Relationship marketing is defined as “the ongoing process of (see Marques & Domegan, ): the Nordic, the Anglo-Australian and the American. Customer Relationship Profitability, Swedish School of Economics and. Key words: relationship marketing; paradigm shift; IMP group; Nordic school; Anglo- . An early definition of relationship marketing is provided by Grönroos ( p. . Despite its prominence they do not include the Anglo- Australian school. The Anglo-Australian approach (The Cranfield School). transactional and relational strategies depending on the customer-supplier relationship and the level.
The reality, however, is that not all customers want or require a relationship with their supplier Blois, ; Jackson, Thus the contrast between transactional marketing — otherwise known as traditional, conventional, or 4Ps marketing - and relationship marketing may appear less distinct such that "when RM researchers talk about the RM as a paradigmatic shift in marketing it is thus not very clear what the shift is from and even less clear what the shift is to" Mattson, However, in trying to understand the basis of relationship marketing "there are no nice neat stages" Turnbull, Cunningham, and Ford, Mattsson thus comments on the unrelated nature of the various streams of work in the area — the IMP group, the Nordic school, and the Anglo-Australian approach — and acknowledges the lack of co-ordination between the research areas and describing this as scientific myopia.
Whitley and Gopinath and Hoffman discuss why management research becomes fragmented. They argue that it is due to a lack of co-ordination and dialogue between research streams, epistemological differences in approach, the varying needs of rigour and relevance, and the incompatible nature of recognition and reward systems between the various interest groups.
They also demonstrate that this is not a unique feature of the field of marketing, so it is not too surprising if different explanations are to be found. For this reason the article now moves on to generate a researchable understanding of relationship marketing.
This is achieved by an analysis of the relationship marketing literature. In principle the analysis could be conducted in two main ways.
Firstly by discussing the area in terms of the concepts involved. In this way the concept of, for example, a relationship could be examined from a number of different perspectives e. Alternatively an approach can be used whereby the various research streams are analysed; these are often referred to as 'schools of thought'.
The schools-of-thought approach is more commonly used in the literature e. This method is also followed by Sheth and Parvatiyarone of whose specific objectives was to provide a point of reference for research in the field. The schools- of-thought approach suggested by Sheth and Parvatiyar will, therefore, be used in this paper.
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In the following we therefore review independently the literature that has been the result of each of the different relationship marketing schools in order to determine the nature of said schools.
One school of thought originated from the field of services marketing: The Nordic school appeared in the late s in response to perceived shortcomings in the transactional approach to marketing.
Another research group with links to Scandinavia is the Industrial or International Marketing and Purchasing IMP group that is associated with business-to-business markets and the 10 understanding of organisational relationships Turnbull, Ford, and Cunningham, As with the Nordic school this group of researchers formed in the s, identifying the distinctive characteristics of business-to-business relationships and the factors that caused these relationships to evolve.
The IMP group focuses on the interaction between companies on the basis that transactions are not isolated events but part of a continual stream of engagement Gummesson, The interaction takes place within the context of a relationship and this, in turn, is part of a network of relationships within which the two companies are positioned Wensley, The North American approach derives from a heavy emphasis on customer service, often via a dyadic relationship, and it is in this sense that Sheth discusses a definition of relationship marketing with respect to the customer and supplier only.
Payne defines the Nordic approach as including the services and IMP traditions. Ambler and Styles discuss this in more detail. Brodie, Coviello, Brookes, and Little expand the discussion and identify six streams of research in relationship marketing. They differentiate the IMP work into two areas, namely that of the interaction between buyers and sellers and that of the network approach describing relationships between firms within industries and markets. They also identify streams of research associated with channel efficiency and effectiveness, the role of value within chains, and the impact of IT on relationships.
Despite its prominence they do not include the Anglo- Australian school. This brief analysis suggests that there are numerous potential permutations available for analysis. Whilst there is no overarching explanation, the approach followed is to address the leading schools of thought: But before the article moves on to do this, however, a number of mid-range perspectives will be discussed in some detail.
