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  1. 1. European Journal of Social Sciences – Volume 12, Number 4 (2010) Relationship Marketing and Organizational Performance Indicators Shaker, T. Ismail Philadelphia University P.O. Box (1) ,Code: 19392- Amman- Jordan E-mail: ismailshaker@ymail.com Basem, Y. Alsadi Philadelphia University P.O. Box (1) ,Code: 19392- Amman- Jordan Abstract Purpose- This paper aims at exploring the theoretical foundations of relationship marketing concept and examining the effect of utilizing and adopting this concept on organizational performance indicators from the perspective of several high educational institutions experts and academic staff. Design/methodology/approach- Despite the recent popularity of research into relationship marketing, there is still some confusion surrounding the concept of and how it differs both from non relationship marketing and from other ways of managing marketing relationships. Acquiring new customers and retaining existing customers is another key goal for relationship marketing. Findings - This paper finds that there is a positive relationship between relationship marketing concept and organizational performance indicators, relying on successful relationship is the two-way flow of value. Originality/value - For academicians and marketing professionals, the study provides a practical insight into the changes in marketing paradigms, an alternate paradigm of marketing need to be developed that is more process rather than outcome oriented and emphasize value creation rather than value distribution. Keywords: Relationship marketing; Interactive marketing, Value creation rather than value distribution, Partnership and strategic alliances.1. IntroductionThis paper works from the premise "that the real purpose of business is to create and sustain mutuallybeneficial relationships, especially with selected customers. With the main proposition which assumethat successful relationships is the two-way flow of value (Christopher, M., et, al. 2002). Relationshipmarketing is consider a true balance between "giving and getting" as a key benefit to encourage anactive role and is conductive in delivering two- way value, where loyalty is based on trust andpartnership, will prove to be one of the most significant policies to be pursued in development andsustenance of competitive advantage (Ismail, Sh. T. 2009, Gronroos, Ch. 1994). Relationship marketing usually results in strong economic, technical and social ties among thestakeholders parties thereby reducing their transactions costs and increasing exchange efficienciesincluded in relationship marketing which are not only buyers / sellers exchanges but also businesspartnerships, strategic alliances, and cooperative marketing networks. The relationship typicallyinvolves seller- customer exchange, but it could involve any stakeholders relationship (Morgan andHunt, 1994, Gronroos, Ch. 1994). 545
  2. 2. European Journal of Social Sciences – Volume 12, Number 4(2010) Marketing as a distinct discipline was born out of economics around the beginning of thiscentury. As the discipline gained momentum, and developed through the first three quarters of thetwentieth century, the primary focus was on transactions and exchanges. However, the development ofmarketing as a field of study and practice is undergoing reconceptualization in its orientation fromtransactions to relationships (Kotler and Armstrong, 2008, Gronroos, Ch. 1994).. The emphasis onrelationships as opposed to transaction based exchanges is very likely to redefine the domain ofmarketing. All relationship marketing activities are ultimately evaluated in the basis of companys overallprofitability as a key relationship marketing outcomes: customer loyalty and positive customer word -of –mouth communication (Thurau, Th, He, et, al. 2002).2. Theoretical BackgroundJobber and Fahy (2006) mentioned that the relationship marketing is the process of creating,developing and enhancing relationship with customers and other stakeholders. Relationship marketingrefers to the development, growth, maintenance of long- term, cost- effective exchange relationshipwith individual customers, suppliers, employees, and other partner for mutual benefit (Boone andKurtz, 2007). Developing excellent service quality creates the opportunity to build an on goingrelationship with customers. The idea of relationship can apply to many industries. It is particularlyimportant in services since there is often direct contact between service provider and customers. Thequality of relationship that develops will often determine its length. Every marketing transaction involves a relationship between the buyer and seller in atransaction-based situation, the relationship may be quite short in duration and narrow in scope. Thecustomer-seller bonds developed in a relationship marketing situation, on the other hand, last longerand cover a much broader scope than those developed in transaction marketing. Customer contacts aremore frequent, a company emphasis on customer service contributes to consumer satisfaction.