The Meaning of Relationship Marketing and Its Relevance to Business - Assignment Example

?Task It is argued that relationship marketing underscores a paradigm shift that has taken place in the contemporary marketing theories and practices. It broadens the border of marketing activities by advocating for long-term sustainable engagements not only with customers but also with other stakeholders.” It is also argued that internal marketing and social and ethical marketing could be significantly influenced by relationship marketing approaches. On top of that, the increasing role of service concerns in today’s economy further reinforces the importance of relationship marketing. As such, this paper seeks to critically examine the above argument and how it is applicable to the current business context in different organization. The paper starts by explaining the meaning of relationship marketing and the main part of the paper will discuss the relevance of this concept to today’s business. Relationship marketing is perhaps one of the most important concepts of marketing during the contemporary period. Basically, “customer relationship management (CRM) or relationship marketing is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction,” (Kotler & Armstrong, 2010, p. 27). On the other hand, (Gartner, 2007, p.4) defines CRM as a “business strategy with outcomes that optimize profitability, revenue and customer satisfaction by organizing around customer segments, fostering customer-satisfying behaviours and implementing customer-centric processes.” Essentially, many organizations have realised that customer loyalty is very important since it determines the success or failure of their operations. This has prompted the marketers of different firms to forge ahead with different strategies that are meant to create long lasting relationships with the customers. In every business, it can be observed that the quality of the relationship that exists between the company and its customers has a bearing on its performance. Lamb et al (2008) posits to the effect that relationship marketing is a philosophy that emphasises on creating long term relationships with the customers so that the company can sustain its operations in the long run. Customers are compelled to buy certain products that are offered by different firms as a result of the quality of service they get when doing business with them. During the contemporary period, it can be seen that stiff competition characterises different markets and this is the main reason why efforts should be made to retain the customers that already exist in the organization (Athanasopoulou N.D). One viable strategy that can be implemented by the organization is to try to create quality relationships around services offered to the customers so that they can be in a position to identify with the organization. When this identity has been created, the customers are likely to have a predisposition towards the products that are offered by the company. The customers in any business are the main component of the relationship mix which ought to be created around value of the products offered. According to Ferrazzi (2006), the quality of the relationship that exists between the organization and the customers is determined by the attitude of the targeted audiences by the firm towards the value of the products and services offered. This point is also supported by Wang et al (2004) who state that the customers specifically purchase different products so that they can derive various values from using them. There are different values that are derived from consuming a certain product and these include the following: “emotional value,” utility derived from the affective state of goods or services; “social value,” social utility obtained from using a product “functional value” utility derived from the perceived quality of a product as well as “perceived sacrifice” which is loss that is likely to be encountered from purchasing a particular product or service. In most cases, the customers are motivated by the type of satisfaction they are likely to derive from the product or service. Once the customers are satisfied with the quality of the product or service they have purchased from a firm, they are likely to create a good relationship with the company. During the contemporary period, it can also be noted that the personal values of customers towards certain goods and services are constantly changing. The marketers should take these changing values into consideration since it helps them to create quality and long lasting relationship with the consumers. As noted, the customers seek to derive emotional, social as well as functional value from using certain products and services. Wang et al (2004), state that creating customer value is a strategic method that can be used to attract as well as to retain the customers particularly during the modern day customer centred period. Indeed, the customer is king in any business hence the concept of delivering superior value should be given prominence by the marketers of different products and services. This also helps the marketers to achieve ethical marketing. The customers who are happy about the quality of treatment they get from different organizations are likely to become loyal such that they can continue buying different goods offered by the firm. In order to gain a competitive advantage, it can be seen that quality consumer relationship management strategies are also essential since they are designed to retain the customers to the organization. A company that has a large customer base has a competitive advantage over other rival players in the market since it is in a position to generate a lot of revenue from its operations. The strategy of CRM is also beneficial to the company since it is cheaper to maintain in the long run. Wang et al (2004) suggest that it is cheaper to retain the customers that already exist than to attract new consumers for different products offered by the company. For instance, it takes effort to carry out marketing activities such as advertising, personal selling as well as promotion to attract new customers than to retain the ones already existing. These customers are also likely to attract other new buyers of the product through referrals to other potential buyers to try the product. In as far as CRM is concerned, it can be seen that the concept of attitude should be taken into account by the marketers. Ferrazzi (2006) states that the attitude of the customers towards a particular product plays a pivotal role in determining their perceptions towards the firm. This ultimately shapes the quality of relationship that will exist between the two. In order to build long lasting relationships with the customers, the marketers should take into consideration the aspect of attitude. McCarthy & Perreault (1996, p. 196) define attitude as “a learned predisposition to behave in a consistently favourable or unfavourable way towards market related objects or situations.” Since the consumers live in an environment that is characterised by changes, they ought to learn over time different aspects of the product so that they can be in a position to develop either negative or positive attitude towards it. Thus, in order to be in a position to develop quality relationship with the customers, the marketers should be able to establish the behaviour of the consumers and try to positively influence it so that quality relationships can be formed between the two. There are different strategies that can be used in order to develop quality relationships between the company and the customers. For instance, loyalty schemes, social media networking and sales promotion can be used by the company to attract many customers to its products. The internet has significantly changed the communication landscape between the company and the customers and this strategy can also be used by the marketers to build strong relationships with the clients. This is known as online marketing (Kotler & Armstrong, 2004). Specially designed websites can be used by the organization to create a two way communication