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
- Chart the service delivery system. Set standards for each part of the
system, especially the 'encounter points'.
- Identify critical service issues.
- Set service standards for all aspects of service delivery.
- Develop customer communication systems.
- Train employees on building and maintaining a good relationship with
clients.
- Monitor service standards, reward staff for exceeding service levels,
correct sub-standard service levels.
- 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
Forum discussions about Relationship Marketing. Below you can ask a question about this topic, share your experiences, report a new development, or explain something.
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Relationship Marketing and Perception
A very important element to remember when building relations is perception.
Both needs and wants are based on perception, and these are by definition individual ways of seeing things. Every customer ...
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Relationship Marketing in Banking
Relationship marketing is extensively practiced in banks. It is focusing on high earners who can afford extra charges for the special treatment and services....
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Assumptions Behind Relationship Marketing and CRM
The basic assumption of relationship marketing and customer relationship management is that firms benefit more from maintaining long-term customer relationships than short-term customer relationships ...
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Internal Relationships 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 agr...
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The best, top-rated topics about Relationship Marketing. Here you will find the most valuable ideas and practical suggestions.
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Contracts, Penalties and Fees
Gail McGovern and Youngme Moon explain in an article "Companies and the customers who hate them" (HBR June 2007) how many industries (cell phones, credit cards, banking, insurance, leasing) are using ...
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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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Advanced insights about Relationship Marketing. Here you will find professional advices by experts.
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Pitfalls of Traditional Relationship Marketing Relationship Marketing Implementation / Improvement About 50 percent of leading brands' buyers change preferences regarding their favorite brand every year. This reveals hu...
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The Old versus the New View on Relationship Marketing Relationship Marketing Implementation Here is a point by point comparison:
Goal
Old View on Relationship Marketing: Having relationships with customer...
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Six Causes of Relationship Marketing problems Relationship Marketing Implementation Researchers Deb Rapacz and Martin Reilly identified the following six paradigms as the Root Cause limiting effectiveness...
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Factors for Corporate Credibility Establishing Trust Strong bonds and relationships between organizations and customers depend on their perceived credibility. Corporate Cred...
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Customer Relationship TYPES CRM, Relation Marketing, Branding Next time you're using the term "CRM", remember there's an R in it... The R of "Relationship".
Actually, customers (wan...
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Branding In Relationship Marketing Linking the Brand In an article, Deb Rapacz and Martin Reilly invite marketers to adopt relationship marketing as an integrated strategic ...
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Definitions of Relationship Marketing Teaching Relationship Marketing Since its first description by Levitt, Relationship Marketing has been defined in many different ways. Here follows a br...
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Customer Retention Relationship Marketing In the game between Defensive Marketing and Offensive Marketing, the core of Relation Marketing is located at Customer R...
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Use of Permission Marketing Building Customer Loyalty Permission Marketing, the practice of marketing to consumers only after gaining their express permission, is a method or...
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