(Armstrong and Kotler, 2007). When a company integrates customer service and quality with marketing, the result is arelationship marketing orientation. Relationship marketing creates a new level of interaction betweenbuyers and sellers. Rather than focusing exclusively on attracting new customers, marketers havediscovered that it pays to retain current customers.2.1. Interactive MarketingInteractive marketing refers to buyers- seller communications in which the consumer controls theamount and type of information received from a marketer. Interactive techniques have been used formore than a decade; point-of-sales brochures and coupon dispensers are a simple form of interactiveadvertising. Today, however, the term also includes two-way electronic communication using a varietyof media such as the internet, CD-ROMS, and virtual reality kiosks (Boone and Kurtz, 2007). Interactive marketing frees communication between marketers and their customers from thelimits of the traditional, linear, one way message to passive customers using broadcast or print ads.Now customers come to companies for information, creating opportunities for one-to-one marketing.For example, each customer who visits a Web site has a different experience, based on the pathway oflinks he or she chooses to follow. These electronic conversations establish innovative relationshipsbetween users and the technology, providing customized information based on users interests andlevels of understanding. People gain access to chosen programs and services via their personalcomputers and telephones, and they can purchase products not only from stores but also via televisionor the internet. (Miller, et, al. 2002). The study of Varey and Ballantyne (2005), titled Relationship marketing and the challenge ofdialogical interaction, the authors make the distinction between three types of interaction,informational, communicational and dialogical, and argue that dialogical communication between 546
  3. 3. European Journal of Social Sciences – Volume 12, Number 4 (2010)marketers and stakeholders is necessary for an organization to be an innovative social and economiccontributor. The authors explain that dialogical interaction refers to an extended conversation amongtwo or more people - in essence the basis for a relationship that involves both parties learning together.Yet in todays high tech world where managers are removed from any contact with their customers, theway such dialogues can occur are much different from the approaches used in traditional marketswhere the seller of a product interacts directly with the customer. Therefore, it is argued, managersneed to make an effort to develop dialogical inquiry which can inform them and allow them to reflecton their past behaviors and consequences. This believes will lead to a greater understanding of eachparticipants point of view and lead to the establishment of further and deeper relationships.2.1.1. Buyer-Seller RelationshipRelationship marketing depend on the development of close ties between the buyer, whether anindividual or company and seller. This tie considers as the core elements of the buyer-sellerrelationship; the three promises that form the basis of relationship marketing and the four dimensionsof relationship marketing model (Boone & Kurtz, 2007, Gronroos, Ch. 1994).). Relationships MKG is based on promises from organizations that go beyond obvious assurancethat potential customer expect. Asset of promises- out side the organization, within the organizationand between buyers and sellers interaction- determine whether a marketing encounter will be positiveor negative buyer-seller relationship. Relationship marketing has seen a number of developments since the early work of ChristopherM. et al. (2002), most notably the development of terms and processes that have been used todemonstrate the adoption of the new paradigm. It is the automation of processes that has drivenpractitioners with Customer Relationship Management Programs that enable data collection, analysisand communication of tailored messages to the most promising prospects as the focus of activity. Making PromisesMost firms makes promises to potential customers through external marketing, directs towardcustomers, suppliers, and other parties outside the organization. The promises communicate what acustomer can expect from the firms goods and service. The promises must be both realistic andconsistent with one another. A firm that makes unrealistic promises cans a disappointed customer whomay not buy the good or service again, (Zeithmal, V. et al. 2006, Boone and Kurtz, 2007),) Enabling PromisesA company can follow through on its promises to potential customers through external marketing onlyif it enables these promises through internal marketing. Internal marketing includes recruiting talentedemployees and providing them with tools, training, and motivation they need to do their job effectively(Boone and Kurtz, 2007). Keeping PromisesEvery customer interaction with a business reaches the moment of truth when a good or service isprovided to the customer. Buyer-seller relationship following external and internal marketing, definesthe point at which a company keeps its promises (Zeithmal, V. et al. 2006)2.1.2. Dimensions of Relationship MarketingClearly, making, enabling, and keeping promises are crucial parts of relationship marketing process,but developing relationships require more than promises. All relationships depend on the developmentof emotional links between the parties. There are four key dimensions of relationship marketing:bonding, empathy, reciprocity, trust and tangibility (Chris and Graham, 2007). 547
