RELATIONSHIP MARKETING
ARIZONA STATE UNIVERSITY
MKT 402 - CONSUMER BEHAVIOR
WEEK 4
1. Definition of Relationship Marketing
Most opinions say that relationship marketing (RM) is a philosophy or culture that
should permeate the entire organization. It is a combination of business processes and
technology used to understand customers about who they are, what they do, what they like
and turn them into loyal customers who always return to the company. It is a systematic
approach to managing mutually beneficial relationships between a company and its
customers.
Hennig Thurau and Hansen (2000) state that the marketing concept is built on four
different but interconnected things, namely: The behavioral approach includes models that
relate to relationship marketing such as the constructs of trust, commitment, satisfaction and
customer retention. In contrast, network theory focuses on the interactive character of
relationships in the field of business to business marketing and deals with the perspective of
inter-organizational relationships.
In the network model, firms engage in a number of complex long-term management
arrangements called networks of relationships. Meanwhile, the new institutional economics
approach tries to use modern economic theory to explain The development and constraints
of relationships, which include transaction cost theory and agency theory, aim to minimize
the costs of structuring and managing relationships. The emergence of thinking towards
relationship marketing is an integrated effort to identify, maintain and build networks with
individual consumers. The network is continuously strengthened to benefit both parties
through interactive contact, is individualized and provides added value for the long term
(Peterson, 1995).
The birth of relationship marketing represents an important change in value system
and philosophical orientation. It is characterized by a new marketing theory that states that
customer satisfaction is still necessary, but no longer sufficient as the sole purpose of
marketing. The goal of developing relationship marketing is based on a structure of long-
term benefits and bonds between buyers and sellers. The variable that marks it is the network
relationship which includes trust, commitment and social norms.
Berry (1983) the marketing expert who first introduced the term and definition of
relationship marketing provides the following definition: "Relationship Marketing is
attracting, maintaining and in multi-service organizations- enhancing customer
relationships the attraction of new customers is merely the first step in the marketing
process, cementing the relationship, transforming indifferent customers into loyal ones,
serving customers as clients-this is marketing too."
The definition above, emphasizes that relationship marketing is an advanced stage to
reach customers This is done by building relationships with customers so that they remain
loyal to the company. Based on this, Berry and Parasuraman (1991) state that "relationship
marketing concerns attracting, developing, and retaning customer relationships."
In the same way, Morgan and Hunt (1994) suggest that: "relationship marketing
refers to all marketing activities directed toward establishing, developing, and maintaining
successful relationshipsl exchanges." Parvatiyar and Sheth (1994) view "relationship
marketing as an orientation that develops close interactions with selected customers,
suppliers and competitors to create value through cooperative efforts." Some other views on
relational marketing as presented by Bicket (1992) state that "relational marketing is
database marketing that emphasizes the marketing aspects associated with database efforts."
Based on the existing services marketing literature at that time, Grönroos (1991)
identified and incorporated profitable outcomes for sellers and buyers by proposing that:
"relationship marketing acts to establish, maintain, and enhance relationships with
customers and other parties at a profit so that the objectives of the parties involved are met.
This is done by mutual exchange and fulfillment of promises."
Furthermore, Gummesson's opinion (1999: 236) related to relational relationships
built in service organizations explains that: "Interaction has stood out as a central concept
in service marketing and it also stands out in its contributions to relationship marketing.
Most literature on service marketing is focused on the provider. The fact that Marketing and
production must work hand in hand is at the core of service marketing theory and so is
quality. The concepts of the service encounter and service quality support the effort of
modern quality management to bridge the gap between marketing and technical functions.
Service marketing is the mother of internal marketing which has subsequently earned the
status of being generally applicable. As many services consist of data processing and
transmission, the electronic relationship is of primary importance for service companies."
In essence, interaction is a key concept in service marketing and contributes to
relationship marketing. A lot of service marketing literature tries to focus on the service
encounter, which is the interaction between the customer and the service provider. In fact,
marketing and production theories must work together in the core theory of service
marketing to produce quality products/services. The concepts of service encounter and
service quality support modern quality management efforts and bridge the gap between
marketing and technical functions. Service marketing is the parent of internal marketing
whose results can be applied generally. Overall, service companies need data transmission
and processing in the electronic relationship, and this is very important.
Gummesson (1999) notes that relationship marketing is about relationships, networks
and interactions. From a practitioner's perspective, it is considered as a strategy to enhance
existing relationships and expand the depth of relationships (by investing more money in the
company's products and services) and by concentrating business on the company's products
and services the most profitable customers. This is marketing-oriented management, not
limited to the marketing or sales department alone but becomes part of the total management
of the company. Many financial services companies use Customer Relationship Marketing
(CRM) or Business Relationship Marketing (BRM) systems as the basis and deliverer of
relationship marketing in their management strategies.
