Importance of Relationship Marketing - Essay Example

Relationship Marketing Department: Definitions According to Kotler (2003), relationship marketing refers to the practice of developing a long term satisfying relations with suppliers, customers and distributors in order to maintain their long-term preference to the business. The ultimate result of relationship marketing is to build a unique marketing network. A unique network comprising of a company, and its stakeholders with whom it has developed mutual profitable business relationship. Morgan & Hunt (1994) defines relationship marketing as the process of establishing, developing and maintaining viable relational exchanges between business and its affiliates. The affiliates include the employees, customers, suppliers and distributors. He argues that, it is healthy for a business to establish a strong foundation that will retain its customers rather than trying to acquire new customers every time. Relationship marketing according to Kanagal (2009) is a philosophy to change the eager customer behaviours and the implementations taking consideration of what the customers think about the company and what the employees should know about the customers. He adds that business should dwell on identification, establishment, enlargement, maintenance and modification of relationships with customers thus building both history and future. According to the definitions, relationship marketing entails taking consideration of the channel to acquire new customers, nurturing and satisfying their needs. In satisfying customer’s needs, companies are able maintain their customers rather than trying to convince and attain new customers. It is clear that a good relationship with and knowing what they need fosters success in business. In general, RM can be defined as a channel towards business success developed through building a strong foundation that maintains the stakeholders of the business. The channel considers engaging customer requirements, preference and tastes in an effort to deliver the best services that will retain them and create a bright future of the business. Importance of relationship marketing Relationship marketing helps in building knowledge, preference and trust factor in customers. In the current world of technology, there is the luxury to know and decide on whom to trust in every purchase. Businesses need to step extra mile to create know, like and trust factor system (Morgan & Hunt, 1994). The system can be achievable through consistent activeness on social media networks, offline networks and websites. Responses and ability to interact with customers helps build a strong platform for the success of a business. These responses and reviews also help in attracting more customers to a business. Another importance of relationship marketing is the creation of business opportunities. Developing people-to-people marketing skills helps in opening more business opportunities. Business, customer connection experience creates a long lasting impression. Thus, the fond memory created with customers cause them to get to their mind quickly and more often (Kotler, 2003). Customers can thus refer their friends to the business whenever they ask. RM helps in creating own flare in the business. Having own flare makes a business unique to the customers. Unique features are essential especially in the current world where competition is growing stiffer and stiffer. Thus through establishing person-to-person marketing a business can easily and quickly develop a unique style of service to customers. To some extent, businesses can customize the products to meet needs of individuals known to them (Reicheld et al, 2003). These needs are observable through dialogue-based relationship. In processes of delivering unique services, the business develop trust in own techniques. Generation of trust builds a bright future of a business. Staying on top of the customer’s need forms another importance of RM. A suitable marketing model creates a person-to-person relationship thus laying a platform for long-term success. Active listening and reacting towards the customer’s needs ensures that they have confidence in the business. It is the customer’s nature to remain connected to those businesses they feel address their requirements (Reicheld et al, 2003). Process of Relationship Marketing Communication is one of the antecedents of relationship marketing. It is the central element in both internal and external marketing. Communication creates a suitable environment for quality service provision and dissemination of information between the company and customers. A planned communication process requires the company to share information to its customers through distinct communications media. Thus, a company should have a platform where clients can access its important information and get knowledge of the services. Interaction forms another major part of relationship marketing. It creates a framework where a company can share information to the customers and in return get the response from them (Parasuraman et al, 2004). Interaction may be through social media or direct interaction in the process of service delivery. It helps understand customer requirements and needs. The process of RM also requires dialogue between the customers and the company. Through dialogue, customers provide information, which is essential to the company. The information helps in designing a customer friendly environment. Customers feel that their views are respected and that they have a place in the future of the company. It is also through dialogue that a company gets to know what customers desire, and the expectations they have. Relationship marketing process also entails the consideration of customers’ value. Great communication, interaction and dialogue aims at giving customers the best services they deserve. Having well trained and equipped personnel ensures that customers’ interests get addressed in the way they want (Parasuraman et al, 2004). How RM promotes Trust, commitment and bond. Trust can be defined as a feeling that one holds to a thing or situation. In business, the feeling occurs when a customer is sufficiently satisfied and convinced with services or products of a company. Trust requires confidence and integrity from both customers and the company (Morgan & Hunt, 1994). It should positively influence customer’s commitment to the business