iCRT LEARNING MODULE

Course Code THM07

Course Title Tourism and Hospitality Marketing
Units 3
Module Title Relationship Marketing

College for Research & Technology of Cabanatuan

Date Developed:
Document No. 001-2020
Tourism And Hospitality February 7, 2021
Marketing Module 10 : Date Revised: Issued by:
Relationship Marketing Developed by: Page 1
Jennifer J. Miranda CRT
HOW TO USE THIS DIGITIZED LEARNING MODULE
Welcome to the module in Relationship Marketing. This module contains
training materials and activities for you to complete this module. This module covers
what a tourism product is and its component, the stages of the product life cycle and
the destination life cycle and also the product development process.

You are required to go through a series of learning activities in order to complete

each learning outcome of the module. Each of the learning outcomes is provided with
Modules. Follow these activities on your own and answer the self-check at the end of
each learning outcome. You may remove a blank answer sheet at the end of each
module (or get the answer sheets from the online facilitator) to write the answers for
each self-check. If you have questions, don’t hesitate to ask your facilitator for
assistance.

This module was prepared to help you gain fundamentals and basic knowledge
about Tourism and Hospitality Marketing. This will be the source of Information for you
to acquire knowledge and skill in this particular trade independently and at your own
pace, with minimum supervision of help from your instructor.

 Talk to your online facilitator and agree on how you will both organize the
Training of this unit. Read each through the module carefully. It is divided into
sections, which cover all the skills and knowledge you need to successfully
complete this module.
 Work through all the information and complete the activities in each section.
Read Modules and complete self-check. Suggested references are included to
supplement the materials provided in this module.
 Most probably your facilitator will be your supervisor or manager. Your online
facilitator will support and correct you.
 Your online facilitator will tell you about the important things you need consider
when you are completing activities and it is important that you listen and take
notes.
 You will be given plenty of opportunity to ask questions and practice on the job.
Make sure you practice new skills during regular work shifts. This way you will
improve both your speed and memory and also your confidence.
 Talk to more experienced workmates and ask for their guidance.
 Kindly the self-check questions at the LMS (EDMODO) to test your own progress.
 When you are ready, ask your online facilitator to watch you online via Zoom or
Google Meet to perform the activities outlined in this module.
 Ask your online facilitator work through the activities: ask for written feedback
on your progress. Your online facilitator keeps feedback/pre-assessment reports
for this reason. When you have successfully completed each element, ask the
facilitator to mark on the reports that you are ready for assessment.
Date Developed:
Document No. 001-2020
Tourism And Hospitality February 7, 2021
Marketing Module 10 : Date Revised: Issued by:
Relationship Marketing Developed by: Page 2
Jennifer J. Miranda CRT
 When you have completed this module, and feel confident that you have
sufficient practice, your online facilitator will arrange an appointment with
registered assessor’s to assess you. The results of your assessment will be
recorded in your competency Achievement Record.

MODULE CONTENT
Date Developed:
Document No. 001-2020
Tourism And Hospitality February 7, 2021
Marketing Module 10 : Date Revised: Issued by:
Relationship Marketing Developed by: Page 3
Jennifer J. Miranda CRT
MODULE TITLE: Relationship Marketing

NUMBER OF HOURS: 3 hours (1 week)

LEARNING OUTCOMES:

At the end of the module, you MUST be able to:

1. Define what relationship marketing is and its value to the tourism

enterprise.
2. Differentiate between traditional and relationship marketing.
3. Explain the role of internal marketing in the building of
relationships.
4. Identify what hinders relationship marketing.

Contents:

1. Relationship marketing defined

2. Internal marketing
3. Resistance to relationship marketing

Conditions:

The students must be provided with the following:

1. Hard copy or soft copy of the course syllabus
2. MS Word
3. Pen
4. Paper

Assessment Method:

1. Submission of Research paper.

2. Written examination.
3. Quizzes using Google forms.

Date Developed:
Document No. 001-2020
Tourism And Hospitality February 7, 2021
Marketing Module 10 : Date Revised: Issued by:
Relationship Marketing Developed by: Page 4
Jennifer J. Miranda CRT
 MODULE 10
RELATIONSHIP MARKETING
Learning Objective: After reading this MODULE, you should be able to:

1. Define what relationship marketing is and its value to the tourism

enterprise.
2. Differentiate between traditional and relationship marketing.
3. Explain the role of internal marketing in the building of
relationships.
4. Identify what hinders relationship marketing.

INTRODUCTION

Berry (1983) first coined the term relationship marketing (RM) and
defined it as attracting, maintaining, and enhancing customer relationships.
The American Marketing Association reinforced the importance of RM in its
revised definition of marketing to include building relationships.