  4. 4. European Journal of Social Sciences – Volume 12, Number 4(2010) BondingTwo parties must bond together in order to develop a long- strong relationship. Stronger bonds increaseeach partys commitment to the relationship (Jobber and Fahy, 2006) EmpathyThe ability to see situations from the perspective of the other party- is another key emotional link in thedevelopment of relationships (Chris and Graham, 2007) TangibilityThe physical facilities, equipment and appearance of personnel (Lovelock and Wirtz, 2006) ReciprocityEvery long-term relationship includes some give-and-take between the parties; one make allowancesand grants favors to the other in exchange for the same treatment when its owned need arises (Chrisand Graham, 2007). TrustTrust is ultimately the glue that holds a relationship together over the long haul. Trust reflects theextent of one partys confidence in another partys integrity. When parties follow through oncommitments, they enhance trust and strengthen relationships. Stronger trust leads to more cooperationbetween parties in a relationship (Chris and Graham, 2007)2.2. Creating ValueMarketing has progressed from a simplistic focus on "giving the customer what they want to a pan-company orientation in which the specific capabilities of the business are focused around creating anddelivering customer value to the target market segment. A Key role of marketing in this newframework is to determine what value proposition to create and deliver to which customer. (ZeithamlV. et al. 2006).2.2.1. Axioms and Purpose of Relationship MarketingRelationship marketing attempts to involve and integrate customers, suppliers and other infrastructuralpartners into a firms developmental and marketing activities such involvement results in closeinteractive relationships with suppliers, customers or other value chain partners of the firm. Interactiverelationships between marketing actors are inherent as compared to the arms length relationshipsimplied under the transactional orientation. This emphasizes cooperation rather than competition andconsequent conflict among the marketing actors. Thus, development of relationship marketing points toa significant shift in the axioms of marketing competition and conflict to mutual cooperation. (Peck, H.et al. 2000) The First AxiomOf transactional marketing is the belief that competition and self-interest are the drivers of valuecreation. Through competition, buyers can be offered a choice, and this choice of suppliers motivatesmarketers to create a higher value offering for their self-interest. This axiom of competition is nowchallenged by the proponents of relationship marketing who believe that mutual cooperation, asopposed to competition and conflict, leads to higher value creation, In fact, some social psychologistshave gone so far as to suggest that competition is inherently destructive and mutual cooperationinherently more productive (Shoham et al. 2005, Morgan, et, al,. 1994). 548
  5. 5. European Journal of Social Sciences – Volume 12, Number 4 (2010) The Second AxiomOf transactions marketing is the belief that independence of choice among marketing actors creates amore efficient system for creating and distributing marketing value. Maintaining an ‘arm’s lengthrelationship’ is considered vital for marketing efficiency. Industrial organizations and governmentpolicy makers believe that independence of marketing actors provide each actor freedom to choosehis/her transactional partners on the basis of preserving their own self-interests at each decision point.This results in the efficiency of lowest cost purchases through bargaining and bidding. However, thisbelief is also challenged recently in economics (Agarwal & Eramilli, 2003, Morgan, et, al,. 1994).). The purpose of relationship marketing is, therefore, to enhance marketing productivity byachieving efficiency and effectiveness (Gronroos, Ch. 1994). Several relationship marketing practicescan help achieve efficiency, such as customer retention, efficient consumer response and the sharing ofresources between marketing partners. Each of these activities has the potential to reduce operatingcosts of the marketer(Gronroos, Ch. 1994). Similarly, greater marketing effectiveness can be achievedbecause it attempts to involve customers in the early stages of marketing program development,facilitating the future marketing efforts of the company. Also, through individualized marketing andadoption of mass customization processes, relationship marketers can better address the needs of eachselected customer, making marketing more effective (Kim, Y. 2003).2.2.2. Customer LoyaltyThe relationship marketing ladder of loyalty, most companies direct the greater part of their marketingactivity at wining new customers. But while businesses need new customers, they must also ensure thatthey are directing enough of their marketing effort at existing customers. So we can describerelationship marketing as a ladder-hierarchy of loyalty (Christopher M. et al. 2002). Loyal customers(moving from new customers to regular purchasers then to loyal supporter. In 1994 Gummesson defined relationship marketing as “a process, a chain of activities. Itrepresents a holistic attitude to marketing” and thus reflected the shift from transactional aspects ofdoing business with a customer to relational aspects. The development of these relational aspectsindicates the importance attached to the duration of the relationship, i.e. the longer the