relationship. Thus, trust increases relationship ties and reduces risk perception. RM is essential in developing confidence in customers. On the move to ensure customers are heard and their requirements met, RM develops trust in customers. This is because customers generate a feeling of customized services. On the other hand, commitment entails believing that an ongoing relationship with stakeholders in business is important in a way to warrant maximum efforts towards maintaining it. A business and its customers must be reliable and loyal in order to show stability in the relationship (Macmillan et al, 2005). Relationship marketing bases itself from identification of customer requirements to building a strong partnership for the future. The process enhances commitment as customer’s needs get addressed thus limited desire to seek alternative services provider or product. A bond is a tie between a business and its customers. The strong the business-customer bond is the higher the chances of success. Relationship marketing is essential in promoting business-customer bond. The nature of the strategies of RM ensures creation of a strong bond based on getting reliable and committed customers and stakeholders. Loyalty Loyalty is a customer’s deep commitment to buy or to patronize for a good or a service in a frequent manner. It entails repetitive purchase of the same brand of a product despite other influences and marketing efforts by competitors to cause switching to other products (Yim et al, 2008). According to Kotler (2003), companies need to have a system that considers regular customers more to promote loyalty. He argues that regular customers should earn the most advantages in order to develop and maintain their loyalty. Application of relationship marketing has led many companies to reconfigure their resources. In the reconfiguration, customer loyalty programs are core in the marketing strategy. The programs aim at creating a platform that can suit customer’s needs. Thus, service marketers should be concerned by consumer preferences ensuring quality service delivery. Successful relationship marketing strategies improve customer loyalty and the performance of firms through the creation of stronger bonds, (Macmillan et al, 2005). RM represents a strategic response by business to gain the competitive advantage. The responses base on the idea that, appreciation of how market players interrelate, the mutual energy instilled through trust, and commitment allows businesses to remain competitive. In the current world, companies cannot dwell only on attracting customers or expansion of markets. The secret to survive in mature markets is sustaining long-term relationships with stakeholders. According to Morgan & Hunt (1994), RM succeeds in building trust and commitment with the shareholders thus creating a loyal customer relationship. For example, a direct marketing study conducted by Smith et al, (1997) showed that, relationship marketing helps in maximizing long-term profitability in firms. The success attributed to customer loyalty due to increased levels of satisfaction. How RM promotes B2B and B2C In marketing, the decision to use B2C or B2B requires considering customers first. RM aims at providing a long-term and sustainable relationship between a business and the stakeholders. To achieve the best results, a suitable relationship is essential. It requires knowing the customers to one’s business and making a decision to either use B2B or B2C marketing (Yim et al, 2008). The decision may be easy or challenging depending whom a product aims. RM focuses on laying a foundation in a business that focus on the future and sustainability of a business. The future of business lies on active stakeholders to make it sail to the next level. In B2B, the focus is on features of the product to be released in the market. Therefore, marketing materials must be in depth to ensure customers have enough information on how the product can help them in their business. On the other hand, B2C majors its focus on the benefits a product has, thereby pointing them out. Customers also require knowing how the product benefits them personally. The root motive of these two marketing strategies is to maintain a firm relationship with the stakeholders of a business (Yim et al, 2008). RM layouts of developing a strong foundation of stakeholders’ relationship enhance these strategies. The main goal of RM is to establish a connection between business and stakeholders. Thus, B2B and B2C share a common goal of creating a connection in the stakeholders as set out by RM. Customers expect a relationship that do not only value the business but them too. Customers require knowing the business well as they look for a personalized relationship. Adverts in the current world are no longer the only way to get to customers. Customers need to feel a sense of trust embedded in the business. It is necessary for business when marketing on social media to connect and engage customers. References Kotler, P. 2003, Marketing Insights from A to Z 80 Concepts Every Manager Needs to Know. Accessed from http://www.col.org/SiteCollectionDocuments/country-information/marketinginsightsfroma-z.pdf Kanagal N. (2009) ‘Role of Relationship Marketing in Competitive Strategy’, Journal of Management and Marketing Research,Vol.2 pp.97-112 Macmillan, K., Money, K., Money, A. and Downing, S. 2005. Relationship marketing in the not-for-profit sector: an extension and application of the commitment--trust theory. Journal of Business Research, Vol.58, No.6, pp. 806--818. Morgan, R. M. and Hunt, S. D. 1994. The commitment-trust theory of relationship marketing. Journal of marketing, Vol.58, No.3. pp.20-38 Parasuraman, A., Zeithaml, V. and Berry, L. 2004. Refinement and reassessment of the SERVQUAL scale. Journal of retailing, Vol. 67, No.4, p. 114. Reicheld, F. and Sasser W. 2003. Zero defections. Operations management: critical perspectives on business and management, 105 p. 289. Smith, J., Brock and Donald W. (1997). The Effects of Organisational Differences and Trust on the Effectiveness of Selling Partner Relationships. Journal of Marketing, Vol. 61 No.1, pp 3–22. Yim, C. K. (Bennett), TSE, David K., & Chan, Kimmy Wa. 2008 ‘Strengthening Customer Loyalty Through Intimacy and Passion: Roles of Customer – firm Affection and Customer – Staff Relationships in Services’, Journal of Marketing Research, Vol.45 (December), pp.741- 756 Read More