Relevance Marketing (Lumsden Nee Bottom 2004)

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Relevance Marketing: The New, Improved Relationship Marketing? Post Graduate Research / Bournemouth University (2004).

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Relevance Marketing (Lumsden Nee Bottom 2004)

  1. 1. Relevance Marketing: The New, Improved Relationship Marketing?
  2. 2. Relevance Marketing: The New, Improved Relationship Marketing? Relevance Marketing: The New, Improved Relationship Marketing? Jeremy Bottom This dissertation is submitted for the award of MA in Interactive Marketing. I declare that this dissertation is the result of my own independent investigation and that all sources are duly acknowledged. Signed…………………………………………………… Academic Year of Submission: 2003-04 2
  3. 3. Relevance Marketing: The New, Improved Relationship Marketing? Abstract There is a view that the degree of scholarly and practitioner interest in relationship marketing established it as the key marketing issue of the decade in the 1990s. But what is relationship marketing? Moreover, do consumers actually want relationships or just relevant propositions in today’s dynamic and complex marketing environment? These questions framed this exploratory research. This paper is concerned with the validity, generality and practical applicability of six ‘relationship marketing’ concepts within the UK’s Business-to-Consumer (B2C) marketing environment: relationship marketing (per se); one-to-one marketing (Peppers and Rogers, 1993); many-to-many marketing (Gummesson, 2004a); loyalty marketing; electronic Relationship Marketing (e-RM); and what the literature (academic and professional) generally refers to as Customer Relationship Management (CRM). The paper then introduces an alternative consumer marketing perspective (relevance marketing) and a contemporary CRM measurement framework: Customer Relevance Management (CRM) (Humby, 2004). An objective of the research was to determine whether the medley of concepts and frameworks presented in the literature review are largely academic rhetoric or a marketing reality for a group of senior marketing managers, independent marketing consultants and leading authorities on marketing in the academic field. A qualitative methodology was adopted resulting in eleven one- to-one (in-depth) primary data collection events. The author tentatively suggests that this investigation has provided a critical understanding of the development and future of relationship marketing as an academic and professional domain within the UK’s B2C marketing environment. The paper concludes with a challenging question for all marketing academicians. 3
  4. 4. Relevance Marketing: The New, Improved Relationship Marketing? Table of Contents: 1. Introduction 1.1 Confused and Disorientated: Consumers and Marketers 1.2 Relationship Marketing in a B2C Marketing Environment: Rhetoric or Reality? 1.3 Relevance Marketing in a B2C Marketing Environment: Rhetoric or Reality? 1.4 Summary of Investigation 2. Literature Review 2.1 Confused and Disorientated: Academics 2.1.1 Relationship Marketing: Academic Perspectives 2.1.2 Buzzwords 2.1.3 The Emergence of Relationship Marketing in the Academic Literature 2.1.4 Theory Anorexia 2.1.5 Relationship Marketing: Are Academics Missing the Obvious? 2.1.6 Relationship Marketing: Academic Rhetoric or Business Reality? 2.1.7 Relationship Marketing Definitions 2.2 The Impact of Information and Communication Technologies (ICT) on Relationship Marketing in a B2C Marketing Environment 2.2.1 One-to-One Marketing: Rhetoric or Reality? 2.2.2 Many-to-Many Marketing: Rhetoric or Reality? 2.2.3 Consumers: Empowered and Confused 2.2.4 Loyalty Marketing 2.2.5 Relationship Marketing, Customer Relationship Marketing (CRM) and Customer Relationship Management (CRM) 2.2.6 ICT-Enabled Buzzwords 2.3 Relevance Marketing: A Criticism of Relationship Marketing 2.3.1 Customer Relevance Management (CRM) at Tesco 4
  5. 5. Relevance Marketing: The New, Improved Relationship Marketing? Table of Contents (cont’d): 3. Methodology 3.1 Introduction 3.2 Research Strategy: An Exploratory, Qualitative Approach 3.2.1 Rich and Relevant Data 3.3 Epistemological Considerations 3.4 Bias, Reliability and Validity 3.5 A Holistic and Non-Commercial Perspective 3.6 Method 3.7 The Interlocutors 3.8 Evaluation of Research Design 4. Findings and Analysis 4.1 Relationship Marketing > Relevance Marketing 4.2 Data Gathering > Data Analysis > Value Delivery 4.3 Win-Win-Win > Many-to-Many 4.4 One-to-One Marketing > Multi-Channel Integration 4.5 CRM Checklist 4.6 Prospect Relationship (Relevance) Management 4.7 Empowered Consumers 4.8 electronic Relationship Marketing (e-RM) 4.9 The Marketing of the Marketing 5. Conclusion 6. References 5
  6. 6. Relevance Marketing: The New, Improved Relationship Marketing? List of Tables: 1 The Interlocutors List of Figures: 1a Conceptual Areas of Primary Investigation (Phase 1) 1b Conceptual Areas of Primary Investigation (Phase 2) 2 Relationship Marketing Definitions (Source: Various) 3 Business-to-Consumer (B2C) Relationship Marketing 4 One-to-One vs. Many-to-Many (Gummesson, 2004a) 5 A Functional Model for CRM (Clark et al, 2002) 6 Relevance Marketing 7 Customer Relevance Management (Humby, 2004) 8 Relationship Marketing and Relevance Marketing Perspectives 9 CRM Framework (Shaw, 1999) 10 Prospect Relationship Management (PRM) (Lexus) 11 electronic Relationship Marketing (e-RM) Perspectives Appendices: 1 From One-to-One to Many-to-Many Marketing (Gummesson, 2004a) 2 R is for Relevance: An Antidote to CRM Hype (Humby, 2004) 3 Semi-Structured Questionnaire 4 Multi-Channel Direct Marketing 2004 (Centaur Conferences, 2004) 5 Interview with Jonathan Latham, Head of Relationship Management, Sainsbury’s (July, 2004) 6
  7. 7. Relevance Marketing: The New, Improved Relationship Marketing? 1. Introduction 1.1 Confused and Disorientated: Consumers and Marketers Research by Mintel (2002, p.3) suggests that a significant percentage of UK consumers are suffering from “information and decision overload”. Excess information, too many choices and brand proliferation have generated a confusing commercial environment for over 50% of today’s consumers (Mintel 2002, p.3). The research used cluster analysis to segment this group into “Confused and Disorientated”, “Simplicity Seekers” and “Search Engineers” (Mintel 2002, p.3). Moreover, a survey of UK marketers and customer insight specialists suggests that many of today’s commercial organisations are finding the practice of marketing more complex with increasing media fragmentation and declining customer loyalty (The Future Foundation 2003, p.7). This recent survey also suggests that consumer marketing has become more complicated because consumers have less clearly defined and segmented lifestyles and are, as a consequence, less predictable than in the past (The Future Foundation 2003, p.7). The questions arise: how do commercial organisations add value to their propositions and combat customer confusion; and how do commercial organisations identify their ‘profitable’ customers and sustain loyalty? Mintel’s (2002, p.3) research suggests many commercial organisations may benefit from using “relationship marketing” techniques. But what is relationship marketing? Moreover, do consumers actually want a ‘relationship’ or just relevant propositions in today’s dynamic and complex, Business-to-Consumer (B2C) marketing environment? These questions frame this exploratory study. 1.2 Relationship Marketing in a B2C Marketing Environment: Rhetoric or Reality? This investigation is concerned with the validity of relationship marketing as presented in the academic literature. Within this discussion, “validity means (in 7
  8. 8. Relevance Marketing: The New, Improved Relationship Marketing? essence) that a theory, model, concept or category describes reality with a good fit” (Gummesson 2000, p.93). Acknowledging that the Information and Communication Technology (ICT) explosion of the 1990s has had a significant impact on the practice of B2C marketing, this investigation is predominately concerned with ICT-enabled relationship marketing concepts and frameworks. The primary areas of investigation determined by the literature review include: one-to-one marketing (Peppers and Rogers, 1993); many-to-many marketing (Gummesson, 2004a); loyalty marketing; electronic Relationship Marketing (e-RM); and an exploration of what the literature (academic and professional) generally refers to as Customer Relationship Management (CRM). The author then seeks to determine whether the relationship marketing concepts presented are largely academic rhetoric or a marketing reality for a group senior B2C marketing managers, independent consultants and academics. Figure 1a diagrammatically represents this phase of the investigation. 1.3 Relevance Marketing in a B2C Marketing Environment: Rhetoric or Reality? The second phase of the investigation is concerned with the validity of relevance marketing as presented within this paper. Within the domain of relevance marketing, it is assumed that a consumer’s loyalty to a commercial organisation is primarily driven by the organisation’s ability to continuously deliver relevant propositions rather than the consumer’s desire to have a ‘relationship’. In essence, relevance marketing is a criticism of relationship marketing as presented in the academic literature. Within this phase of the investigation, the author seeks to determine whether the concept of relevance marketing and its ICT-enabled cousin, Customer Relevance Management (CRM) (Humby, 2004), are largely academic rhetoric or valuable contributions to the development of B2C marketing from the viewpoint of the study’s interlocutors. 8
  9. 9. Relevance Marketing: The New, Improved Relationship Marketing? 1.4 Summary of Investigation This investigation focuses on the B2C marketing environment and does not seek to explore the validity, generality and practical applicability of relationship marketing and relevance marketing in a Business-to-Business (B2B) context: the duration of the MA Interactive Marketing programme limits the scope of the present study. In summary, the study aims to provide a critical understanding of the development and future of relationship marketing as an academic and professional domain within the UK’s dynamic and complex, B2C marketing environment. Moreover, the study seeks to determine whether relevance marketing is the new, improved relationship marketing or just another marketing buzzword. 9
