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TABLE OF CONTENTS
1. 2. 3. Executive Summary ----------------------------------------3 Introduction ------------------------------------------------ 4 Transactional Marketing ---------------------------------- 4 i. Marketing Mix -------------------------------------5 ii. Is Transactional Marketing Valid Today? ----- 5 Relationship Marketing ----------------------------------- 6 i. Strengths of Relationship Marketing ----------- 9 ii. Six Market Model --------------------------------- 9 Transactional v/s Relationship Marketing ------------- 10 Customer Relationship Management ------------------- 12 i. Strategic CRM ------------------------------------ 13 ii. Operational CRM -------------------------------- 13 iii. Analytical CRM ---------------------------------- 15 Impact of CRM on Marketing and Operations -------- 15 Of Organization i. Customer-Centric ---------------------------------17 ii. One-to-one Marketing --------------------------- 17 Conclusion ------------------------------------------------- 18 Bibliography ----------------------------------------------- 19
firms have to face a little bit of problems with their marketing strategies and operations but in a longer run it provides a substantial growth in the revenues and lower the expenses occurred on creating new customer each time. and try to make new customer every time.Relationship Marketing Executive summary Transactional marketing and relationship marketing a two different approaches taken by the marketers for the marketing and promotion of the organizations products and services. transactional is wholly concerned about the promotion and selling of the product with little or no concentration over customer value and satisfaction. but the main difference between these two approaches is. With the implementation of CRM system with in the organizations. Organizations with who has a relationship marketing approach doesn’t really have a threat of their customer switching to the competitors and have a competitive edge over rivals. on the other hand relationship marketing is all about building and maintaining the long-term customer relationships. those customer who are repurchasing (Satisfied customer). and organizations try to provide their customer with valued product and services. CRM is a technology-based system of marketing where organizations come into contact with their long-term customers. creating a sense of loyalty by providing the valued product and services for mutual benefits. and organizations enjoy growth in profits each year. Satisfied and customer promotes the organizations name and could also get the referrals. because its been said that 80% of the organization’s business comes from 20% of the customers. AIOU/AIMS/Shaheenshad/AM552069 .
who is having a transactional viewpoint. Customer relationship marketing is the key component of the marketing strategy. which mainly focuses on the single sale formula. “Transactional marketing focuses on maximizing the profit of the company by recruiting more and more customers to purchase the firm’s product.” (M. producing the product with quality as a primary concern. 1995. rather planning for the longer run of the product in the market. with a view that more products would be sold if huge number of people knows the product. It is being viewed as a single event or one among the series of event taking place that day. Pg 53) In this changing world of technology and emergence of many new modes in the marketing. W. Transactional marketing is mostly about forwarding the message focused on advertising and promoting the product. 2007. would be concerned about completing up the call and AIOU/AIMS/Shaheenshad/AM552069 . Vilcox. but now the focus is being shifted from its buying and selling perspective to it being more customers focused and described as “the art of creating and maintaining customers. Mohan. This employs pull technique.” (J O’shaughnessy.Relationship Marketing Introduction Marketing is in the process of evaluation. T. it is based on the short time scale. E-marketing and online marketing. like. The old definition of marketing was only defining it as a process of buying and selling. Relationship marketing plays a vital role in the growth of the organization. No any universally approved definition of marketing has been given as yet. A pharmacist. Transactional marketing Transactional Marketing is also known as Traditional marketing. Pg4) Previously marketers’ focused on the transactional marketing to make transactions for the company but now marketers’ seems more aggressive about the relationship marketing where marketers’ try to bind the customers in a long-term relationship to gain long term profits and save expenses occurred on creating new customers. For Example: a day-to-day example of transactional marketing could be a phone call made to the physician to get some therapeutic recommendations. Traditional marketing still holds control of many of the corporates. Orientation on product features. O. with little or no emphasis on customer services. pushing the sales through mass marketing and promotions of the product. Transactional marketing is a marketing approach. and satisfying the customers needs and wants without building any relationship with them. These all topics would be discussed deeply in the later part of the discussion.
