Relationship Marketing
(Levitt)

Knowledge Center

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 -

Special Interest Group - Relationship Marketing Special Interest Group (137 members)

Forum - Relationship Marketing   Here you will find interesting and educational discussions.   What is Relationship Marketing? Definition (2 reactions) Relationship marketing is a form of marketing that evolved f...           What are 'Business Relationships'? (2 reactions) What differences do customers perceive between personal rela...           Is Relationship Marketing a New Paradigm Is relationship marketing an addendum to the traditional mar...           Contracts, Penalties and Fees Gail McGovern and Youngme Moon explain in an article "Compan...           What is International Relationship Marketing (IRM)? International Relationship Marketing means relationship mark...           Relationship Marketing Focus (3 reactions) One of the major points Relationship Marketing must focus on...           Relationship Marketing as Part of your Strategy and Tactics A practical approach is the "Group Merchant/Distributor B...           Relationship Marketing Should be a Systematic Approach Implementing a customer relationship program or as you refer...           Relationship Marketing Strategies in Retail (1 reactions) What type of relationship marketing strategies are useful fo...           Relationship Management and The Creative Industries Does anyone know of Relationship Marketing works being used ...           Relationship Marketing in Banking (1 reactions) Relationship marketing is extensively practiced in banks foc...           Relationship Marketing and Perception (2 reactions) A very important element to remember when building relations...           Increasing sales by relationship marketing (1 reactions) How does one increase sales in a Biometric company by using ...           Selling is transforming a LEAD into a DEAL (1 reactions) Sale is all about identifying the LEAD and converting them i...           Relationship Marketing and Customer Loyalty (1 reactions) One of the important objectives of relationship marketing st...         What's Behind Relationship Marketing and CRM... The basic principle of relationship marketing and customer r...           Internal (Relationship) Marketing As you may know, internal marketing was first present...           It`s all about Relations (1 reactions) Relationships marketing is about relations, how you relate t...           The ART of Relationship Marketing When the marketers have used science to develop a market for...           Relationship Marketing Levels What are the levels of relationship marketing?...           Relationship Marketing Critics ‘Relationship marketing is attacked by consumer groups becau...

Best Practices - Relationship Marketing Here you will find the most valuable ideas.   Relationship Management in Chinese Culture: Guanxi (关系) (3 reactions) The Chinese are acclaimed to be the masters of building Guan...

Expert Tips - Relationship Marketing Here you will find high-quality advice from experts.   Pitfalls of Traditional Relationship Marketing Relationship Marketing Implementation / Improvement...       The Old versus the New View on Relationship Marketing Relationship Marketing Implementation...       Six Causes of Relationship Marketing problems Relationship Marketing Implementation...       Factors for Corporate Credibility Establishing Trust...       Customer Relationship TYPES CRM, Relation Marketing, Branding...       Branding In Relationship Marketing Linking the Brand...       Definitions of Relationship Marketing Teaching Relationship Marketing...       Customer Retention Relationship Marketing...       Use of Permission Marketing Building Customer Loyalty...

Resources - Relationship Marketing Here you will find powerpoint presentations, micro-learning videos and further information sources. Factors Influencing the Effectiveness of Relationship Marketing Effective Relationship Marketing...   A Service-Oriented View on Marketing Service-Dominant Logic, Perspectives on Marketing...   The Effect of Relatinal Constructs on Relationship Performance Relationship Marketing...   Introduction Into Permission Marketing (PM) Direct Marketing, Email Marketing, Internet Marketing, Search Marketing...   Interview with Theodore Levitt on Global Marketing Understanding Global Marketing...     News about Relationship Levitt         News about Relationship Marketing Concept         Videos about Relationship Levitt         Videos about Relationship Marketing Concept         Presentations about Relationship Levitt         Presentations about Relationship Marketing Concept         Books about Relationship Levitt         Books about Relationship Marketing Concept         More about Relationship Levitt         More about 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