  10. 10. Relevance Marketing: The New, Improved Relationship Marketing? Phase 1 One-to-One Marketing (Peppers and Rogers, 1993) Many-to-Many Marketing (Gummesson, 2004a) Information and Relationship Marketing Customer Communication (RM) Relationship Technologies Management (ICT) (CRM) electronic Relationship Marketing (e-RM) Loyalty Marketing Business-to-Consumer Marketing Environment (B2C), UK Fig.1a: Conceptual areas of primary investigation (Phase 1) Information and Phase 2Relationship Communication Marketing (RM) Technologies (ICT) Customer Information and Relevance Relevance Communication Marketing Management Technologies (Humby, 2004) (ICT) Business-to-Consumer Marketing Environment (B2C), UK Business-to-Consumer Marketing Environment (B2C), UK Fig.1b: Conceptual areas of primary investigation (Phase 2) 10
  11. 11. Relevance Marketing: The New, Improved Relationship Marketing? 2. Literature Review 2.1 Confused and Disorientated: Academics The study’s literature review highlights: a fuzzy and ambiguous academic domain suffering from “theory anorexia” (Gummesson 2002a, p.588); a teleological climate where academics publish “self-serving jargon” (Tapp 2003, p.107); and a marketing industry where the majority of practitioners neither read nor recognise contemporary academic research, concepts or theories published in today’s academic marketing journals (McKenzie et al 2002, p.1196). The question arises: are marketing academics also ‘confused and disorientated’ in today’s dynamic and complex marketing environment? 2.1.1 Relationship Marketing: Academic Perspectives Ballantyne et al (2003, p.160) suggest that the degree of scholarly and practitioner interest in relationship marketing established it as the “key marketing issue of the decade” in the 1990s. Indeed, there is a plethora of relationship marketing textbooks and journals. However, the precise meaning of relationship marketing is not always clear in the academic literature (Zineldin, 2000). Brodie et al (1997, p.383) suggest relationship marketing has become a “catch-all” phrase with the concept being used to reflect a number of different types of relational activity, including database marketing. However, Ballantyne et al (2003, p.164) do not wholly support Coviello et al’s (1996) classification of database marketing as relational marketing and suggest database marketing is more likely to be “an enabling technology that may support any kind of practice perspective”. This study does not intend to explore every conceptual quagmire surrounding the relationship marketing concept within the academic literature given the limits of this study and the sheer volume of relationship marketing definitions, theories and perspectives. However, a useful starting point for this discussion is Christopher et al’s (2004, p.1) perspective: 11
  12. 12. Relevance Marketing: The New, Improved Relationship Marketing? “It is now widely accepted that the goal of any business is to create and sustain mutually beneficial relationships with customers. Equally widely accepted is the view that the cement that binds successful relationships is the two-way flow of value. This is the context from which the philosophy and practice of relationship marketing has emerged” The author notes Christopher et al (2004) are commonly recognised as some of relationship marketing’s chief protagonists and have been concerned with the development of the concept for many years. However, this worldview of business is not universally accepted within the academic community. McDonald (2000, p.28) suggests the relationship marketing domain exists “without any underpinning process, occupied by happy-clappy, touchy-feely, weepy-creepy, born-again zealots”. This study’s research design will aim to offer the author an opportunity to further explore these diametrically opposed worldviews. 2.1.2 Buzzwords Egan (2001a, p.188) suggests relationship marketing is perhaps the best example of a buzzword in the marketing literature where “different authors use the same term to describe different concepts or different terms to describe the same concept”. However, Gummesson (1994) suggests multiple uses of the term relationship marketing are perhaps not surprising given the complexity of relationships themselves. Furthermore, Egan (2001b, p.376) suggests relationship marketing theory is often “highly selective” citing Reichheld’s (1996) popular publication ‘The Loyalty Effect: The Hidden Force behind Growth, Profits and Lasting Value’ as an example of relationship marketing research “designed to support a particular (often consultant based) perspective”. The question arises: how many of today’s relationship marketing academicians are guilty of teleologism in their research and subsequent publications? This study’s methodological design will aim to offer the author an opportunity to further explore this contentious issue. 12
  13. 13. Relevance Marketing: The New, Improved Relationship Marketing? 2.1.3 The Emergence of Relationship Marketing in the Academic Literature Sheth (2002, p.590) suggests relationship marketing emerged as a field of marketing enquiry due to a shift in marketing focus from customer acquisition to customer retention. Bruhn (2003, p.xiv) supports this observation suggesting that the principal aim of relationship marketing is to transform marketing from the “inside-out” focus on transactions to an “outside-in” focus on customer relationships. A common view within the literature is that relationship marketing is a “criticism” (Bruhn 2003, p.9) of pure transaction-focused marketing concepts such as McCarthy’s (1960) 4P classification of the marketing mix (product, place, promotion and price). Gummesson (2002b, p.326) vehemently supports the relationship marketing worldview commenting “transaction marketing theory is clearly manipulative and management centric”. Petrof (1997, p.26) comments on the popularity of relationship marketing in the 1990s: “With few exceptions, marketing specialists and, in particular, academicians accepted relationship marketing as the latest gospel and began spreading it faithfully as loyal disciples” However, the issue of whether relationship marketing is (or was) a “paradigm shift” (Morgan and Hunt 1994; Gronroos 1994; Buttle 1996; Palmer 2002; Sheth and Parvatiyar 2002) still seems largely unresolved within the academic literature. For example, Sheth and Parvatiyar (2002, p.14) suggest relationship marketing is considered a paradigm change in both academic and practitioner literature and relationship marketing has the potential to become a well- respected, freestanding and distinct discipline in marketing. Conversely, McDonald’s (2000) previously cited criticism of the domain highlights that relationship marketing is not necessarily a paradigm shift universally accepted within the academic community. 13
  14. 14. Relevance Marketing: The New, Improved Relationship Marketing? 2.1.4 Theory Anorexia Gummesson’s (1996 cited Egan 2001b, p.376) summary of research efforts into the concept as a “theory-less stack of fragmented philosophies and observations” still appears valid today with at least 26 definitions of relationship marketing in the academic literature (Harker, 1999). Daskou and Mangina (2003, p.87) highlight that the conceptual quagmire surrounding the definition of relationship marketing in the academic community is fuelled by the academic diversity of the discipline’s developers and their socio-political heritage. Although the domain and conceptual foundations of relationship marketing do not appear to be fully developed, the author suggests there is merit in continuing this exploration primarily because; many leading academics including McDonald (2003) and Gummesson (2002b) have noted marketing theory is increasingly divorced from reality; this study’s primary objective is to provide a critical understanding of the development and future of relationship marketing as an academic and professional domain within the UK’s dynamic and complex, B2C marketing environment. Gummesson (2002a, p.588) suggests, “Marketing management today suffers from theory anorexia and cannot feed on and digest what is happening in the new economy” 2.1.5 Relationship Marketing: Are Academics Missing the Obvious? Relationship marketing is not in itself a new concept: it is clearly a “new-old” concept for the straightforward reason that concern for relationship development is as old as the nature of business itself (Palmer 1996; Ballantyne 2000; Payne et al 2002). Gummesson (2003) supports this view suggesting that relationship marketing has always existed between the consumer and the supplier and challenges the academic community (p.168): “Isn’t it simply that academia is often too closed and smug, thus missing the obvious?” 14
  15. 15. Relevance Marketing: The New, Improved Relationship Marketing? Supporting Gummesson’s (2003) critique of the academic community, the author tentatively suggests that it is likely that many of today’s relational marketing concepts and ubiquitous buzzwords such as one-to-one marketing (Peppers and Rogers, 1993), loyalty-based management (Reichheld, 1996) and even Customer Relationship Management (CRM) were effectively practised at the beginning of the 20th century by UK shopkeepers. The study’s research design will aim to offer the author an opportunity to further explore this empirical finding. 2.1.6 Relationship Marketing: Academic Rhetoric or Business Reality? There is a view within the academic literature that the practical applicability of relationship marketing in B2C marketing environments is limited (Barnes 1997; Hibbard and Iacobucci 1998; O’Malley and Tynan 2000). O’Malley and Tynan (2000, p.804) suggest that it is neither possible nor profitable for most organisations in a B2C marketing environment to create close, personal and long- term relationships with all their customers. The practical and economic arguments for dismissing this form of relationship marketing seem valid but has the academic community been ‘over-selling’ the relationship marketing concept for O’Malley and Tynan (2000) to reach this rather obvious conclusion? Moreover, are marketing academics becoming ‘confused and disorientated’ by trying to fit the realities of marketing into tight, theoretical boxes for their academic peers? McDonald (2003, p.158) comments: “Marketing must find a way of escaping from the increasing proclivity of the academic community to creep further and further into the more esoteric groves of academe, talking about increasingly narrow issues in an increasingly impenetrable language to an increasingly restricted audience” Harker’s (1999, p.16) exploration of relationship marketing definitions refers to a “relationship marketing community”. The questions arise: who inhabits the relationship marketing community and what is the relevance of their body of work for today’s marketing practitioners? This study’s bibliography highlights 15