Last but not the least component of the marketing mix is Placement of the product. He doesn’t pay any attention or importance to the out comes of the call then the desire to conclude it quickly. “Transactional marketing. branding. Ezine Articles. Product Price Promotion Placement According to McCarthy Product captures the 1st place in the mix. The sales man tries to persuade the customer to buy the product by describing the benefits of the product. All these four components are kept into mind before and planned really well by the marketer before throwing the product into its launch. fails to work in today’s world”. Transactional marketing’s Marketing Mix The factors marketers consider before the launch of any product or service into the market. which consists of the four components: 1. and sales the product and then never gets back to the customer. and have became few of the most important needs of human being and those things have helped the marketers to build a dialogue with the customers which was AIOU/AIMS/Shaheenshad/AM552069 . Blackwell. Then comes the advertising.Relationship Marketing keep going on with the work. This marketing mix or “4p’s” were put together by Jerome McCarthy. packaging of the product. with a process of fixing the right and affordable price for the product. its better to acquire the trend. 4. 2008. with its production and management. 2. Phone and other handheld devices are the greatest innovations. Is transactional marketing valid today? As the world changes its operations gets faster pace.com/?Overview-of-Traditional-Marketing&id=374128 (accessed on March 14th 2009) New technologies such as Internet. J. to make it in reach of the customers. 3. Or we can think about a sales agent who is being given commission for each sale he makes. business category Available from http://ezinearticles. say many analysts. Overview of Traditional Marketing. which is included in the promotion of the product. Second comes the Price.
and. maintain and enhancing customer relationships.theidm. It was claimed by (Rosenberg and Czepiel.” (Berndt. terminate relationships with customers and other stakeholders. Not even companies but consumers too are increasingly using those communication tools to take care and control of their relationships with those companies whom they buy their products from. Pg 6) RM uses Event driven tactics of customer retention marketing.Relationship Marketing previously not easy. maintain and enhance. Relationship marketing was introduced by Berry in 1983.” (Anonymous. 2008) Available at http://www. Pg 5) AIOU/AIMS/Shaheenshad/AM552069 . and treats marketing as a time taking process not an unconnected single event. Pg 6) In very first days of relationship marketing it was described as an approach to attract. (Berndt. But in later days Gronroos (1994) proposed the comprehensive definition of relationship marketing as. retention and satisfaction of the customers. Relationship marketing reverses the historical emphasis of creating customers and paying no attention retaining them. at a profit so that the objective of all parties involved are met. This is done by mutual exchange and fulfilment of promises”. “The certainties of the transaction age are being replaced by the subtleties of the relationship age. (Buttle. “The process to identify and establish. and keeping the record of those needs and demands as they grow and transform. This concept of “Relationship marketing was regarded as the biggest change in 50 years. Relationship marketing is focused on creation. Its emphasis is diverted on building and maintaining long term relationship with customer.com/resources/idm-insights/transactional-marketing-isdead-long-live-relationship-marketing/ [Accessed on 25th of March] Relationship marketing It’s true that any business. 1984) “It is between five and ten times as expensive to win a new customer than it is to retain an existing one”. which focuses on customer satisfaction stay in the market for long. Successful organizations never go wrong with their customers’ demands. Tim kitchin says. 2004. 1996. when necessary. and became the ‘Battle Cry’ of the 1990’s. then attracting new ones everytime. 2004.
pdf (Accessed on 14th March. AIOU/AIMS/Shaheenshad/AM552069 .fhu. This ongoing process of building and creating new values with individual customers.edu/MKT261%20Ch %2006%20Relationship%20Marketing.Relationship Marketing (Anonymous. 2009) Due to the cost of creating new customers. Pg 1) Available at http://rtbrown. marketers today are more focused about retaining the customers rather then making new ones.faculty. and sharing lifetime benefits with them is vital and very important for the organisations because it creates the sense of loyalty in customers and long-term profit for the company.
