Assignment 220
Delp10
B207BPowerpoint-Week11.pptxB207B
Shaping Business Opportunities II
Block 3- Reading 16
Relationship marketing
Learning outcomes
This reading starts by defining relationship marketing, and considers its benefits and some important related concepts
It then examines different types of relationships, before discussing relationship marketing in business-to-business contexts, for which relationship marketing is regarded as particularly important.
Finally, the reading ends with a consideration of the conditions under which relational and transactional approaches are more suited.
Reading 16: Relationship Marketing
Relationship marketing
Relationship marketing is about developing repeat purchases or exchanges with customers over the long-term, rather than merely promoting one-off transactions. These contrasting types of exchange are sometimes referred to as ‘collaborative exchanges’ and ‘discrete exchanges’, respectively.
Relationship marketing represents a shift from a combative to a collaborate mindset between companies and their customers, while simultaneously maintaining an awareness of profit as a driver and recognising that customers vary in their degree of profitability.
Reading 16: Relationship Marketing
Benefits of relationship marketing
It is more cost-effective to retain than replenish customers
Retaining customers provides profit over the customer lifetime.
Additional benefits of relationship marketing include:
long-term customers
being able to help improve production and delivery, thereby enhancing the quality of an offering; increased understanding of customers;
less price sensitivity; and greater predictability of outcomes as well as profitability.
Reading 16: Relationship Marketing
Customer lifetime value/ Equity
One of the ‘fundamental goals’ of relationship marketing is usually said to be ‘maximising the lifetime value of a customer.
The concept of customer lifetime value – ‘the value of the entire stream of purchases a customer makes over a lifetime of patronage focuses on the value of customers rather than the brand.
Customer equity is ‘the sum of the lifetime values of all the firm’s customers, across all the firm’s brands’
Reading 16: Relationship Marketing
Customer lifetime value /Equity
Recognising the value of customer equity helps to ensure that the impact of enhancements to products or services to improve customer satisfaction are taken into account when considering the costs of the enhancements.
Product or service enhancements can boost loyalty, especially when they are particularly appealing to heavier users of the brand.
Reading 16: Relationship Marketing
Customer loyalty
The aim of customer relationship management is ‘to foster loyalty and repeat purchasing
Loyalty not only encourages repeat purchasing but can insulate companies from pressures to lower prices.
Reading 16: Relationship Marketing
Customer value and customer satisfaction
While customer satisfaction is believed to feed loyalty, the relationships between satisfaction, loyalty and profit are not straightforward.
Customer satisfaction does not guarantee loyalty or customer retention and vice versa.
Customers may switch brands, vary the brands they purchase or buy a variety of brands.
Buying multiple brands rather than remaining loyal to one is more common
Reading 16: Relationship Marketing
Service-dominant logic
The two central ideas of S-D logic are:
It reconceptualises marketing as service-for-service exchange (rather than the exchange of goods-for-money or goods-for-goods)
It regards value as being co-created by both parties to an exchange, rather than being created and delivered by only one.
Reading 16: Relationship Marketing
The axioms of S-D logic
Service is the fundamental basis of exchange
Value is cocreated by multiple actors, always including the beneficiary
All social and economic actors are resource integrators
Value is always uniquely and phenomenologically determined by the beneficiary
Value cocreation is coordinated through actor-generated institutions and institutional arrangements
Reading 16: Relationship Marketing
Types of relationship- Dwyer
Dwyer et al. (1987, p. 15) distinguish three types of relationship beyond discrete exchanges:
seller-maintained (an asymmetric relationship)
buyer-maintained (an asymmetric relationship)
bilateral (in which both parties are highly motivated, for example, in business-to-business contexts).
Reading 16: Relationship Marketing
Types of relationships- Ladder of loyalty
Reading 16: Relationship Marketing
Types of relationships- Life cycle
awareness – recognition by one party that another party is a potential exchange partner
exploration – the potential exchange partners consider and conduct a trial exchange
expansion – the benefits from exchange and the interdependence of the exchange partners increase
commitment – loyalty emerges
dissolution – withdrawal or disengagement.
Reading 16: Relationship Marketing
Business to business relationships
Relationship marketing is seen as particularly important for business-tobusiness relationships because:
they take longer to establish,
are longerlasting,
involve higher switching costs
affect outcomes to a greater extent than for business-to-consumer relationships
Reading 16: Relationship Marketing
Drivers affecting strategic decision-making
Reading 16: Relationship Marketing
Block 3- Reading 17
Internal marketing
Internal marketing
Internal marketing is marketing conducted within an organisation to encourage staff’s identification with the brand and improve their customer oriented behaviour in representing and communicating the brand externally to consumers.
For a brand identity to be communicated consistently and credibly to external stakeholders, it must be understood an correctly enacted by staff.