relationshiplasts, the more profitable it becomes. To manage a relationship successfully over time necessitatesproficiency in terms of process management, i.e. organizing your company in an efficient manner sothat the customers needs and wants can be satisfied in an effective way over time. Thus processmanagement should offer the possibility of moving a transactional customer up the loyalty ladder(Payne, A., et al, 1997) to become a repeat buyer i.e. a loyal customer. There is a plethora of tools to aid loyalty management. Reicheld, (1994), refers to measurementsystems, customer targeting based on lifetime value, and defection analysis and value propositionrenewal. Payne, et, al. (1997) emphasize the importance of measuring, arguing that what getsmeasured, or lends itself to measurement, is likely to be implemented. Darryn, M. et al. (2006), mapping the re-engagement of CRM with relationship marketing, they aims toreframe and enhance the relationship marketing literature through advocating an emphasis on processand a renewed commitment to social and informational exchanges. It takes as its starting-point therecognition that customers exist in complex dynamic systems in which they enact multiple roles.However, current implementations of customer relationship management (CRM) typically only viewcustomers through a single lens (as customers) that denies firms a holistic view of those with whomthey interact. Moreover, CRM systems typically embed and script actions (i.e. call centre options,offers driven by cross-selling and segmentation) rather than enabling rich communication andfacilitating appropriate responses that emerge from that communication (Gronroos, Ch. 1994).. It isargued here that, as a consequence, both parties to a relationship need to negotiate the nature ofsystems that connect them, because those systems, in part, determine the content of relationshipexchanges. 549
  6. 6. European Journal of Social Sciences – Volume 12, Number 4(2010) Bejou and Palmer (2005) make a concerted attempt to stretch our thinking about the futuredirection relationship marketing can take more than a decade on from the early writings. The content isbased on a colloquium in relationship marketing held at Cheltenham, UK and the manuscript is co-published simultaneously as volume four of the Journal of Relationship Marketing. A set of six paperscover the topics of communication, justice theory, word-of-mouth, organizational theory, CRMimplementation and verbal behavior in negotiations. A seventh paper by the editors introduces theissues addressed by the papers. Combined they present alternative approaches to thinking about anorganizations relationship with its customers or stakeholders that can guide future research inrelationship marketing. Woratschek and Horbel (2005) play devils advocate by asking why we should bother trying tosatisfy variety seekers given that they are unlikely to become loyal customers. They use the example ofa tourist destination that has low repeat custom because it attracts passing tourists rather than having abase of local residents. This situation is common for many tourist destinations and could also apply toirregularly purchased products and services as well. They present reports a link between customersatisfaction and the level of word of mouth recommendation by visitors, indicating that a satisfiedinfrequent visitor will deliver business through word of mouth communications (Thurau, Th, He, et, al.2002). These findings challenge managers approaches to viewing variety-seeking behavior and anumber of practical recommendations are made by the authors.2.3. Partnership and strategic alliancesPartnering with others, more companies today are partnering with other members of the supply chain toimprove the performance of the customer value-delivery network. For example, Toyota knows theimportance of building close relationships with it suppliers. In fact, it even includes the phrase "achievesupplier satisfaction" in its mission statement. Suppliers satisfaction means that they can rely onsuppliers to help it to improve its own quality, reduce cost, and develop new products quickly(Christopher M. et al. 2002). Another form of Partnership and strategic alliances are the "suppliers" and "alliance" marketsthey both need to be viewed as a partnership –they can make to the establishment of a successfulrelationship marketing strategy. In the mid-1980s, the Austin Rover car manufacturing company hadwell over 1000 suppliers with whom it had arms-length, often adversarial, relationships. Ten yearslater a transformed company now called the Rover group, had fewer than 500 preferred suppliers withwhom it had the closest possible relationships (Peck H. et al. 2000). The study of Leo Y. M. et al. (2002), concludes that there is a positive association betweenrelationship marketing orientation (RMO) and business performance, a valid measure of RMO has notyet been proposed and systematic analysis of its effect on business performance has thus far not beenpossible. This paper addresses some conceptual and measurement issues related to the study of RMOand its impact on business performance in a service context. It first reviews the concept of RMO andits important dimensions. Next, a measurement scale with acceptable reliability and validity isdeveloped to capture the dimensions of RMO. In turn, analysis of data shows that RMO is positivelyand significantly