Relationship Marketing
(Levitt)

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Summary

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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Forum about Relationship Marketing.


What are 'Business Relationships'?
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What is International Relationship Marketing (IRM)?
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Relationship Marketing as Part of your Strategy and Tactics
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Relationship Marketing Should be a Systematic Approach
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Relationship Marketing Strategies in Retail
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Relationship Marketing in Banking
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Relationship Marketing and Perception
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Relationship Marketing and Customer Loyalty
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Internal (Relationship) Marketing
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It`s all about Relations
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The ART of Relationship Marketing
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Relationship Marketing Levels
What are the levels of relationship marketing? (...)
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Relationship Marketing Critics
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Best Practices

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The top-rated topics about Relationship Marketing. Here you will find the most valuable ideas and practical suggestions.


What is Relationship Marketing? Definition
Relationship marketing is a form of marketing that evolved from direct response marketing in the 1960s and emerged in th (...)
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Is Relationship Marketing a New Paradigm
Is relationship marketing an addendum to the traditional marketing mix elements, or is it a new paradigm altogether? (...)
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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 "relationsh (...)
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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 man (...)
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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 r (...)
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Expert Tips

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Advanced insights about Relationship Marketing. Here you will find professional advices by experts.


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 (...)

The Old versus the New View on Relationship Marketing

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Here is a point by point comparison: Goal Old View on Relationship Marketing: Having relationships with customer (...)

Six Causes of Relationship Marketing problems

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Researchers Deb Rapacz and Martin Reilly identified the following six paradigms as the Root Cause limiting effectiveness (...)

Factors for Corporate Credibility

Establishing Trust
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Customer Relationship TYPES

CRM, Relation Marketing, Branding
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Branding In Relationship Marketing

Linking the Brand
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Definitions of Relationship Marketing

Teaching Relationship Marketing
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Customer Retention

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Use of Permission Marketing

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Information Sources

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Various sources of information regarding Relationship Marketing. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops.


Factors Influencing the Effectiveness of Relationship 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


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