The Aspect of Relationship Marketing Approach in Managing the Organizations - Essay Example

Introduction This paper provides an insightful study into the effectiveness of post-modern marketing approach in providing assistance to the marketers in conducting marketing activities under uncertain situation. Uncertainty is a feeling that every contemporary business needs to confront with in almost all the markets. If an organisation fails to respond to market uncertainties and mould its marketing strategies accordingly, it is doomed to lose its customers and profitability eventually. The traditional marketing concept surrounding the concept of marketing mix has simply lost its influence in the modern marketing activities because of the evolution and significance of relationship marketing approach. This essay, therefore, studies the effectiveness of relationship marketing in guiding the marketer to deal with uncertainty through the management of relationship with various parties in the market. Post-modern Strategic Marketing- The Shift To Relationship Marketing The modern approach to marketing activities is changing its emphasis from the traditional marketing mix (product, price, place, and promotion) to the conception of relationship marketing. The practicability and flexibility of the relationship marketing approach have led to the rapid evolution of this concept in the modern marketing activities. Veloutsou et al. (2002, p433) also assert that, "it is currently acknowledged that RM represents a paradigm shift in marketing". Relationship marketing approach emphasises on mutually beneficial relationships between the organisation and the other members of the environment so as to create long-term ties among these groups. Gronroos (1994, p355) posits that relationship marketing "is to establish, maintain, and enhance relationships with customers and other partners, at a profit, so that the objectives of the parties involved are met. This is achieved by a mutual exchange and fulfilment of promises". Hence, relationship marketing focuses on fostering the mutual relationship of an organisation with its customers, suppliers and other firms in order to meet the objectives of all the parties as they enter into an exchange with the company. In the modern dynamic environment, companies are no longer seen as indifferent from the influence of other parties in the market viz., the customers, suppliers, competitors etc; rather the modern companies need to interact with all these parties in order to maintain long-term relationship chain that is bound to satisfy all of them. This is what was found to be lacking in the traditional approach of the marketing mix. Andersen (2001, p167) illuminates that, "marketing practitioners and scholars are abandoning the marketing mix approach as it does not justify the complex interaction and information exchange processes between organizational buyers and sellers". In the simplest form, relationship marketing has gained popularity as a post-modern approach to marketing over the traditional concept of 4Ps because of its ability to rationalise the existing interaction and relationship of a company with other members of the environment. The fact that makes relationship marketing more helpful for marketers is the approach of creating a bond between the seller and the buyers. Not only the seller but also the buyers take active part in fostering this relationship with each other. Company nurtures this association by satisfying consumers every time, while the buyers enhance this relationship by making repeated purchases. On the other hand, the traditional marketing mix relies on the seller's part to conduct marketing activities. Gronroos (1997, p327) emphasises this point as that, "the marketing mix makes the seller the active part and the buyer and consumer passive. No personalized relationship with the producer and marketer of a product is supposed to exist, other than with professional sales representatives" Another important aspect of relationship marketing paradigm is that it is flexible enough to be beneficial for the company in all conditions prevailing in the market. Gronroos (1997, p333) maintains that, "the Four Ps were never applicable to all markets and to all types of marketing situations". The market situation in the modern environment is not static; rather it is dynamic and changes from time to time, making the marketers feel uncertain about the future situational changes in the environment influencing the company's position in the market. Relationship marketing provides the marketers with phenomenal ability to stay firm in the changing marketing situations with the help of effective management of market relationships. Relationship Marketing Under Uncertainty The contemporary business environment is characterised with dynamic changes taking place every moment. These changes are often so significant that they even question the survival of some companies in the market. The marketing environment today is so uncertain that companies need to transform