Customers were brought to a website they could download exciting free gifts for their mobile phone very easily. how could they make long-term relations with them and much more. Life-cycle of satisfied customer In recent days of technology. This campaign allowed Pepsi to communicate directly with millions of their customers in an innovative way. Technology could be used in several ways to encourage interaction between the brand and the customer. relationship marketing is being used efficiently to come close to the customers and make them feel special. For example: PEPSI launched an innovative digital marketing campaign in recent days. what they like.Relationship Marketing Fig. This kind of campaign actually allowed Pepsi to gather more information on who are their actual customers. AIOU/AIMS/Shaheenshad/AM552069 . where they actually used very modern ‘quick response code’ through mobile phone technology.
“Transactional marketing of the 1980’s placed the emphasis on the individual sale. 5. that gives the organization a competitive advantage over its rivals. The main emphasis goes on to retention of the customer for the longer benefits of the company. Pg 10) Cranfield’s Adrian Payne. and supplier issues are deal by supplier market. which they think are central for RM. Dibb. 2001. Every business needs long-term relationships for market performance viability. Internal Markets Supplier Markets Recruitment Markets Referral Markets Influence Markets Customer Markets Internal markets deals with the employee with in the company. It provides the customer with valued products and striving for the customers’ satisfaction. so it is also possible that satisfied and loyal customers could initiate the word of mouth promotions for the company and could provide referrals. (S. 4. As we have discussed above the cost incurred attracting new customer is much more so marketers today try to build long term relationships with the customers. It could take long before you AIOU/AIMS/Shaheenshad/AM552069 . L. 6. Simkin. 3. The biggest threat any businesses have is the fear that their customers could switch to its competitors but if an organization follows a good relationship strategy their customers are less likely to switch to the competitors that will also create hindrances for the competitors to enter into the market. Those are: 1. maintaining the relationships with supplier for the mutual benefits. Six Markets Model Marketers say that there has been a shift from transactional marketing to on-going relationship based marketing.Relationship Marketing Strengths of Relationship marketing Relationship marketing is more focused on providing the valued products and services to the customers. 2. Adrian Payne says. not on making new customer everyday. which will lower the cost of attracting new ones. Referral marketing develops a plan for referral stimulation. relationship marketing of 1990’s placed the emphasis on individual customers’ and sought to establish a long-term relationship between customer and company”. It is noticed that effect of word of mouth advertisement is much stronger then any other form of advertisement or promotion. Martin Christopher and his colleague identified six markets model.
Where as influence markets include submarkets such as. ” AIOU/AIMS/Shaheenshad/AM552069 . consumer associations etc. 2001. stockholders. Simkin. Pg 11) Transactional Vs Relationship marketing There is no issue among different scholars and the practitioners about the differences and the inter-relation between the two main marketing perspectives i. L.Relationship Marketing see the results of referral marketing plan. As discussed above. get a dog. “If you want loyalty. (S. on the other hand relationship marketing takes the sale as the first step to relation building. not considering any previous interactions. The best example of these two different approaches is Tesco and WalMart. and defined these two marketing perspectives. where as WalMart is focused on providing its customer with low priced products. (Transactional and Relationship). Dibb. Brodie and Munro (1997) after working hard on various ideas by different schools of marketing of Europe and US. WalMart has a motto. transactional marketing attracts the customers to buy the product and walk away.e. government agencies. Coviello. which was set by Sam Walton. As Tesco seems to be striving to engage in relationship with its customer by introducing different loyalty programs and offering different promotions to them.
It’s a long-term relationship 4. Communicate to make sense n meaning 8. mechanistic. Focuses on retention of the customer 2. Goal is to delight the customer AIOU/AIMS/Shaheenshad/AM552069 . Focuses on Single sale recruitment. Production-oriented based business model 9. Communicate to persuade 8. Quality at all aspects 7. Higher commitment towards customers 6. Limited commitment toward the Customers 6. Focused on product qualitywhile Production 7. Goal is customer satisfaction Relationship Marketing 1. 2. More humanistic and relationship based business model 9. Its short-term 4. Little or no importance given to Customer services 5. Emphasises on product features 3. Customer service taken as the most important element 5. Emphasises on product benefits and and systematic solutions 3.Relationship Marketing Transactional Marketing 1. Functional.
