Relationship Marketing

Girish Mude
 Relationship Marketing Defined

“To establish, maintain, and enhance (usually

but not necessarily long-term) relationships
with customers and other partners, at a profit,
so that the objectives of the parties involved
are met. This is achieved by a mutual exchange
and fulfillment of promises.”

___Grönroos (Service Management and Marketing, 1990)

 Relationship Marketing
• Focuses on long term rather than short term
• Emphasizes retaining customers over making a
sale
• Ranks customer service as a high priority
• Encourages frequent customer contact
• Fosters customer commitment with the
firm
• Bases customer interactions on cooperation and
trust

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 Evolution
Target Marketing One-to-One Marketing
In the ‘60s, many firms began to Technology allows firms to
apply the principles of customize offerings to individual
segmentation to different users
customer groups

1900 1960 1980 2000+

Mass Marketing Customer Marketing
Evolved in the early 1900s and In 1980, the focus shifted towards
dominated marketing developing customer relationships
management for decades
 Scope Depth
Customer Management Process Threads
Marketing Selling Servicing
Are we making the right level
Customer Relationship and type of marketing, sales,
and service investments in
Broadcast Strategies
Customer Interaction Channels

each of our customer

segments?
Mail

Field Personnel
Are we taking a holistic
Customer Relationship approach to our customers
Agents/Distributors across processes and
Structure
channels?
Call Center

Retail

Internet Customer Relationship Have we implemented best

practices and technology in
Performance process/channel?

Back Office Process/Systems

Benefits of relationship marketing
THE SHIFT FROM TRANSACTION-BASED
MARKETING TO RELATIONSHIP MARKETING
• Transaction-based marketing Buyer and seller exchanges characterized
by limited communications and little or no ongoing relationship between the
parties.
• Relationship marketing Development, growth, and maintenance of long-
term, cost-effective relationships with individual customers, suppliers,
employees, and other partners for mutual benefit.
• Views customers as equal partners in transactions.
• Encourages long-term relationships, repeat purchases, and
multiple brand purchases from the firm.
• Collaborative exchange between buyer and seller.
Transaction vs. Relationship Marketing
 Difference between Marketing and CRM
Marketing CRM

Goal: Expand customer base, Goal: Establish a profitable,

increase market share by long-term, one-to-one
mass marketing relationship with customers;
understanding their needs,
preferences, expectations
Product oriented view Customer oriented view

Mass marketing / mass Mass customization, one-to-one

production marketing
Standardization of customer Customer-supplier relationship
needs
Transactional relationship Relational approach
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Three Levels of Relationship Marketing

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Difference between Relationship
Marketing and CRM
 Relationship Marketing Defined

Relationship marketing:
• Involves two-way communication with individual stakeholders, one at a time
(1:1),
• Firm focuses on share of mind = share of customer = share of wallet, rather
than share of market,

• Procter and Gamble:

– Must differentiate its brands of laundry detergent for sale to the masses,
– It tries to build relationships with mothers who will buy increasing numbers of P &
G products over the years,
– From Ivory powder for washing baby clothes and Pampers diapers to Crest
toothpaste for the family and Olay cosmetics for themselves.
 Mass marketing Relationship marketing

Discrete transactions Continuing transactions

Short-term emphasis Long-term emphasis

Two-way communication
One-way communication /collaboration

Acquisition focus Retention focus

Share of market Share of mind

Product Differentiation Customer Differentiation

Continuum from Mass Marketing to Relationship Marketing

 Customer Relationship Management (CRM)

CRM:

• Is used to define the process of creating and maintaining relationships with

business customers or consumers.

• Is a holistic process of acquiring, retaining, and growing customers.

• Includes all online and offline relationship management.

 Firms are recognizing that if they don’t keep their customers happy, someone
else will.