Marketing of Services-Perspectives - Essay Example

ASSIGNMENT It is often said that someone is a "good net worker" because he or she is able to put individuals in touch with others who have a mutual interest. This type of marketing occurs primarily in a business to business context, where firms commit resources to develop positions in a network of relationships with customers, distributors, suppliers, the media, consultants, trade associations, government agencies, competitors and even the customers of their customers. The concept of networking is relevant in consumer marketing environments, where customers are encouraged to refer friends and acquaintances to the service provider. Individual customers may have relationships with different individuals, departments, clubs, charities etc, with in a supplier firm, depending on the situation. As Evert Gummesson (1999) advocates total relationship marketing as " Marketing based on relationships, networks and interaction, recognizing that marketing is embedded in the total management of the networks of the selling organization, the market and society". It is directed to long term, win-win relationships with individual customers, the value is jointly created between the parties involved". In the above context if we look at affinity cards networks of relationship we can easily see three parties which are involved in the relationship network are; affinity credit card issuing bank, charity or political parties or universities or other types of such organizations and the customer who held and actually using the affinity credit cards and also members of above mentioned organizations. Basically affinity cardholders are members of a particular organization or somewhat related to organizations in the form of any relationship. It may be direct or indirect like supporters of any club or political parties. Basic relationship exists between actual affinity card users and the organization to which they belongs or affiliate directly or indirectly. On the basis of such relationships organizations develop or forge a networked relationship with the bank. The second type of relationship exists between organization and the affinity card issuing branch/bank. The relationship between bank and organization depend on mutual benefits. Bank gets the loyal customers from the memberships of the organization who use their affinity credit cards and in exchange, organization gets some monetary benefits as agreed upon by the organization and the bank. This type of business-to-business relationship depends on mutual benefits for both the parties. Bank gets the whole memberships of the organization as their customer without much of investment in customer enhancement activities and the organization benefited by getting some initial signup fee and recurring money for every buying through credit cards. Finally the relationship between customer and organization depends on some intangible aspects such as loyalty, pride, brand using status etc. and a distinct identity. 2. As Cardweb.com (www.cardweb.com) estimated that 250 million affinity credit cards were in circulation worldwide and it is almost one-third of all credit cards. So affinity credit cards have larger share in the credit card market. If we see the reason behind the growth of affinity card market up to such level, the main reason behind this type of business is mutual benefits and trust. As we have discussed the three parties or stake holders involved in business get mutually benefited. The banks, which issue credit card, get a larger number of customers at one go. Services involving discrete transactions can be transformed into membership relationships by providing services in bulk. The advantage for the banks to provide services to the organizations of having membership relationships is that it knows who its current customers are and, usually, what use they make of the services offered. This customer information can be valuable for segmentation purposes if good records are kept and the data are readily accessible for analysis. Banks after knowing the identities and addresses of current customers enables the organizations to make effective use of direct mail (e-mail), telephone selling and personal sales call etc. in turn members can be given access to special numbers of even designated account managers to facilitate their communication with the banks. As far as the organizations are concerned they immediately get benefits (financially) from initial signing fee (one time) and recurring commissions from each purchases. Most of the organization used to collect funds with this type of networked relationship with the banks in case of affinity credit cards. By sighing contract with banks these charity organizations or university collect money for using it for good cause. In this way every commercial transactions create funds to use it for some social cause, which ultimately benefits the whole society. By developing such type of relationship marketing business-to business transactions create finds with out much efforts to fulfill corporate social responsibility on a long-term regular basis. Finally growth of affinity credit cards is due to its special feature for its customers i.e., trust, loyalty, brand image, status, pride and special identity. By using special organizations name, customer relate himself/herself with the organization, its brand value, its social value as well as self satisfaction for doing something fruit full for the society. Customer feels that they are contributing something for their society as a whole. This type of cards provides them distinct identity. Apart from the discussed benefits for its stakeholders, affinity cards system fulfill or support the social causes of the society as a whole and one way to provide recurring funds for it. 3. In my opinion, one of the potential service, which could benefit from relationship based marketing like affinity credit card is the airlines industry. If we take the example of British airways (BA), it can use this type of relationship marketing