1. Relationship Marketing
What is relationship
marketing, and why does it
matter?
MS6105
Week 2
2012-13

2. What is marketing?
 Facilitating an exchange
between two parties
(customer and
organisation)
 Both a business activity
and a philosophy
 Various approaches
 Sales support
 Communications
 Operational
 Strategic
Customer
Organisation

3. The target marketing process
Define
market
Segment
market
Target a
segment
Position
Price
Product
Place
Promotion
People
Physical evidence
Process

4. Marketing Motorcycles
 See case study.

5. Criticisms of the TM approach
 Theoretical and practical limitations
 Too simplistic yet unrealistic
 Studies on the profitability of retention
 Reichheld & Sasser 1990, Evans & Laskin 1994
 Changes in customer culture
 Increasing sophistication and promiscuity
 Changes in technology
 Increasing information storage and processing
power

6. The continuing search for
competitive advantage
 The anatomy of the
product
 Change in emphasis
from physical to
emotional USP
Augmented product
Actual product
Core product

7. What is relationship
marketing?
“…to identify and establish, maintain and enhance and,
when necessary, terminate relationships with customers
and other stakeholders, at a profit so that the objectives
of all parties are met; this is done by mutual exchange
and the fulfilment of promises.” (Gronroos 1994)
“Thinking in terms of having customers, not merely
acquiring customers” (Berry 1983)

8. Strategic and tactical
requirements of RM
 Define organisation as a
service organisation
 Focus on long term retention
rather than acquisition
 Approach marketing from a
process management
perspective
(Gronroos 1996)
 Seek direct contact with
customers
 Develop a database on
individual customers
 Develop collaborative
networks of
suppliers/intermediaries
Strategic implications Tactical implications

9. The requirements of a relationship
Attraction
Satisfaction
Trust
Commitment
Loyalty
Target
marketing
Customer
care, service quality
& internal
marketing
Total Quality Management

10. Three components of RM
 Customer service (service
quality/marketing)
 Internal marketing
 Total Quality Management
Christopher Payne & Ballantyne 1991

11. The six markets model of RM
(Employee)
Recruitment
markets
Supplier
markets
Internal
markets
Referral
markets
Influence
markets
Customer
markets
Christopher, Payne & Ballantyne (1991)
Gummesson (1999)
Suggests 30Rs!!

12. JJ Motorbikes
 Develop a marketing strategy for JJ
Motorbikes using RM principles
 Identify the offer being made to customers
 Highlight other key relationships
 Explain what needs to be done to effectively
service these relationships
(resources, communication channels etc).

13. The RM plan
 Strategic and
tactical planning
 Marketing strategy
 Components of the
plan
 Emergent Vs.
intended strategy
Where are we now?
Strategic audit
Where do we want to be
Objectives
How might we get there?
Strategy and tactics
How will we make
sure we arrive?
Monitoring and control

14. RM shifts the focus
The emergent view of strategy (e.g. Mintzberg, Quinn)
Also strategy as `fit’ (e.g Porter) or `Stretch’ (e.g.
Grant, Barney, Hamel & Prahalad).
Learn from
experience
Monitor
results
Reflect
knowledge in
future actions
Take action
Consistent patterns
of behaviour
(i.e. strategy)
emerges over time

15. The relationship portfolio
 The relationship
ladder (Christopher
et al 1998)
 The relationship life
cycle
Prospective
Developing
Established
Declining
Time
Turnover
Little & Marandi 2003

16. Managing the relationship
portfolio
High
High
Low
Low
Relationship strength
Relationshippotential
Invest for growth Select for development
or ignore
Maintain Ignore

17. The RM-TM continuum
RM TM
High customer anxiety
High degree of contact
Customized product
Importance of confidence, social
and special benefits
Customers in favour of relationships
Low customer anxiety
High contact unnecessary
Standard product
Customers not seeking
relationships
Little & Marandi 2003

18. It’s all about process
 Perhaps the biggest implication of the
RM approach
 Shifts emphasis from products and
brands to the systems that maintain
and develop repeat custom
 This is more about what goes inside the
organisation than about customers `out
there’ in the environment.