Reading 17: Internal Marketing
Benefits of internal marketing
It helps to promote a coherent brand identity: A deep understanding of the brand and identification with it within an organisation helps staff to convey a coherent brand identity externally. This is particularly important for service organisations which rely heavily on staff’s behaviour and attitudes for expressing the brand identity.
It provides a focus for staff’s diverse organisational role and activities: Having a clear understanding of the organisation’s goals and brand helps staff appreciate how their jobs contribute towards them and provides a unifying focus for staff across different functions within the organisation.
Reading 17: Internal Marketing
Benefits of internal marketing
It supports relationship building with customers: Person-to-person interactions between customers and staff are better able to build relationships and stimulate loyalty than are person-to-organisation interactions.
It enables staff to feed back information to the organisation and contribute ideas to improve customer-orientation: Frontline staff can be valuable sources of information about consumers and competitors and help organisations to address consumers’ needs more successfully. They can also play a vital role in collecting customer feedback data that can be used to turn customer detractors into promoters of an organisation or brand.
Reading 17: Internal Marketing
The role and impact of staff
The relationship between staff and consumers is at the ‘heart of the brand experience’ with staff behaviour key to creating value.
Consumer-facing staff represent the brand to consumers and affect how they perceive it.
Also other staff might not have frontline roles can also influence perceptions of their organisation’s brand in technology-mediated organizations.
For example, the ease with which you might engage with a retail brand’s online ordering system or an airline’s automated check-in and bag drop system at an airport.
Reading 17: Internal Marketing
The role and impact of staff
Small changes can improve the service or save costs can lead to a virtuous or vicious circle, having (respectively) either a positive or negative impact on perceptions of the brand by both customers and staff
For example, a jeweller might offer free gift wrapping to customers, which increases the value they receive and their gratitude to staff, which in turn makes staff feel appreciated and increases their job satisfaction, creating a virtuous circle.
Reading 17: Internal Marketing
The role and impact of staff
Achieving a strong customer-focus and consistent brand portrayal throughout an organisation also involves hiring suitable staff whose values align with those of the organisation.
This highlights again the importance of integration of functions, as the human resources function is important in recruiting employees who fit the role and the brand’s or organisation’s values.
Reading 17: Internal Marketing
The role and impact of staff
Marketing also needs to work with human resources and other organisational functions to motivate and inspire staff to provide excellent customer service.
They have to believe in the brand to be able to deliver the brand’s promise authentically to customers.
As with relationship marketing it is often more cost effective to retain experienced and committed staff than constantly replacing them.
Reading 17: Internal Marketing
Internal marketing communication
The better informed and aligned staff are with their employer’s brand, the more likely they are to respond in the brand’s best interests.
The need for two-way communication in internal marketing has long been recognised.
A lack of clarity among frontline employees about their roles and responsibilities can deter them from undertaking any type of discretionary behaviour.
Effective internal marketing also facilitates innovation through feeding back staff’s experience and expertise to improve customer service and the organisation’s offering and operations.
Reading 17: Internal Marketing
Internal communication
Welch and Jackson see the interrelated dimensions as corresponding to the following four levels of internal communication:
Line management communication – relating to the management of daily activities.
Internal team peer communication – relating to discussion of team tasks.
Internal project peer communication – relating to the achievement of project goals.
Internal corporate communication – relating to building employee engagement.
Reading 17: Internal Marketing
Unfair customers
Staff also need appropriate support from management.
You are most likely familiar with the mantra ‘the customer is always right’ and although the sentiment behind it reflects the importance of being customer-focused.
But there are occasions when a customer may be unreasonable, abusive or plain wrong.
Reading 17: Internal Marketing
Unfair customers
The following types of unfair cusomters:
Verbal abusers
Blamers
Rule breakers
Rule makers
Opportunists
returnaholics
Reading 17: Internal Marketing
Unfair customers
Recommendations for dealing with unfair customers. included:
dealing ‘fairly but firmly’ with unfair customers
encouraging managers to intervene to deal with unfair customers when necessary
planning in advance by identifying situations in which unfair customer behaviour might arise
training both frontline staff and managers how best to prevent, manage and communicate with unfair customers
using explanations as a communication strategy (which helps reduce
negative outcomes but might not always work with unfair customers)
terminating relationships with unfair customers if necessary.
Reading 17: Internal Marketing
Types of employees
Brand champions are the ones who will enthuse colleagues and consumers about the brand. Many are likely to have been with the organisation for a long time, but long service does not guarantee this level of commitment.
Brand agnostics are employees who are interested but not committed. The organisation’s goal should be to try to convert this group into becoming brand champions.
Brand cynics are not convinced by the brand concept and will be hard to convert.
Brand saboteurs actively work against the brand.
Reading 17: Internal Marketing
