The document outlines the evolution and fundamental concepts of relationship marketing (RM), emphasizing its importance in maximizing customer lifetime value and enhancing long-term relationships. It discusses the transition from traditional marketing approaches to RM, detailing key drivers, principles, and the expanded marketing mix that integrates customer service, quality, and marketing strategies. Furthermore, it highlights the importance of engaging various market domains, including customers, suppliers, and internal stakeholders, to achieve mutual benefits and improved profitability.

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RELATIONSHIP MARKETING:
BASIC CONCEPTS

3. Definition and Importance Of RM
 Evolution of RM
 Fundamental Principles of RM
 Expanded Marketing Mix
Drivers of RM
 Elements of RM : Quality, Customer Service
and Marketing

4. The ongoing process of identifying and creating new
value with individual customers and then sharing the
benefits over a lifetime of association.
Gordon (1982)
Identify and established, maintain and enhance and
when necessary also to terminate relationships with
customers and other stockbrokers, at a profit, so that
the objectives of all parties involved are met, and that
this is done by mutual exchange and fulfillment of
promises.
Gronroos (1997)

5. The shift from traditional to relationship focus in
running the business.
Increase customer retention and loyalty.
Higher customer profitability through lower cost of
recruiting customers and reduce costs of sales.
Linking together customer service, quality and
marketing.

7. 1950s 1960s 1970s 1980s 1990s
Majorareaofconcentration
Consumer
marketing
Industrial marketing
Nonprofit & societal
marketing
Services marketing
Relationship
marketing

8. YEARS MARKETING
1950’s Consumer marketing
1960’s Industrial marketing
1970’s Non profit and societal
marketing
1980’s Services marketing
1990’s Relationship marketing

9. YEARS MARKETING
1950’s Consumer marketing
1960’s Industrial marketing
1970’s Non profit and societal
marketing
1980’s Services marketing
1990’s Relationship marketing

10.  In 1950’s the marketing interest was focused primarily on
consumer marketing. During this time manufacturers
realize the importance of including customer in their
marketing programs.
 In 1960’s the focus shifted towards industrial markets.
The shift became dominant as manufacturers acknowledge
the importance of establishing relationship with their
customers
 In 1970’s non-profit or societal marketing became the
center of attention as marketers moved from solely making
profits toward social responsibility.
 In 1980’s attention was directed to the service sector.
This sector became important as a result of the need to
provide complementary services to the consumer and
industrial sectors.
 In 1990’s the area of interest is towards relationship
marketing. This move came about due to the need to
acquire, maintain and retain customers.

11. ERA SELECTED MARKET
DRIVERS OR
ENABLES
STRATEGIC RESPONSE OR
FOCUS
1960’S •Consistent expansion
of most consumer and
business to business
markets
•Diversification and balance of
product portfolio
1970’s •Slowing market growth •Companies focus on their
core business
1980’s •Expansion of upscale
market segment
•Growth of global
competition
•Product innovation to
address upscale
•Market development
Early
1990’s
•Contraction of many
upscale markets
•Simplification of product,
services and process.
Late
1990’s
•Renewed expansion of
upscale market
•Focus on relationship
marketing

12. 1. Convenience
Products
2. Shopping
Products
3. Specialty
Products
4. Unsought
Products

13. Materials
and Parts
Capital
Items
Supplies
and
services

14. Moved solely making
profits towards social
responsibility.
1970’s Non Profit Or Societal
Marketing

15. 1. A Pure Tangible
Goods
2. A Tangible
Goods With
Accompanying
Services
3. A Major Service
With
Accompanying
Minor Goods And
Services
4. A Pure Service
1980’s Services Sector

16. 1. A Pure Tangible
Goods
2. A Tangible
Goods With
Accompanying
Services
3. A Major Service
With
Accompanying
Minor Goods And
Services
4. A Pure Service
1980’s Services Sector

17. Micro level
It is a recognition that the nature of
interrelations with customer is
changing.
Macro level
The recognition that marketing impacts
on a wide range of areas.

18. At Micro Level

19. CHARACTERISTIC TRANSACTIONAL
MARKETING
RELATIONSHIP
MARKETING
Focus On single sale Customer retention
Orientation Product features Product benefits
Time scale Short time scale Long time scale
Customer service Little High
Customer commitment Limited High
Customer contact Moderate High
Quality Concern of production Concern of all

20. Extending the ‘lifetime value’ of customers through strategies
that focus on retaining targeted customers.
Recognition that companies need to forge relationships with
a number of market domains or stakeholders if they are to
achieve long term success in the final marketplace.
Marketing has moved from being the sole responsibility of the
marketing department to a market facing company and cross-
functional.