Mid-Range Perspectives As discussed, relationship marketing is a diverse field with no single best explanation.CRM Customer Relationship Management - Marketing Video Lecture by Prof Vijay Prakash Anand
As the debate has proliferated there have been attempts to postrationalise the body of work to 12 provide a more unified explanation Aijo, ; Eggert and Stieff, ; Mattsson, ; Palmer, ; Pels, Coviello, and Brodie, Mattsson has proposed that there are various types of relationship marketing; these he refers to as limited and extended.
The limited view, he proposes, is essentially an elaboration of the transactional marketing approach. In his discussion of the extended view of relationship marketing he suggests that this is more aligned with a network or relationship perspective of marketing.
Berry and Palmer largely align with this view, but also introduce and support the notion that there is a philosophical element underlying the adoption of relationship marketing practices. Eggert and Stieff have built on this by introducing the idea that relationship marketing can be seen as behavioural or attitudinal. The behavioural approach involves a series of transactions on behalf of the seller designed to achieve repeat transactions through a process of interaction with the buyer, typically driven by economic goals rather than including some of the wider aspects of the exchange such as customer satisfaction.
This aligns with the tactical or marketing mix plus approach suggested by Palmer and Mattsson. As a contrast to this Eggert and Stieff suggest the alternative is the attitudinal perspective. The relationship is characterised not by the desire of the seller to achieve a transaction or series of transactions, but the motivation to achieve a state of mutual acknowledgement that the relationship exists Bliemel and Eggert, In the business-to-consumer area there is some empirical evidence to support these contentions from the discussion of loyalty schemes by Hart, Smith, Sparks, and Tzokas and of purchasing clubs by Liebermann Rather relationship and transaction marketing are concurrently practiced with firms adopting mid- range positions appropriate to the context in which they operate.
The table is based upon the article of Brodie, Coviello, Brookes, and Little In business-to-business markets, buyers and sellers are fewer but larger and transaction values are greater and, therefore, of higher significance. An early theme emerging was that in such markets transactions are not discrete but occur as part of a continuing stream of interaction between organisations.
With changes in the external environment, such as market concentration, higher switching costs, and increased perceptions of risk, buyers and suppliers actively sought to change the nature of the relationship from a basis of competition to co-operation as a strategy of risk reduction Turnbull, Ford, and Cunningham, The interaction between companies, and many individuals within companies, constitutes the relationship.
This is the unit of analysis, rather than the transaction.
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They are dyadic in nature, but multiple relationships between buyers, suppliers, and other firms aggregate into networks. This is the primary distinction between relationships and networks. The challenge for managers is to manage individual relationships in the short term, but also to manage the long-term portfolio or network of supplier and customer relationships.
The ability of managers to do this determines the ability of the company to compete. This moves competition away from a narrow definition of industries or markets, as in industrial organisation economics Bain, and the thinking inherent in transaction marketing.
Competitive advantage can be gained from the appropriate selection and management of network partners. According to this group it is possible to identify four conceptual cornerstones of relationship marketing.
The Nordic School Characteristically as markets mature and technologies within those markets converge and become common the opportunities for differentiation decrease Porter, The management of relationships via the process rather than the conventional marketing mix is thus the focus. The Nordic school identifies three core processes. The interaction process is shared with the IMP group in the management of the relationship.
Additional processes are those of dialogue and value. The dialogue process is necessary as a means to support the successful establishment, maintenance, and enhancement of the interaction process Schultz, Tannenbaum, and Lauterborn The perception of value by the buyer is important to the understanding of the value delivered by the interaction process; perceived value must at least equal the value that is sacrificed.
The value process seeks to ensure that value is created and perceived to be delivered to the customer. The Anglo-Australian Approach This perspective sees traditional marketing as being built upon, and enhanced by, quality and service to form a comprehensive approach to delivering increasing levels of value to customers in enduring relationships with the company Christopher, Payne, and Ballantyne, As with the other traditions this is regarded as a holistic or integrative approach to business, operating in a cross-functional way to provide customer satisfaction and increasing levels of value.