  16. 16. Relevance Marketing: The New, Improved Relationship Marketing? relationship marketing’s chief protagonists (the community) and the domain’s specific publications such as the ‘Journal of Relationship Marketing’. But how many of today’s B2C marketers actively embrace this knowledge resource? Recent research by McKenzie et al (2002, p.1196) suggests that within the UK marketing industry, the majority of practitioners neither read nor recognise contemporary academic research, concepts or theories published in today’s academic marketing journals. Moreover, Tapp (2003, p.112) suggests currently there is a misalignment between the academic work published in the majority of journals and the requirements of marketing managers. The methodological design of this study will aim to offer the author an opportunity to explore whether there is a significant gap between the professional practice and theoretical development of the domain. 2.1.7 Relationship Marketing Definitions Eloquently summarising the conceptual fuzziness of relationship marketing, Harker (1999, p.15) highlights there is no universally accepted definition of the concept because attempts to define relationship marketing are attempts to stipulate what concepts should form the essence of relationship marketing. However, embracing content analysis as a qualitative data research methodology, Harker (1999, p.16) suggests Gronroos’s (1994) definition of relationship marketing is the “best” in terms of its coverage of the underlying conceptualisations of relationship marketing and its acceptability throughout the “relationship marketing community”. Furthermore, Daskou and Mangina (2003, p.87) suggest Gronroos’s (1994) definition is still popular within the academic community predominately because the definition is viewed as reasonably comprehensive. Gronroos (1994) suggests: “Relationship marketing is to identify and establish, maintain and enhance and when necessary also to terminate relationships with customers and other stakeholders, at a profit, so that the objectives of all parties are met, and that this is done by a mutual exchange and fulfilment of promises” 16
  17. 17. Relevance Marketing: The New, Improved Relationship Marketing? At this stage of the report, the author feels obliged to highlight several key references that have informed the study’s understanding and presentation of the relationship marketing concept: Gronroos’s (1994) popular definition; a medley of contemporary definitions (see Figure 2); an article in the professional publication ‘Data Strategy’ (Webber 2004, p.16); Christopher et al’s (2004, p.1) previously cited relationship marketing worldview; and Chaffey et al’s (2000 cited Egan 2001a, p.193) one-to-one relationship marketing perspective. “Relationship Marketing covers all actions for the analysis, planning, realisation, and control of measures that initiate, stabilise, intensify, and reactivate business relationships with the corporation’s stakeholders – mainly customers – and to the creation of mutual value” Bruhn (2003, p.11) “Relationship marketing has the aim of building mutually satisfying long-term relations with key parties – customers, suppliers, distributors – in order to earn and retain business” * Kotler (2003, p.13) “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 cited Chaffey et al 2003, p.42) “Relationship marketing is marketing based on interaction within networks of relationships” ** Gummesson (2002c, p.3) * Kotler (2003, p.13) notes this definition embraces three definitions from the literature: Christopher et al (1991); McKenna (1991); and Gummesson (1999). ** Gummesson (2003) suggests this definition is the outcome of an inductive grounded theory approach, “going beyond the usual descriptive definitions” (p.168). Fig.2 Relationship Marketing Definitions (Source: Various) 17
  18. 18. Relevance Marketing: The New, Improved Relationship Marketing? Reflecting upon relationship marketing’s axioms and definitions, the author suggests: relationship marketing implies the development of long-term relationships with key parties (consumers within the context of this investigation) in order to better understand how to develop and deliver propositions tailored to the needs of the specific market segments identified. Furthermore, relationship marketing appears to respect and value markets segmented at the level of the individual i.e. one-to-one marketing (Peppers and Rogers, 1993). In summary, the author suggests the philosophy of relationship marketing is to create and sustain a ‘win-win’ scenario within a commercial environment. Moreover, the practice of relationship marketing requires commercial organisations to develop ‘interactive’ methodologies to determine and sustain a two-way flow of value. Within this context, value is defined as “the balance between benefits received and sacrifices made to experience those benefits” (Buttle 2004, p.228). Figure 3 diagrammatically represents the author’s worldview of relationship marketing in a B2C marketing environment. Business Consumer Mutual Exchange Of Value * * Value is defined as “the balance between benefits received and sacrifices made to experience those benefits” (Buttle 2004, p.228) Fig.3 Business-to-Consumer (B2C) Relationship Marketing 18
  19. 19. Relevance Marketing: The New, Improved Relationship Marketing? 2.2 The Impact of Information and Communication Technologies (ICT) on Relationship Marketing in a B2C Marketing Environment 2.2.1 One-to-One Marketing: Rhetoric or Reality? Prior to the mass marketing approach that had accompanied the Industrial Revolution and dominated commercial activity in the 20th century, sellers often knew their customers and generally understood their needs (Mitchell 2000; Egan 2001a; Chen and Popovich 2003). With mass retailing (e.g. supermarkets) and the marketing of standardised products through one-to-many (Hoffman and Novak, 1996) marketing channels (e.g. analogue television), buyers and sellers (inevitably) lost their “intimate relationships” (Chen and Popovich 2003, p.685). However, there is a view that the contextual changes of the 1990s and 2000s (i.e. the explosion of IT and the Internet) have offered commercial organisations the opportunity to re-establish one-to-one (Peppers and Rogers, 1993) marketing relationships with their customers (Falk and Schmidt 1997; Mitchell 2000; Zineldin 2000; Lindgreen and Pels 2002; Chen and Popovich, 2003; Urban 2004). The questions arise: are one-to-one (Peppers and Rogers, 1993) marketing relationships genuinely achievable, economically viable or even desired by today’s B2C marketing practitioners? This study’s methodological design will aim to offer the author an opportunity to explore whether the one-to-one marketing approach (Peppers and Rogers, 1993) is just enthusiastic, academic rhetoric (driven by ICT developments) or a reality for today’s B2C marketing practioners. 2.2.2 Many-to-Many Marketing: Rhetoric or Reality? Gummesson (2004a) contends relationship marketing theory will develop in a many-to-many (Hoffman and Novak, 1996), networked marketing environment. Specifically, Gummesson (2004a, p.1) argues: “Marketing does not live in one-to-one relationships but in many-to-many networks” 19
  20. 20. Relevance Marketing: The New, Improved Relationship Marketing? One-to-One Marketing Many-to-Many Marketing Peppers and Rogers (1993) Gummesson (2004) Customer Network Supplier Network Customer Supplier * Identify your customers * Identify your networks of relationships * Differentiate your customers * Differentiate your relationships * Interact with your customers * Interact with the network members * Customize * Customize * Learning relationships * Learning networks Fig.4 One-to-One (Peppers and Rogers, 1993) versus Many-to-Many Marketing (Gummesson, 2004a) Supporting Gummesson’s (2004a) development of the one-to-one (Peppers and Rogers, 1993) relational marketing framework (see Figure 4), Peters and Fletcher (2004, p.1) suggest today’s marketing researchers may benefit from modifying existing theoretical perspectives in order to take account of the increasing interconnectedness of today’s consumers and businesses through ICT-enabled social systems, such as the Internet. The many-to-many (Hoffman and Novak, 1996) structure of the Internet coupled with the adoption of the channel by increasing numbers of UK consumers and businesses (Interactive Advertising Bureau UK, 2004) suggests to the author that Gummesson’s (2004a) many-to- many marketing framework may prove to be academically robust within the UK’s B2C online marketing environment. The question arises, is this contemporary framework useful in today’s broader B2C marketing environment where many organisations are finding the practice of marketing “complex” (The Future Foundation 2003, p.6) and many consumers are “confused and disorientated” (Mintel 2002, p.3)? Gummesson (2004a, p.1) contends: 20
  21. 21. Relevance Marketing: The New, Improved Relationship Marketing? “The contribution from one-to-one, not least through the expressive wording, is first and foremost to put the light on individual interaction in marketing. The contribution of many-to-many is taking one-to-one further and addressing the whole context of a complex world” The author suggests Samli and Bahn’s (1992) definition of a market supports Gummessson’s (2004a) many-to-many relationship marketing perspective as presented in Figure 4. Samli and Bahn (1992, p.147) suggest: “A market is a communication network, with communication defined as all means of facilitating the exchange of knowledge, the expression of desires, and the dissemination of information” Moreover, Peters and Fletcher (2004, p.1) suggest Samli and Bahn’s (1992) definition of a market has merit in today’s complex marketing environment because it is “dynamic, focuses on the flow of information and behavioural patterns, and considers both consumers and businesses as critical nodes in a communication network”. However, it should be noted that there appears to be little support within the academic literature for Gummesson’s (2002c, p.315) foundational work: “Relationships, networks and interaction are the core concepts of relationship marketing” This empirical finding suggests that the “relationship marketing community” (Harker, 1999) may not readily adopt Gummesson’s (2004a) many-to-many marketing perspective. The research design will aim to offer the author an opportunity to further explore Gummesson’s (2004a) many-to-many relationship marketing thesis from both an academic and a professional perspective. It is noted that the academic textbook from which this body of work emanates ‘Many- to-Many Marketing’ (Gummesson, 2004b) has only been published in Sweden. However, Evert Gummesson has kindly provided the author with a recent paper ‘From One-to-One to Many-to-Many Marketing’ (Gummesson, 2004a) for reference within this discussion. The thesis is presented in Appendix 1. 21