21. Principles of RM:
 Maximizing the life time value of a customer
Customer Life Time Value (LTV): The future flow of revenues/or net profit expected of every
customer for defined time period.
In practice, increasing the LTV means to set 3 aims:
To increase the period when the clients buy from the company (to increase the customer life
cycle
To increase the amounts spent for every purchase;
To decrease the time between two purchases ;
Extended life cycle of customers:
increases the profit from increased purchases (cross selling);
increases profit from reduces operating costs;
Increases profit from refferals;
 Forge relationship with various market domain or stakeholders, instead of just the customer.
(i.e. The Six Market Model)
 Move responsibility to pan-company and cross section rather than marketing department only.
This is a call to bring marketing out of its functional silo and distribute some functions and
tasks to other departments. All employees must be involved in and devoted to the activities for
establishing long-term relations with customers.

22. Users
Individuals that use product or service
Influencers
Persons who influence the buying decision
Deciders
Have power to decide on product requirement on
suppliers
Approvers
Person who must authorize the proposed actions of
deciders or buyers
Buyers
Persons with formal authority for selecting suppliers and
arranging the terms of purchase
Gatekeepers
Persons who have the power to prevent sellers or
information from reaching members of the buying
centre

23. CUSTOMER
SERVICE
QUALITY
MARKETING
RELATIONSHIP
MARKETING
In order to achieve total customer satisfaction and long term
relationship these 3 elements needs to be linked together

24. Process which provides time
and place utilities for the
customers which involves:
1. Pre-transaction
2. Transaction
3. Post- transaction

25.  Total order entry, all communication with
customers, all shipping, all freight, all invoicing
and total control of repair of products.
 Timely and accurate delivery of products ordered.
 To ensure long-term relationship of mutual
advantage.
 Understanding what the customer buys and
adding value.

26. Match between
what
customer expect
and what
they experience

27.  As a guidance to other in the techniques
involved during the process.
 To get the quality planning cycle and the
communications right.
 To remain competitive in business and
sustain in market.
 To improve productivity and efficiency and to
maximize resources by reducing wastes.
 To maintain profitability and to retain or expand
market share.

28. Process of
perceiving,
understanding,
stimulating and
satisfying need
of selected target
market.

29.  Marketing fills exchange gaps.
 Marketing creates utility or value
for the parties in the exchanges.
THE ROLE OF MARKETING

30. Customer
Services
Promotion
Place
Processes
People
Price
Product

31. THE EXPANDED MARKETING MIX
Customer Service
- A customer oriented corporate philosophy that
integrates and manages all the elements of the
customer interface to meet or exceed expectations
of customer service quality (Bennet, 1995)
- A major factor in the development of customer
loyalty in RM. (Berman, 1996)

32. The categories of products:
A pure tangible product (shampoo, detergent
without any accompanying services).
A tangible product with accompanying services
(buying an automobile you will get free service for
the 1st 1000km).
A major service with accompanying minor goods and
services (savings account accompanied by an
automated teller card for withdrawals).
A pure service (haircut).

33. THE EXPANDED MARKETING MIX
Processes
- Involve procedures, task schedules, activities and
routines by which a product or service is delivered to
the customer.
- Processes are the ways in which firms create value
for their customers
- Close cooperation between marketing and operation
staff in process management.

34. THE EXPANDED MARKETING MIX
People
- Involve employees in an organization.
- Key element in an organization’s success and some
companies include them in their overall marketing
strategy.
- If employees are more connected with the market,
the organizations themselves need to become
customer-centric.

35.  The important forces acting on the marketing mix
include:
◦ The customer – buying behaviour in terms of their
motivation to purchase, buying habits, environment, size
of market and buying power.
◦ The industry’s behaviour – the behaviour of retailer
and wholesaler and other members of the logistics chain
in terms of their motivations, structure, practice and
attitudes.
◦ Competitors – their position and behaviour as
influenced by industry structure and the nature of
competition.
◦ Government and regulatory – controls over
marketing which relate to both marketing activities and
competitive practices.
Refer diagram - page 20

36. LO3

38.  Market
 To direct marketing activities to the existing markets.
 Customer markets at the centre
 Focus on the relationship marketing, customer value,
satisfaction and loyalty, leading to improved profitability
in the longer term.
 Seeking new customers
 Ensure ongoing marketing activity directed at existing
customers.

