Relationship Marketing: Exploring Relational Strategies in Marketing

Introduction

To begin with it is necessary to mention that relationship marketing is a form of marketing, which is developed in order to meet the customer’s needs and requirements. Some consider it the umbrella philosophy, while the others claim it is a wholly unified concept with strongly developed objectives and strategies.

The essay will entail the discussion on the matter whether the CRM is just a multi relational concept, or the multi-dimensional and joint strategy, which requires strongly developed objectives and strategies. This discussion will be based on the research of different approaches used for the implementation of CRM principles, and for the evaluation of the implemented techniques.

This type of marketing differs from the other types of marketing by the notion that CRM (Customer Relationship Marketing) presupposes the long term value to the company to keep the relations with customers (Andrews, 2003).

It is necessary to mention that Relationship is often discussed as the strategic option for the companies who are competing for their customers. Originally, this only notion may confirm that CRM is the strategy, which requires particular approach and has its objective, however, the theoretical perspective of marketing, CRM only represents an intermediary mechanism of regulating the relations with customers, and regulation between discrete approach to the exchange or the integration of the marketing actors into an organized structure. It is emphasized that such orientation and classification is rather massive as a category, however, a more differentiated approach may help managers to regulate the business relations effectively, thus, CRM reminds the “umbrella”, which protects form difficulties, linked with customers’ relations (Cook, 2001).

Discussion

It has been already emphasized, that relationship marketing is the long term, and often mutually beneficial arrangement, when customer and the company concentrate on benefits, and define how to enhance the value through a mutually satisfying exchange. This approach aims to exceed the simple process of purchasing, and make the relations with customer more meaningful, richer and longer. This is achieved by providing a more united, personalized purchase.

According to marketing researches the CRM strategy may be applied if there are alternatives, which make the product competitive, and when customers have an option to choose (Arogyaswamy, 1993).

Fornell and Wernerfelt elaborated the concept of “defensive marketing”, which is aimed to describe the efforts which are aimed to decrease the turnover rates among customers by increasing customers’ loyalty. This approach of customer’s retention essentially contrasts with “offensive marketing” concept, which entails the acquiring of new customers and increasing the frequency of purchases. From this point of view the Customer Relationship Marketing is the united strategy, which entails several approaches, and which is also a component of marketing strategy. Thus, defensive marketing approach is aimed at reducing the dissatisfaction of the customers, and this approach has two components: increasing customer satisfaction and reducing the barriers, which restrict the amount and the satisfaction level of the customers (Arogyaswamy, 2000).

It is necessary to emphasize that the practice of CRM was developed by several generations of managers, consequently, the approaches and the methods of this strategy has deepened a lot, thus, it can not be simple “umbrella philosophy” with numerous relational variations. Most companies who are engaged in manufacturing prestigious cars or private planes have the database of their customers, which provides the information of how, when and where the production was bought, the way they financed the purchase etc., is in a powerful tool to develop one-to-one marketing relations and product benefits. Thus, these customers experience the individual approach, and are glad to have the long term relations. These customers prefer having technical support, purchasing additional options and tunings of their cars or planes within the company’s network (Sant, 2004).

As for the distant marketing, such as web sales, the company has an opportunity to create the profile of the customer on the basis of the purchases, and personal information which customer provides. This information is used for defining the preferred category of the goods in order to make individual propositions for every customer. Further these propositions may be used during the seasonal sales or in the direct mails to the customers.

Some researchers distinguish the approaches of the CRM strategies between markets, hierarchies and the forms, which combine these two types. These joint forms focus on the long-term relations with the customers, reciprocal trading, regulation and franchising (Williamson, 1991).

Arndt (1979, p. 70) emphasizes the existence of joint forms which he regards as the “domesticated markets.” This concept emphasizes the possibility of long term relations only within the domestic market, as in spite of the international relations of the companies and their customers, the necessity to keep this long term international relations seemed unreasonable. After 30 years of the representation of his concept the situation has changed completely. Globalization and the development of the activities by Trans National Companies make such relations reasonable as never due to the fact of awareness of these customers about the trade marks.

From the view point of marketing theory, these approaches and classifications are based on the importance of the supplier, as supplier is regarded as the key component is supplier-consumer system. The concepts which are based on customer or the level of the relations of the company with customer are not so widespread, however, they are steadily developing nowadays. They are often referred as the typologies of marketing relations, while marketing analysts regard them as the defining component of the further marketing strategy. Originally, this classification makes an emphasis that the CRM technique is more a defensive tool i.e. “umbrella philosophy”, as separate components such as typologies can not form the joint strategy.

Originally, the concept of CRM as the “Umbrella Philosophy” is regarded as the additional tool for adjusting and fine tuning of some minor disadvantages of the strategy, consequently, CRM approach may be used as the tool of relational variation. However, the necessity to establish customer relations from the very beginning requires the using of the joint strategy with taking into account several approaches and enabling several concepts (Wilhide, 2003).

It is emphasized that along with the process of classification of differentiated strategy to the relational styles of CRM, the aim of the CRM strategy elaboration is to verify, if there is a link between the relational manner of the company and the particular outcomes of the strategy and the relations with the customers. Analysts often consider that the quality of the relations with the customer impacts the allover success of the company, as long-term relations and returned customers mean the constant income and steady development of the company. The quality of the relations may be measured by the means of different techniques and measurements: one of these techniques is the supplier-customer contacts, it frequency and length. Nevertheless, everything depends on the profile of these relations: customer oriented strategy directly impacts the customer behavior; supplier-focused approach impacts the quality of the relations and the quality of the provided services. According to Ivens (2002) the customer’s quality view of a relationship may be understood of as a multi-dimensional structure. It can be structured in different ways; however, the most general components of this structuring are satisfaction, commitment and trust. Ivens also emphasized the following: “one can expect the dimensions of relational behavior to directly influence these variables. Given this paper’s perspective, customer-perceived relationship quality is expected to be influenced by supplier’s relational behavior.”