their marketing tactics occasionally so as to attract new and retain the existing customers. Ozsomer et al. (1997, p403) refer to such uncertainty in the market as, "it is possible to equate uncertainty with unpredictability, which is the inability to foretell future events... Whatever occurs in the environment is likely to affect the degree of uncertainty experienced by its members". In such a scenario, a marketer confronts the problem of conducting and engaging the company's marketing activities under uncertainty. The marketing strategies, tactics, and activities all need to change with the changes taking place in the market. Brownlie and Spender (1995, p40) illuminate that, "unforeseen changes in economic climate, or in the behaviour of a client, of an agent or a supplier, can suddenly emasculate even the most careful and rigorous market analysis and planning". The whole process of marketing engages a marketer in interaction with several other parties such as customers, suppliers and also the competitors. Hence, uncertainty lies in any unpredictability concerning the actions and behaviours of any of these parties. Relationship marketing concept helps the marketer in conducting marketing activities under uncertainty. As a matter of fact, it is the main purpose of this theory to enable a company market its product and services under unpredictable future conditions. Andersen (2001, p168) propound that the heart of the relationship marketing is, "to decrease exchange uncertainty and to create customer collaboration and commitment through gradual development and ongoing adjustment of mutual norms and shared routines". Under relationship marketing, when a company enters into a mutually beneficial exchange activity with its customers, it needs to focus not on current sales but on initiating a relationship that can evoke customer loyalty and retention. In order to enkindle a long-term relationship with customers, marketers need to provide more than the customers expect from the product or service offered. Gronroos (1997) propounds that the concept of relationship marketing rests on key elements such as fulfilling promises and customer trust. Uncertainty arises when the competitors are strong enough to induce customers to buy their products through various marketing tactics. However, if the consumers perceive a company's product to be providing them more value than what they spend on it, it is very likely that they would cling to the same company. This is the point where a relationship based on loyalty is generated. Hunt and Arnett (2006, p76) say that, "relationship marketing theory maintains that consumers enter into relational exchanges with firms when they believe that the benefits derived from such relational exchanges exceed the costs". Lysonski et al. (1995, p9) propose that, "rapid unpredictable changes are occurring because of new technologies, increasing competitive sophistication, fluctuating commodity prices, competitive entries shrinking brand loyalty, industry oversupply" etc. The question that arises for a marketer in such a situation is concerning the influence of these market uncertainties on the product value perceived by the customers. For example, if a new competitor enters the market with enhanced technology and strives to attract consumers, it is very likely that most of them would be inclined towards the products offered by the competitor. Relationship marketing provides the solution of strengthening the company's relationship with its customer through heightened levels of satisfaction and delight. Another uncertainty originates out of the competitors ability to provide products at a lower price. Any consumer that is rational and sensitive to price changes in the market will move towards the competitors' products. However, the customers sharing strong bond with a company through enhanced satisfaction out of the exchange process are less likely to deviate. Gronroos (1997, p330) elaborate this point as, "in transaction marketing the price sensitivity of customers is often high. A firm pursuing a relationship marketing strategy, on the other hand, has created more value for its customers Such a firm develops over time more and tighter ties with its customers". Hence, the companies that engage its marketing activities based on ameliorating relationship with the customers focus on product value rather than price. The relationship marketing activities are undertaken to ensure that the customers are satisfied from what is offered by the company and share a staunch relationship that is based on confidence, trust, loyalty, collaboration and commitment. This is achieved by the co-action of all the marketing activities with a tendency to build honest relationships. Eiriz and Wilson (2006, p285) maintain that, "only when a firm links marketing productively with customer service and quality is it able to provide total customer satisfaction and build long-term relationships, using this capability both to get new customers and to retain existing ones". Blending products