Chan (2003) states that the main purpose of relationship marketing is actually to find
the Life Time Value (LTV) of customers. After the Life Time Value (LTV) is obtained, the
next goal is how to make the Life Time Value (LTV) of each customer group can be
continuously enlarged from year to year. After that, the third goal is how to use the profit
gained from the first two goals to get new customers at low cost.
Thus the long-term goal is to generate continuous profits from two groups of
customers, namely current customers and new customers. Zeithaml and Bitner (2003) state
that the main objective of relationship marketing is to build and maintain committed
customers who are profitable for the company and at the same time to minimize the time and
effort spent on less profitable customers.
The Economic, Resource and Social Contents of Relationship model presented by
Morgan (2000: 483) shows the influence of social content on trust and commitment, the
influence of resource content on commitment, the influence of trust on commitment and
cooperation, and the influence of commitment on commitment cooperation. Then, in this
study Morgan's model was developed by combining several theories and previous research.
The developed model as shown in The effect of economic content on trust is developed from
the theory of Doney and Cannon (1997) and Lin et al. (2003). Doney and Cannon (1997)
state that customers are motivated to believe in service providers who offer economic
content as trustworthy parties because the willingness to provide this offer is interpreted as a
capability of the service provider. This capability can lead to customer trust, which means an
assessment of the bank's ability to fulfill its obligations.
Doney and Cannon's theory is reinforced by the research of Lin et al. (2003) which
found that economic content has a positive and significant effect on trust. The effect of
economic content on satisfaction is developed from the findings of Liang and Wang (2005).
The results of his research found that economic content significantly affects customer
satisfaction. Customers are satisfied because according to their assessment the bank can
provide economic benefits that exceed their expectations. Banks that can provide economic
content to customers by providing benefits that are greater than the sacrifices incurred will
lead to customer satisfaction. This factor encourages customer consumption motivation and
gains their loyalty by using pricing decisions such as higher interest rates for larger accounts
and stored in banks in the longer term. In addition, the results also show that individual
customers and business customers who have established a relationship with the bank are
more likely to be loyal to the bank. A customer who has been in a relationship for five years
will benefit more than a customer who has only been in a relationship for one year. Satisfied
customers will be willing to establish long-term relationships and will be more valuable to
the bank t h a n new customers because old customers have higher account balances,
relatively lower costs, and tend to use other products and services.
The effect of resource content on trust was developed from research conducted by
Lacey (2003) which found that resource content has a significant effect on trust. Companies
that have resource content will make customers trust the company and are willing to develop
relationships. Resource content affects trust because resource content reduces uncertainty,
increases customer security, and strengthens customer perceptions of the company's
reputation. The effect of resource content on satisfaction was developed by Gwinner et al.
(1988) who found that resource content has a significant effect on satisfaction. Resource
content is perceived as part of service performance and the benefits received by customers
can affect customer satisfaction with services. Therefore, resource content is considered
valuable and important to customers.
The effect of satisfaction on commitment was developed from the study of
Boonajsevee (2005), and Hennig-Thurau et al. (2002). Their results show that increased
customer satisfaction will build a stronger commitment to a bank. So customers will be
satisfied if the bank can meet or exceed their expectations and are less likely to develop a
relationship with the bank. A new bank with another bank if it already has a strong emotional
attachment to a particular bank.
The effect of commitment on relationship intention was developed from research by
Moorman et al. (1993) which states that customers who are committed to a relationship can
have a greater tendency to want to stay in a relationship with the company because their
need to stay is consistent with their commitment. Customer commitment is evidence of the
existence of emotions that transform repeat purchasing behavior into a relationship. If
customers do not feel a sense of closeness to a bank, then the relationship between
customers and bank employees does not have the characteristics of a relationship.
The findings of Mormaan et al. (1993) are supported by a study conducted by
Venetis and Ghauri (2004). Venetis and Ghauri use commitment as an intermediate variable
that plays an important role in forming long-term relationships. The findings in this study
indicate that commitment has a significant effect on relationship intention. In other words,
relationship intention is formed from the commitment of the parties involved in relationship
intention.