Components of CRM

It is considered that Customer Relations Strategy entails three central components – satisfaction, trust and commitment. Satisfaction of often regarded as two-dimensional component. Originally these dimensions are economic and social. Economic satisfaction presupposes the evaluation of the financial results that originate from the relations. Social dimension is aimed to evaluate the psychological aspect of the relations, and is based on the response of the customers, and the character of the relations between company and the customers. Originally, this concept was developed for channel-setting, however, it was further adapted to industrial relationship perspective also regarded as the integrating items from the INDSAT scale.

Trust component is defined as the customers’ belief that the company would perform actions that will result in positive outcomes for the customer, and the relations between the company and the customer, as well as not take unexpected actions that would result in negative outcomes for the company itself. (Shepherd, 2003) The scale which is developed to estimate the trust level is focused on the industrial perspectives of the company and the conceptual part required for the research of the CRM concept.

Commitment is defined as the exchange partner’s belief that an ongoing relationship with another is so important as to warrant maximum efforts at maintaining it (Reuber, 2005). This definition explain the two central aspects. Commitment represents the value judjement, and moreover, it stabilizes the relations, as the involved partners are generally eager to make particular efforts in order to preserve these relations.

Conclusion

The notion that relationship marketing is just an ‘umbrella philosophy’ with numerous relational variations rather than as a wholly unified concept with strongly developed objectives and strategies can not be confirmed. It is the complex multi-dimensional approach, which presupposes several components to be observed and evaluated. This conceptual approach entails several strategies, which are aimed at adjusting favorable company-customer relations, and presuppose various aspects to be taken into account. The fact is that, relational variations can not be regarded as the separate strategy, and can not be included as the component of a large-scale strategy, consequently, it is not simply an “Umbrella Philosophy”

Finally, it is necessary to emphasize that the definition of the CRM as the umbrella philosophy or the joint strategy depends on the approach towards the incorporation of this tool. If CRM entails only several separate components it is not a strategy, but a tool for improving the relations with customers. If CRM is the multi-dimensional approach which is aimed at establishing these relations from the very beginning it is the full-fledged strategy.

References

1. Arndt, J.. Toward a Concept of Domesticated Markets. Journal of Marketing, 43 (4), 69-75. 1979
2. Andrews, Jonathan, and Andrew Scull. Customers and Patrons of the Mad-Trade: The Management of Lunacy in Eighteenth-Century London. Berkeley, CA: University of California Press, 2003.
3. Arogyaswamy, Bernard, and Ron P. Simmons. Value-Directed Management: Organizations, Customers, and Quality. Westport, CT: Quorum Books, 1993.
4. Cook, Jack S., Kathy Debree, and Amie Feroleto. “From Raw Materials to Customers: Supply Chain Management in the Service Industry.” SAM Advanced Management Journal 66.4 (2001): 14
5. Fischer, Marc, Heiner Frankemolle, Lutz-Peter Pape, and Karsten Schween. “Serving Your Customer’s Customer: A Strategy for Mature Industries.” The McKinsey Quarterly (1997): 81
6. Frank, Katherine. “Exploring the Motivations and Fantasies of Strip Club Customers in Relation to Legal Regulations.” Archives of Sexual Behavior 34.5 (2005): 487
7. Frank, Katherine. “Exploring the Motivations and Fantasies of Strip Club Customers in Relation to Legal Regulations.” Archives of Sexual Behavior 34.5 (2005): 487
8. Hofmeyr, Jan, and Butch Rice. Commitment-Led Marketing: The Key to Brand Profits Is in the Customer’s Mind. New York: John Wiley & Sons, 2000.
9. Ivens, B.S. Governance Norms in Relational Exchange: What We Do Know and What We Do Not Know. Competitive paper presented at the 18th Annual IMP conference, Dijon (France) 2002.
10. O’Sullivan, Orla. “Some of Your Customers Are Unprofitable. OK, Now What?.” ABA Banking Journal 89.11 (1997): 42
11. Reuber, A. Rebecca, and Eileen Fischer. “The Company You Keep: How Young Firms in Different Competitive Contexts Signal Reputation through Their Customers.” Entrepreneurship: Theory and Practice 29.1 (2005): 57
12. Sant, Tom. Persuasive Business Proposals: Writing to Win More Customers, Clients, and Contracts. 2nd ed. New York: AMACOM, 2004.
13. Schmitt, Bernd H. Customer Experience Management: A Revolutionary Approach to Connecting with Your Customers. Hoboken, NJ: John Wiley & Sons, 2003.
14. Shepherd, Dean A., and Andrew Zacharakis. “A New Venture’s Cognitive Legitimacy: An Assessment by Customers.” Journal of Small Business Management 41.2 (2003): 148
15. Wilhide, Richard K. “Can Customers Change Their ATM Perceptions.” ABA Banking Journal 82.5 (1990): 108
16. Williamson, O.E. Comparative Economic Organization: The Analysis of Discrete Structural Alternatives. Administrative Science Quarterly, 36, 269-296. 1991