associated with sales growth, customer retention, market share, ROI, and overallperformance. The other paper explores relationship marketing from a management philosophy perspective.Pels and Saren (2005) discuss the influence of positivistic and interpretative approaches to strategy,organizational theory and marketing by reviewing the philosophies that have dominated these topicsand how they have changed. They conclude that a pluralistic approach now needs to be taken thataccepts the co-existence of multiple approaches. The reader is left with the challenge to solve theresultant problem of how multiple paradigms can coexist in the same firm. Henneberg (2005) providesa practitioner oriented article by examining the opportunities for future research in customerrelationship management implementation models. The paper provides managers with direction for theimplementation of a CRM program, although the failure of many current programs and very high 550
  7. 7. European Journal of Social Sciences – Volume 12, Number 4 (2010)dissatisfaction levels with such programs (reported as 52% in the study) may mean that the CRMmodels may quickly become obsolete as managers move on to more rewarding activities.3. Research ObjectivesThis study attempts to explore the extent to which the concept of relationship marketing clearlyunderstood and adopted by Jordanian private universities. This study is cause and effects in nature andseeks to answer the following research questions: To what extent is the concept of; interactive marketing, Value creation rather than valuedistribution, and "Partnership and Strategic Alliances"? Are understood and adopted by theseuniversities. And to measure its effect on an organizational performance indicator as Increasing marketShare, Retaining current customers. Attracting new customers. Creating loyal customers. Increasingprofit, Increasing return on investment, Positive image.4. Significant of the StudyThe study is expected to make recommendations to high educational institutions managers on thecritical role of marketing relationship in doing their business, particularly in highly competitive marketas a Jordanian educational market, which consider a profitable market.5. Variables of the Study5.1. Independent VariableRelationship Marketing; Interactive Marketing, Value creation rather than value distribution,Partnership and strategic alliances.5.2. Dependent VariableOrganizational performance indicators; Increasing market Share, Retaining current customers.,Attracting new customers., Creating loyal customers., Increasing profit, Increasing return oninvestment, Positive image.6. Hypotheses of the StudyThere is a significant statistical relationship between the degree of utilizing the components ofrelationship marketing concept by Jordanian high educational institutions (private universities) andtheir performance indicators. Related to interactive marketing, value creation rather than valuedistribution, and "partnership and strategic alliances".7. Materials and MethodsThis study is cause and affect in nature and relies on a simple random sample to collect the requireddata.7.1. The Population Study and the Sample of the StudySix of thirteen of high educational institutions (private universities) withdrawn randomly from thepopulation of the study. 551
  8. 8. European Journal of Social Sciences – Volume 12, Number 4(2010)7.2. Data CollectionThe data collected through pre- designed questionnaire which was directed to the academic people ineach university. A self-administered questionnaire was used to collect the required data from thesample of the study. Using the drop and collect method, the researchers delivered 19 questionnaires tothe academic people in each university and then collected it within 14 days. The highly controlled datacollection procedures ensured 88 % response rate.7.3. The Research ToolThe require data was collected by means of a self-administered questionnaire, which was developed forthis purpose. The questionnaire was validated through a mini survey of academics and experts. Theiropinions and comments were considered in the final version of the questionnaire. The author excludesthese questionnaires from the final analysis7.4. Reliability testThe reliability correlation was examined by Cronbach alpha and found 0.959 which is consideredacceptable for this research. Because it is more than accepted value (0.60). (Malhotra, N. K. 2007)8. An Applied SectionThe statistical package SPSS was used to analyzed data. Descriptive analysis and one-way ANOVAwere used. A Descriptive analysis for Independent & dependent variables, shows that the range meansvalue was (2.88 – 3.77).8.1. Hypothesis TestingThe aim of this project is to study the relationship marketing concept and its effects on anorganizational performance indicator, the result will display by following Hypothesis:8.1.1. The Main HypothesesThere is a significant relationship between the degree of utilizing relationship marketing concept, andincreasing the level of an organizational performance indicator. This was branched to three hypotheses,which was: H1There is a significant relationship between the degree of utilizing interactive marketing concept, andincreasing an organizational performance indicator. To investigate hypothesis No. 1 of the study, descriptive statistics of variables were computed,table (1) shows that:Table 1: Descriptive statistics for utilizing interactive marketing concept variable mean Std.deviation Interactive marketing concept 3.39 0.84918 Organizational performance 3.44 0.871685 Descriptive analysis Shows that the mean value of utilizing interactive marketing concept was(3.39) with std. deviation value (0.84918), and the mean value for an organizational performanceindicator was (3.44) with std. deviation value (0.871685).which means that there are positive attitudestoward these variables because their means are above mean of the scale (3). 552