Traditional marketing (also called transactional marketing) ideas

centered on the acquisition of new customers and focused on transactional
exchanges with anonymous customers. However, marketers have soon
realized that securing the loyalty of its existing customers and maximizing
their lifetime value have become integral to success (Li & Petrick 2008).

RELATIONSHIP MARKETING DEFINED

Relationship marketing involves creating, maintaining and enhancing

long-term relationships with individual customers as well as other
stakeholders for mutual benefit (Belch & Belch 2008).

RM sees the customer as an asset. Its function is to attract, maintain,

and enhance customer relationships (Shoemaker et al. 2007). The goal is
not only to encourage guests to return but to get them to tell their friends
and relatives how good the product or service is.

Shoemaker et al. (2007) define RM as an ongoing process of

identifying and creating new value for individual customers for mutual
value benefits and then sharing these benefits over a lifetime of
association.
Date Developed:
Document No. 001-2020
Tourism And Hospitality February 7, 2021
Marketing Module 10 : Date Revised: Issued by:
Relationship Marketing Developed by: Page 5
Jennifer J. Miranda CRT
 According to Achrol and Kotler (1999), now is the time to shift from
being an agent of the seller to being an agent of the buyer, and from being
a marketer of goods and services to being a customer consultant and
manager of his or her products.

Morgan and Hunt (1994) asserted that "relationship marketing refers

to all marketing activities directed toward establishing, developing, and
maintaining a successful relational exchange."

Gummesson (1994) proposed that "relationship marketing is

marketing seen as relationships, networks, and interaction."

As a tourism marketer, there is a need to maintain a good client

database which should be regularly updated. From this list, one has to
identify the top 20% of one's clients, which can yield 80% of one's
business. Then, focus 80% of one's time in cultivating this top 20%. This is
known as the Pareto principle, very popular for its 80-20 concept.
Applying this principle will make sense later on when one is out there in
the field. Not all clients are equal; some will yield bigger business than
others. Hence, one should be concentrating on clients who can give the
highest returns by developing relationships with them.

The popular Filipino term for regular clients is "suki." What is the
"suki" mentality? If there is a regular stall in the market you buy your
vegetables from, the "tindera" (seller) would call you "suki." On the
seller's end, he normally gives you a good price since he knows you are a
regular customer. On your end, you normally do not canvass or look at
other stalls anymore, trusting that this particular stall offers the best price
and provides good quality products. Applying the "suki" concept to the
tourism industry is like establishing loyalty and building relationships with
your customers. When the buyer-seller relationship deepens, trust and
commitment are established. The seller commits to providing quality
service at a reasonable price while the buyer trusts that quality service and
reasonable prices are provided in turn. The service provider becomes top
of mind as far as the buyer is concerned.

Levels of Relationships

Date Developed:
Document No. 001-2020
Tourism And Hospitality February 7, 2021
Marketing Module 10 : Date Revised: Issued by:
Relationship Marketing Developed by: Page 6
Jennifer J. Miranda CRT
 To further understand how relationships can develop between
tourism providers and their clients, let us discuss the five levels of
relationships (Kotler et al. 2010):

1. Basic-sells a product and does not follow up after the sale.

2. Reactive sells a product and encourages customer to call if he

has concerns or questions but will not make the first move to ask.

3. Accountable - representative gets in touch during and after the

event to solicit customer feedback.

4. Proactive-salesperson phones customer from time to time to

update on product innovations in the prospect of future sales

5. Partnership-company works continuously with the customer to

discover ways to deliver better value.

DIMENSIONS OF RELATIONSHIP MARKETING

Customer Retention

In order to retain customers, the following elements have to be

understood by the tourism marketer

1. The value of customer satisfaction. Customer satisfaction

measures how much a customer's expectations are met. Customers
purchase products and services with a level of expectations in mind. As
discussed in Chapter 3, in the decision-making process, there is a post-
purchase evaluation. Customers evaluate a product based on their level of
satisfaction. This can lead to one of these five options: extreme
satisfaction, satisfaction, neutral, dissatisfaction, or extreme dissatisfaction.

2. The cost of lost customers. Companies should know that when

a customer defects, the company loses the customer's lifetime value

3. The importance of resolving customer complaints. This is a

critical component of customer retention. Unresolved customer complaints
may result in negative word of mouth and loss of future sales

Customer Loyalty

Date Developed:
Document No. 001-2020
Tourism And Hospitality February 7, 2021
Marketing Module 10 : Date Revised: Issued by:
Relationship Marketing Developed by: Page 7
Jennifer J. Miranda CRT
 Customer loyalty is the likelihood that customers are to return and
are willing to perform activities with the organization. Customers spend
more money while within the company premises and tell management
when things go wrong instead of just walking away (Shoe maker et al.
2007)

Some satisfied customers do not become loyal for the following

reasons:

1. They never return to the same area.

2. Customers like to experience different service providers when

they return to the area.