with any charity or university or any other national organization, which could be used as the organization and airlines relationships. As we know most of the airlines competing for travelers fiercely in the post 9/11 market. Low cost airlines, which are no-frill airlines, provide their customers low airs and capture major share in the market. Rynair airlines is one of the example of low cost airlines growing very fast and carrying more and more people. So the airlines which used to be and treat themselves as National carriers and carry a particular national image must offer value through connecting with some charity or university type organization which again arouse national pride for their passengers and creates loyalty. Most of the airlines and also BA use to reward in some way or other to their loyal customers who fly more than specified air miles and award them points which could reflect their status and some special services and facilities and Bonus. By connecting with any organization provide them certain travelers time to time as well as loyal customers without much effort and image building. So airways like BA get more and more flyers, which may loyal and regular service users. The organization or charity or university, which can link with BA, has also set to gain economically. Initially the signing fee it could get and thereafter whenever a member uses BA it get certain amount recurring which could again be used for development and for social cause. It could complement the corporate social responsibility of British Airlines and if it is a national carrier then it must contribute positively to the national welfare and developments. So in this way both parties get mutual benefit. Again the organization have to make an understanding with the airlines that its members at least get a special recognition and status during the fight that they are contributing something to national welfare or for any social cause through traveling by BA. This special status and recognition makes them loyal customers of BA and in the long run this type of relationship marketing could open new avenues for British airlines. BA could use special organizations logo such as universities .As we know lots of students studying in British universities of outside UK, which are bound to fly to & fro. Using certain university affiliation and providing special status gives pride to the flyers during the flight and therefore this creates a group of valued, related customers who are loyal to BA. 4. Affinity credit card study is completely dependent upon relationship marketing concept. Basically relationship marketing has been defined as "attracting, maintaining and in-multi services organizations enhancing customer relationships (Berry, 1983, 2002) and to establish, maintain and enhance relationship with customers and other partners at a profit, so that objectives of the parties involved are met. This is achieved by a mutual exchange and fulfillment of promises (Gronroos, 1990). Relationship marketing assumes a need for building lasting relationship with customers the need of the marketer. Benefits from a customer relationship to the customer have received less attention than those to the provider (Gwinner et al. 1998, Odekerken-schroder, 1999). Gwinner, Gremiler and Bitner (1998) and Sheth and Parvatiyar (1995) studied customers' relational benefits. Fournier (1998) study also resulted in the same type of approach to customers' relationships with brands: an approach of relational benefits, emotions and perceptions of the customer. Gwinner et al. (1998) showed that most of the benefits that customer derived from relationship could be grouped into three clusters. The first and the most important, group concerned what the researchers labeled confidence benefits, followed by social benefits and special treatment. Confidence benefits included feelings by customers that in an established relationship, there was less risk of something going wrong. Confidence in correct performance ability to trust providers, lowered anxiety when purchasing, knowing what to expect and receipt of the firms' highest level of service. Social benefits embraced mutual recognition between consumers and employees, being known by name, friendship with the service provider and enjoyment of certain social aspect of relationship. Special treatment benefits included better prices, discount on special deals that were unavailable to most other consumers extra services, high priority when there was a wait and faster services than most other customers received. So looking at the relationship marketing and expectations of customers we see that affinity credit card relationship marketing fulfills almost all of the above criteria. They have confidence benefits, social benefits and special treatment benefits. Actually the basic objective of marketing strategies are to build the customers commitment to a brand i.e. creating customer satisfaction, building brand equity and creating and maintaining a long-term trusted relationship. If all the three criteria have been fulfilled by any organization there is no question of choice for customers. Through today's customer is more knowledgeable, informative and speculative but even then if the service/product provides them quality, price, recognition status and prompt service, they are less likely to switch loyalty. In affinity credit card type relationship marketing customers are fully satisfied and hence loyal. Highly satisfied or even delighted customers are more likely to become loyal apostles of a firm, consolidates their buying with one suppliers and spread positive word of mouth. Loyalty develops with bonding i.e. reward- based bonding, social bonding, customization bonding and structural bonding (Lovelock, and Wirtz, 2004). In affinity credit card system social bonding and emotional, personalized relationship with individual plays a major role which decreases the effects of other monetary or short term financial benefits and hence reduces the choice for customers. 