IMPORTANCE OF THE RELATIONSHIP MARKETING

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Meaning and role of relationship marketing

Relationship Marketing -The process of creating , maintaining  and enhancing strong ,value-laden relationships with Customers and other stakeholders. Relationship marketing is based on the premise that important accounts need focused and continuous attention. This is the  role of relationship marketing. A major challenge for high-performance companies is that of building and maintaining viable businesses in a rapidly changing marketplace. They must recognize the core elements of the business and how to maintain a viable fit between their stakeholders, processes, resources, and organization capabilities and culture

Relationship Marketing practices are evolving and facing challenges in highly quicksilver external environment and hence there is a need of hour to comprehend complex networking of stakeholders. Transactional exchange, being replaced by relational exchanges is new mantra of success. Relationship Marketing (RM) is stressing upon ongoing long term trust, cooperation and collaboration. It is critically based on- customer-centric preferences, psyche & loyalty- in globalized scenario. Relationship Marketing may prove to be an effective strategy and rapid endeavor responding towards stiff competition in healthy ethical way.

Relationship marketing and win-win situation

Lot many scholars, practitioners and academicians have understood the importance of RM in providing win-win situation both for companies as well as faithful customers. This is the harbinger of new marketing orientation. Relationship Marketing is aimed to create strong, long lasting, fruitful relationships by developing intense long-term bonds through its various instruments of personal nexus.

As a result customer start identifying, associating themselves with the product, prefer and accept company’s product and service over competitors offerings, buys again, and recommend others to buy. The present marketing concepts rests on four main Pillars, namely a market focus, customer orientation, coordinated marketing and profitability. Their focus has shifted towards integrating the three elements-people, service and marketing, which is known today as customer service, quality and marketing in a close alignment.

Relationship Marketing is an epitome of success,today. But Relationship is an aeon-old concept not just with new wrapping but with much more. It leads to customer retention and loyalty. Its focus is on one-to-one relationship between customer and company. Stronger relationships lead to more customer business share through win-win situation for both the parties. Partnering is the highest loyalty facet. The partners are actively engaged through co-creation.

Why relationship marketing’ is important?

The customers of new era are exacting and needs customized products. Today’s turbulent economy and competitive business scenario needs totally refreshed approach which is expected to be fulfilled through Relationship Marketing up to high extent. RM has led to paradigmatic shift in marketing philosophy. Much contribution is expected through pragmatic contribution by managers who actually implement RM. Academicians should contribute more in the concept, nature,examples and theory.

Some reasons for relationship marketing’s importance consist:

1. higher marketing costs of attracting new as opposed to existing customers (Maltby et al., 1991);
2. continuing exchange opportunities with existing customers (Christopher et al., 1991);
3. strong relationships and continuing contact can equal useful feedback (Zeithaml, 1981);
4. good relationships lead to good word-of-mouth (Palmer, 1994);
5. customer relationships are significant intangible marketing assets of the firm which need to be cultivated and sustained (Normann, 1991).

Weir and Hibbert (2000) construe that thriving organizations should develop relationships so that prospects become regular customers and then advocates/partners. Building a strong base of loyal customers is important to every organization. The Pareto’s 80/20 rule says that 80 percent of a firm’s profits come from 20 percent of its customers. If a firm can just retain a larger percentage of existing customers, it can augment its competitive advantage and its profits.

Relationship Marketing: Conceptual cogitation

Relationship Marketing is evolving as a practice oriented pathway that is transforming itself into an extension of marketing discipline. As a marketing offshoot- Relationship Marketing is breaking precincts of Transactional Marketing. Technological elevation & possible proliferation of offered products/services is allowing customers to choose well from huge available array. It is being offered with extended value at reduced cost. Today a customer is being bombarded with wide-ranging information.

The product selection is chosen-as a result of Information Explosion, Mobile services, Major Print and Broadcasting advertising Media, Marketing Communication mix. Most observers agree that relationship marketing is not only based on looking at individual transactions (O’Malley and Tynan, 2000).Transactional marketing is now viewed as integrated into relationship marketing (Tyler and Stanley, 1999).

Relational exchange is a long-term and complex relationship between service providers and customers, not simply or only a series of transactions (Berry, 1983; Jackson, 1985; Dwyer et al., 1987). Relationships are likely to rely less on contract law and more on issues such as trust, equity, responsibility, and commitment (Gundlach and Murphy, 1993)

Consequently, as a next step- an integrative relationship assumes overlap in the plans and processes of the interacting parties. Further it suggests close economic, emotional and structural bonds among them. It reflects interdependence rather than independence of choice among the parties. It emphasizes cooperation rather than competition and consequent conflict among the marketing actors.

Thus, development of relationship marketing points to a significant shift in the axioms of marketing: competition and conflict to mutual cooperation, and choice independence to mutual interdependence. Thus motto for companies should be: while cooperation and interdependence goes hand in hand should meet customer need- economically yet profitability. At the same time the risk for the business reduces across the customer retained span. Also  more value addition is possible than competitor at lesser cost. It can hamper not only the overall selling of competitors but also shift their locus of business.

Summary

While cooperation and interdependence goes hand in hand should meet customer need-economically yet profitability. At the same time the risk for the business reduces across the customer retained span. Also  more value addition is possible than competitor at lesser cost. They have to either improve the product through innovation or should reduce cost. Innovation and imitation is not always easy and cost can not be reduced after certain extent for competitor as it affects revenue adversely.

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