3. Customers are price sensitive and will shop for the best deal.

Is a loyalty program the same as a frequency program?

1. Frequency does not build loyalty. It is loyalty that builds

frequency. Customers can stay focused on the deal and not on the
product.

2. Loyalty program is a strategy undertaken by a firm to manage the

three components of the loyalty circle (how the service works,
value creation, and communication) to create an emotional bond
with customers so that they give the firm a majority of their
business, provide positive word of mouth, act in partnership with
the firm, and spend more with the firm than a non-loyal guest
would. (Shoemaker et al. 2007)

3. Frequency program is defined as any program that rewards guests

with points, miles, stamps or punches that enable them to redeem
such rewards for free or discounted merchandise.

4. With frequency programs, sales may increase as they would with

price discounts. Repeat purchase may also increase but the focus
is on the rewards and not on product superiority or brand
relevance.

Referrals from Satisfied Customers

Date Developed:
Document No. 001-2020
Tourism And Hospitality February 7, 2021
Marketing Module 10 : Date Revised: Issued by:
Relationship Marketing Developed by: Page 8
Jennifer J. Miranda CRT
 Positive word of mouth will be most likely generated by satisfied and
loyal customers. This amounts to high level of positive reinforcement on
the purchase decisions of prospective customers. With the advent of social
media, electronic word of mouth creates a wider range of positive reviews.
With the intangibility of the tourism product, there is heavy reliance on the
experience of others. What other people say about a product or a
destination matters a lot in the pre-purchase stage of would-be customers.
There is less risk involved in the purchase of a product since other people
have already tried it and were satisfied. Hence, word of mouth is one of
the most sought after information by prospective customers when
evaluating alternatives.

Complaint Management System

One of the most challenging tasks of a service industry is handling
complaints. The variability of the tourism product sets the precondition of
unavoidable differences in the delivery of the services. One cannot expect
to deliver tourism products and services perfectly every time. There will
always be the possibility that things could go wrong.

What should be the perspective when things do not go as planned

and customers begin to complain?

1. Always bear in mind the first rule in customer service: "The

customer is always right!"

2. If one thinks he is not, then rule no. 2 is: "Go back to rule no. 1.

3. Feedback is an important tool in knowing what our market wants.

Complaints are negative feedback from customers. Consider
complaints as a gift.

In the practice of relationship marketing, customer feedback in the

form of complaints should be encouraged. Customers should know how
they could file complaints. Dissatisfied customers who complain can more
easily be converted into repeat and loyal customers than those who just
walk away with no intentions of coming back.

Research has shown that negative word of mouth spreads twice as

quickly as positive word of mouth. Hence, an effective complaint
management system should be set in place to manage customer
complaints. Sincerely addressing customer complaints will help establish
good customer relations.

Date Developed:
Document No. 001-2020
Tourism And Hospitality February 7, 2021
Marketing Module 10 : Date Revised: Issued by:
Relationship Marketing Developed by: Page 9
Jennifer J. Miranda CRT
 INTERNAL MARKETING
In relationship marketing, quality should be the concern of everyone
in the organization. Quality cannot be established by just the frontliners or
guest contact employees; it should also be embraced by non-guest contact
employees. The key to building relationships with customers would be the
organization's employees. It is therefore imperative for management to
devise ways by which there will be very low employee turnover and very
high employee morale.

The principle of internal marketing is to market hospitality jobs to

employees just as they market hotels and/or restaurants to our customers
(Shoemaker et al. 2007). Some international hotels seek out the top
graduates of universities and offer them attractive employment packages in
order to beef up their roster of employees

Companies with low employee morale will tend to provide the

minimum service requirements. They are not willing to go the extra mile.
When employees are happy and motivated, these attitudes reflect on how
they perform on their jobs. The happier and more content they feel, the
more they will be willing to keep customers happy and content.

DEFINING CONSTRUCTS OF RELATIONSHIP

MARKETING
Relationships involve commitment and trust. Trust is the belief that
an individual or exchange partner can be relied on to keep his word and
promise. Trust is an antecedent to loyalty because the customer trusts the
organization to keep its word. Increased feelings of trust will lead to
commitment, and commitment to loyalty.

Commitment is the belief that an ongoing relationship is so important

that the partners are willing to work at maintaining it and are willing to
make short term sacrifices to realize long-term benefits Opportunistic
behavior will cause a lack of trust.

Antecedents and consequences of commitment include trust, value

(saving time, experiential, and emotional), certainty that the firm will
deliver benefits, and switching costs. Other consequences include
increased product usage and voluntary activities such as strong word of
mouth and business referrals.