  22. 22. Relevance Marketing: The New, Improved Relationship Marketing? 2.2.3 Consumers: Empowered and Confused There is a view that technological developments have “empowered” consumers within the customer-supplier dyad (Chaffey et al, 2003; Kotler, 2003; Urban, 2004). Daskou and Mangina (2003, p.87) suggest there is a new type of consumer who is more informed, demanding and sophisticated. Enthusiastically, Urban (2004, p.78) suggests today’s consumers now have the opportunity to effectively verify an organisation’s claims (value propositions) and efficiently search for superior alternatives through “enabling” many-to-many (Hoffman and Novak, 1996) technologies, such as the Internet. However, Mintel’s (2002) previously cited research suggests to the author that such conclusions should be tempered with reference to the UK’s B2C marketing environment i.e. ICT developments may also be fuelling consumer “information and decision overload” (Mintel 2002, p.3). This study’s research design will aim to offer the author an opportunity to further explore relationship marketing strategies in a many-to- many (Hoffman and Novak, 1996), networked marketing environment where it is postulated that consumers are becoming increasingly empowered and confused. 2.2.4 Loyalty Marketing There is a view that for commercial organisations to achieve closer relationships with their customers in today’s “new economy” (Gummesson 2002c; Kotler et al 2002), a rich customer database is required. Gilbert (2003, p.189) suggests that some of the UK’s leading mass retailers (e.g. Tesco and Sainsbury’s) are successfully adopting ICT-enabled programmes that generate rich and relevant data: loyalty schemes. However, Enver (2004, p.1) suggests true customer “knowledge” is virtually impossible to achieve within many B2C sectors where poor data, and privacy laws, often militate against relationship building. Furthermore, UK research by Pressey and Matthews (2000, p.272) suggests relational marketing strategies are not practical for mass retailers, such as supermarkets, where many transactions are “discrete, short-term, one-off acts”. 22
  23. 23. Relevance Marketing: The New, Improved Relationship Marketing? The question arises: do any loyalty marketing programmes within the UK’s B2C marketing environment generate ‘win-win’ scenarios? Stone et al (2003, p.308) suggest approximately 80% of UK households participate in at least one customer loyalty scheme and Tesco attribute more than £100 million of incremental sales per annum directly to their loyalty programme ‘Clubcard’ (Humby et al, 2003). Moreover, Humby et al (2003, p.5) suggest Tesco has issued more than £1 billion of ‘Clubcard’ loyalty vouchers to customers and the organisation has run the programme for no net cost since 1995. These findings suggest that loyalty programmes can be effective relational strategies within the UK’s B2C marketing environment. The study’s research design will aim to offer the author a further opportunity to investigate loyalty schemes and the concept of loyalty marketing. 2.2.5 Relationship Marketing, Customer Relationship Marketing (CRM) and Customer Relationship Management (CRM) A review of the academic publications the ‘Journal of Relationship Marketing’ (2002a; 2002b; 2002c; 2003a; 2003b) and the Institute of Direct Marketing’s ‘Interactive Marketing’ (2004a; 2004b; 2004c) highlights that a number of academics and practitioners assume relationship marketing, Customer Relationship Marketing (CRM) and Customer Relationship Management (CRM) are effectively synonymous terms in today’s B2C marketing environment. The academic question arises: are the terms conceptually interchangeable? The author suggests this is a challenging question because there are no universally accepted definitions of relationship marketing, Customer Relationship Marketing (CRM) or Customer Relationship Management (CRM) within the literature (Harker 1999; Egan 2001a; Kenyon and Vakola 2003; Enver 2004). However, to satisfy the study’s primary objective, ‘to provide a critical understanding of the development and future of relationship marketing as an academic and professional domain within the UK’s B2C marketing environment’, the author will 23
  24. 24. Relevance Marketing: The New, Improved Relationship Marketing? explore various CRM perspectives and definitions within the literature. The study’s methodological design will aim to offer the author a further opportunity to explore this conceptual quagmire from both an academic and a professional perspective. This research strategy should also offer the author an opportunity to explore whether a significant gap exists between the professional practice and theoretical development of relationship marketing, Customer Relationship Management (CRM) and Customer Relationship Marketing (CRM). Kotler (2003, p.52) contends the merits of a Customer Relationship Marketing (CRM) strategy: “Customer Relationship Marketing (CRM) enables companies to provide excellent real-time customer service by developing a relationship with each valued customer through the effective use of individual account information” Kenyon and Vakola (2003) suggest Chablo’s (1999, p.12) definition of Customer Relationship Management (CRM) is purposeful within a B2C marketing context: “Customer Relationship Management (CRM) is a comprehensive approach which provides seamless integration of every area of business that touches the customer – namely marketing, sales, customer service and field support – through the integration of people, processes and technology, taking advantage of the revolutionary impact of the Internet” However, Coad (2004, p.323) suggests the idea of a ‘single-customer view’ is somewhat utopian and in practice unworkable for many organisations in a B2C marketing environment. Srivastava et al (1999, p.170) suggest: “The Customer Relationship Management (CRM) process addresses all aspects of identifying customers, creating customer knowledge, building customer relationships, and shaping their perceptions of the organisation and its products” Acknowledging Srivastava et al’s (1999) definition, Zinkham (2002, p.83) suggests Customer Relationship Management (CRM) is perhaps a broader concept than relationship marketing. Conversely, Gummesson (2004a, p.1) 24
  25. 25. Relevance Marketing: The New, Improved Relationship Marketing? argues relationship marketing is the broader, overriding concept and suggests CRM is a relationship marketing “brand” offered by consultants and practitioners: “CRM (Customer Relationship Management) is the values and strategies of relationship marketing – with emphasis on the dyadic customer-supplier relationship – turned into practical application and dependent both on human action and information technology” Buttle’s (2004, p.34) definition of Customer Relationship Management (CRM) is interesting because it takes a business strategy view of CRM rather than focusing on the ICT component: “CRM is the core business strategy that integrates internal processes and functions, and external networks, to create and deliver value to targeted customers at a profit. It is grounded on high quality data and enabled by IT” The author suggests that a recent CRM definition by Zikmund et al (2003, p.3) neatly fits the ‘win-win’ and ‘interactive’ relationship marketing worldview presented within this literature review: “Customer Relationship Management (CRM) is a business strategy that uses information technology to provide an enterprise with a comprehensive, reliable, and integrated view of its customer base so that all processes and customer interactions help maintain and expand mutually beneficial relationships” With CRM’s proximity to the fuzzy and ambiguous concept of relationship marketing, the plethora of CRM definitions and perspectives is perhaps unsurprising. In summary, the author suggests that the term CRM is more associated with the use of ICT as a means of implementing the relational marketing approach. This conclusion is supported by Clark et al’s (2004, p.24) value framework for CRM (see Figure 5) and Gummesson’s (2002, p.314) observation “relationship marketing is an attitude and CRM is a tool”. The study’s methodological design will aim to offer the author an opportunity to explore the validity of Clark et al’s (2002) CRM framework within the B2C marketing environment. 25
  26. 26. Relevance Marketing: The New, Improved Relationship Marketing? “CRM is the management process that uses individual customer data to enable a tailored and mutually viable value proposition” (Clarke et al 2002, p.23) Data Analysis and Value Marketing Identification Strategy IT Conditions Conditions Monitoring, Feedback and Control Data Gathering and Organisation Value Delivery Cultural and Climate Conditions Fig.5 A functional model for Customer Relationship Management (CRM) (Source: Clark et al, 2004) 2.2.6 ICT-Enabled Buzzwords A review of the contemporary academic relationship marketing literature yields a plethora of ICT-enabled ‘relationship marketing’ definitions and perspectives, for example, Technologicalship Marketing [TM] (Zineldin, 2000), electronic Customer Relationship Marketing [e-CRM] (McIntyre, 2003; Luck and Lancaster, 2003) and e-loyalty (Reichheld et al, 2000). The question arises: are these electronic Relationship Marketing (e-RM) concepts substantive variants of the relationship marketing concept or ICT-enabled buzzwords? The author acknowledges that marketing theory is “context driven” (Sheth and Sisodia, 1999) and endorses the view that marketing academics must challenge “in-bedded concepts” (Egan 2001a, p.24) as the competitive environment changes but are these electronic Relationship Marketing (e-RM) concepts inhabiting a cul-de-sac of relationship marketing theory and impeding the development of a cohesive relationship 26