Anderson. saying: “CRM is the strategic use of Information. 2001. maintaining and expanding customer relationships. (K. but it touches all the areas of the business. CRM in any business holds the primary position. processes. services and support) across the whole customer life cycle. Pg 2) Judith W. to make sure. Pg1) But in today’s business. Pg1) So it’s very important for the business to retain the customers to gain a long-term profit because new customers. It is a fact that most of the customers are profitable for the business in the second year of their business with you. Pg 41) CRM came into existence in 1990’s. Anderson. and growing indepth relationship with them.” (2003. it could be. C.” (2001. marketing. that customers become and stay loyal. in the beginning. C. The term CRM is being used in number of different ways. 2001. Kincaid gave a very broad definition of CRM. from customer services group to information and technology team. Kerr. in terms of advertising. marketing and service functions of the business. will cost you the money.” (K. it’s more important to keep those customers. Anyone in these areas could be the internal champion of CRM in the organization. CRM is not just about the selling and marketing. being a manager. CRM is the most effective technique one uses. even before your people (Employee). It is most comprehensive approach of dealing with something. technology and people to manage the customer’s relationship with your company (Marketing. As defined by Anderson and kerr: “Customer Relationship Management is a comprehensive approach for creating. Operational CRM 3. Strategic CRM 2. CRM could be thought at three different levels: 1.Relationship Marketing Customer Relationship Management As said by Peter Drucker “The purpose of business is to create customers. the terms CRM is used to give details about software applications that mechanizes the selling. researching about their wants and finally educating them how beneficial are you to do business with. Kerr. According to the view of some IT related companies. sales. Analytical CRM AIOU/AIMS/Shaheenshad/AM552069 .
worldwide webs. Indifferent attributes. Like. This culture is striving to create and retain the customers by providing them better value than competitors do. Excitement factors and Performance factors). first three focuses on customer satisfaction (Basic factors. of which. so that customers could easily interact with different people in the organization. which is used as a quality management and marketing technique to measure the client’s happiness. marketing and customer care. Customer satisfaction model and SERVQUAL for services companies. Customer satisfaction is usually assessed through two techniques i. It could be outlines as: “A top-down perspective on CRM which views CRM as a core customer-centric business strategy. specific reward systems are introduced to improve employee behaviours to increase customer satisfaction. or direct sales. where each interaction with customer is added up. This model distinguishes six categories of quality attribute. Reverse attributes. Pg 3) Operational CRM Operational level of the customer relationship management deals with the front line interaction with the customers. the best among employees is one. 2004. without mentioning their personal information over again. sales. while other three factors mentioned by Kano are. A client database is settled usually. who would provide an outstanding value or services to the customers. AIOU/AIMS/Shaheenshad/AM552069 .Relationship Marketing Strategic CRM Strategic CRM is more leaned towards the development of customer-focused kind of business culture. It could through call centres. Customer satisfaction model This model was given by N. It is more focused on the front office business processes. Questionable attributes and finally. Here.e. that aims at winning and keeping profitable customers” (Buttle. direct emails or call. Kano. Resources are used to enhance customer value.
com/methods_kano_customer_satisfaction_model. Kano 1984) Customer satisfaction model Available http://www.html (accessed on 19th March 2009) at AIOU/AIMS/Shaheenshad/AM552069 . N.12manage.Relationship Marketing (Prof.
