Relationship Marketing
(Levitt)

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

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 -

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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....         See 1 more topics Begin a new topic

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Best Practices - Relationship Marketing Premium   Relationship Management in Chinese Culture: Guanxi (关系) The Chinese are acclaimed to be the masters of building Guanxi (关系) (it means "connections" or "relationships" in Chinese), sometimes by ourselves, unfortunately there is an obvious misunderstanding of the concept in Chinese culture an...

Expert Tips - Relationship Marketing Premium   Pitfalls of Traditional Relationship Marketing About 50 percent of leading brands' buyers change preferences regarding their favorite brand every year. This reveals huge improvement opportunities b... Usage (application): Relationship Marketing Implementation / Improvement       The Old versus the New View on Relationship Marketing Here is a point by point comparison:         Six Causes of Relationship Marketing problems Researchers Deb Rapacz and Martin Reilly identified the following six paradigms as the       Factors for Corporate Credibility Strong bonds and relationships between organizations and customers depend on their perceived credibility. Corporate Credibility refers to the extent t... Usage (application): Establishing Trust       Customer Relationship TYPES Next time you're using the term "CRM", remember there's an R in it... The R of "Relationship". Actually, customers (want to) have many different ... Usage (application): CRM, Relation Marketing, Branding       Branding In Relationship Marketing In an article, Deb Rapacz and Martin Reilly invite marketers to adopt relationship marketing as an integrated strategic approach to marketing. Th... Usage (application): Linking the Brand       Definitions of Relationship Marketing Since its first description by Levitt, Relationship Marketing has been defined in many different ways. Here follows a brief historical excursus of def... Usage (application): Teaching Relationship Marketing       Customer Retention In the game between Defensive Marketing and Offensive Marketing, the core of Relation Marketing is located at Customer Retention. Customer retention e... Usage (application): Relationship Marketing       Use of Permission Marketing Permission Marketing, the practice of marketing to consumers only after gaining their express permission, is a method organizations can use to ... Usage (application): Building Customer Loyalty     Resources - Relationship Marketing Premium Factors Influencing the Effectiveness of Relationship Marketing Relationship marketing (RM) has emerged as one of the dominant mantras in business strategy circles, though RM investigations often yield mixed result... Usage (application): Effective Relationship Marketing   A Service-Oriented View on Marketing Presentation about a service-dominant logic mindset in marketing, including the following sections: 1. Getting the logic right 2. Goods-Domi... Usage (application): Service-Dominant Logic, Perspectives on Marketing   The Effect of Relatinal Constructs on Relationship Performance Peter C. Verhoef, Philip Hans Franses and Janny C. Hoekstra examine the effect of relational constructs, such as satisfaction, trust and commitment on... Usage (application): Relationship Marketing   Introduction Into Permission Marketing (PM) Presentation that introduces the concept of Permission Marketing, including the following sections: 1. Introduction of PM 2. Definition of P... Usage (application): Direct Marketing, Email Marketing, Internet Marketing, Search Marketing   The Importance of Noncustomers Even the biggest enterprises (other than a government monopoly) has many more noncustomers than it has customers". Peter Drucker in "Management Challe... Usage (application): Market Research, Customer Strategy, Innovation Strategy, Customer Survey Pitfalls   Interview with Theodore Levitt on Global Marketing Theodore Levitt explains and ponders on global marketing and marketing mass global products. A global product is a product that is equally attrac... Usage (application): Understanding Global Marketing     News Relationship Levitt         News Relationship Marketing Concept         Videos Relationship Levitt         Videos Relationship Marketing Concept         Presentations Relationship Levitt         Presentations Relationship Marketing Concept         More Relationship Levitt         More Relationship Marketing Concept       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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