  27. 27. Relevance Marketing: The New, Improved Relationship Marketing? marketing domain? Moreover, will tomorrow’s mobile technological developments offer relationship marketing’s primary interlocutors an opportunity to generate a plethora of m-RM, m-CRM and m-loyalty definitions and frameworks? The study’s methodological design will aim to offer the author an opportunity to explore the fuzzy and ambiguous ‘umbrella’ concept of electronic Relationship Marketing (e- RM) from both an academic and a professional perspective. 2.3 Relevance Marketing: A Criticism of Relationship Marketing The question arises: do consumers actually want ‘relationships’ or just relevant propositions in today’s dynamic and complex, B2C marketing environment? The author suggests that it is not unreasonable to presuppose that a significant percentage of UK consumers may find the idea of having ‘relationships’ with commercial organisations simply absurd. So where does this leave the domain of relationship marketing within the context of this investigation? Assuming that the function of B2C marketing is to offer relevant propositions to relevant customers (i.e. profitable customers) and to provide relevant solutions to customers’ problems, the author tentatively suggests branding the domain of relationship marketing as relevance marketing may enhance the validity of the definitions and frameworks promulgated by the domain’s chief protagonists. Within this discussion, “validity means (in essence) that a theory, model, concept or category describes reality with a good fit” (Gummesson 2000, p.93). The author notes: this is not a criticism of the relationship marketing philosophy or the practical applicability of the definitions and frameworks but a criticism of the terminology. The author presents a sample of relevance marketing and Customer Relevance Management (CRM) definitions, perspectives and frameworks in Figure 6. Relevance marketing is built upon the (rather obvious) premise that if a customer is presented with a relevant proposition or solution, it is more likely that a mutual exchange of value will occur. Within the domain of relevance marketing, it is assumed that a consumer’s loyalty to a commercial 27
  28. 28. Relevance Marketing: The New, Improved Relationship Marketing? organisation is primarily driven by the business’s ability to continuously deliver relevant propositions rather than the consumer’s desire to have a ‘relationship’. Moreover, the author tentatively suggests that the marketing of relevant propositions generally relies upon the organisation’s manipulation of the classic pillars of marketing i.e. the marketing mix, or 4Ps (product, place, promotion and price) coupled with an understanding of the customers’ perception of value obtained through ‘interactive’ processes and marketing strategies. “Relevance marketing is an attitude and Customer Relevance Management is a tool” (Adapted from Gummesson, 2002) “Relevance marketing is to identify One-to-One Relevance Marketing and establish, maintain an enhance and (Adapted from Peppers and Rogers, 1993) when necessary also to terminate accounts with customers and other * Identify your customers stakeholders, at a profit, so that the * Differentiate your customers objectives of all parties are met, and this is done by a mutual exchange and * Interact with your customers fulfilment of promises” * Customize * Learning relevance (not relationships!) (Adapted from Gronroos, 1994) “Customer Relevance Management (CRM) is a core business strategy that integrates Marketing internal processes Strategy IT Conditions and functions, and Conditions “Customer Relevance Management, however external networks, to well designed and executed create and deliver can only work within an value to targeted environment delineated by customers at a Marketing Strategy, Cultural and IT Parameters” profit. It is grounded on high quality data and enabled by IT” Cultural and Climate Conditions The Customer Relevance Management Space (Adapted from (Adapted from Clark et al, 2004) Buttle, 2004) “Relevance marketing has the aim of building mutually satisfying long-term, interactive accounts with key parties in Mutual Exchange order to earn and retain Of Value business” Business Consumer (Adapted from Kotler, 2003) Fig.6 Relevance Marketing 28
  29. 29. Relevance Marketing: The New, Improved Relationship Marketing? 2.3.1 Customer Relevance Management (CRM) at Tesco Somewhat surprisingly, the study’s literature review has only established one reference adopting this terminology and consumer marketing perspective: “R is for Relevance: An antidote to CRM Hype” (Humby, 2004). The PowerPoint presentation that accompanied Humby’s (2004) lecture at the Institute of Direct Marketing’s (IDM) Annual Lecture is provided in Appendix 2 for further reference. Humby (2004) contends, “the CRM revolution was a lot of hype and noise” and “it’s time to tear up the rule book and develop some new metrics of customer investments”. Humby (2004) suggests the Customer Relevance Management (CRM) philosophy embraces a customer-centric approach which involves the measurement and assessment of every aspect of customer interaction and works on the assumption that an organisation’s brand assets are a function of its customer assets (see Appendix 2 for explicit definitions of brands assets and customer assets). Moreover, Humby (2004) suggests “customers generate income and brand equity from the combination of advocacy, share of wallet and financial value” and the Customer Relevance Management (CRM) measurement framework “integrates all customer investment decisions and monitors their impact across each segment in terms of current and future value”. From an academic perspective, Humby (2004) does not explicitly define Customer Relevance Management (CRM) and it should be noted that this concept has not been formally published within the academic literature. However, Figure 7 (Humby, 2004) diagrammatically represents Humby’s (2004) Customer Relevance Management (CRM) measurement framework as presented at the IDM’s Annual Lecture in London, England. Humby is the chief information architect behind Tesco’s loyalty programme ‘Clubcard’ and is therefore considered to be a leading authority on (ICT-enabled) B2C marketing strategies within the UK’s marketing environment. In a recent publication, ‘Scoring Points: How Tesco is winning customer loyalty’, Humby et al (2003, p.16) comment: 29
  30. 30. Relevance Marketing: The New, Improved Relationship Marketing? “For Tesco Clubcard, the definition of Customer Relationship Management (CRM) is best summarised as: to improve our performance at every point of contact with our customers, to make them happier and the company richer. It’s no more complicated than that” Moreover, in a recent interview (Powell 2004, p.4), Humby contends: “CRM is built on a fallacy because customers don’t want a relationship with their bank or their grocer or their supermarket. Tesco does not have a CRM programme. Tesco has a loyalty scheme and what this is saying is ‘we get your data for giving you money back, and with the data we will give you a more relevant experience in our shops because you choose to shop there’ " The author tentatively suggests Tesco’s Customer Relevance Management (CRM) worldview ‘fits’ the relationship marketing and relevance marketing frameworks presented within this study: the organisation’s B2C marketing strategy appears to be framed an ‘interactive’ and ‘win-win’ philosophy. Moreover, recent figures suggest that Tesco’s Customer Relevance Management (CRM) strategy is highly effective within the UK’s B2C marketing environment with the behemoth achieving a 12% share of the UK’s total retail sales (The Grocer 2004, p.15). Humby et al (2003, p.1) comment: “Before Clubcard, Tesco was stuck as the UK’s second-ranking supermarket. Today, not only is it the UK’s largest grocer, it is the world‘s most successful Internet supermarket, one of Europe’s fastest growing financial services companies and arguably one of the world’s most successful exponents of what the jargon terms Customer Relationship Management, or CRM” The author tentatively suggests that the concepts of relevance marketing and its ICT-enabled cousin, Customer Relevance Management (CRM) (Humby, 2004), may have intuitive appeal for B2C marketers who are looking to add value to their proposition, combat customer confusion and gain loyalty in a marketing environment where many consumers are suffering from “information and decision overload” (Mintel 2002, p.3). This study’s methodological design will aim to offer the author an opportunity to further explore these concepts from both an academic and a professional perspective. This strategy should offer the author 30
  31. 31. Relevance Marketing: The New, Improved Relationship Marketing? an opportunity to investigate whether relevance marketing is the new, improved B2C relationship marketing or just another marketing buzzword. Marketing Inputs Multi-Dimensional Behavioural Segments Retention Price, Product, Promotion Marketing Inputs Upsell Cross Sell New Channels Customer Service Inputs Outcomes Sales Desk Contribution Call Centre Commitment After Sales Championing Fig.6 Customer Relevance Management Measurement Framework (Source: Humby, 2004) Price, Product, Promotion Price Promotions Product Innovation Fig.7 Customer Relevance Management Measurement Framework (Humby, 2004) 31
  32. 32. Relevance Marketing: The New, Improved Relationship Marketing? 3. Methodology 3.1 Introduction The study’s primary aim is to provide a critical understanding of the development and future of relationship marketing as an academic and professional domain within the UK’s dynamic and complex, B2C marketing environment. Crudely summarising, the study’s methodological design will aim to offer the author an opportunity to explore the validity of the marketing concepts and frameworks presented in the literature review. Within this context, “validity means (in essence) that a theory, model, concept or category describes reality with a good fit” (Gummesson 2000, p.93). Primary areas of investigation determined by the literature review: • Relationship Marketing; • Customer Relationship Management (CRM); • Loyalty Marketing; • One-to-One Marketing (Peppers and Rogers, 1993); • Many-to-Many Marketing (Gummesson, 2004a); • electronic Relationship Marketing (e-RM); • Customer Relevance Management (Humby, 2004); • Relevance Marketing Considering the ambitious nature of the study’s primary aim and the plethora of concepts, theories, threads, themes and tensions presented within the literature review, the author suggests a purposeful sample would include senior B2C marketing managers, independent marketing consultants and marketing academics. The author notes: the conceptual areas of primary investigation are diagrammatically represented by Figures 1a and 1b. 32
