Meaning of Relationship Marketing <ul><li>Relationship Marketing is a marketing strategy whose objective is to establish and maintain a profitable, long-term relationship with a customer, which goes beyond the initial contact. </li></ul><ul><li>Relationship marketing is a form of marketing that evolved from direct response marketing; it places emphasis on building longer-term relationships with customers rather than on individual transactions. Relationship marketing involves an understanding of customers' needs and wants through their lifestyles and providing a range of products or services accordingly. </li></ul>
Relationship Marketing Philip Kotler The process of creating, maintaining and enhancing value-laden relationship with valued customers, distributors, dealers and suppliers by promising and consistently delivering high quality products, good services and fair prices". Marketing is shifting from trying to maximize the profit on individual transactions rather than to building mutually beneficial relationship with consumers and other parties.
Why Relationship Marketing? <ul><li>Emphasis on relationship rather than a transactional approach to marketing. </li></ul><ul><li>Projecting a positive image of the organization among the consumers. </li></ul><ul><li>Extend the principles of relationship marketing in order to enter into diverse market domain. </li></ul><ul><li>Build goodwill in the market. </li></ul><ul><li>Improve customer satisfaction. </li></ul><ul><li>Enhance brand equity through customer retention and loyalty. </li></ul><ul><li>Maintain parity between internal market within the organization as well as with external relationship variables like customers, suppliers, referral sources etc. </li></ul><ul><li>Create a co-operative and collaborative activities that aimed at enhance mutual economic value of both marketer and customer at reduced cost. </li></ul>
Why Relationship Marketing? <ul><li>According to a Harvard Business Review study: </li></ul><ul><li>A satisfied customer in 10 years will bring 100 more customers to the company. </li></ul><ul><li>It costs 7 times more to attract a new customer than to serve an old one. </li></ul><ul><li>20% of the company's loyal customers account for 80% of its revenue (Pareto's principal). </li></ul><ul><li>Approximately 70% of customers switch brands because they don't like the service or the provider. </li></ul><ul><li>On an average a customer tells 9-10 people about a problem. </li></ul><ul><li>The chances of selling to an existing customer are 1 in 2; the chances of selling to a new customer are 1 in 16. </li></ul>
Relationship Marketing Vs Transactional Marketing Basis Relationship Mkt. Transactional Mkt. Time Short term focus Long term focus Price sensitivity Customers are more sensitive to price Customers tends to be less sensitive to price Role of marketing function Appropriate marketing mix programme Interactive marketing Measuring of customer satisfaction Monitoring market share Managing the customer Customer related service Little emphasis on customer related service Strong emphasis on customer related service Quality dimension Quality is the sole responsibility of production Quality is concern for every one
Advantages of Relationship Marketing <ul><li>This marketing strategy ensures a better relationship with customers and other stakeholders of the organization. </li></ul><ul><li>If relationship marketing is adopted in an organization, it will ensure a lower amortized cost for acquiring new customers. </li></ul><ul><li>The customers will become less price sensitive. </li></ul><ul><li>Later on they will become the word of mouth advertisers and referrals for the company. </li></ul><ul><li>Relationship marketing ensures improved employee as well as customer satisfaction and thus retained them for a long–term. </li></ul><ul><li>There will be a healthy relationship with suppliers if relationship marketing is practiced. </li></ul><ul><li>A good relation with government and other regulatory bodies is also visualized under relationship marketing </li></ul>
Strategies for Relationship Marketing <ul><li>Objectives setting : Objective in relationship marketing is quality, because relationships cannot be sustained if there are any problems with quality. </li></ul><ul><li>The mission :Develop a mission which reflects this through a focus on shared values and people-based goals . </li></ul><ul><li>SWOT analysis : </li></ul><ul><li>Market analysis and segmentation :In relationship marketing, this should include, as far as possible, analysis of the six market groups identified earlier. These groups might then be segmented so that the organisation can focus on means of tailoring the relationship to the specific needs of different groups. </li></ul><ul><li>Strategy formulation :select the strategic options which will provide the greatest chance of successfully achieving the organisation's goals. </li></ul><ul><li>Developing the relationship marketing mix : 7 P’s </li></ul>