Relationship and Traditional Marketing - Essay Example

Relationship and Traditional Marketing Introduction The establishment of businesses is dependent not only on the ability to sell products but also to build and maintain relationships with consumers. To do this, competitive strategies with marketing are required, specifically which creates a sense of loyalty and trust as well as a stronger reputation as a business. When defining relationship and traditional marketing, there are several defined approaches that are established as a result. These change the way in which an organization functions as well as the capabilities that they have to grow and to have a sense of stability within their corporation. Identifying the various qualities and characteristics of relationship and traditional marketing among businesses can then provide a stronger understanding of what the effective means are for marketing. Two case studies which represent this are Starbucks in relationship marketing and McDonalds with transaction or traditional marketing. Internal Environment The first way in which business is affected with marketing is through the internal environment and the way that the organization functions. Without the correct foundation for employees and the work being done, there is the inability to reach specific goals. In traditional marketing, the focus is on a marketing mix, specifically which is based on getting sales and outcomes that are a part of the main orientation of the business. The marketing mix includes basic components of advertising, organizational structures and the establishment of new opportunities for showing the products within a corporation. In relationship marketing, this alters to the customers that respond in a positive manner, which means that the employees and the organizational environment have to be conducive to getting the correct responses. Since the employees are the ones which establish the main relationships, there is an emphasis on the internal environment and how it creates specific responses. The shift that has to be made within the internal environment then becomes reliant on the way in which the organization looks at employees and the work that they offer to the corporation. Specifically, the environment is one which requires affiliations, partnerships and relationships with the company from the internal organization (Gronroos, 322, 1997). When comparing the two organizations, it can be seen that there are differences in the organizational environment and how this affects the marketing and customer relationships. McDonalds is based on a traditional hierarchical structure with managers who overlook employees in various locations. The infrastructure which has been developed within the organization is based specifically on creating food in a fast period of time and on the delivery of different types of products with efficiency. Most of the employees are trained to fit into the corporate structure and into the fast delivery of products. While some benefits have arisen with the scholarships and assistance with education, these are limited means that don’t directly offer results to employees and their compensation of working in the business (McDonalds, 2010). Starbucks has a different internal environment and structure that links to the organization. The employees are immediately told that they are treated equally, instead of a hierarchical structure. Each is looked at as assets within the corporation, as well as valuable resources that can add into the overall development of the company. The first part of this is from the coffee suppliers who are delivered credit every time their coffee is used, specifically to support and enhance their lifestyle. The environment that the staff is required to work in as well as the regulations for working are also created specifically for comfort among all employees. Employees are also offered extra bonuses, such as stock options and full medical coverage, despite the placement that they hold within the work arena. Starbucks also offers specialized affiliations and opportunities among stakeholders, specifically to enhance the relationships among those that are in the work arena (Starbucks, 2010). The difference in both of these applications shows two components that provide enhancement of the business. The turn – around rate of employees in Starbucks and the stakeholder return is higher in the business (Starbucks, 2010), whereas McDonalds has been directly impacted by the changes in the economy and a turn – around time of employees by 3-6 months (McDonalds, 2010). The concept that is associated with both is internal marketing. The stronger that the retention rate and expectations are among employees, the easier it becomes to advertise. Customers notice the change in retention and begin to build relations with those that are working within the company. More important, the relationship building, affiliations and applications to the business continue to grow with the impression of the business and how well it treats its employees as well as how the employees look at the business. As the employees advertise the benefits of working in the business it grows substantially with those who want to support the organization. The use of relationship marketing then turns into internal marketing, as opposed to one which works against the business from the employee relationships that aren’t created through the traditional functions and means (Varey, Lewis, 926, 1999). Marketing Activity The marketing activity of both Starbucks and McDonalds further affects how the business expands and is approached by consumers. McDonalds is known for traditional advertising through billboards, TV commercials, print ads and other basic coupons and features. These are furthered with Internet commercials that are seen through various portals. The marketing activity is based on continuous changes within the corporation, such as changing the products available. Currently, this is “The Return of McRib.” After this is available for a limited time, this will change to another sandwich or specialized return to grab interest of consumers. The continuous life cycle of new or changed items on the menu is what drives the marketing of the business with