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Relationship Marketing

Relationship Marketing

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Published by Iguodala Owie

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Published by: Iguodala Owie on Nov 18, 2011
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Relationship marketing
From Wikipedia, the free encyclopedia
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MarketingKey concepts
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Relationship marketing
is a form of marketing developed from direct response marketing campaigns conducted in the 1960's and 1980's which emphasizes customer retention and continual satisfaction rather than individual transactions and per-casecustomer resolution.Relationship marketing differs from other forms of marketing in that it targets anaudience with more directly suited information on products or services which suitretained customer's interests, as opposed todirector "Intrusion" marketing, whichfocuses upon acquisition of new clients by targeting majority demographics basedupon prospective client lists.
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[edit] Development
 
According to Leonard Berry
, relationship marketing can be applied: when there arealternatives to choose from; when the customer makes the selection decision; andwhen there is an ongoing and periodic desire for the product or service.Fornell andWernerfelt
 used the term "defensive marketing" to describe attempts toreduce customer turnover and increase customer loyalty. This customer-retentionapproach was contrasted with "offensive marketing" which involved obtaining newcustomers and increasing customers' purchase frequency. Defensive marketingfocused on reducing or managing the dissatisfaction of your customers, whileoffensive marketing focused on "liberating" dissatisfied customers from your competition and generating new customers. There are two components to defensivemarketing: increasing customer satisfaction and increasing switching barriers. Traditional marketing originated in the 1960s and 1970s as companies found it moredifficult to sell consumer products. Its consumer market origins molded traditionalmarketing into a system suitable for selling relatively low-value products to masses of customers. Over the decades, attempts have been made to broaden the scope of marketing, relationship marketing being one of these attempts. Marketing has beengreatly enriched by these contributions.The practice of relationship marketing has been greatly facilitated by severalgenerations of customer relationship management software that allow tracking and analyzing of each customer's preferences, activities, tastes, likes, dislikes, andcomplaints. This is a powerful tool in any company's marketing strategy. For example, an automobile manufacturer maintaining a database of when and how repeatcustomers buy their products, the options they choose, the way they finance the purchase etc., is in a powerful position to custom target sales material. In return, thecustomer benefits from the company tracking service schedules and communicatingdirectly on issues like product recalls.The latest trend in relationship marketing is personalized marketing. In personalizedmarketing, the main preference is given to consumer. The consumer shopping profileis built as the person shops on the website. This information is then used to computewhat can be his likely preferences in other categories. These items are than shown tothe customer through web cross-sell, email recommendation and other channels.Personalized marketing has also migrated into direct mail, allowing marketers to takeadvantage of the technological capabilities of digital, toner-based printing presses to produce unique, personalized pieces for each recipient. Marketers can personalizedocuments by any information contained in their databases, including name, address,demographics, purchase history, and dozens (or even hundreds) of other variables.The result is a printed piece that (ideally) reflects the individual needs and preferencesof each recipient, increasing the relevance of the piece and increasing the responserate.
[edit] Scope
Relationship marketing has been strongly influenced byreengineering. According toreengineering theory, organizations should be structured according to complete tasks
 
and processes rather than functions. That is, cross-functional teamsshould be responsible for a whole process, from beginning to end, rather than having the work go from one functional department to another. Traditional marketing is said to use thefunctional department approach. This can be seen in the traditional four P's of themarketing mix. Pricing, product management, promotion, and placementare claimed to be functional silos that must be accessed by the marketer if she is going to performher task. According to Gordon (1999), the marketing mix approach is too limited to provide a usable framework for assessing and developing customer relationships inmany industries and should be replaced by an alternative model where the focus is oncustomers and relationships rather than markets and products.In contrast, relationship marketing is cross-functional marketing. It is organizedaround processes that involve all aspects of the organization. In fact, somecommentators prefer to call relationship marketing "relationship management" inrecognition of the fact that it involves much more than that which is normallyincluded in marketing.Martin Christopher, Adrian Payne, and David Ballantyne 
at the Cranfield Graduateschool of Management claim that relationship marketing has the potential to forge anew synthesis between quality management, customer service management, andmarketing. They see marketing and customer service as inseparable.In spite of this broad scope, relationship marketing has not lost its core marketingorientation though. It involves the application of themarketing philosophyto all partsof the organization. Every employee is said to be a "part-time marketer". The wayRegis McKenna (1991) puts it:"Marketing is not a function, it is a way of doing business . . . marketing has to be all pervasive, part of everyone's job description, from the receptionist to the board of directors."Because of this, it is claimed that relationship marketing is a more pure form of marketing than traditional marketing.
[edit] Approaches
[edit] Satisfaction
Relationship marketing relies upon the communication and acquisition of consumer requirements solely from existing customers in a mutually beneficial exchangeusually involving permission for contact by the customer through an "opt-in" system.
With particular relevance to customer satisfaction the relative price and quality of goods and services produced or sold through a company alongside customer servicegenerally determine the amount of sales relative to that of competing companies.Although groups targeted through relationship marketing may be large, accuracy of communication and overall relevancy to the customer remains higher than that of direct marketing, but has less potential for generating new leads than direct marketingand is limited toViral marketingfor the acquisition of further customers.

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