channel that can help the marketers to establish the needs of the clients. Social media sites like Facebook, YouTube and Twitter can also be used by the company to create long term relationships with the consumers. Over and above, it can be observed that the concept of CRM plays a significant role in improving the viability of the organization in the long run. A firm that is able to create quality relationships with the customers is in a position to retain them and this gives it a competitive advantage since it will enjoy a strong customer base. This also means that the firm will be in a position to generate more revenue from its operations as a result of the fact that it has a large market share. Therefore, it is imperative for companies that are concerned about their long term survival to create quality relationships with their customers so that they can continue purchasing the products offered. It is quite easy to retain the already existing customers than to attract new ones. Task 2 The marketing program for each foreign market must be carefully planned where the managers identify their targeted customers’ needs and cultural values. This can be done through standardization or adaptation of the marketing mix. Basically, standardized marketing mix is an international marketing strategy for using the same product, distribution channels advertising and the marketing mix elements in all the firm’s international markets (Kotler & Armstrong, 2010). Standardization results in lower production, distribution, marketing and management and this helps the companies to offer high quality products to the consumers at relatively low cost. The company is also in a position to create brand power as well as to lower the costs through the economies of scale generated from selling quality products at relatively low prices. On the other hand, the adapted international marketing mix is a strategy for adjusting the marketing mix elements so that they suit the needs and interests of the people in the host country (Strydom, 2004). The strategy is quite expensive but it has a lot of advantages where it is in a better position to generate more revenue by virtue of creating a larger market share through fulfilment of the needs and interests of the local people. As such, this paper seeks to analyse the standardisation vs. adaptation strategies that can be used by Y2K restaurant which is of American origin and intends to open shop in the United Arab Emirate (UAE) region located in the Middle East. In order for this fast food shop to operate viably in this new international market, it is imperative to take into consideration various factors that may impact on its operations. “Virtually all aspects of a company’s operations are affected by the standardization/adaptation decision, including entry strategies, R&D, production, procurement, finance, organizational structure and, primarily, its marketing mix,” (Hise & Choi, n.d, P. 2). This fast food restaurant will primarily sell burgers as well as fried chicken in this new market. However, there are different strategies that ought to be considered so that it can operate viably. The type of product that is going to be marketed in a new international market has a bearing on the strategy (standardization or adaptation) that will be used by the company. Research has shown that “High-tech products are more likely to be associated with a standardized strategy than an adaptive one (Cavusgil and Zou 1994; Duprez, Diamanto, Poulos, and Schlegelmich 1994; Wang 1996 as cited in Hise & Choi, n.d). Chicken is a consumer product and it belongs to the food category. There are various factors that shape the behaviour of people with regards to their consumption patterns of different types of food. Research has shown that the consumption patterns of food by the British and those from Asian regions differ immensely as a result of many factors. Culture has an important bearing on the consumption patterns of food by different people from different regions. For instance, the majority of people from the Middle East belief in Islamic religion and this significantly shape their consumption patterns of different types of food. Some of the people maintain a vegetarian diet while others believe in the Halaal system in terms of the type of meat they eat. The penetration strategy adopted by a multinational company (MNC) has an impact on the strategy adopted by the company when it establishes new business in a new international market. It is quite clear that different social institutions in the host country impact on the way people will perceive food products offered by a foreign company. Ferreira, Li & Suk (2009, p. 28) posit to the effect that a “Firm’s institutional environment includes its internal culture as well as broader influences from the state, society and inter-firm relations that define socially acceptable economic behavior.” It can therefore be observed that the behaviour of the people is likely to be impacted by social factors such as culture. Therefore, in order for Y2K Company to operate effectively in the UAE region, it is imperative that it uses the adaptation strategy rather than the standardization strategy so that it can manage to penetrate this market with success. The standardization approach is ideal for industrial products and other durable goods that are marketed across the globe through the use of similar strategies. Firms are often exposed to “foreign entry strategies face dual and potentially conflicting pressures toward compliance to internal norms (corporate normative) and toward adaptation to local environmental requirements (DiMaggio and Powell, 1983 as cited in Ferreira, Li & Suk, 2009, p. 33). The other strategy that should be taken into consideration is related to pricing. The behaviour of the consumers towards a market offering is mainly influenced by its price. Fairly priced products are likely to attract many customers while in some case products that are expensive will deter the customers from buying the product. Therefore, there are many strategies that should be taken into account in order to ensure that the price of the products going to be offered by the company mentioned above are not going to deter the customers. According to Kotler and Armstrong (2010), there are many factors that should be considered when pegging prices of products. When penetrating a new market, issues such as level of income of the targeted consumers should be taken into account as well as the market forces that shape the performance of other similar products. Therefore, Y2K should segment its market on the basis of demographic factors as well as psychographic segmentation. Factors such as level of income, age and gender have an impact on the way customers are likely to respond to a market offering. Since this is going to be a new company in a new market, its products should be priced according to the market forces prevailing at a certain period. In a bid to attract many customers, the company should use the strategy of offering lower prices compared to other similar products in the market. Having observed the response of the customers towards the products offered, then the company can review the prices when people have shown interest in its product offerings. Price discounts can also be used by the company so as to be in a position to attract many customers to its products. Basically, a new fast food restaurant intending to open business in UAE should implement an adaptation strategy rather than a standardised strategy. There are many advantages that can be obtained from utilising this strategy given that the perceptions of people towards consumer products are mainly shaped by aspects such as cultural values. Thus, in order to Y2K to succeed in its endeavour to establish a new business venture in this region, it should take into account factors such as cultural values of the targeted consumers. Issues such as level of income should also be considered when pegging prices since these have an impact on the way consumers are going to respond to the new market offering. 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