traditional marketing methods (McDonalds, 2010). The Starbucks marketing method differs from this by focusing on changes that enhance those that are in the community. While there are some traditional brand recognition marketing activities, such as brand names on the cup, advertisements and print ads, these are limited with the Starbucks initiatives. Instead, there is a focus on enhancing the products and coffee houses that are in each area. Changes such as creating a pleasing environment, offering music and wi-fi, giving rewards to those who drink the coffee and having a menu that is in demand is at the heart of the marketing activity. When demands change, such as the desire to have low priced coffee, Starbucks initiates new marketing campaigns, such as the $1 coffee cup and free refills. Listening and responding to consumers as the main priority is what drives forward the business and provides room for continuous consumers within the community (Starbucks, 2010). The differences between these two marketing strategies show that there are differences which help businesses to arise in different ways. The life cycle, reputation and the marketing activity of McDonalds has a distinct difference than Starbucks. Shorter life cycles, reputations that are not as fulfilling and the need to continuously implement new types of marketing programs are the basis of McDonalds. The sustainability of Starbucks through the relationship base creates a stronger implementation and response to the community. The relational marketing that is used is one which creates multiple dimensions of opportunity for establishing relationships and creating loyalty to customers. Reward programs are one of the concepts which build loyalty to customers while creating a sense of trust from those that are visiting the shop. The concept of listening to customers and changing the facility according to the customer needs and desires furthers this with establishment and enhancement of the corporation to meet consumer needs. The strategies that have been developed directly promote the establishment without traditional marketing tactics and make the shop more sustainable because of factors such as life time value, influences, customer service and relationships that are created (Hunt, Arnett, Madhavaram, 72, 2006). Reputation of Businesses Brand recognition and the reputation of businesses is another aspect that is considered with the relationship and traditional marketing values. When maintaining the customer wants and needs, there is the ability to create a stronger reputation. The reputation is one that is not reliant specifically on the advertisements and the ability to get products. Instead, it is based on the perspective of the customer and the way in which they value the business. This creates a relationship in which they will come back to the business and will create specific values that are associated with the market. More important, there is the ability to build theories and models that help to establish a stronger relationship to customers, specifically which enhances the reputation of the business and the brand identity that is a part of this (Svensson, 95, 2001). The reputation that is carried by both businesses shows that there are specific differences because of the relationship and traditional marketing used. The first is through McDonalds and the customers that have a specific reputation about the lack of quality with the products. This began in 2006 with the documentary, “Super Size Me” which showed that the monopoly of McDonalds was lacking in humanitarian qualities with the beef that was used and combined this with the lack of quality in health that was in the products. This was combined with the reputation of the business that followed, specifically through several employees that worked at a meat packing plant and noted that the money was taken by the corporation while the demands of employees was close to slave labor. Even though McDonalds claimed to offer healthier foods, many are finding the same items, some which have over 40 types of chemicals in the meal. More important, the advertising and the relationship to consumers has led to law suits, specifically because of the lack of quality in the food and the effects that this has on individuals. Since these claims, McDonalds hasn’t changed the quality of food and has continued to lead into downfalls with the reputation of the business and the yearly revenue (Hickmann, 1, 2006). The concept of reputation among businesses and Starbucks shows that the relationship marketing is able to enhance the way in which a company functions. Starbucks has created innovative reputation management techniques at various levels to ensure that the reputation continues to rise among employees. For instance, they have implemented a free drink for those that have a slight problem with the service at Starbucks such as waiting too long for a drink. The reputation helps to gain loyalty and creates a difference in how consumers look at Starbucks. This is furthered with the customer service policies that are implemented at various levels and are a part of the organizational expectations. At a corporate level, Starbucks has enhanced this by creating relationships with musicians and others in society to incorporate into the Starbucks firm. This is followed with the several community based policies and community practices to enhance the community, such as going green and development in various countries. Each of these practices is advertised through both word of mouth and within the Starbucks policies to promote the concept of ethical practices within the corporation. The result is that several are becoming more loyal to Starbucks with a reputation that continues to excel among stockholders and consumers in response to the effectiveness of the store policies (Starbucks, 1, 2006). The reputation of the brand is not only one which affects customers, but also is based on how stakeholders respond to a business. Currently, Starbucks is known to have one of the strongest stakeholder relationships because of the reputation of the brand (Starbucks, 2010). However, after the incidents with McDonalds and the lack of health food available, there were several stakeholders who stopped