Contemporary Relationship Marketing

Relationship Marketing and Management

Relationship marketing is a form of marketing that shifts focus away from sales transactions to emphasize customer satisfaction.

Learning Objectives

Illustrate the basis for and application of relationship marketing in the short and long term

Key Takeaways

Key Points

  • Relationship marketing is cross-functional, in that it is organized around processes that involve all aspects of the organization.
  • The practice of relationship marketing has been facilitated by several generations of customer relationship management software that allow tracking and analyzing of each customer’s preferences, activities, tastes, likes, dislikes, and complaints.
  • Customer relationship management involves using technology to organize, automate, and synchronize business processes—principally sales activities, but also those for marketing, customer service, and technical support.
  • A key principle of relationship marketing is the retention of customers through varying means and practices to ensure repeated trade.

Key Terms

  • demographic: A grouping of people for statistical purposes, based as age, race, gender, etc.

Relationship Marketing & Management

Relationship marketing is a form of marketing that shifts focus away from sales transactions to emphasize customer satisfaction. It refers to a short-term arrangement where both the buyer and seller have an interest in providing a more satisfying exchange. This approach tries to disambiguiously transcend the simple post-purchase exchange process with a customer to make more truthful and richer contact by providing a more holistic, personalized purchase. Thus, relationship marketing uses this experience to create stronger ties between buyer and seller. Relationship marketing is cross-functional, in that it is organized around processes that involve all aspects of the organization. It can be applied when there are competitive product alternatives for customers to choose from, and when there is an ongoing and periodic desire for the product or service. Examples of markets in which relationship marketing can be crucial include:

  • Internal markets
  • Supplier markets
  • Recruitment markets
  • Referral markets
  • Influence markets
  • Customer markets

With the growth of the internet and mobile platforms, relationship marketing has continued to evolve and move forward as technology opens more collaborative and social communication channels. This includes tools for managing relationships with customers, which go beyond simple demographic and customer service data. The practice of relationship marketing has been facilitated by several generations of customer relationship management software that allow tracking and analyzing of each customer’s preferences, activities, tastes, likes, dislikes, and complaints. Relationship marketing extends to include inbound marketing efforts, public relations, social media, and application development. It is a broadly recognized, widely implemented strategy for managing and nurturing a company’s interactions with clients and sales prospects. The overall goals are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service.

Customer Relationship Management

Customer relationship management (CRM) is a widely implemented model for managing a company’s interactions with customers, clients, and sales prospects. It involves using technology to organize, automate, and synchronize business processes—principally sales activities, but also those for marketing, customer service, and technical support. Once simply a label for a category of software tools, today CRM generally denotes a company-wide business strategy embracing all client-facing departments and beyond. When an implementation is effective, then people, processes, and technology work in synergy to increase profitability and reduce operational costs. A CRM system may be chosen because it is thought to provide:

  • quality and effeciency
  • a decrease in overall costs
  • an increase in profitability
A screenshot from an example CRM system, WebCRM.

Customer Relationship Management Systems: Customer relationship management systems help companies keep track of interactions clients and business associates.

Successful development, implementation, use, and support of CRM systems can provide a significant advantage to the user, but often there are obstacles that obstruct the user from using the system to its full potential. A CRM attempting to contain a large, complex group of data can become cumbersome and difficult to understand for ill-trained users. The lack of senior management sponsorship can also hinder its success. Stakeholders must be identified early in the process and a full commitment is needed from all executives before beginning the conversion. Additionally, an interface that is difficult to navigate or understand can inhibit the CRM’s effectiveness, causing users to pick and choose which areas of the system to use and which to push aside. This fragmented implementation can cause inherent challenges, as only certain parts are used and the system is not fully functional.

Customer Retention

A key principle of relationship marketing is the retention of customers through varying means and practices to ensure repeated trade. This is accomplished by satisfying customer requirements more effectively than competing companies through a mutually beneficial relationship. Customer retention involves counterbalancing new customers and opportunities with current and existing customers as a means of maximizing profit. Many companies in competitive markets will redirect or allocate large amounts of resources or attention towards customer retention. In markets with increasing competition, it may cost five times more to attract new customers than it would to retain current customers.

Business Marketing

Business marketing is the practice of organizations facilitating the sale of their products or services to other companies or organizations.

Learning Objectives

Differentiate the characteristics of business marketing from consumer marketing

Key Takeaways

Key Points

  • Demand in business markets exists only because of another demand somewhere in the consumer market.
  • The number of products sold in business markets dwarfs the number sold in consumer markets.
  • Business marketing generally entails shorter and more direct channels of distribution.
  • Business products can be complex, and so can figuring out the buying dynamics of organizations.