39. Prospect
Customer
Client
Supporter
Advocate
Emphasis on
developing and
enhancing
relationships
(customer keeping)
Emphasis on new
customers
(customer catching)
Partner

40.  A suspect is someone who comes
across your companies’ promotion.
They are a potential suspect for your
company.
 Anyone who reads or hears an ad, looks
at a brochure or encounters some other
type of promotion is a suspect.
 Suspects include everyone who might
possibly buy your product or service.
We “suspect” they might buy; we do not
know enough yet to be sure.
Suspect

41.  Someone who pays attention to your
promotion.
 If the person is interested in your promotion
they become a potential prospect.
 A prospect is someone who has a need for
your product or service and has the ability to
buy.
 Although a prospect has not yet purchased
from you, he or she may have heard about
you, read about you, or had someone
recommend you to him or her.
Prospect

42.  A customer is someone who purchases either your
product or service.
 First-Time Customer. First-time customers are those
who have purchased from you one time. They are
customers of yours but are almost certainly still customers
of your competitor as well.
 Repeat Customer. They have purchased from you two
or more times. They may have bought the same product
twice or bought two different products or services on two
or more occasions. They will buy from you but will also
continue to give their business to competitors. In
professional services you may be one of a number of
firms on their panel.
Customer

43.  A customer who buys a second time which is
who come back to you.
 A loyal customer or client buys from you rather
than anyone else. You have a strong, ongoing
relationship that makes him or her resistant to
the pull of the competition.
 For professional services firms this is where
you begin to make the transition from being a
supplier to trusted advisor. You are ‘top of mind’
and the first firm that a client calls when they
need help.
Client (Loyal Customer)

44.  A customer who gives unpaid
advertising for the products or
services of a business.
 Promotes your business on your
behalf. They are so happy about
your product/service that they tell
others.
 Like a client, an advocate buys
everything you have to sell and
purchases regularly.
Advocate

45. Partner
 Someone who has the relationship of a partner with you

46. The best form of marketing is to get your
customers to do the marketing for you.
Consist 2 main categories
Customer
Best marketing done by an organization’s existing
customers - positive word of mouth (WOM) and delivery of
outstanding services quality.
Non-customer
Recommend an organization to prospective customers,
including intermediaries, connectors, third party markets
and various agencies.

47.  Emphasizes a long term very close
relationship and a win-win situation.
 Suppliers/vendors - providers of
physical resources to the business.

48.  Market to access wider range of specialist skills.
 Represents potential employees’ who possess
the necessary skills and attributes needed to
match the profile that the company wishes to
portray to its customers
 Refers to third parties - colleges, universities,
recruitment agencies or other employers

49. Includes :-
 finance markets
 regulatory markets
 governments markets
Apply the term ‘influencer’ to a range of third
parties who exercise influence over the
organization and its potential customers

50.  Internal Market refer to any person working
within an organization.
 The marketing activity needs to be done internally
within a firm.
 Key aspects involved:
 Employees must understand that they have both a
customer as well as a supplier whose needs and
wants must be addressed.
 All the staff also works together in a manner that is
attuned to the company’s mission, strategy and
goals.
 To ensure all members of the staff provide the best
representation of the company and successfully
handle all telephone, mail, electronic, and personal
interactions with the customer.

51.  RM and traditional transactional marketing are
not mutually exclusive and they are not
necessarily in conflict with each other.
 RM may be more suitable in the following
circumstances or situations:
◦ High value products or services
◦ Industrial products
◦ Products are not generic commodities
◦ Switching cost are high (e.g telco contract)
◦ Customers prefer a continuous relation
◦ There is customer involvement in the
production phase.

52.  Relationship marketing implies a consideration of not just better
relationships with customer markets but also the development
and enhancement of relationships with supplier, employee,
referral, ‘influencer’ and internal markets.
 Thus the key concept of relationship marketing involves both a
consideration of the six market areas and the creation
of bond with each market through the delivery of value
satisfaction as represented by the quality of the ongoing
relationship as well as the quality of products and services
being produced. It is this notion of total quality, the sense of
providing customer perceived value, that creates an opportunity
to turn transaction based marketing into relationship-based
marketing.