“Identify and establish, maintain, and enhance, and when necessary, terminate relationships with customers and other stakeholders, at a profit, so that the objectives of all parties involved are met. This is achieved by a mutual exchange and fulfilment of promises”
Johnson Regina Kachidza | Building Relationship Building Business
1. R E G I N A K A C H I D Z A
BUILDING RELATIONSHIP
BUILDING BUSINESS
2. Lecture Agenda
Development of relationship marketing
When to use relationship marketing
KMV model of relationship marketing
Satisfaction
Relationship intensity
3. Relationship Marketing
Remember definition?
“Identify and establish, maintain, and enhance, and
when necessary, terminate relationships with
customers and other stakeholders, at a profit, so that
the objectives of all parties involved are met. This is
achieved by a mutual exchange and fulfilment of
promises” (Gronroos, 1994, p. 9)
4. Relationship Marketing
RM has developed out of transaction and ‘product’
perspectives on exchange behaviour into one that
values the needs of the ‘people’ involved within a
series of exchanges.
RM is about collaboration….. not adversarial or
competitive activities.
5. Transactional or Discrete Exchanges
Transactional Exchanges
Transactional
Exchanges
Transactional
Exchanges
Product & Price Orientation
One-Off
No History and No Future
Driven by the 4Ps Marketing Approach
7. A Range of Relationships
Relationships are far from static nor are they polar: they vary
in intensity, are dynamic and change with context. We do not
always want, or choose, to have intense relationships.
To be successful it is necessary for marketing (managers)
to recognise the range and depth of relationships that
organisations and their customers desire.
9. A Range of Relationships
Prospect
Customer
Client
Supporter
Advocate
Emphasis on
long-term
loyalty
Emphasis
on one-off
transactions
10. When to Use Relationship Marketing
Use relationship marketing when:
Customers have long time scales
Especially applicable for large scale B2B projects
When switching costs for consumers are high
Which would decrease the likelihood of winning customers
from competitors
When customer has a relationship (rather than a
cost) orientation
When benefits of the relationship outweigh the costs
11. Types of Relationship at DaimlerChrysler
Transaction Coordination Cooperation Alliance
Based on…. Data Information
Exchange
Knowledge
Transfer
Specialist
knowledge
build up
Lasts for… Length of
Transaction
Length of
contract
Series
Life Cycle
Beyond the
Life Cycle
Level of
Commitment
Suppliers not
Integrated
Limited
Integration
Strong
Integration
Seamless
Examples Pencils Mouldings Exhausts Fuel Cells
Adapted from Wagner and Boutellier (2002)
12. Relationship Revenues v Costs
Sleeping
giants
Power
traders
Pets Delinquents
Low High
High
Low
Relationship costs
Relationshiprevenue
Kotler, et al (2008, p. 396)
13. Relationship Revenues v Costs
Sleeping giants
Very lucrative but undemanding
Power traders
Take up a lot of effort, but have high revenue
Pets
Similar to power traders
Both could be best served with transaction marketing
Delinquents
Most difficult groups to deal with
Can offer lower levels of service to reduce costs, since defection
is not such a loss
18. Trust, Commitment and Satisfaction
A natural outcome from building trust and developing
commitment is the establishment of customer
satisfaction.
Satisfaction is thought to be positively related to
customer retention which in turn leads to an improved
return-on-investment and hence profitability.
Many organisations seek to improve levels of customer
satisfaction, with the intention of strengthening
customer relationships and driving higher levels of
retention and loyalty.
Ravald and Gronroos (1996)
19. Satisfaction and Retention
“Totally satisfied customers were six times more likely to
repurchase Xerox products over the next 18months than its
satisfied customers” Jones and Sasser (1995, p. 91)
For less than totally satisfied customers, the possible
increase in satisfaction from another brand, is worth the
risk of potentially lower levels of satisfaction
Successful relationships are more likely to lead to totally
satisfied customers, but…
… totally satisfied customers are more likely return for another sale
The sooner the organisation can establish trust and commitment the
more likely it is to retain customers
20. Relationship Intensity
Factors previously discussed can be combined with a
couple more into one model of relationship intensity
Fill (2011, p. 569 citing Bruhn)
21. Relationship Intensity
Relationship quality is “the capability of one of the
relationship parties to reduce the complexity of
transactions, lower the uncertainty and raise the
interaction efficiency between the interaction
parties” Bruhn (2003, p. 63)
22. Relationship Intensity
Purchasing behaviour
How does the buyer act in relation to the purchase (e.g.,
impulsive or deliberate)
Information behaviour
Extent of search for competitive products
Integration behaviour
How much information does the buyer share about
themselves that is relevant to the purchase
Communication behaviour
Does customer spread WOM concerning the company?
23. Thing to Remember
Development of relationship marketing
That transactional and collaborative exchanges can
exist side by side
The links between trust, commitment and
relationship
How relationship intensity develops
Editor's Notes
Commitment is “the desire that a relationship continue (endure) in order that a valued relationship be maintained or strengthened.” Fill 2009, p. 213
TC = Termination Costs; A = Acquiescence; RB = Relationship Benefits; PL = Propensity to Leave; SV = Shared Values; C = Communication; FC = Functional Conflict; OB = Opportunistic Behaviour; U = Uncertainty