Key Terms

  • purveyor: Someone who supplies what is needed.

Business Marketing

Business marketing is the practice of individuals or organizations—including commercial businesses—facilitating the sale of their products or services to other companies or organizations that in turn resell them, use them as components in products or services they offer, or use them to support their operations. In the broadest sense, the practice of one purveyor of goods doing trade with another is as old as commerce itself. As a niche in the field of marketing as we know it today, however, its history is more recent. Business markets have a derived demand. This means that a demand in business markets exists only because of another demand somewhere in the consumer market. In other words, business markets do not exist in isolation. For example, the demand for restaurant furniture is based on the consumer demand for more restaurants.

Also known as industrial marketing, business marketing is also called business-to-business marketing, or B2B marketing, for short.

A row of electronic product shops in Guangzhou, China.

B2B Marketing: Electronic product shops are an example of B2B marketing. They are local companies that supply various products.

B2B Versus B2C

Business-to-business (B2B) markets differ from business-to-consumer (B2C) markets in many ways. For one, the number of products sold in business markets dwarfs the number sold in consumer markets. Suppose you buy a computer from Dell. The sale amounts to a single transaction for you. But think of all the transactions Dell had to go through to sell you that one computer. Dell had to purchase many parts from many computer component makers. It also had to purchase equipment and facilities to assemble the computers; hire and pay employees; pay money to create and maintain its website and advertisements; and buy insurance, accounting, and financial services to keep its operations running smoothly. Many transactions had to happen before you could purchase your computer. Business products can be very complex. Some need to be custom built or retrofitted for buyers. The products include everything from high-dollar construction equipment to commercial real estate and buildings, military equipment, and billion-dollar cruise liners.

Business marketing generally entails shorter and more direct channels of distribution. While consumer marketing is aimed at large groups through mass media and retailers, the negotiation process between the buyer and seller is more personal in business marketing. A single customer can account for a huge amount of business. Some businesses, like those that supply the U.S. auto industry, have just a handful of customers, i.e., General Motors, Chrysler, Ford, etc. Figuring out the buying dynamics of organizations can also be very complex. Many people within an organization can be part of the buying process and have a say in what ultimately gets purchased, how much of it, and from whom. Having different people involved makes business marketing much more complicated, and because of the quantities each business customer is capable of buying, the stakes are high. However, B2B and B2C marketing do share some basic principles. Namely, the marketer must always:

  • successfully match the product or service strengths with the needs of a definable target market;
  • position and price to align the product or service with its market, often an intricate balance; and
  • communicate and sell the product in the fashion that demonstrates its value effectively to the target market.

Social Marketing

Social marketing is the systematic application of marketing to achieve specific behavioral goals for a social good.

Learning Objectives

Define the concept of social marketing, its application and impact on society

Key Takeaways

Key Points

  • Social marketing can be applied to promote merit goods – or to make a society avoid demerit goods – and thus to promote society’s well being as a whole.
  • The primary aim of social marketing is social good, while in commercial marketing the aim is primarily financial.
  • Social marketing has matured into a much more integrative and inclusive discipline that draws on the full range of social sciences and social policy approaches as well as marketing.
  • Green marketing concentrates on the marketing of products that are presumed to be environmentally safe.

Key Terms

  • demerit: A quality of being inadequate; a fault; a disadvantage
  • proviso: A conditional provision to an agreement

Social Marketing

Social marketing is the systematic application of marketing, along with other concepts and techniques, to achieve specific behavioral goals for a social good. Social marketing has similar characteristics to marketing orientation but with the added proviso that there will be a curtailment of any harmful activities to society, in either product, production, or selling methods. Social marketing can be applied to promote merit goods – or to make a society avoid demerit goods – and thus to promote society’s well-being as a whole.

For example, this may include asking people not to smoke in public areas, asking them to use seat belts, or prompting them to make them follow speed limits. Social marketing is sometimes seen only as using standard commercial marketing practices to achieve non-commercial goals. This is an oversimplification, as the primary aim of social marketing is social good, while in commercial marketing the aim is primarily financial. Increasingly, social marketing is being described as having “two parents” – a “social parent,” i.e., social sciences and social policy; and a “marketing parent,” i.e., commercial and public sector marketing approaches. Social marketing has, in the last two decades, matured into a much more integrative and inclusive discipline that draws on the full range of social sciences and social policy approaches as well as marketing.

