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Relationship marketing and customer relationship management have taken a central position in marketing strategy in the past two decades. A confluence of factors, including the transition to service-based economies; advances in communication, logistics, and computing technologies; increased global competition; and faster product commodization have enhanced the salience of “relationship-based loyalty” to sellers compared with other marketing mix factors.
Moreover, some of these trends are simultaneously increasing customers’ desire for the unique characteristics found in relationship-based exchanges (e.g., reduced perceived risk, higher trust, enhanced cooperation, and greater flexibility). Thus, in many situations, both sellers and customers are becoming more interested in conducting business transactions embedded within relationships.
For Dell, to use relationship marketing in their business, the primary question is, how relationship marketing must be implemented to improve customer loyalty. One of the loyalty program is setting up Dell 24/7 Call centre to continuously engage with customers through multiple channels. However, moving customer call centers offshore provides significant cost savings but also can seriously degrade customer relationships. Dell‟s well documented experience.
Relationship Marketing Fundamentals:
Throughout the 1980s and 90s, traditional-based thinking came under increasing criticism. By the late 1990s there was talk of the decline and even death of marketing as a subject (Brady and Davis, 1993; Doyle, 1995; Kashani, 1996; Gordon, 1998). While this might seem a little overdramatic, there is no doubt that for many, a rethink was needed, as even the Chartered Institute of Marketing admitted that: „the old ways of marketing have become increasingly expensive, wasteful and inefficient‟. So why, after so many years, was traditional marketing suddenly in the spotlight amid claims that it was failing? Basically, there were four main strands: changing market dynamics; an inflexible „tool box approach‟; the narrow scope of traditional marketing and the stagnation of marketing as a subject area. Moreover, no one knows who (or how old) the next Highly Influential Customer will be, but Dell can still thrive in a marketing environment in which companies like Dell have less control. They can do so by creating a sound relationship marketing approach that builds trust throughout the relationship lifecycle through relevant and increasingly targeted communications, experiences and improvements. Peppers explain, “Relationship marketing can enable Dell to cultivate that trust through supporters and advocates who have their own interest in Dell‟s continued success.” The fundamentals of relationship marketing remain the same, whether new tactics involve messages dispensed over smart phones, on Facebook or into regulatory mailings or billing statements. Paul Erickson, Digital Cement‟s Vice President, Strategic Growth, says the crucial elements of this approach include: Fig-1
Fundamentals of Relationship Marketing:
Source: Relationship Marketing 3.0. (2009). Thriving in Marketing’s New Ecosystem. Available:
http://www.digitalcement.com/CRM/pdf%5Cdigitalcementwp_092409_final.pdf. Last accessed 20 April 2012.
Relationship marketing investments should be allocated primarily to social and structural programs rather than financial programs. Social programs appear to generate the highest returns. Relationship marketing programs aimed at increasing communication the amount, the frequency, and the quality are especially effective early in the lifecycle, because communication is a strong driver of relationship quality and future relationship growth or relational velocity. Structural programs, such as electronic order-processing interface, customized packaging, and other policy or procedural changes, also enhance relationships between the customer and the selling firm. Structural relationship marketing programs should target highvolume, existing, or growing customers, because a larger sales volume supports implementation costs and often provides more value to customers with high-frequency interaction. In contrast, firms should minimize their proactive use of financial Relationship Marketing programs (e.g., price reductions, rebates, discounts) and instead consider these programs only as price/volume discounts or competitive responses. Most financial programs simply cannot generate positive short-term returns or build long- returns.
Further to that, fundamentals of relationship marketing put massive importance on lifecycle. This requires continues influence over the customer and clients alike. Influence markets are important to an
organization in terms of relationship marketing as members of this market include bodies that directly impact on the organization. It is therefore essential that organizations identify the main influencers to its‟ markets „in order to protect and progress core business‟ (Cranfield School of Management 2000, p.23). This section will attempt to identify the influencers, and determine how these relationships‟ are exploited by Dell. To ascertain the factors that affect Dell and the way that Dell conducts itself in the Influence market and the Referral Market was difficult as there was limited information to be found in terms of these markets. However, the relationships that are conducted in the Influence and Referral market are more rather implied in the sense that Dell relies on partnerships and its reputation to corner these markets. In terms of the Influence market it could be said that governments, and the computer industry, are the main factors affecting this market for Dell. For instance governments both national and international affect the influence through legislation affecting employment, interest rates, tax, and on monopoly laws. These factors affect how Dell as a company expands and conducts its business on a national and global scale. However, evidence from Dell website, it is clear that Dell is in close partnership with the U.S. government, through developing defence systems with the military and supplying the U.S. government with computers. It could be said that this partnership allows Dell a certain amount of room to maneuver in the U.S. to expand its market share.
Another factor affecting the Dell in the Influence Market is the computer industry in the sense that Dell has to keep ahead of the competition in the constantly changing industry through inspiring innovation as well as creating partnerships with other firms and its suppliers for example. In terms of the referral market Dell exploits this market through supplying businesses and education centres, such as universities and schools, as well as charitable organizations. By supplying these types of organizations Dell manages to maximize its advertising potential through exposure of its products, for example a satisfied customer will always refer and recommend a good product to their friends and will always use the same company again and again.
Also, Dell can use the effect of supplying schools and universities in the sense that students and young children if exposed to Dell products will be familiar with Dell products and may encourage parents to purchase a Dell computer. To supply charitable organizations Dell has a recycling program where customer how want to upgrade their computers can trade in their current P.C. to Dell who would then pass on to charities. Again by promoting this philanthropy Dell can reach more potential customers through being seen as an organization that is ethical and that gives back to the community in order to increase computer literacy amongst those who cannot afford a computer.
References and Bibliography:
Cranfield School of Management 2000, Marketing Management: a Relationship Marketing Perspective, Macmillan Business, Basingstoke. Relationship Marketing 3.0. (2009). Thriving in Marketing‟s New Ecosystem. Available: http://www.digitalcement.com/CRM/pdf%5Cdigitalcementwp_092409_final.pdf. Last accessed 20 April 2012. Kraemer, K.L., Dedrick, J., Yamashiro, S. (2000), „Refining and Extending the Business Model with Information Technology: DELL Computer Corporation‟, The Information Society, vol.16, no.1, pp.5-21. Porter, M. (1979), „How Competitive Forces Shape Strategy‟, Harvard Business Review, 57, no.2, pp.137-45.
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