2. Relationship Quality
This research focuses on "relationship quality" as a relationship outcome and an
overall means of assessing the strength of the relationship between two firms (Garbarino and
Johnson, 1999; Smith, 1998). There has been no clear consensus in the literature on the
overall dimensions of "relationship quality" (Dorsch et al, 1998;. Kumar et al, 1995; Bejou
et al, 1998;. Hennig-Thurau et al,, 2002). The importance of relationship satisfaction and
trust as indicators of higher order relationship quality constructs, has been emphasized by
various authors (Crosby et al, 1990; Dwyer et al, 1987; Shamdasani and Balakrishnan,
2000; Hennig-Thurau et al, 2001). Other researchers have added relationship commitment as
a dimension of relationship quality (Hennig-Thurau and Klee, 1997; Leuthesser, 1997;
Dorsch et al, 1998; Hennig-Thurau et al, 2002; Roberts et al, 2003; Hewett et al, 2002). In
the same context, De Wulf et al. (2001) assumed that better relationship quality would be
accompanied by greater satisfaction, trust, and commitment. This suggests that, although the
three dimensions are different aspects of attitudes, consumers tend to perceive all three
together (Crosby et al, 1990; De Wulf et al, 2001).
On the other hand, Woo and Ennew (2004) conceptualized relationship quality as a
high-level construct of cooperation, adapting to an overall atmosphere of relationship
quality. They provided evidence of a direct and positive influence of relationship quality on
service quality but failed to establish a similar link with satisfaction and behavioral
intentions.
Hennig-Thurau et al (2002), used three core variables (satisfaction, trust, and
commitment) as relationship satisfaction, so that all three are considered to have a positive
effect on loyalty as a relationship outcome. Relationship satisfaction is seen as assessing the
overall relationship with the supplier company; trust is seen as the client's level of
confidence in the integrity of the supplier, and commitment is considered as a positive
influence on loyalty as a relationship outcome lasting desire to buy the company and continue
its relationship with the vendor. Each variable is explored in more detail.
3. Relationship Satisfaction
One of the most important elements in B2B markets, and particularly service markets
such as the banking services industry, is the development of client relationships. The
complexity of products, services and the long-term nature of business relationships in the
banking services industry mean that effective business and relationship satisfaction lies at
the heart of how important banking services marketing is. According to the principles of
relationship marketing, a successful business should be able to improve client relationship
satisfaction. It will thus improve the performance of the company. In the past, relationship
satisfaction has been conceptualized as a prerequisite for relationship quality. Crosby and
Stevens (1987) identified three levels of relationship satisfaction namely: interaction with
personnel, service core, and organization. In their study of insurance customers, Crosby and
Stevens (1987) found that all three levels contributed to overall satisfaction within the
relationship domain. In a business context, relationship satisfaction has been defined as a
positive affective state resulting from a company assessing all aspects of its working
relationships with other companies (Anderson and Narus, 1990; Ganesan, 1994; Dwyer et
al, 1987).
Between satisfaction and relationships are important, but satisfaction does not
automatically lead consumers to repurchase (Reichheld and Aspinall, 1993). Several studies
have examined the relationship between service quality and customer satisfaction, and they
highlight the antecedent role of customer satisfaction in service quality perceptions (Bolton
and Drew, 1991; Boulding et al, 1993). The findings are actually most supportive of reverse
causality (Anderson et al, 1994; Cronin and Taylor, 1992; Dick and Basu, 1994) This
research is in line with De Wulf et al (2001).
This study conceptualized affective satisfaction relationships from different regions
of the country and the results were more rational (Smith and Barclay, 1997). This study
posits the satisfaction relationship as a cumulative variable that is influenced as the
relationship is developed and not as a result of a specific transaction (Anderson et al, 1997).
In addition, in an effort to avoid overlap between perceptions of service quality and
perceptions of relationships, this research examines relationship satisfaction as an overall
(global) relationship assessment.
CONSUMER CULTURE FIT:
1. Consumer Culture-Fit
The application of the concept of globalization to the international world today
brings a very broad range of consequences in every aspect of human life without exception,
including in the business sector with all components that support the business sector.
Currently, managers in order to manage their company organizations need a global vision
and perspective, if they want to achieve success. National and cultural boundaries are no
longer able to inhibit or limit the organization from external competitive pressures, so that
organizational success is largely determined by the ability of managers or leaders to adapt to
an international environment that is not only much wider but also very dynamic and full of
various opportunities and challenges.