  9. 9. European Journal of Social Sciences – Volume 12, Number 4 (2010) To investigate first hypothesis; simple regression analysis was applied table (2) shows that:Table 2: Regression analysis for utilizing interactive marketing * Model r r2 β t Sig. F Sig. H. Result Utilizing interactive marketing 0.761 0.579 0.781 11.610 0.00 134.784 0.00 Reject H0 concept The analysis shows that there is a relationship between the utilizing interactive marketingconcept, and increasing an organizational performance indicator, r. Value reached (0.761), F. ValueReached (134.784) by significant (0.00), this indicate there is a relationship between utilizinginteractive marketing concept and increasing an organizational performance indicator. Thereforehypothesis No. 1 (H1) is true and Null hypothesis was rejected. H2There is a significant relationship between the degree of utilizing Value creation rather than valuedistribution concept, and increasing an organizational performance indicator.To investigate hypothesis No.2 of the study, descriptive statistics of variables were computed, table (3)shows that:Table 3: Descriptive statistics for Value creation rather than value distribution concept variable means Std.deviation Value creation rather than value distribution concept 3.20 0.86876 The mean value of the utilizing Value creation rather than value distribution concept was (3.20)with std. deviation value (0.86876), which means that there are positive attitudes toward thesevariables because their means are above mean of the scale (3). To investigate hypothesis three simple regression analyses was applied; table (4) shows that:Table 4: Regression analysis for Value creation rather than value distribution concept Model r r2 β t Sig. F Sig. H. Result Value creation rather than 0.753 0.567 0.755 11.322 0.00 128.192 0.00 Reject Null H value distribution concept There is a relationship between degree of utilizing Value creation rather than value distributionconcept, and increasing an organizational performance indicator, r. Value reached (0.753), F. ValueReached (128.192) by significant (0.00), this indicate there is a relationship between utilizing Valuecreation rather than value distribution concept, and increasing an organizational performance indicator.Therefore hypothesis No. 2 (H2) is true and Null hypothesis was rejected. H3There is a significant relationship between the degree of utilizing Partnership and Strategic Alliancesconcept, and increasing an organizational performance indicator. To investigate hypothesis No.3 of the study, descriptive statistics for variables were computed,table (5) shows that:Table 5: Descriptive statistics for Partnership and Strategic Alliances concept Variable mean Std.deviation Partnership and Strategic Alliances concept 3.106 0.89914 553
  10. 10. European Journal of Social Sciences – Volume 12, Number 4(2010) The mean value of the degree of utilizing Partnership and Strategic Alliances concept was(3.106) with std. deviation value (0.89914), which means that there are positive attitudes toward thesevariables because their means are above mean of the scale (3). To investigate hypothesis No.3 simpleregression analyses was applied; table (6) shows that:Table 6: Regression analysis for Partnership and Strategic Alliances concept Model r r2 β t Sig. F Sig. H. Result Partnership and Strategic Alliances 0.736 0.541 0.713 10.749 0.00 115.537 0.00 Reject Null H The table shows that there is a relationship between the degree of utilizing Partnership andStrategic Alliances concept and increasing an organizational performance indicator, r. Value reached(0.736), F. Value Reached (115.537) by significant (0.00), this indicate that there is a relationshipbetween the utilizing Partnership and Strategic Alliances concept and increasing an organizationalperformance indicator. Therefore hypothesis No.3 (H3) is true and Null hypothesis was rejected. Also, multiple regression analysis were applied for independent variables to detect its affecton dependent variables, table (7) shows that:Table 7: Regression analysis -the degree of utilizing relationship marketing concept and increasing an organizational performance indicator for total model The relationship marketing on an organizational performance β t Sig. F Sig. H. Result indicator. A- Interactive marketing 0.379 4.027 0.000 B Value creation rather than value distribution 0.253 2.478 0.015 69.355 0.00 Reject H0 C- Partnership and Strategic Alliances 0.282 3.188 0.002 Shows that (F) value reached (69.355) by sig. (0.00), this indicate to There is a significantrelationship between relationship marketing concept, and an organizational performance indicator.9. Conclusion and Recommendation9.1. ConclusionDepend on above display for the result of this study which aims at investigates the relationshipmarketing concept and its effects on an organizational performance indicator, the