Date Developed:
Document No. 001-2020
Tourism And Hospitality February 7, 2021
Marketing Module 10 : Date Revised: Issued by:
Relationship Marketing Developed by: Page 10
Jennifer J. Miranda CRT
 The top ten defining constructs of general relationship marketing are
trust, satisfaction/ experience, loyalty, commitment, service quality,
communication, empathy/customer orientation, relationship
quality/value/duration, reciprocity, and culture. These defining constructs
should be duly taken care of by firms/organizations to achieve success in
the marketplace (Agariya & Singh 2011).

These constructs need to be evident in the company-client

relationship so that the company can really say that it practices relationship
marketing

BENEFITS OF BUILDING RELATIONSHIPS

WITH CUSTOMERS
Building a relationship with customers should be the strategic focus
of tourism establishments. Research proves that a small increase in loyal
customers can result in a major increase in profitability (Kotler et al. 2010).
Research has shown that a 5% increase in customer retention can result to
25-80% increase in profits (Agariya & Singh 2011). Estimates suggest that
it is six times more profitable to sell to existing customers (Smith & Zook
2011). Some benefits of relationship marketing include continued
patronage of customers, reduced marketing costs, and decreased price
sensitivity of loyal customers, availability of feedback, ability to create a
database asset, strengthened brand loyalty, and partnership activities with
customers.

When competition is strong, companies should rely on its base of

loyal customers. They can provide continuous sales despite the advent of
new products and services, and/or reduction of prices by the competition.

Loyal customers are also able to provide you with the much-needed
customer feedback, both positive and negative. They are the ones who
would tell when your product/service quality is deteriorating. They are also
the ones who would recommend your product and services to others.

A customer's lifetime value is the net profit received from doing

business with a given customer during the time he continues to buy from
you. This lifetime value can be huge especially when referrals are
considered.

RESISTANCE TO RELATIONSHIP MARKETING

Date Developed:
Document No. 001-2020
Tourism And Hospitality February 7, 2021
Marketing Module 10 : Date Revised: Issued by:
Relationship Marketing Developed by: Page 11
Jennifer J. Miranda CRT
 Some tourism marketers have expressed resistance to the shift to
relationship marketing mainly due to the following reasons, cited by Li and
Petrick (2008):

1. Novelty-seeking behavior of tourists. The novelty-seeking

behavior of many tourists leads to the constant tendency of
tourists to seek change and switch brands. However, future
research has been suggested to compare the role of relationship
building and novelty-seeking in the purchase behavior of tourists.

2. Challenge to work closely with customers. There is a need to

focus on a better understanding of the needs of the customers.
But with the pervasiveness of technology, many functions of
traditional intermediaries are bypassed and these roles are
assumed by the customers using online means. Thus, interaction
between the seller and buyer becomes minimal.

3. Irrelevance of RM. Another argument raised that counters

relationship marketing advocates the fact that service quality and
customer satisfaction are integrated to the core of the tourism
industry, it being a service industry. Hence, a discussion of
relationship building through better service and customer
satisfaction is already a given and should be a non-issue.

Relationship marketing does not disregard traditional marketing

tools. In fact, RM enhances and reinforces these traditional tools. RM
does not seek to invalidate the traditional or transactional view. The
relationship paradigm incorporates, rather than invalidates, the
traditional view (Li & Petrick 2008). Acquiring new customers should
not be disregarded just because you have loyal customers. It is
similar to a funnel wherein attracting new customers and retaining as
many old ones as possible will help increase your sales volume. For
any business to grow there should be a steady flow of new
customers and a solid base of loyal customers.

Reasons People Fail to Build Customer

Relationships

Date Developed:
Document No. 001-2020
Tourism And Hospitality February 7, 2021
Marketing Module 10 : Date Revised: Issued by:
Relationship Marketing Developed by: Page 12
Jennifer J. Miranda CRT
 Here are some things that organizations most often unknowingly do
that hinder building of relationships with customers:

1. Ignore inquiries.

2. Ignore customer emails.

3. Do not return calls within a reasonable amount of time.

4. Fail to get to know the customers.

5. Fail to satisfy the customers.

6. Fail to deliver what was promised.

7. Do not act on complaints.

8. Find fault in the service delivery by pointing fingers at everyone

else except self.

REFERENCE:
TOURISM MARKETING BOOK
(2015 EDITION)
(MARICEL GATHALIAN-BADILLA)

Date Developed:
Document No. 001-2020
Tourism And Hospitality February 7, 2021
Marketing Module 10 : Date Revised: Issued by:
Relationship Marketing Developed by: Page 13
Jennifer J. Miranda CRT