This marketing mix approach was not actually replaced but it was repositioned as the toolbox to understand and respond to all the main players in company’s environment i. This new dimension of marketing changed the entire approach. Analytical CRM.” (Solomon. marketing data taken through the surveys or loyalty schemes etc. “… Managing customer relationships. CRM is all about managing customer relationships. it drives a change in behaviour… this means that I have to change my behaviour as an enterprise based on a customer. Customers. more personalized solutions to the problems of the customers. which is based on the marketing mix. unions. it means I’m treating different customers differently.Relationship Marketing Analytical CRM Analytical CRM is focused on using the customer data to enhance the customer and organization value. Analytical CRM provides more powerful up selling and cross selling chances. across all enterprises…. with effective customer acquisition and retention techniques. This data could be found from history of the purchases made. which customer would respond to certain offer. credit scores or payments made. Impact of CRM on marketing and operations of an Organization As discussed above. getting the customer satisfaction in return. AIOU/AIMS/Shaheenshad/AM552069 . and will help the company to get answers of the most important questions like. delivers most timely. suppliers. try to satisfy their needs and continuously increase their level of satisfaction and take them up to the loyalty level. He outlined the importance of this approach to the stakeholders. the relationship develops a context over time. customers who are most likely to switch to the competitors. Rightly have been said by Don Peppers. Companies became more concerned about keeping the customer then striving completely making new ones. companies changed their marketing strategies. In organization’s point of view. In early 1990’s Philip Kotler proposed a new dimension of organizational performance and success based on the relationships rather than the transactional marketing approach. If I’m managing customers’ relationships. Pg 92) This view of CRM completely changed the operations of the organizations. It is based on the customer information. which customer should be targeted. which allow them to identify their best customers.e. and every customer is different than other so each one is being treated differently. 2003. Different CRM strategies are used by the companies. which part needs more sales efforts etc. This information helps the organization to identify its loyal customers. distributors. employees etc. in customer’s point of view.
For example: if a customer is ordering anything online from any supplier. A CRM based organization is focusing on up selling and cross selling than just following the single sale strategy. their marketing strategies seemed to be customer centric (striving to create the customer loyalty rather than making AIOU/AIMS/Shaheenshad/AM552069 . This idea of retaining the customers made huge changes within the organizations and changed its marketing and operations. It has almost shifted the focus from mass marketing to individual customer. while traditional market metrics hardly allowed the companies to make operational decisions that affect individual customers. CRM system is mostly technology based. and estimate their lifetime value such customers. CRM helped the organizations to improve its mass marketing and campaign measures. Traditional marketing approach was more focused on the sales while CRM has a view of long-term relationship with the customers. in this situation a customer would think twice before placing an order online with the organization again. Businesses today put a lot of efforts on analysing the purchasing behaviour of the customer. 2006. For example: Businesses today provide different kinds of promotion and loyalty schemes to retain the customer. and he suddenly gets 200 mails from firms which sale related products. According to the information each customer is targeted separately. CRM has affected the marketing of the organization in a sense that it made organizations to change all its marketing strategies and operations. CRM made businesses more conscious about customer services. 1 stamp on the loyalty card on purchase of one book from Eason. Different schemes and campaigns are being organized by the business to retain the customers. With the implementation of CRM system in the organizations. what does he purchase? How frequently he purchases? What amount he spends? Etc. acquiring and serving the customers. if it is not implemented properly. they manage several databases where they keep records of each customer i. This concept also had a deep affect on the marketing management of the organization. retaining good customers and determining which customer should be retained or given a higher level of services. Pg 7) CRM has a huge impact on marketing of the organization. and it affects the customers’ behaviour a lot. These retention campaigns cost a lot but its very effective in longer run. Like different newspapers give a free copy to its regular customers sometimes.e. Managing each customer relationship is the heart of CRM. and are changing their marketing strategies accordingly. and the time one gets 10 stamps on the card h/she gets 10% off on the next purchase. Organizations now attempt to define the characteristics of the best customers. increasing their value towards the company. These schemes include different promotions to create a sense of loyalty among the customer. The popular among them is Loyalty scheme. CRM based organizations are concerned about the customers. Organizations started building and maintaining databases of the customers’ information.Relationship Marketing (Payne.
