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 -

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Relationship Marketing Special Interest Group
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Relationship Marketing Education & Events
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Pitfalls of Traditional Relationship Marketing
About 50 percent of leading brands' buyers change ...
Usage (application): Relationship Marketing Implementation / Improvement
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The Old versus the New View on Relationship Marketing
Here is a point by point comparison:
Usage (application): Relationship Marketing Implementation
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Six Causes of Relationship Marketing problems
Researchers Deb Rapacz and Martin Reilly identifie...
Usage (application): Relationship Marketing Implementation
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Factors for Corporate Credibility
Strong bonds and relationships between organizatio...
Usage (application): Establishing Trust
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Customer Relationship TYPES
Next time you're using the term "CRM", remember th...
Usage (application): CRM, Relation Marketing, Branding
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Branding In Relationship Marketing
In an article, Deb Rapacz and Martin Reilly invite...
Usage (application): Linking the Brand
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Definitions of Relationship Marketing
Since its first description by Levitt, Relationshi...
Usage (application): Teaching Relationship Marketing
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Customer Retention
In the game between Defensive Marketing and Offens...
Usage (application): Relationship Marketing
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Use of Permission Marketing
Permission Marketing, the practice of marketing...
Usage (application): Building Customer Loyalty
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Factors Influencing the Effectiveness of Relationship Marketing
Relationship marketing (RM) has emerged as one of ...
Usage (application): Effective Relationship Marketing
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A Service-Oriented View on Marketing
Presentation about a service-dominant logic mindse...
Usage (application): Service-Dominant Logic, Perspectives on Marketing
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The Effect of Relatinal Constructs on Relationship Performance
Peter C. Verhoef, Philip Hans Franses and Janny C....
Usage (application): Relationship Marketing
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Introduction Into Permission Marketing (PM)
Presentation that introduces the concept of Permis...
Usage (application): Direct Marketing, Email Marketing, Internet Marketing, Search Marketing
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The Importance of Noncustomers
Even the biggest enterprises (other than a governm...
Usage (application): Market Research, Customer Strategy, Innovation Strategy, Customer Survey Pitfalls
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Interview with Theodore Levitt on Global Marketing
Theodore Levitt explains and ponders on global mar...
Usage (application): Understanding Global Marketing
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Compare with Relationship Marketing:
Customer Relationship
Management | Marketing
Mix | Extended Marketing
Mix | SERVQUAL
| Benchmarking |
Customer Satisfaction
Model |
Total Quality Management |
Quality Function Deployment
Return to Management Hub: Marketing
| Supply Chain & Quality
More Management Methods, Models and Theory
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Special Interest Group Leader
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