  33. 33. Relevance Marketing: The New, Improved Relationship Marketing? 3.2 Research Strategy: An Exploratory, Qualitative Approach The author suggests that the adoption of an exploratory, qualitative research methodology would be appropriate. Moreover, the author suggests that the exploratory, qualitative nature of the research is implied by the study’s primary aim. Denscombe (1998, p.174) suggests qualitative research tends to be associated with: words as the unit of analysis rather than numbers; thick description (Geertz, 1973) i.e. a detailed description of the process, context and people in the research (Daymon and Holloway 2002, p.100); small-scale studies rather than large-scale studies; a holistic perspective rather than a specific focus; researcher involvement rather than researcher detachment; and an emergent rather than a prescriptive research strategy. Moreover, Daymon and Holloway (2002, p.6) suggest qualitative researchers have a desire to explore and present the various subjective perspectives of participants. These characteristics generally associated with qualitative research and qualitative researchers have framed the author’s strategic decision to adopt a qualitative approach i.e. the author suggests that a qualitative methodology is more likely to “fit” (Denscombe 1998, p.3) the study’s primary objective than a quantitative approach. 3.2.1 Rich and Relevant Data Daymon and Holloway (2002, p.159) suggest the underlying principle of gaining rich, in-depth data should guide the sampling strategies of qualitative researchers. The author suggests that exploring the marketing concepts and frameworks presented in the literature review with senior B2C marketing managers, independent marketing consultants and marketing academics may generate rich and relevant data. Furthermore, exploring relationship marketing’s axioms, definitions, theories and concepts with such an ambitious sample may offer the author an opportunity to explore whether a significant gap exists between the professional practice and theoretical development of the domain. 33
  34. 34. Relevance Marketing: The New, Improved Relationship Marketing? 3.3 Epistemological Considerations It is important to consider the epistemological premise and ontological approach of the research strategy in order to establish a conceptual framework to review the research methodology (Gunter, 2000). The author suggests that the primary research strategy of seeking the subjective opinions of the study’s participants is informed by an interpretivist worldview. By adopting a hermeneutic position, the author suggests the research is embracing constructivism as an ontological approach and this is considered to be synergistic with the explorative nature of the study. Supporting the author’s approach, Daymon and Holloway (2002, p.5) suggest qualitative methods “are frequently seen to be inseparable from the interpretive, constructivist worldview”. Embracing an inductive approach, the author will analyse the qualitative data and then develop conclusions. It is hoped that the research will move inductively from specific data to more general patterns of commonalities (Daymon et al 2002, p.6). However, because the research is qualitative in design, the author acknowledges that any findings can never be more than strong possibilities. In summary, the research is primarily concerned with gaining insight and understanding. 3.4 Bias, Reliability and Validity It is imperative that the author does not introduce bias into the research and therefore damage the educative authenticity of the findings. For example, the author must be careful not to ‘over-sell’ the concept of relevance marketing during the primary data collection. This scenario would be somewhat ironic considering this study’s literature review highlights a marketing climate where academics have published “self-serving jargon” (Tapp 2003, p.105) and “highly selective” (Egan 2001b, p.376) marketing theory. The criteria against which the quality of the research will be judged relate to the benchmarks of reliability and validity. By embracing these benchmarks, the 34
  35. 35. Relevance Marketing: The New, Improved Relationship Marketing? author aims to overcome any charge of being too impressionistic during the data collection and too subjective in the analysis. To enhance the overall validity and reliability of the study, two strategies for ensuring the quality of the research have been determined. The primary strategy is “member checking” (Lincoln and Guba 1985 cited Daymon and Holloway 2002, p.95): presenting participants with a summary of the data collected and the author’s interpretation of the data. The second strategy is to provide a “thick description” (Geertz 1973 cited Daymon and Holloway 2002, p.100): a detailed description of the process, context and people in the research (Daymon and Holloway 2002, p.100). A weakness of the second strategy is that some participants may not wish to be identified. 3.5 A Holistic and Non-Commercial Perspective The author suggests that his previous professional experience (UK Sales and Marketing Manager for a leading multiple retailer in a niche market sector) and his recent academic experience (post-graduate student of interactive marketing) may provide a holistic focus to the research. Moreover, the author suggests that his non-commercial (academic) approach is possibly a strategic advantage for gaining access to purposeful individuals: participants may be less inclined to help researchers from organisations that may commercially gain from their involvement. Furthermore, a marketing consultant or journalist investigating this topic would possibly have commercial objectives to consider and therefore their findings and analysis may not be free from bias and teleological assumptions. 3.6 Method It is a common view that the use of exploratory techniques such as group discussions and in-depth interviews are appropriate for exploring fuzzy marketing phenomena (Gummesson 2000; Daymon and Holloway 2002). However, the author dismisses the strategy of organising group discussions for two reasons: 35
  36. 36. Relevance Marketing: The New, Improved Relationship Marketing? participants may moderate their views within a group discussion; and it would be challenging to co-ordinate the diaries of such an ambitious sample. The author suggests that an appropriate primary data collection method would be to organise one-to-one, in-depth interviews with an appropriate number of senior B2C marketing managers, independent marketing consultants and marketing academics. This method choice has been primarily influenced by contemporary studies including Mouncey et al’s (2002) ‘Interactive marketing: The new marketing – Or more of the same?’. Mouncey et al (2002) aimed to explore the fuzzy and ambiguous domain of interactive marketing within the UK’s B2B and B2C marketing environments. Embracing a qualitative methodology, Mouncey et al (2002) conducted individual, in-depth interviews with ten senior marketing practitioners employed across a variety of industry sectors. Mouncey et al (2002, p.133) suggest the primary data generated by this exploratory technique was useful for their publication: “While a limitation of the research is the small sample size, the in-depth interview approach has provided valuable detailed case-study-based insights enabling the key underlying principles to be identified” Given the breadth of this study’s primary objective, the author aims to conduct at least ten in-depth interviews. The one-to-one interviews are to be guided by a semi-structured questionnaire framed by the key issues and crucial questions identified within the literature review. The semi-structured questionnaire is presented in Appendix 3. Ideally, the interviews would be conducted face-to- face. However, the author would consider telephone interviews, or possibly electronic interviews (e-interviews) framed by the semi-structured questionnaire, if a “purposeful” (Daymon and Holloway 2002, p.159) individual targeted by the author agreed to participate but expressed a preference to contribute to the study via these channels. The author acknowledges that semi-structured and unstructured interviews are on a continuum and it is hoped that the interviewees 36
  37. 37. Relevance Marketing: The New, Improved Relationship Marketing? will elaborate on the issues raised by the author and “speak their minds” (Denscombe 1998, p.113). However, the author acknowledges that this is less likely via electronic (asynchronous) methods. With this in mind, the author hopes that the majority of the primary data collection events will be face-to-face. Moreover, the author suggests the real-time events should be at least 45 minutes in duration considering the ambitious nature of the investigation. Finally, the author hopes to recruit individuals with diverse commercial and academic interests to enhance the “generalizability” (Daymon and Holloway 2002, p.91) of the research. For example, it would be useful to interview senior marketing practioners from non-related commercial sectors (e.g. Fast Moving Consumer Goods (FMCG) and luxury goods). An emergent rather than a prescriptive research strategy will determine the precise ratio of senior marketing managers, independent consultants and academics. However, the author hopes that the sample will contain an appropriate balance of academic and professional marketing perspectives. 3.7 The Interlocutors The author presupposed that a percentage of the key speakers at Marketing Week’s ‘Multi-Channel Direct Marketing 2004’ conference would be interested in contributing to this study. Centaur Conferences (Appendix 4) comment: “This event is dedicated to exploring and solving the challenge of how to deliver effective and measurable communications to customers within this virtual, multi- channel world where every campaign must add to the bottom line” The author approached (via e-mail) four of the fourteen keynote speakers and was encouraged by a 75% response rate resulting in three face-to-face interviews. Merlin Stone (Professor of Relationship Marketing - IBM / University of the West of England); Jonathan Latham (Head of Relationship Management – Sainsbury’s); and Matthew Button (CRM and Database Manager – Lexus GB) have all agreed to be identified within the study. 37