e. so organizations now have to spend more on training the employees and make them aware of the system. This one-to-one marketing term could be new but the approach is quite old. They have personalized web pages with wide rang of products to select. Peppers.” (D. which have increased the burden because this approach of one-to-one marketing and customer loyalty expects a lot. M. For example: the owner of a grocery store would naturally take this one-to-one approach while dealing with customers. 1994) CRM has also affected the operations of the organization in terms of putting more pressure on them.com. Customer centric This term is being used for the organizations that are operated from customers’ point of view. who have a returning customer percentage from 3 to 5%. remembering the customer details about their preferences and their characteristics and ultimately providing the services based on that knowledge. It is thought that this personalized interaction will grow customer loyalty and will give a better return on the marketing investments. i. A CRM system could run better if the organization have the right employees. comparing to other e-business retailers. a growth in the market share and an analysis of customer profitability.com. customer retention. One-to-one marketing It is also expressed as 1:1 Marketing. It’s a CRM strategy which emphasis on personalized interaction with customers. rather than mass marketing. Organizations now tend to make databases of the customers. CRM provides the organization with a sustainable competitive advantage. And it’s been taking place since the commerce cam into existence. “One-to-one marketing seeks to reinvent marketing with the personal touch absent from many modern business interactions. the low price lead towards the customer loyalty and a long-term relationship of amazon.com and 15 to 20% of them are returning customers. who have knowledge of the CRM system. For example: The best example of customer centric organization could be Amazon.Relationship Marketing new customer every time) and focus is being given to One-to-one marketing. CRM system is more or less technology based so certain tools should be upgraded continuously like WebPages. In simple worlds organization makes sure that its customers could easily contact it. More than 20 million people have purchased at amazon. In nutshell we can say that CRM has given organization great benefits in terms of improved marketing methods. Rogers. AIOU/AIMS/Shaheenshad/AM552069 .
Due to this relation maintaining approach. striving to make them loyal with the company. building and maintaining the relationships with the customers for the long-term profits. Companies have to change all of their previous strategies and start working on this new approach. because 80% of an organization’s revenues are generated by 20% of the customers AIOU/AIMS/Shaheenshad/AM552069 . While CRM is the comprehensive approach of creating and maintaining long term relationships. Relationship marketing is all about creating. but this approach of marketing is still applicable and many big organizations still use this approach of marketing more or less.Relationship Marketing Conclusion After above discussion it could be concluded that relationships with customers help a lot growing the revenues of the organization. This one0to-one marketing approach has impacted a lot on different aspects of the organization. Transactional marketing is the one sale ahead strategy which doesn’t mainly focuses on building the relations. companies have also affected in terms of their marketing strategies. and their operations. But in recent days its quite obvious that CRM approach is really successful. this is more technology-based approach to stay in touch with customers.
Competitive marketing: a strategic approach Anderson. F.. S.theidm. M. Customer Relationship Management Berndt. 6. 2003. Simkin.. 2007. 12. 14. Contemporary Issue In Business Ethics Solomon. F. 2008. K... C.. Relationship marketing Carey. 4. 2008) Available at [Online] http://www. 10. Mohan. Peppers.. Ezine Articles. Kerr.. A. The One to One Future Vilcox. Customer relationship management Sandhusen.com/? Overview-of-Traditional-Marketing&id=374128 (accessed on March 14th 2009) (Anonymous. 13. L. Conquering ConsumerSpace Kincaid. 8.edu/MKT261%20Ch%2006%20Relationship %20Marketing. 2009) (Prof.pdf (Accessed on 14th March. Customer relationship management: Concepts and Tools Dibb. 3rd Edition Buttle. Marketing Briefs. 2001. Overview of Traditional Marketing. Richard L. 1996.. Chartered Institute of Marketing J. Richard J. D.. Customer Relationship Management and Customer Services Payne.faculty. 16. 2000... 5. 17. [Online] Available from http://ezinearticles.com/methods_kano_customer_satisfaction_model. 2004. 2006. Marketing. 3. Thomas. AIOU/AIMS/Shaheenshad/AM552069 . A. 2004. Marketing communication: Principles and Practice Buttle.fhu. O. 2. J. 1994. Pg 1) Available at [Online] http://rtbrown. 2003. 7. 11. 9. N. business category.. Micheal R. Judith W. Handbook of CRM O’shaughnessy. Rogers. 2001.html (Accessed on 19th March 2009) 15.Relationship Marketing Bibliography 1.12manage. Kano 1984) Customer satisfaction model Available at [Online] http://www. 2002. Mary W.com/resources/idm-insights/transactional-marketing-isdead-long-live-relationship-marketing/ [Accessed on 25th of March] (Anonymous... Blackwell. 1995.
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