep customers, and
maximize customer
profitability
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Transaction & Relationship Marketing
Transaction Relationship
One of exchanges Ongoing exchanges
Brand Management Focus Customer Management

Short time Focus Time Long time Focus

Perspective
Mass Communication Primary Personal Communication
Communication
Isolate Market research Customer Ongoing Dialogue
feedback
Mechanism
Mass Markets/ Market Market Size Markets of One
Segments
Market Share Criterion of Mind Share (Share of
Success Customers)
Profitability of Lifetime value of
Transaction Critical Metrics Customers
Brand Equity Customer Equity

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Directing Marketing…

• Business Paradigm and the ‘Value’ Aspect

• Developing Market-Driven Organization
and Strategies
• Role of Market Research and ‘Creation’ of
Markets
• Limitation of Convention Marketing
Definition
• Limitation of Marketing Mix (4Ps)

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…towards Relationships
• Fallacy of Competition Analysis
• Focus on Value Equity
• Managing Customer as an Asset
• Focus on Knowledge
Management and Experience
• Impact of Electronic Channels
• Frozen Services

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The Paradigm Shift in
Marketing Orientation
Process

Relationship
Perspective

Value Distribution Value Creation

Exchange
Perspective

Outcome
Seth & Parvatiyar

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Value chain- process of
Customers

RELATIONSHIP VALUE

TECHNOLOGY

BUSINESS PROCESS VALUE

Seth & Parvatiyar

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Impact of Technology on
Modern Marketing

Increased
Competition

Greater
New
Changing Marketing Demand
Technology
Customers Evolution for
Development
Relationship
Marketing

IT Revolution
Relationship
Marketing
more Affordable
& Effective

Seth & Parvatiyar

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 Adopting Relationship Marketing
Advantages of Relationship Marketing
• Means to reduce costs and improve marketing
effectiveness
Manpower cost have been reduced by re-engineering,
automation and downsizing.
Financial restructuring and efficient have reduced
financial costs
TQM, JIT and FMS have reduced Operations costs

RESEARCHSHOWS THAT TODAY MANUFACTURING

COSTS HAVE REDUCED FROM 55 TO 30 PERCENT AND
MANAGEMENT COSTS FROM 20 TO 55 PERCENT, BUT
THE MARKETING COSTS HAVE INCREASED FROM 20 TO
55 PERCENT

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 Adopting Relationship Marketing
Advantages of Relationship Marketing
• Means to reduce costs and improve marketing
effectiveness
THE PRACTICE OF RELATIONSHIP MARKETING HAS THE
POTENTIAL TO IMPROVE MARKETING PRODUCTIVITY
THROUGH IMPROVED MARKETING EFFECIENCIES AND
EFFECTIVENESS

THE BENEFITS COME THROUGH LOWER COST OF

RETENTION AND INCREASED PROFITS DUE TO LOWER
DEFECTION RATE.

IT TAKES FIVES TIMES MORE TO AQUIRE A NEW

CUSTOMER THAN TO RETAIN AN EXISTING ONE.

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 Adopting Relationship Marketing
Practicing Relationship Marketing
• Developing a core service around which to
build customer relationships.
• Customizing the relationship to individual
customer
• Augmenting the core service with extra
benefits
• Pricing services to encourage customer loyalty,
and
• Marketing to employees so that they perform
well for customers.

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 Basis of Building Relationship

• TREATING CUSTOMERS DIFFERENTLY

• INFORMATION BASED DECISIONS

• CUSTOMER CENTRIC

• FLEXIBILITY

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 Forming a Relationship

MUTUAL

SELLER/ END BUYER/

COMMITMENT
PRODUCER USER

TRUST

CONNECTIVE
LINKS
•Information
•Social
•Process

Seth & Parvatiyar

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 Defining Relationship
Marketing Concepts
MARKETING IS TO ESTABLISH,
MAINTAIN, AND ENHANCE
RELATIONSHIP WITH CUSTOMERS
AND OTHER PARTNERS AT A PROFIT,
SO THAT THE OBJECTIVES OF
PARTIES INVOLVED ARE MET. THIS
IS ACHIEVED BY MUTUAL EXCHANGE
AND FULFILLMENT OF EXCHANGES

GRONROOS

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 Defining Relationship
Marketing Concepts
 THE PROMISE CONCEPT
 RELEVANCE OF TRUST
 THE HOUSE OF KNOWLEDGE IN
RELATIONSHIP MARKETING
 PROCESS VIEW OF RELATIONSHIP
MARKETING
 COOPERATIVE VIEW OF
RELATIONSHIP MARKETING
 ROLE OF MARKETING ORIENTIATION

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The House of Knowledge in Relationship Marketing

Relationships Culture & Climate

Knowledge

INTERACTION
& Stake-
Firm
DIALOGUE holder

Knowledge Management

TRUST COMMITMENT

Seth & Parvatiyar

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Process View of Relationship Marketing
• Relationship Marketing is system-
oriented; but includes managerial
aspects too.
• Systems Approach suits to the basic
tenets of Marketing. It includes all
relevant actors, marketing
environment and even the process of
marketing.
• Managerial Facets facilitate the
actionable and normative elements
that are required in such a theory

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Process View of Relationship Marketing
Basic tenets of Marketing
1. The market behaviour
2. The market transaction as a
unit of analysis
3. The marketing as a dynamic
process of relationship between
buyers and sellers
4. The exogenous variables that
influence the market behaviour
Cont.

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Process View of Relationship Marketing
In this respect what is required
is the ‘raison d’ etre’ of
marketing, a perspective that
is common cause that no
stakeholder (consumer, seller,
government, or social critic)
can question. Indeed, that
perspective should really reflect
what marketing is all about.
Seth (et.al)

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Process View of Relationship Marketing
• Marketing is a process that includes
several parties.
• Objective of each party is to be met and
is done by mutual exchange and
fulfillment of promises (TRUST)
• These parties form an interactive network
that further interacts with customers and
environmental actors.
• Relationship Marketing is dynamic
because of its process nature.
Gronroos

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 Cooperative View of Relationship
Marketing
• Relationship Marketing is concerned
with cooperative and collaborative
relationship between firm and
customers.
• Relationship is formed between
Firm and one or many of its
customers , including
– End Consumer
– Distributors or Channel Members
– B2B Customers

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 Cooperative View of Relationship
Marketing
Thus Relationship Marketing is
An ongoing process of engaging
in cooperative and collaborative
activities, and programs with
immediate and end-user
customers in order to create or
enhance mutual economic value
at a reduced cost.

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 SERVICE COMPETITION
• Relationship makes Customer
less Price Sensitive
• Monitoring Customer
Satisfaction
• Customer Perceived Quality
(Technical & Functional)
• Customer Feedback
• Customer Complaint Tracking
(CCT)
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 Strategic Importance of
INTRAORGANIZATIONAL COLLABORATION

• Level of interdependence depends

whether the Organization has chosen
Transaction Based Strategy or a
Relationship Based Strategy
• Transaction Strategy relates more to
Product and traditional Marketing mix
• Customer Interface is an essential
component of Relational Marketing
• Customer Interface involves a
broader scope for par-time marketers
of other functional areas.
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 Prerequisite
INTERNAL MARETING FOR EXTERNAL MARKETING
PRODUCER

Internal External
Marketing Marketing

CRM

EMPLOYEE Interactive CUSTOMER

Marketing

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