In connection with the above, various preparations have been made by many
companies, especially by the majority of companies that have a range of operations in
various countries or better known as Multi National Corporation (MNC), starting from
increasing the competitiveness of the products they produce, providing various knowledge
about the international environment, observing the competitive strategies carried out by their
competitors to policy changes made to the assessment of achievement or performance for a
prospective manager who will be promoted to undergo overseas assignments first
(expatriates), so that they are able and have broader experience with nuances that are very
different from the situation and conditions of the domestic environment. The work that they
have been doing. Their success in carrying out these assignments becomes an assessment of
their achievements for higher positions (promotion). (Avery, Baradwaj, Singer, 2008)
International assignments are becoming increasingly important today and have
become part of the managerial career. career.) As a consequence of As a consequence of
these conditions, cross-cultural leadership competencies are needed in companies that
operate internationally. More obviously, this condition will greatly affect the interaction
between expatriate managers and their local employees, because it requires adaptation by
both managers and employees. For the managers it is very closely related with leadership
style that must be applied as a result of the cultural differences they have. For internal
employees, they must also accept and adjust their behavior to changes in leadership styles
applied by managers who have a global view. Because success in the adjustment of both
parties is the key to success for overall organizational performance. Therefore, the
interaction between cultures must be more intense so that the diffusion and penetration of
cultural values occurs so that there is a high enough adaptation. (Avery, Baradwaj, Singer,
2008) Wallendorf &Reilly in Mowen (1995) provide definition culture is a set of patterns
of behavior that are socially transmitted symbolically through language and other means to
members of a particular society. The ways of living life of a society can be defined as the
culture of that society. Every group society group will culture is a way of life of a society
that is transmitted to its members from one generation to the next. The definition above
shows that culture is a way of life of a society that is transmitted to its members from one
generation to the next. T he process of transmission from generation to generation
undergoes various processes of distortion and penetration of other cultures. This is possible
because information and mobility of members of a society with other members of society
flow without barriers.
In order for culture to continue to evolve, the process of adaptation as described
above continues to need to be carried out. The developing paradigm is that culture is
dynamic and can be the result of a learning process, so the culture of a society does not
present itself. The process of learning and studying one's own culture in a society is called
enculturation. Enculturation causes the culture of a particular society to move dynamically
with the times. Conversely, a society that tends to be difficult to accept new things in society
and tends to maintain the old culture that is no longer relevant is called acculturation.
The culture that exists in a group of people is a set of rules and ways of life. With the
rules and ways of life, members are guided to live a harmonious life. People are introduced
to the existence of good-bad, right-wrong and the expectations of life. With such rules
people will have a foothold for behavior and action. If the actions taken fulfill the rules that
have been outlined, then there will be a feeling of satisfaction (satisfaction) in him in the
course of work and life. Members of society will also feel happy if they are able to fulfill
their social requirements. People will be very happy if they are able to act well according to
the rules of their culture. Culture is therefore a means of satisfying the needs of its members.
There are six dimensions of cultural values in different cultures according to Mc
Carty & Hattwick (1992) as follows:
1) Individual versus collective. There are cultures that prioritize individual values over
community values, and there are cultures that prioritize group values over individual
values.
2) Masculinity/femininity. Looking at how male roles outweigh female roles, or how men
and women divide roles
3) Time orientation. Looks at how community members behave with an orientation to the
past, present or future.
4) Avoiding uncertainty. A society's culture tries to deal with uncertainty and builds beliefs
that can help them deal with it. For example, they believe in and practice religion.
5) Activity orientation. An action-oriented and thought-oriented society.
6) Relationship with nature. How a society treats nature, whether it dominates nature or
creates harmony with nature.
In a certain society, the value orientation above will change in accordance with the
adaptation process that occurs. The values embraced by a society from time to time will
continue to change. Culture is learned, owned and socialized from one generation to another.
Culture is characterized by being conservative, refusing to / difficult to change and wanting
continuity. Trompenaars (1994), a cultural researcher in organizational studies, said that "it
is my belief that you can never understand other cultures. Meanwhile, Hofstede (1984)
conducted "cross-cultural studies" by examining IBM employees in 40 countries as
participants in researching "international differences in work-related values" using the
definition of culture as a way of thinking of human groups that distinguishes members of a
group from other groups, which interacts as a whole from common characteristics affecting
the response of human groups to their environment. Cultural patterns according to Hofstede
(1984) consist of:
a. Uncertainty avoidance
Uncertainty avoidance is the degree to which culture members try to avoid uncertainty.
Members of cultures that are low in certainty avoidance compared to members of cultures
that are high in uncertainty avoidance have less tolerance for uncertainty and ambiguity, they
express high anxiety and require more formal rules, absolute truths and lower tolerance with
others.
