Relationship Marketing
(Levitt)

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Build continuing relationships between the organization and its customers. Explanation of Relationship Marketing of Theodore Levitt. ('83)

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What is Relationship Marketing? Description

Relationship Marketing is an approach which emphasizes the continuing relationships that should exist between the organization and its customers. It emphasizes the importance of customer service and quality and of developing a series of transactions with consumers. The terminology was first described by Theodore Levitt in 1983.


Origin of the Relationship Marketing Approach. History

Already in 1980, B. Schneider wrote: What is surprising is that researchers and businessmen have concentrated far more on how to attract customers to products and services than on retaining customers. In 1983 Levitt wrote: In a great and increasing proportion of transactions, the relationship actually intensifies subsequent to the sale. This becomes a central factor in the buyer's choice of the seller the next time.

Relationship Marketing is strongly linked to Business Process Reengineering. According to this reengineering theory, organizations should be structured according to complete tasks and processes. Rather than functions.


Usage of Relationship Marketing. Applications

Relationship marketing and traditional transactional marketing are not mutually exclusive and they are not necessarily in conflict with each other. Relationship Marketing may be more suitable in the following circumstances or situations:

  • High value products or services.
  • Industrial products.
  • Products are not generic commodities.
  • Switching costs are high.
  • Customers prefer a continuous relation.
  • There is customer involvement in the production phase. See: Co-Creation.

Steps in the Relationship Marketing Process

  1. Chart the service delivery system. Set standards for each part of the system, especially the 'encounter points'.
  2. Identify critical service issues.
  3. Set service standards for all aspects of service delivery.
  4. Develop customer communication systems.
  5. Train employees on building and maintaining a good relationship with clients.
  6. Monitor service standards, reward staff for exceeding service levels, correct sub-standard service levels.
  7. Ensure that each employee fully understands the importance of quality and relationships in the marketing philosophy.

Strengths of Relationship Marketing. Benefits

  • Focus on providing value to customers.
  • Emphasis on customer retention.
  • The method is an integrated approach to marketing, service and quality. Therefore it provides a better basis for achieving Competitive Advantage.
  • Studies in several industries show that the costs to keep an existing customer are just a fraction of the costs to acquire a new customer. So often it makes economic sense to pay more attention to existing customers.
  • Long-term customers may initiate free word of mouth promotions and referrals.
  • Long-term customers are less likely to switch to competitors. This makes it more difficult for competitors to enter the market.
  • Happier customers may lead to happier employees.

Limitations of the Relationship Marketing model. Disadvantages

Relationship Marketing is less appropriate in the following circumstances:

  • Relatively low value products or services.
  • Consumer products.
  • Generic commodities.
  • Switching costs are low.
  • Clients prefer a single transaction to relationships.
  • No / low customer involvement in production.

Book: Theodore Levitt - The Marketing Imagination -




Relationship Marketing Forum (22 topics) Help
  What's Behind Relationship Marketing and CRM...  - The basic principle of relationship marketing and customer relationship management is that firms benefit more from maintaining long-term customer relationships than short-term customer relationships (Reinartz & Kumar, 2000).
In the 21st c...
     
  Internal (Relationship) Marketing  - As you may know, internal marketing was first presented by Berry and co. (1976) and then by other researchers such as George (1977) and Thompson and co. (1978)
However, there is, as yet, no clear agreement about the strategic concept o...
     
  What are 'Business Relationships'?  - What differences do customers perceive between personal relationships and business relationships? Do they even think of their interactions with businesses as 'relationships'?...      
  What is International Relationship Marketing (IRM)?  - International Relationship Marketing means relationship marketing in international context. It covers all actions for the analysis, planning, realisation, and control of measures that initiate, stabilise, intensify, and reactivate business relationsh...      
  Relationship Marketing in Banking  - Relationship marketing is extensively practiced in banks focusing on high earners who can afford the extra charges for the special services....      
  Relationship Marketing as Part of your Strategy and Tactics  - A practical approach is the "Group Merchant/Distributor Board Meeting".
Phase 1: We invited CEO's with their spouses (approx 50 people) for an event weekend. Friday - social program with all. Saturday morning - presentation of our mission...
     
  Relationship Marketing Strategies in Retail  - What type of relationship marketing strategies are useful for retailers to increase their sales?...      
  Relationship Management and The Creative Industries  - Does anyone know of Relationship Marketing works being used in the 'Creative Industries', particually The Music Industry? I cant seem to make this model work in my head or on paper....      
  The ART of Relationship Marketing  - When the marketers have used science to develop a market for the product, the front line sales personel uses the ART of selling to ensure that benefits are relayed to consumer using the POINT-TELL-PAINT technique. POINT out a feature of the product, ...      
  Is Relationship Marketing a New Paradigm  - Is relationship marketing an addendum to the traditional marketing mix elements, or is it a new paradigm altogether?...      
  Relationship Marketing and Customer Loyalty  - One of the important objectives of relationship marketing strategies is to satisfy the customers and thereby building a strong customer base. It will help to reduce the customer defection rate....      
  Customer Relationship Marketing  - Implementing a customer relationship program or as you refer to it in your article as "Developing Customer Communication Systems" is a key factor in making relationship marketing work in your business. A random approach to relationship marketing...      
  Relationship Marketing Critics  - ‘Relationship marketing is attacked by consumer groups because the system favors the more loyal customer or higher spending individual over other customers.
Have companies truly understood aspects of the future potential value of customers, what...
     
  Relationship Marketing Levels  - What are the levels of relationship marketing?...      
  Selling is transforming a LEAD into a DEAL  - Sale is all about identifying the LEAD and converting them into a DEAL.
A LEAD can be converted into a DEAL:
L - Locate the Prospect
E - Educate him
A - Answer his questions
D - Decide the sale.
...
     
  Increasing sales by relationship marketing  - How does one increase sales in a Biometric company by using modern theories in relation marketing?...      
  It`s all about Relations  - Relationships marketing is about relations, how you relate to customers, it`s about Customer Experience and providing products and services that are valued by the customers. So how do we know what is valued: we need to listen and refocus; it`s about ...      
  Relationship Marketing and Perception  - A very important element on building relations is perception.
Both needs are wants are based on perception, and these are individual chioces. Every customer is unique and should be treated as such, in order to build a strong relation and ...
     
  What is Relationship Marketing? Definition  - Relationship marketing is a form of marketing that evolved from direct response marketing in the 1960s and emerged in the 1980s, in which emphasis is placed on building longer term relationships with customers rather than on individual transactions. ...      
  Relationship Marketing Focus  - One of the major points Relationship Marketing must focus on is after sales services. A lot depends on it maintain the relationship between the company and its consumers....      

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