with pleasing service to the customers also enhances satisfaction and consequently has a positive impact on building long-term relationships. Relationship marketing guides the marketers not to pursue immediate profit-making strategy. The crux of this theory encompasses the company's efforts to enhance customer satisfaction so as to derive long-term returns and benefits. Gronroos (1997, p329) suggest that, "in relationship marketing the marketer does not plan primarily for short-term results. Their objective is to create results in the long run through enduring and profitable relationships with customers". In the modern unpredictable business environment, the companies need to stress on providing maximum satisfaction to its customers so as to ensure maximum retention. The business will remain secure for long-term if the existing customers are loyal and keep coming back to the company frequently. Modern companies do not only engage in relationships with the customers, but also they need to interact with the other firms in a modus operandi fashion. Eiriz and Wilson (2006, p279) "when the firm chooses the market to externalise its activities it will establish relationships with other firms". Strong relationships also need to be maintained with these firms so as to avoid any future uncertainties. The behavioural uncertainty and future strategies of these firms can be mitigated with the help of maintaining strong ties with them. Eiriz and Wilson (2006, p289) put forward that the "relationships established through a variety of formal and informal links with other firms are the mechanism that organisations need to respond to uncertainty and resource dependence because, generally, organisations are not self sufficient". Due to the fact that companies do not have all the means available to conduct all the activities needed for its operations, it needs to form alliances with other firms in the market. The companies need to promote an interdependent relationship with the firms that are engaged in the exchange process with it so as to ensure a long-term association. Suppliers also happen to be an important element of the chain of relationship management. Palmer (1996, p23) assets that "the effectiveness of internal and supplier relationships may have a significant impact on the quality of customer relationships". The suppliers are the major contributors towards a company's efforts to satisfy customers. Without a timely and reliable supply of commodities, a company is simply unable to meet the needs and demands of consumers on time. Hence, maintaining positive relationship with the suppliers also has an impingement on the quality of products provided to the customers. Conclusion This paper sheds light on the aspect of relationship marketing approach in managing uncertainty confronting the organisations. Relationship marketing helps marketer to engage and organise its marketing activities around the objective of building long-term relationship with customers, suppliers and other firms through effective strategies. Although it is likely to be a long-term process, yet its impact on the customer satisfaction is significant. If the company is able to satisfy and delight its customers, it is certain that it will have a high rate of customer retention as well as growth in the number of buyers. This acquisition and retention of customers together with efficacious management of relationship with suppliers and other firms will secure the company's position in the event of uncertainty. Reference List Andersen, P.H. (2001), Relationship Development And Marketing Communication: An Integrative Model, Journal Of Business & Industrial Marketing, 16(3), 167-182 Brownlie, D. & Spender, J.C. (1995), Managerial Judgement In Strategic Marketing: Some Preliminary Thoughts, Management Decision, 33(6), 39-50 Eiriz, V. & Wilson, D. (2006), Research In Relationship Marketing: Antecedents, Traditions And Integration, European Journal of Marketing, 40(3/4), 275-291 Gronroos, C. (1994), Quo Vadis, Marketing Towards A Relationship Marketing Paradigm, Journal of Marketing Management, 10(5), 347-360 Gronroos, C. (1997), From Marketing Mix To Relationship Marketing: Towards A Paradigm Shift In Marketing, Management Decision, 35(4), 322-339 Hunt S.D. & Arnett D.B. (2006), The Explanatory Foundations Of Relationship Marketing Theory, Journal of Business & Industrial Marketing, 21(2), 72-87 Lysonski, S., Levas, M. & Lavenka, N. (1995), Environmental Uncertainty And Organizational Structure: A Product Management Perspective, Journal Of Product & Brand Management, 4(3), 7-18 Ozsomer, A., Calantone, R.J. & Di Benedetto, A. (1997), What Makes Firms More Innovative A Look At Organizational And Environmental Factors, Journal Of Business & Industrial Marketing, 12(6), 400-416 Palmer, A.J. (1996), Relationship Marketing: A Universal Paradigm Or Management Fad, The Learning Organization, 3(3), 18-25 Veloutsou, C., Saren, M. & Tzokas, N. (2002), Relationship Marketing What If European Journal Of Marketing, 36(4), 433-449 Read More