A prominent feature is the normative definition of six markets or stakeholder groups that the firm should address in varying degrees to achieve its objectives Figure 1. The six market model Source: Christopher, Payne, and Ballantyne Quality initiatives were a common feature of businesses through the s as, in particular, Japanese management techniques became more widely adopted. This was usually associated with the manufacturing function as a way of improving the physical quality of products.
Similarly, customer service achieved heightened levels of popularity, particularly in the financial services sector, as companies with largely similar products sought a means of differentiation. These developments met with mixed success, though. Total quality management was mainly seen as the domain of manufacturing and operations Ballantyne, Product quality improved and costs were consequently lowered as quality techniques became more universal, so competitive advantage and differentiation on the basis of quality, and indirectly lower price, began to diminish Porter, Marketers, on the one hand, are the service promise makers and logistics, on the other hand, are the service promise providers.
Also important is the personal commitment of individuals to provide service, which may be variable due to misalignment of strategic intent, confusing communications, and ill trained and poorly committed staff. The major components of each of these schools of thought are compared with each other and to transaction marketing in Table 2. However, it is possible to outline a number of broad directions for future research. For example, building upon Cooper, Gardner, and Pullinsa bibliometric study could be carried out in order to assess the current state of relationship marketing.
A list of key words for searching the abstracts of articles in top marketing journals and the most cited articles in the relationship marketing literature could be generated.
Conclusions as to whether or not there is now a consistent theory of what constitutes relationship marketing could then be reached based upon upon statistical analysis of the cites. In other words, do we have a dominant paradigm underlying relationship marketing, or is relationship marketing in a state of transition?
In contrast to earlier studies now dating back to the mids, articles from from the European and Australasian marketing literature would be included. Related to this research direction is the examination of the academic and the managerial output of the different relationship marketing schools, for example, in terms of research methodologies, research discoveries, and best practice. The Effective Implementation of Relationship Marketing If relationship marketing apparently is so important then how do we best design for its implementation?
Researchers could seek to develop more knowledge on relationship quality and the relations between relationship quality, customer retention, and shareholder value. For 21 example, relationship marketing as a concept has been well discussed and widely promoted to the marketing profession. The question arises of how relationship marketing can be characterised in practice. What do relationship marketers do that is different from or better than transaction marketers, and are there any practices that are characteristic of relational practice?
How can relationship marketing be identified, and if there are variations in practice how can these be further delineated? The Continuum of Relationship Marketing? Yet a third avenue would be to consider in more detail the notion of relationships expressed as a continuum with transactional at one pole and relational at another e. This implies that the transition from one style to another is incremental. If it is bilateral decision then both parties retrieve the invested amount and resources.
Supplier exits relationship in case of failure to contribute sales volume or profit. Customer ends relationship unilaterally due to changes in product requirement, repeated servicing failure, etc.
Dissolution can be avoided by reducing cost-to-serve. Why a Business Wants Relationship with its Customers? Every business regards its customers as a lifetime stream of revenue; losing a single customer can cost the business very high.
Lifetime Value LTV for a customer is considered to analyze the effectiveness of a particular marketing channel. A business can generate greater sales volume and in turn greater revenue if it knows its customers well and have good relationship with them. Thus, solely for the economic purpose, every business wants to have healthy relationships with their customers.
Relationship Management Theories There are various schools of thoughts with different theories of relationship management. Buyer-seller relationships are normally long-term and close. Relationships are composed of interpersonal bond, connections among businesses, and strengths or weaknesses of the business. The businesses chose the mode and the manner of interaction with the entities at various levels of importance.
Theory by Nordic School A Scandinavian services marketing group, named The Nordic School, emphasizes on supplier-customer relationship. Customer provides information and supplier provides solution.
Theory by Anglo-Australian School It states that relationships are important not only from the viewpoint of customers but also from the angle of stakeholders of the business such as employees, suppliers, and government. Theory by North American School According to this theory, good relationships reduce costs significantly.