  38. 38. Relevance Marketing: The New, Improved Relationship Marketing? The Institute of Direct Marketing (2004c, p.5) publishes ‘Interactive Marketing’ : “The aim of Interactive Marketing is to provide an indispensable resource for senior marketing managers seeking awareness of new marketing concepts, strategies and applications from around the world” The author presupposed that a percentage of the editorial board would be interested in contributing to this exploratory study. Encouraging communications with the journal’s publishing editor and co-editor in chief determined a shortlist of potential interlocutors. The author approached (via e-mail) seven members of the editorial board and was encouraged by 85.7% response rate resulting in one face-to-face interview, one telephone interview and two e-interviews. For the telephone interview, the respondent kindly offered to record the event. Furthermore, all e-participants offered the author the opportunity to question their responses via e-mail. Note: after initially dismissing the idea of e-interviewing the National CRM Manager for Sears (Canada), the author contacted the individual hoping that this strategy may enhance the study’s external reliability. Bruce Clarkson (National CRM Manager – Sears); Peter Mouncey (Independent Consultant & Visiting Fellow at Cranfield University); Alan Mitchell (Business Writer); and Richard Webber (Independent Consultant & Visiting Professor at University College London) have all agreed to be identified within the study. The author approached (via e-mail) seven marketing academics. This resulted in a 71.4% response rate and three face-to-face interviews. Malcolm McDonald (Emeritus Professor of Marketing at Cranfield University); John Egan (Principal Lecturer at Middlesex University); and Keith Fletcher (Professor of Marketing at the University of East Anglia) have all agreed to be identified within the study. The editorial board of ‘The Journal of Relationship Marketing’ has only one member based in the UK. Christine Ennew (Professor of Marketing at Nottingham University) has agreed to be identified in the study: a 100% response rate. A “thick description” (Geertz, 1973) of all the participants is provided in table 1 with interview timings and event details. 38
  39. 39. Relevance Marketing: The New, Improved Relationship Marketing? Interlocutor Organisation / Event Details Background / Relevant Primary Role Information Professor Malcolm McDonald Chartered Extensive industrial experience, Malcolm International Ltd Institute of including a number of years as McDonald Marketing Marketing Director of Canada Dry. Cranfield University (Cookham, Chairman of six companies. Author of Berks) 37 books. Current interests centre Independent 30-06-04 around the use of IT in advanced Consultant (45 minutes) marketing processes. Bruce Clarkson Sears (Canada) e-interview National CRM 07-07-04 Manager Peter Mouncey Cranfield University e-interview Director of research at the IDM, a Independent 09-07-04 visiting fellow at Cranfield University Consultant 13-07-04 and a consultant on market research and CRM. Professor University College of Private House Formerly Managing Director of Richard London (London) Experian’s Micromarketing division. Webber Visiting Professor 12-07-04 Generally recognised as the originator Independent (60 minutes) of UK geodemographic systems. Consultant John Egan Middlesex University Middlesex Twenty-four years’ experience working Principal Lecturer of University in the retail marketing sector with Marketing 13-07-04 companies such as Bloomingdales (90 minutes) (New York), Harrods (UK). Jonathan Sainsbury’s Sainsbury’s HQ . Latham Senior Manager (London) Head of Relationship 15-07-04 Management (45 minutes) Professor University of East Private House Research interests include consumer Keith Fletcher Anglia (Norwich) behaviour, database marketing and Professor of 19-07-04 the development of CRM. Marketing (90 minutes) Professor University of the IBM IBM Professor of Relationship Merlin Stone West of England (London) Marketing. Business Research Leader University of Surrey 22-07-04 with IBM’s Business Consulting IBM (2 hours inc. Services. Director of four companies. Consultant lunch!) Author of 11 books, 40 Journal Articles Alan Business Writer Telephone Author of ‘Right Side Up’ and co- Mitchell Interview author of ‘The New Bottom Line: 08-07-04 Bridging the Value Gaps that are (50 minutes) Undermining your Business’ Professor Nottingham Nottingham Director of DeHaan Tourism and Christine University University Travel Research Institute Ennew Professor of 26-07-04 Editorial Board: ‘The Journal of Marketing (70 minutes) Relationship Marketing’. Matthew Lexus (GB) Ltd Lexus (GB) Button CRM & Database (Epsom) Marketing Manager 12-08-04 (45 minutes) Table 1. The Interlocutors 39
  40. 40. Relevance Marketing: The New, Improved Relationship Marketing? 3.8 Evaluation of Research Design While a limitation of the research is the small sample size, the interview approach has provided valuable insight into the fuzzy and ambiguous domain of (relationship) marketing. The author considers the methodology was appropriate and the sample contained an appropriate balance of academic and professional perspectives. The author suggests: adopting a “member checking” (Lincoln and Guba 1985 cited Daymon and Holloway 2002, p.95) strategy has enhanced the internal validity of the research; providing a “thick description” (Geertz, 1973) of the study’s participants and the primary data collection events has enhanced the overall quality of the research; and the reliability of the research has been enhanced by the application of a “consistent” (Denscombe 1998, p.240) set of questions during the primary data collection events. The author notes: the eleven discrete primary data events satisfied the minimum requirement; the average duration of the face-to-face interviews exceeded the minimum requirement; the majority of the face-to-face interviews were recorded (the single exception being Malcolm McDonald: author forgot to tape!); and the semi- structured questionnaire was a useful stimulus during data collection. Finally, the author feels obliged to present an extract from Gummesson’s (2002b, p.325) publication ‘Practical Value of Adequate Marketing Management Theory’ which has significantly influenced the author’s methodological approach: “Vedic philosophy treats knowledge as a blend of three interacting elements: the process of knowing (methodology), the knower (the researcher) and the known (the result). All three are needed in knowledge generation...My interest in theory has gradually brought me closer to qualitative methods and the philosophy of science philosophies as expressed in hermeneutics, phenomenology and the humanities, and away from quantification and positivism of traditional sciences. This transition is caused by the limitations experienced in quantitative research and the complacent, taken-for-granted attitude of marketing academics that statistical studies are the key to truth, the superior approach, and the cure-all. From my experience both as a producer of surveys, a buyer of market research, and a user of marketing data, I have seen it deliver only in special cases. By giving preference to a highly deductive, survey- based approach, researchers contract chronic myopia. Opportunities of getting closer to the ‘real reality’ and thus securing validity are pushed aside by a fascination for intricacies or research techniques, mistaking the outcome for a valid image. In saying this, I do not disqualify quantitative research as such, only claim that it is over-used and over-rated as a tool in decision-making and the implementation of business. An ingenious concept, category or theory gives much more guidance than survey distributions, standard deviations, staples and random samples. Together with experience, tacit knowledge and intuition, theory gives a structure and a framework, a context” 40
  41. 41. Relevance Marketing: The New, Improved Relationship Marketing? 4. Findings and Analysis 4.1 Relationship Marketing > Relevance Marketing This study is concerned with the validity of relationship marketing as presented in the academic literature. During the primary data collection phase of the study, an Independent Consultant questioned the validity of the ‘relationship marketing’ definitions presented in chapter 2: “Doesn’t it strike you as curious that these definitions of relationship marketing are in fact non-definitions, since they define relationship marketing as the attempt to do something with, or for, or in the context of a relationship, and make no attempt to define what they mean by a relationship?” The author tentatively suggests that this insightful comment supports the relevance marketing definitions and perspectives presented in Figure 6. A medley of perspectives relating to the validity of relationship marketing and relevance marketing is presented in Figure 8. These findings indicate that Humby’s (2004) Customer Relevance Management (CRM) approach and this study’s criticism of the relationship marketing domain may have a degree of validity within the B2C marketing environment. The study’s primary aim is to provide a critical understanding of the development and future of relationship marketing as an academic and professional domain within the B2C marketing environment. A Senior Marketing Manager commented: “My sense is that the term (relationship marketing) is less relevant than a clear explanation or description of the scope of the idea. Typically there is not a pragmatic, business related description of what we’re trying to do and how we’re going about it. The best definition of the activities (independent of the technologies) that I’ve come across is Dr Robert Shaw’s definition of CRM: ‘An interactive process for achieving the optimum balance between corporate investments and the satisfaction of customers needs to generate the maximum profit’ ” 41