Applications

Health promotion campaigns in the late 1980s began applying social marketing in practice. Notable early developments took place in Australia. These included the Victoria Cancer Council developing its anti-tobacco campaign “Quit” (1988), and “SunSmart” (1988), its campaign against skin cancer. WorkSafe Victoria, a state-run Occupational Health and Safety organization in Australia, has used social marketing as a driver in its attempts to reduce the social and human impact of workplace safety failings. Social marketing theory and practice has been progressed in several countries such as the US, Canada, Australia, New Zealand and the UK, and in the latter a number of key Government policy papers have adopted a strategic social marketing approach.

A green recycle sign that says "sustainable, renewable, natural."

Green Marketing: Marketing sustainable ideals has come to the forefront of social marketing in recent years.

A variation of social marketing has emerged as a systematic way to foster more sustainable behavior. Referred to as Green Marketing, it concentrates on the marketing of products that are presumed to be environmentally safe. Green marketing incorporates a broad range of activities, including product modification, changes to the production process, packaging changes, as well as modifying advertising. It is a part of the new marketing approaches which do not just refocus, adjust or enhance existing marketing thinking and practice, but seek to challenge those approaches and provide a substantially different perspective.

Branding

A brand is a name, term, design, symbol, or any other feature that identifies a seller’s good or service.

Learning Objectives

Review the history of branding, the types, why it is necessary and how it impacts the buyer

Key Takeaways

Key Points

  • Brands in the field of mass- marketing originated in the 19th century with the advent of packaged goods.
  • Proper branding can result in higher sales of not only one product, but other products associated with that brand as well.
  • A brand is one of the most valuable elements in an advertising theme, as it demonstrates what the brand owner is able to offer in the marketplace.

Key Terms

  • experiential aspect: The sum of all points of contact with the brand; otherwise known as the “brand experience. “
  • anthropological: Relating to anthropology; The holistic scientific and social study of humanity, mainly using ethnography as its method.
  • brand identity: The outward expression of a brand, including its name, trademark and visual appearance.

A brand is a name, term, design, symbol, or any other feature that identifies a seller’s good or service. A concept brand is a brand associated with an abstract concept like breast cancer awareness or environmentalism. A commodity brand is a brand associated with a commodity. “Got milk? ” is an example of a commodity brand.

History of Branding

Branding began as a way to tell one person’s cattle from another by means of a hot iron stamp. Brands in the field of mass marketing originated with the advent of packaged goods in the 19th century. Industrialization moved the production of many household items from local communities to centralized factories. Factories established during the Industrial Revolution introduced mass-produced goods to sell their products to a wider market. It became apparent that a generic package for a good had difficulty competing with familiar, local products. Packaged goods manufacturers had to convince the market that the public could place just as much trust in the non-local product. Campbell Soup, Coca-Cola and Juicy Fruit gum were among the first products to be “branded” in an effort to increase the consumer ‘s familiarity.

A cattle brand burned onto a piece of wood.

Branding: Branding is the use of a symbol to show ownership of a certain product.

By the 1940s, manufacturers began to recognize the way consumers were developing relationships with their brands in a social, psychological and anthropological sense. From there, manufacturers learned to build their brand’s identity and personality. This began the practice known as “branding,” whereby consumers buy “the brand” instead of the product.

Branding Concepts and Techniques

Proper branding can result in higher sales of not only one product, but on products associated with the brand as well. For example, if a customer loves Pillsbury biscuits, he or she is more likely to try other products offered by the company. Some people distinguish the psychological aspect of a brand from the experiential aspect. Psychological aspects include thoughts, feelings, perceptions and images associated with the brand. The experiential aspect consists of a consumer’s overall contact with the brand, otherwise known as the “brand experience. ”

Brand image is a symbolic construct created within the minds of people. It consists consists of all the information and expectations associated with a product, service or the company. People engaged in branding seek to create the impression that a brand associated with a product or service has certain qualities that make it unique. A brand is therefore one of the most valuable elements in an advertising theme, as it demonstrates what the brand owner is able to offer in the marketplace. The art of creating and maintaining a brand relevant to a target audience is called brand management.

Brand orientation, meanwhile, refers to the concentration of an entire organization toward its particular brand. Brand orientation is developed in responsiveness to market intelligence. A brand which is widely known in the marketplace acquires brand recognition. When this recognition builds up to a point where a brand enjoys a critical mass of positive sentiment, it is said to have achieved brand franchise. Brand recognition is most successful when people can recognize a brand through visual signifiers like logos, slogans and colors.The outward expression of a brand, including its name, trademark and visual appearance, is brand identity. This is in contrast to the brand image, a customer’s mental picture of a brand.