5. Kuwait has a gross domestic product (GDP) of $ 50 billion USD for 2004. The country's key industrial sectors like oil & gas, finance and telecommunications have been utilizing advance ICT (information & communication Technologies) systems for planning and management but lacks cohesive and detailed national ICT strategy. Progress in ICT has been generally slow. Today, the country has the third highest ICT use with total population of 275 million having 590;000 inter5net users, 490,000 telephone and 2,109,000 cellular subscribers only behind UAE & Bahrain among Arab countries. Kuwait has one of the highest Internet penetration rate in Arab world and is one of the most aggressive adopters of broadband technology. Having such type of technological infrastructure. There is large increase in Internet users as well as the high penetration of credit and debit payment cards in Kuwait. The total number of payment cards (debit & credit) in circulation in Kuwait is estimated at some 1.45 million by the end of 2003 with a penetration rate of 59% in the highest in Arab world. The prevalence of advanced online banking solutions and practices in Kuwait further contribute to the spread and development of e-commerce in the country. Several local banks of Kuwait having Internet banking services and being the highest e-banking adoption rate among all Arab states. Four of Kuwaitis seven commercial banks now offer retail-banking services through the Internet while the other three banks are planning Internet banking. All the banks offer phone and ATM banking services. According to Madar research group, of the total 500,000 bank accounts with various banks, Internet banking accounts form about 100,000 (20% of the total accounts). One of highest percentage Internet banks accounts among the Arab states. Some banks in Kuwait allow a/c balance inquiry; Inter account funds transfer as well as funds transfers. Users can also pay their bills to utility services, use or issue instructions through SMS & WAP for required services. There are almost 300 ATM is in Kuwait and also mobile ATM's providing services to users. Bank's like NBK (National Bank of Kuwait) the largest bank provides additional services online. They allow enquiries to A/C information, transactions draft, check book requests, online brokerage, mobile banking foreign exchange and equality trading etc. and at par with banking systems in developed world whether for bank-to-bank transfers, internal operations or customer services, so banks in Kuwait showed a great importance for having all necessary information about their customers. Banks in Kuwait are trying to use customer relationship management techniques to secure personal relationship with their customers, maximizing customer profitability and create a customer-oriented culture. Due to better personal customer relationship management, it facilitates easy flow of data with in organization, better analysis results in higher sales, happier customers and much improved bottom line. Due to better customer relationship management and personal attention to customers banks have been able to increase per employee productivity, better follow up and satisfied customers and overall growth in organizational efficiency. But even then, lack of information on a broader perspective and culture prevents the implementation of effective CRM. Culturally, nonadoption to new technologies and change put banks, customers and employees on back foot. Basically it has been understood that personal relationship management and trust building with customers is very important banks and relationship management could be implemented for better services and easy interaction at personal level. To improve overall customer relationship management banks in Kuwait must adopt various measures which include: . The managerial staff should accept the changes as natural. Technology plays major role in implementing effective customer relation management, so everybody in and out of the organization must be technology savvy. Managerial staff as well as customers may time to time be educated about new technology through workshop campaign training programmes etc. Customer must be contacted frequently and preferably through personal e-mail or phone to increase their awareness and trust with the bank. Finally a clear and structured plan could be developed and followed closely. So, by adopting above technique and recommendations banks in Kuwait could serve their customers more efficiently and build a life long relationship and retain loyal customers. ******************************************************************* References: 1. Berry, Leonard L. (2002) "Relationship Marketing of services-perspectives from 1983 and 2000", Journal of relationship marketing, vol.1, no.1, 59-77. 2. Berry, Leonard L. (1983), "Relationship Marketing", in L.L. Berry, G.L. Shostack and G.Upah (eds.) Emerging perspectives on services marketing, Chicago: American Marketing Association, 25-28. 3. Fournier, Susan (1998) "consumer and their brands: Developing relationship theory in consumer research", Journal of consumer research, vol.24 (march), 343-373. 4. Gronroos, Christian (1990), The marketing strategy continuum: Toward a marketing concept for the 1990's, working papers no. 201, Swedish school of economics and business administration, Helsinki. 5. Gummensson, Evert (1999) " Total relationship marketing", Oxford, England: Butterworth-Heienemann, 24. 6. Gwinner, Kevin P., Dwayne D. Gremler, and Mary Jo Bitner (1998), "Relational Benefits in Services Industries: The Customer's Perspective," Journal of the Academy of Marketing Science, 26 (2), 101-114. 7. Lovelock, Christopher and Wirtz, J. (2004), Services Marketing, 5th ed., Pearson Education Inc. 8. Odekerkan-schroder, Gaby (1999) " The role of the buyer in affecting buyer-seller relationships, Empirical studies in a retail context, Maastricht. 9. Sheth, Jagdish N. and Atul Parvatiyar (1995), "Relationship Marketing in Consumer Markets: Antecedents and Consequences," Journal of the Academy of Marketing Science, 23 (4), 255-271. Read More