Relationship Marketing 2001

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Relationship Marketing 2001

• Dr. Wim G. Biemans

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Overview of the course

• Lectures
• 7 general lectures
• no seminars in small groups
• Paper
• group of 5 students
• deadline May 10 results May 22
• Exam
• open questions
• in English
• Grade
• written exam 70 (but at least 5.5)
• paper 30
• Website

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Contents

• March 27 Basic principles of relationship
  marketing
• April 3 Economics of relationship marketing
• April 10 Relationship marketing strategy
• April 17 Networks of relationships
• April 24 Information and communication
  technology
• May 1 Relationship marketing instruments
• May 8 Implementation of relationship marketing
• May 10 ----- deadline for paper -----
• May 22 ----- feedback and final questions
  -----
• May 28 ----- exam -----

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1 Basic principles of RM

• The need for relationship marketing
• Some real-life examples
• Different perspectives on relationship marketing
• Different definitions of relationship marketing
• The basic principles of relationship marketing

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Just a Quotation...

• It has always been incredible to me how
  insensitive companies can be to customers. Most
  of them dont seem to understand that their
  future business depends on having the same
  customer come back again and again.
• (W.H. Davidow, 1986, Marketing High Technology)
  

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The case of b-to-b marketing

• STAGE OF THE SALE SELLER BUYER
• before real hope vague need
• romance hot heavy testing
  hopeful
• sale fantasy bed
  fantasy board
• after looks elsewhere for "You
  don't care
• next sale
• long after
  indifferent "Can't this be made
• 
  
  better?
• next sale "How about a new one?
  "Really?"

7
Buying a computer at Dunnet...

• It could have been so easy, but
• they didnt know what they were selling
• they sold a computer with incompatible software
• they clearly didnt care after the sale
• they hung up on me
• they gave false information over the phone
• they didnt have good internal co-ordination
  between Technical Services and Customer Service
• they didnt deal correctly with customer
  complaints
• they havent learned anything!!!

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Frustrating questions

• Why do so many companies always ask for my name,
  address, ZIP code and all kinds of other
  information that I have already given them many
  times before?
• Why did NRC Handelsblad call me every year to try
  to sell me a subscription when I already had one
  for 12 years?
• Why do I always have to tell an ATM how much
  money I want?
• Why is it impossible to find an address,
  phonenumber or anything to complain to Ford
  Nederland?

9
Shifting emphasis in marketing

• 1950s consumer marketing
• 1960s industrial marketing
• 1970s nonprofit and societal marketing
• 1980s services marketing
• 1990s relationship marketing
• But what exactly is relationship marketing???
• First what exactly is a relationship???

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What is a relationship?

• A relationship is mutually oriented interaction
  between two reciprocally committed parties (IMP
  group 1995)
• two active parties
• commitment over time
• considerable interaction
• two interdependent parties
• adaptations and blurring boundaries
• A relationship is more than just a series of
  interactions over time long-term commitment is
  essential!!!

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Relationships evolve over time

• Awareness A recognizes that B is a potentially
  interesting partner
• Exploration potential partners consider costs
  and benefits of exchange (perhaps through trial
  purchase)
• Expansion increasing benefits and
  interdependence
• Commitment pledge of relational continuity (e.g.
  through investments and adaptations)
• Dissolution termination (perhaps unilaterally)

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Shift to relationship marketing
relationship marketing
emphasis on customer retention
emphasis on customer acquisition
transaction marketing
functionally based marketing
cross-functionally based marketing
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Relationship or transaction?

• TRANSACTION MARKETING
• focus single sale
• product features
• short term perspective
• little emphasis on customer
• service
• limited customer
• commitment
• moderate customer contact
• quality is primarily concern
• of production

• RELATIONSHIP
• MARKETING
• focus customer retention
• customer value
• long term perspective
• much emphasis on customer
• service
• high customer commitment
• high customer contact
• quality is concern of all

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Some definitions...

• Relationship marketing is attracting,
  maintaining and enhancing customer relationships
  
  (Berry, Shostack and Upah 1983)
• Relationship marketing combines elements of
  general advertising, sales promotion, public
  relations and direct marketing to create more
  effective and more efficient ways of reaching
  customers. It centers on developing a continuous
  relationship with customers across a family of
  related products.
  (Copulsky and
  Wolf 1990)

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and two more

• Relationship marketing is the consistent
  application of up-to-date knowledge of individual
  customers to product and service design which is
  communicated interactively, in order to develop a
  continuous and long term relationship, which is
  mutually beneficial (Cram 1994)
• Relationship marketing is a strategic
  orientation adopted by both the buyer and seller
  organizations, which represents a commitment to
  long-term mutually beneficial collaboration
  (Morris et al. 1998)

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Nothing new really...
larger firms larger markets more
competition technological advances
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Relationship marketing...

• uses media that are individually addressable
• uses media that are interactive (two-way)
• exploits technological advances by using
  inexpensive media
• creates a dialogue with individual customers
• focuses on share of customer instead of share of
  market
• tracks individual customers

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Creating a dialogue

• In general, marketers are much more prepared to
  talk to customers than to hear from them
• Having a dialogue is not the same as conducting a
  series of interviews!
• A dialogue is an exchange of thought between two
  parties
• all parties must be able to participate
• all parties must want to participate
• the dialogue can be controlled by all parties
• the dialogue will change the behavior of all
  parties

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Share of customer

• Question Which business would you rather own?
• One that gets 10 of each customers total
  purchases?
• One that sells to only 10 of the market, but
  gets 100 of each customers purchases?
• Advantages in the area of
• customer loyalty
• marketing, sales and administrative costs
• better fit between products and customer needs