RELANTIONSHIP MARKETING As A TOOL Presentation Transcript
“ EXAMINATION OF A NEW PARADIGM” RELATIONSHIP MARKETING AMARNATH.K
JOURNAL: ADVERTISING EXPRESS
AUTHOR:SANJITH KUMAR ROY
OLD IS GETTING CHANGED..!! OLD IS NOT MORE GOLD Marketing for many years has been based on the management of demand, for example, by advertising and promotion, and the management of price to stimulate demand, or by developing new and different products appealing to different segments of the market at different price points. THIS INTERACTION BETWEEN SUPPLY AND DEMAND IS NO-LONGER ADEQUATE.
THIS HUNT FOR NEW CUSTOMERS IS DIFFICULT! WHY BECAUSE? Of the changing pattern of the demand in keeping with the rise in the service based industries and a fall in the consumers and industrial sectors. THE WORLD IS GETTING SMALLER AND SMALLER AND PEOPLE HAVE SO MANY ALTERNATIVES TO CHOOSE FROM IN THIS NEW COMPETITIVE ENVIORNMENT…………. So services theses days play an important role in the whole process of product offering.
THE REASONS FOR THESES DEVELOPMENTS ARE:
The decline of traditional mass marketing techiques,as customers become more discriminating and demanding;
The saturation of markets as they mature;
The increasing focus on price, as differentiation decreases.
The appearance of technological development that provides new solutions and products ,and
The changing nature of markets, particularly the increase in competition and development of fragmented ,regional, and global markets and companies.
So because of theses ……
Marketing is experiencing a shift from “Transaction –Orientation” to “Relationship-Orientation”
It says instead of one sale at a time view of marketing, emphasis should be laid on the relationship between the organization and its markets.
SO THERE EMERGES THE NEED FOR RELATIONSHIP MARKETING….
WHAT IS RELATIONSHIP MARKETING?
It was first coined by BERRY (1983) as a deviant form of traditional marketing.
Relationship marketing is defined as the process of attracting, maintaining and ,in multi-service organizations, enhancing customer relationships (BERRY,1983).
VAVRA(1992) defines it as a customer retention program in which a variety of after marketing tactics are used for customer bonding or staying in touch after the sale is made.
So Relationship marketing is to be the ongoing process of engaging in-cooperative and collaborative activities and programs with immediate and end –user customers to create or enhance mutual economic value at reduced cost.
The underlying dimensions for theses definitions are: the PURPOSE(OR OBJECTIVE);PARTIES(OR CUSTOMER PARTNERS); and PROGRAMS (OR DEVELOPING RELATIONS).
Some factors that led to the rapid development of relationship marketing are:-
SOPHISTICATED TECNOLOGY like computers and telecommunications that allow the producers to interact with the customers.
TOTAL QUALITY MOVEMENT DRIVE among the companies has led to the enhancement of relationship marketing.
WHAT IS THE DIFFERENCE BETWEEN TRADITIONAL AND RELATIONSHIP MARKETING? Instead of saying it has differences its better we say, the CONTINUUM IN THE MARKETING STRATEGY, because of theses competition and other factors
THE MARKETING STRATEGY CONTINUUM-SOME IMPLICATIONS Consumer packaged Goods Consumer durables industrial Goods Services The product continuum Internal marktg of substantial strategic importance to success Internal marktg of no or limited importance to success The role of Internal marketing Interface of substantial strategic importance Interface of no or limited strategic importance Interdependency between marketing, operations and personnel Real-time customer feedback system Adhoc customer satisfaction surveys Customer Information system Managing the customer base(Direct approach) Monitoring market share(Indirect approach) Measurement of customer satisfaction Quality of interactions(Functional quality dimension )grows in importance and may become dominant. Quality of output( technical quality dimension is dominant) Dominating quality dimension Less sensitive Customers tends to be more sensitive to price Price Elasticity Interactive marketing Supported by marketing mix activities) Marketing Mix Dominating Marketing Function Long term focus Short term focus Time perspective Relationship Marketing Transaction Marketing The Strategy continuum
Key Elements in Relationship Marketing
To identify and build a database of the current and potential customers ,which incorporates the information regarding the demographic ,lifestyle and purchase behavior of the customers.
To deliver the right messages to the right target customers at the right time through proper communication channels.
To keep track of each and every relationship and monitoring the cost of acquiring the consumers and their lifetime value.
The emphasis on the interaction between suppliers and customers is shifting from a transaction to a relationship focus.
The relationship marketing focuses on maximizing the lifetime value of desirable customers and customer segments.