  42. 42. Relevance Marketing: The New, Improved Relationship Marketing? The author tentatively suggests that this definition supports the study’s presupposition presented in chapter 2 that the function of B2C marketing is to offer relevant propositions to relevant customers (i.e. profitable customers) and to provide relevant solutions to customers’ problems (needs). Arguably, this CRM definition sits comfortably within the domain of relevance marketing: “Customer Relevance Management (CRM) is an interactive process for achieving the optimum balance between corporate investments and the satisfaction of customers needs to generate the maximum profit” “Customers want good, professional service that reflects the information held about them and respects their integrity as intelligent people! They want integration between channels. No, people don’t want real relationships with all the organisations they trade with. Most organisations still struggle to get to first base in meeting the needs and expectations of their customers and the thought that this is a ‘relationship’ is a joke” (Independent Consultant) “The problem with CRM has been this tremendous lack of clarity regarding its scope. I suggest that CRM is evolving to Customer Management (leave out the relationship word). This will force harder work regarding the development of the value proposition, how the organisation will deliver it, and what the customer experience will be. This is tough to do but those who do it will differentiate themselves in the market” (Senior Marketing Manager) “Customers want the freedom to determine whom they want a relationship with and what the nature of the relationship should be. Humby’s reference to Relevance Management is very close to part of Shaw’s definition of CRM” * (Senior Marketing Manager) “Take Gronroos's relationship marketing definition and just think about it for a moment. Remove the word 'relationship' and it still stands as a definition of marketing. Where, pray, did the need come from to add extra words?” (Academic) “I think there is a lot of disillusionment about ‘relationships’ in marketing and given that CRM actually isn’t about relationships in that kind of personal, marriage-type metaphor then arguably relevance is quite an interesting perspective” (Academic) “Customer Relevance Management seems very sensible” (Independent Consultant) * See section 4.5 for Shaw’s (1999) CRM Checklist Fig.8 Relationship Marketing and Relevance Marketing Perspectives 42
  43. 43. Relevance Marketing: The New, Improved Relationship Marketing? 4.2 Data Gathering > Data Analysis > Value Delivery There was a general consensus that relationship marketing strategies (commonly referred to as CRM strategies) can add significant value to a commercial organisation’s brand equity (value proposition) in today’s highly competitive, B2C marketing environment. This finding supports Mintel’s (2002) previously cited research. Moreover, there was a common view that “segmentation is the key to marketing” and CRM strategies can help marketers identify their ‘profitable’ customers. These findings support the presupposition presented in chapter 2 that relationship (relevance) marketing implies the development of long-term relationships (accounts) with key parties (profitable customers within this context) in order to better understand how to develop and deliver propositions tailored to the needs of the specific market segments identified. A Senior Marketing Manager commented: “We tip all of our prospects into a segmentation model and we then decide which segments are worth nurturing and which segments are not” A common view was that successful CRM requires rich and relevant consumer data. Moreover, there was a general consensus that (ICT-enabled) loyalty programmes can offer commercial organisations valuable real-time data. These findings support Buttle’s (2004, p.34) previously cited CRM perspective that successful CRM strategies are “grounded on high quality data and enabled by IT”. A Senior Marketing Manager commented: “Data is the essential element of a CRM strategy. It is the key to building profitable dialogue and creating value for both the customer and for us” These findings support Clark et al’s (2002) conceptualisation of the CRM space as presented in Figure 6. Moreover, the CRM strategies of Sainsbury’s, Lexus (GB) and Sears (Canada) seem to fit: Clark et al’s (2002) value framework as presented in Figure 5; and Humby’s (2004) Customer Relevance Management framework (Appendix 2) which advocates segmenting customers by their 43
  44. 44. Relevance Marketing: The New, Improved Relationship Marketing? behaviour (data) and then developing marketing strategies for only those “multi- dimensional behavioural segments” (customers) who will find them relevant. 4.3 Win-Win-Win > Many-to-Many The study’s presupposition that the philosophy of relationship (relevance) marketing is to create and sustain a ‘win-win’ scenario over the long-term (Figure 3) was endorsed by all participants. However, Sainsbury’s relationship marketing philosophy is to create and sustain a ‘win-win-win’ scenario: “We have relationships with suppliers and with customers and the ideal campaign will have a win for the supplier, a win for Sainsbury’s and a win for the customer. So, we work on a win-win-win scenario” The author suggests that this marketing approach is supported by the organisation’s broader, paradigmatic view of Customer Relationship Management (CRM) i.e. Sainsbury’s relationship marketing approach goes beyond the customer-supplier dyad to include commercial organisations within the supply chain. This finding tentatively supports Gummesson’s (2004a, p.1) previously cited worldview of relationship marketing i.e. “marketing does not live in one-to- one relationships but in many-to-many networks”. Furthermore, an Independent Consultant reflected upon the appropriateness of Gummesson’s (2002) many-to- many (network) philosophy in today’s multi-channel marketing environment: “Networks are relevant in a multi-channel environment where a consistent view of the customer is an organisation’s aim” However, Gummesson’s (2004a, p.1) many-to-many marketing concept was not recognised as being a useful perspective by all participants. A Senior Marketing Manager commented: “This is getting way too complex when the subject is really back to influencing consumer behaviour for commercial gain” 44
  45. 45. Relevance Marketing: The New, Improved Relationship Marketing? 4.4 One-to-One Marketing > Multi-Channel Integration In chapter 2, the author suggested relationship marketing respects and values markets segmented at the level of the individual. The majority of the study’s interlocutors agreed with this presupposition. However, there was a view that the one-to-one (Peppers and Rogers, 1993) relationship marketing concept has been ‘over-sold’ by academics and CRM software vendors. In summary, there was a general consensus that one-to-one (Peppers and Rogers, 1993) relationship (relevance) marketing is theoretically possible but not a common reality in today’s B2C marketing environment. An Independent Consultant commented: “The capability to communicate one-to-one should be expanding all the time with ICT developments – if only organisations would take data/information/knowledge management more seriously and learn to integrate and co-ordinate channels” 4.5 CRM Checklist A Senior Marketing Manager commented: “I have found Shaw’s CRM checklist very useful in assessing what we’re doing (and what needs to be done) in terms of customer management” The participant kindly summarised Shaw’s (1999) CRM checklist: • Measuring inputs across all functions including marketing, sales and service costs and outputs in terms of customer revenue, profit and value • Acquiring and continuously updating knowledge about customer needs, motivation and behaviour over the lifetime of the relationship • Applying customer knowledge to continuously improve performance through a process of learning from successes and failures • Integrating the activities of marketing, sales and service to achieve a common goal • The implementation of appropriate systems to support customer knowledge acquisition, sharing and the measurement of effectiveness • Constantly flexing the balance between marketing, sales and service inputs against changing customer needs to maximize profits Fig.9 CRM Framework (Shaw 1999 cited by a Senior Marketing Manager) 45
  46. 46. Relevance Marketing: The New, Improved Relationship Marketing? The Senior Marketing Manager noted that Humby’s (2004) Customer Relevance Management (CRM) measurement framework (Figure 7) and Shaw’s (1999) CRM checklist (Figure 9) share common ground. The author suggests that the only significant difference between the frameworks is the terminology employed. 4.6 Prospect Relationship (Relevance) Management Lexus’s (GB) CRM and database marketing strategy is based upon the concept of Prospect Relationship Management (PRM). The components of this framework are presented in Figure 10. “Prospect Relationship Management is about acquiring and nurturing prospects (across multiple channels) and making sure the customers stay happy” (Button 12/08/04) • PRM (Prospect Relationship Management) not CRM; successfully nurturing a prospect to become your customer • Understand the tone with which to speak to your customer from the insight gleaned from your data • Employing consumer insight to create relevant offers based on spending patterns and established behaviour • Examining different segmentation models to guarantee you’re aiming for the right target Fig.10 Prospect Relationship Management (PRM) (Lexus) During the interview, the author suggested the term ‘Prospect Relevance Management’. Lexus’s CRM and Database Manager commented that Prospect Relevance Management is a valid perspective considering Lexus’s CRM strategy involves “employing consumer insight to create relevant offers based on spending patterns and established behaviour”. The author notes: the synonymity of the terms relationship marketing and CRM is highlighted by the organisational responsibilities of Sainsbury’s Senior Relationship Marketing Manager and Lexus’s CRM and Database Manager. In practice, these roles share a lot of common ground (e.g. the development of customer acquisition programmes and the management of customer retention programmes). 46

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