investing in the business (Hickmann, 2006). These different reputation levels show that there is a direct influence on the consumer relationships and the reputation that carries not only with the loyalty of customers, but also to those that are investing within the corporation. As the relationships continue to grow with consumers, it directly affects how stakeholders respond and the value which they believe is a part of the corporation. The reputation which is created then becomes an asset to the community with the consumer interactions remaining one of the main factors in building the reputation of the company for further growth (Christopher, Payne, Ballantyne, 27, 2002). Attitudes to Customers Another aspect which directly affects the company is based on the attitudes which are created through the customers. Traditional marketing is one that is based on the four Ps, which includes product, price, promotion and placement. While this still dominates the market, it is also known that the relationships that are created from customers are based on the mix with the 4Ps and the relationships that are a part of the marketing. For instance, the product is one which should be valued by the customer while building a relationship with what consumers want. The promotion, placement and price create the same, distinct attitudes from customers and result in the ability to reach to different groups of individuals. The return from consumers is one that changes how individuals respond to the specific environment (Zineldin, Philipson, 229, 2007). When evaluating McDonalds and Starbucks, it can be seen that the 4ps as well as the construction of relationship building creates the distinction of attitudes from customers. The reputation of Starbucks is one that has developed into one of the most well – known among customers. This is specifically because of the customer loyalty programs that have been created by the business. This attitude has influenced customers to be loyal and to trust the company. The commitment, brand acceptance and the loyalty to the business has grown because of the loyalty programs and rewards that are continuous among those that go to Starbucks. The attitudes that have grown from these programs include alterations in how many look at Starbucks, specifically with the belief that the quality of the product is higher and that the delivery of the coffee is better than others that are in a similar location (Uncles, Dowling, Hammond, 294, 2003). The reputation and attitude of customers is one that shows the opposing viewpoint with McDonalds. Continuous attacks on the company are made from a variety of concepts that show that McDonalds doesn’t have quality and doesn’t commit to the surrounding community. The unhealthy products, for instance, is one of the continuous attacks that are made on the company and the reputation that it holds. Lobbyists have also attacked the corporation for environmental waste and unfair and unethical practices within the organizational structure. Unless McDonalds has the increased attacks from those that are surrounding the area, the structure doesn’t change. The attitudes of those in the community then continue to rise in awareness and the desire to not be a part of the establishment. The result is difficulties in continuing to move forward with the establishment and to expand with the desired aspects of the company. While the 4 Ps of traditional marketing continue to be followed, the lack of matching the attitudes of customers creates a distinct difference in the ability to expand and build the corporation in an alternative manner (Schattle, 2000). Evaluation and Conclusion When looking at Starbucks and McDonalds, it can be seen that there is a distinct difference from the marketing that is used. McDonalds follows the traditional programs of marketing, which is based on the ideologies of the 4Ps and continuing to advertise with traditional means. The result is the inability to listen to consumer demand, such as changing the health items or responding to the environment in a positive manner. Establishing long term customer relationships and looking at this as an asset through both the internal organization and the marketing used then creates boundaries for the growth and reputation of the company. Starbucks contrasts to this with the strong relationship marketing used. The attitudes of consumers and the reputation that it carries is one that combines a sense of loyalty and commitment. Starbucks is seen as a corporate responsible system and is known for having distinctive features that continue to drive consumers into carrying a positive attitude about the corporation. The result is a rise in the corporation as well as positive returns from the community and stakeholders. The continuation of this formula provides more opportunities for growth and is allowing the corporation to continue to rise among those in the community as a stronger corporation. The difference between relationship marketing and traditional approaches is one that creates different interactions with customers. The two case studies show that there is a distinctive difference in the reputation and growth of the company, specifically because of customer responses. The concept of relationship marketing is one that becomes essential, specifically because this type of investment can create loyalty, trust and growth of brand reputation among those that have gone to the business. At the same time, the traditional marketing can only work as a basic foundational principle. Without the customer relationships and the ability to establish a strong reputation, there is the inability to understand and meet the needs that drive the business forward through consumer response. References Christopher, M, A Payne, D Ballantyne. (2002). Relationship Marketing: Creating Stakeholder Value. UK: Butterworth Heinemann. Gronroos, Christian. (1997). “From Marketing Mix to Relationship Marketing – Towards Paradigm Shift in Marketing.” Management Decision (35), (4). Hickmann, Martin. (2006). “Fast Food Titan McDonald’s Finds Latest Attack on Its Reputation Hard to Swallow.” The Independent (April). Hunt, Shelby, Dennis Arnett, Sreedhar Madhavaram. 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