Quality ,customer service and marketing are closely related ,but most of the time they are managed separately. The relationship marketing makes these elements coherent.
Delivering differentiated messages to theses people through established and new media channels based on the consumers characteristics and preferences.
PURPOSE OF RELATIONSHIP MARKETING
CUSTOMER RETENTION IS THE ONLY PURPOSE
Relationship marketing attempts to involve and integrate customers ,suppliers and other infrastructural partners into a firm’s developmental and marketing activities .Such involvement results in close interactive relationships with suppliers, customers or other value chain partners of the firm.
Thus RM reflects interdependence rather than independence of choice among the parties and emphasizes cooperation rather than competition and consequent conflict among the marketing actors.
So development of relationship marketing points a significant shift in the axioms of marketing competition :
COMPETITION AND CONFLICT TO MUTUAL COOPERATION.
CHOICE INDEPENDENCE TO MUTUAL INTERDEPENDENCE.
TRANSACTIONAL MARKETING RELATIONSHIP MARKETING INDEPENDENCE AND CHOICE MUTUAL INTERDEPENDENCE COMPETITION AND CONFLICT MUTUAL COOPERATION AXIOMS OF TRANSACTIONAL AND RELATIONSHIP MARKETING
SIX MARKET FRAMEWORK OF RELATIONSHIP MARKETING
Markets are also important as it reflects the competitive aspects of relationships.
Thus it says that in order to build and sustain customer value it is important to recognize that relationships must be built with a number of constituencies.
The framework thus ,represents the groups of components that are critical to building and maintaining relationships.
The essence of this framework is that although customer markets are at the center of the figure it is not the only market of importance in terms of relationship marketing; the other markets are as influential as customer markets depending on the situation and context.
Many organizations market to trade customers (Intermediaries, distributors or retailers) and consumers (end purchasers ,user and consumer), but their relative power within the supply chain is likely to determine which relationships are in focus and which are not.
REFERRAL MARKETS (WOM)
Referrals are characterized by their credibility towards the environment of the relationships or as endorsers of one of the parties involved .Referrals can be decisive as they posses a high credibility factor. They aren’t gained from publishing their point of view.
Each and every employee of an organization is responsible for creating and distributing value to the customers. According to BERRY (1984),employees are an organizations first customers.
Recruiting right employees for the right post in an organization is a very important factor in the overall performance of the organization. Recruitment has slowly become a marketing related task. The potential employee will search for internal qualitative factors that go far beyond its products and services.
Influence Markets are the markets that may or may not influence a relationship ;however they share the potential to influence relationships regardless of whether they are internal or external.
In the marketing system ,suppliers should be included as relationship partners. In SCM(supply chain management), the whole marketing system is considered the unit of analysis. This is in synchronization with the six market framework.
RELATIONSHIP MARKETING PROGRAMS
By observations of the corporate practices ,there are three types of relationship marketing programs
One- to – marketing
They take different forms depending upon whether they are meant for end-customer, distributor customers ,or business –to-business customers.
Marketers use a combination of one or more types of theses to build closer and mutually beneficial relationships with their customers.
VARIOUS TYPES OF RELATIONSHIP MARKETING PROGRAMS PREVALENT AMONG DIFFERENT TYPES OF CUSTOMERS Institutional Buyers (B2B) Distributors/Resellers Individual customers Joint marketing and co-development Co-operative marketing Co-branding Co-marketing/ Partnering Key account management and co-development Customer business development Data warehousing and data mining Individual marketing Special supply arrangements E.g.-JIT,MRP Continuous Replenishment Loyalty programs Continuity marketing CUSTOMER TYPES PROGRAM TYPES
FOR INSTANCE …TELECOMMUNICATION SECTOR..
CHALLENGES FOR RELATIONSHIP MARKETING
Once the strategy of RM is established, implementing RM requires application of a range of skills and resources from the initial database and product to fulfillment capabilities and feedback mechanisms.
Some of the challenges faced by RM marketers are:
Gaining access to the appropriate systems and executional capabilities.
Developing the right organizational structure.
Budgeting for lifetime customer value.
Managing an integrated communication program.
Building alliances between manufacturers and retailers.
To conclude,relationship marketing emerged as a result of shift from customer acquisition to customer interactions.
RM provides advertisers with a richer set of tools for building brand image and awareness and spending promotional money more effectively. Advertisers who fail to master the techniques of RM will find themselves outplayed by the smarter competitors .
The important question to be answered now is to decide whether to deploy RM or not and to determine how and when to do so.