summary concludes:Positive relationship between relationship marketing and organizational performance indicators. Theseresults agreed with the ideas represented by various authors in the theoretical background to prove thatthe relationship marketing refers to long-term and mutually beneficial arrangement wherein both buyerand seller focus on value enhancement through the certain of more satisfying exchange (Gronroos, Ch.1994). So relationship marketing can be applied: when there are competitive service alternatives forcustomers to choose from; and when there is an ongoing and periodic desire for the service. Relationship marketing is one of the most time-consuming, but most effective strategies formarketing extension programs. Relationship marketing is a process, not a one-time event; clients mustunderstand that you are committed long-term and that they can depend on you to provide the servicesrequired. To be effective, you must establish a relationship with the customers (students andstakeholders) you are targeting by making a connection with them over time. In order to build arelationship, as with any other relationship in life, Extension needs to be constantly in touch with itscustomers. By making a connection with diverse customers. Utilizing Relationship marketing; Interactive marketing, Value creation rather than valuedistribution, Partnership and Strategic Alliances: Creates value; Value creation generates the energy 554
  11. 11. European Journal of Social Sciences – Volume 12, Number 4 (2010)that holds these institutions together, and their very existence depends on it. The physics that governsthe interrelationships and energy states of institution systems’ elementary particles - its customers,employees, and investors - can be called ‘the forces of loyalty’. Because of the links between loyalty,value, and profits, these forces are measurable in cash flow terms (Thurau, Th, He, et, al. 2002,Christopher M. et al. 2002, Boone and Kurtz, 2007). Loyalty is inextricably linked to the creation ofvalue as both a cause and an effect. As an effect, loyalty reliably measures whether or not theuniversity has delivered superior value: Customers either come back for more or they go elsewhere. The key feature of institution success is the development of mutually beneficial relationships(Christopher M. et al. 2002).. The result is agreed with the fact that relationships are two way andindeed, should be mutually beneficial (Gronroos, Chr. 1994). as mentioned through introduction andtheoretical background. The assumption is that a satisfied customer equates to a loyal customer andthat a loyal customer implies a relationship (Thurau, Th, He, et, al. 2002). The main findings show that there is an imbalance between ‘giving and getting’ that ‘wheneducational institutions ask their customers for friendship, loyalty and respect, they often don’t givethese in return, despite adopting the concept of relationship marketing.9.2.RecommendationAs a cause, loyalty initiates a series of economic effects that cascade through the educationalinstitutions, as follows: 9.2.1) Revenues and market share grow as the best customers are swept into the educational institutions, building loyal customers, positive word of mouth and referrals (Thurau, Th, He, et, al. 2002). Because the institution’s value proposition is strong, it can afford to be more selective in new customer acquisition and to concentrate its investment on the most profitable and potentially loyal prospects, further stimulating sustainable growth (Gronroos, Ch. 1994).. 9.2.2) Sustainable growth enables the educational institution to attract and retain the best employees. Consistent delivery of superior value to customers increases employee’ loyalty by giving them pride and satisfaction in their work. Furthermore, as long-term employees get to know their long-term customers to connect with them, they learn how to deliver still more value, which further reinforces both customer and employee loyalty. 9.2.3) Loyal long-term employees learn on the job how to reduce costs and improve quality, which further enriches the customer value proposition and generates superior productivity. The educational institutions can then use this productivity surplus to fund superior compensation and better tools and training, which further reinforce employee productivity, compensation growth, and loyalty (Gummesson, 1994) . 9.2.4) Spiraling productivity coupled with the increased efficiency of dealing with loyal customers generates the kind of cost advantage that is very difficult for competitors to match. Sustainable cost advantage coupled with steady growth in the number of loyal customer (Gummesson, 1994, Gronroos, Ch, 1994).10. Areas For Further ResearchFuture researchers may wish to explore moderating relationship of consumer relational preferences.Another limitation is that the cross-sectional nature of the data only allows for co relational, rather thancausal, inferences to be made. The possibility exists for a path to be operating in the opposite directionfrom what we propose. Another potentially fruitful area for future research is delineating among thedifferent types of special treatment benefits explored in this study. Perhaps some special treatmentbenefits are more relevant than others with respect to their impact on an organizational performanceindicator 555
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