In cultures where uncertainty avoidance is high, aggressive behavior is acceptable even
though individuals must restrain aggression by avoiding conflict and competition. People in
cultures with high uncertainty avoidance try to avoid ambiguity and develop rules and rituals
in every possible situation. Uncertainty avoidance is useful in understanding differences
when communicating with strangers. Whereas in cultures where uncertainty avoidance is
high, there is a strong desire to reach a shared consensus.
b. Power Distance
Indicates how much members of institutions and organizations accept unequal power.
Individuals from high power distance cultures will accept power as part of society. As a
result, the superior will consider their subordinates differently from them and vice versa.
Members of a high power distance culture will see power as a basic reality for society. And
emphasize on coercion or referent power. Whereas in cultures with low power distance,
believe that power can only be used to legitimize circumstances.
The power distance dimension focuses on the relationship between people who are at
different statuses. (between superiors and subordinates). Power distance is useful in
understanding behavior with strangers. Low and high power distance exists in all cultures
but tends towards the superior one. Examples of cultures with high power distance are
Egypt, Ethiopia, Ghana, Guatemala, India, Malaysia, Nigeria, Panama, Saudi Arabia, and
Venezuela. Examples of cultures with low power distance are Australia, Canada, Denmark,
Germany, Ireland, Israel, New Zealand, Sweden and the USA.
c. Masculinity-feminity
High masculinity involves placing a high value on strength. In masculinity cultures,
assertiveness regarding quality of life is very low compared to femininity cultures. Cultural
systems with a high masculinity index will emphasize social role differences, performance,
ambition, and independence. Whereas cultural systems with a low masculinity index will
emphasize sex roles, quality of life, service, and interdependence. Hofstede (1983) states
that the comparison between people in femininity culture and people in masculine culture is
stronger in motivation to achieve ideals, work-centered way as the center of life.
d. confucian work dynamism
Hofstede (1983) examined four dimensions, namely individualism-collectivism, power
distance, uncertainty avoidance, masculinity-feminity in studying multinational companies.
These dimensions have a western bias due to the methodology used in the data collection.
In relation to Chinese culture (in 1987 the Chinese Culture Connection there was a
group of researchers led by Michael Bond at the University of China in Hong Kong, testing
Hofstede's (1983) conclusions using his research objects in China. They found four
dimensions of cultural variables namely Confucian work dynamism, integration, human
heartness, and moral discipline. Three of these dimensions are related to the dimensions
studied by Hofstede (1983), namely the relationship of integration with individualism, moral
discipline with power distance and human heartedness with masculinity and feminity. Only
one dimension is not related to Hofstede's (1983) research, namely confusian work
dynamism.
This dimension involves eight values: four positively associated values are
relationship, thrift, persistence and shame and four negatively associated values are:
protection, personalization, respect for tradition and repetition. Hofstede (1983) suggests
four keys namely:
1) Societal stability is based on unequal relationships between individuals
2) The family is the prototype for social organization
3) Consistent behavior
4) Education and hard work
Much of the knowledge about cross-cultural leadership issues originated in situations
where international managers were assigned to America. Graen and Wakabayashi (1994)
examined companies with plants in America and Japan, such as: Toyota. The branch located
in America was organized using Japanese methods or ways with most of its employees
being American, requiring cross-cultural leadership skills to be successful. Such leadership
faces particular problems due to the cultural differences between the two countries. Some of
the issues that arise include:
1) Language differences that cause complicated communication and cooperation at
various managerial levels.
2) Japanese managers and workers perceive that American managers have low
compliance with the company and with work partners.
3) American managers found difficulty with the absence of punishment for violating the
idealized order.
4) American managers see the lack of grandeur of the corporate office as a missing status
symbol, such as: a private office, a separate parking lot, meeting rooms for
management and so on.
5) American managers do not spend their entire career with a single company, whereas
Japanese managers expect to work until retirement with a single company.
Although among various countries there has been a good cultural adjustment to
participatory management, the organization as a whole must adapt the form of participation
to the local culture or local culture. Therefore, it is now necessary for global managers to be
able to flexibly change their approach if they are given overseas assignments and work with
people from different foreign cultures.
In connection with these conditions, currently for companies that are engaged
internationally require people who have "cross-cultural competence" and "cultural
sensitivity", so that a variety of companies that apply various additional requirements in the
recruitment of their prospective employees. Through this, it is expected that their employees
have high adaptability and have reliable cross-cultural leadership competence. (Ratiu in
Weinshall, 1993). The various additional requirements according to, among others: being
able to adapt, be flexible, have a high open-minded nature, have many friends or relations
from different nationalities, master various languages that are internationally often used in
international business operations.
The concept of cultural fit, derived from the theory of fit, is a theory of national
culture and then applied to Information Technology adoption research. The concept of 'fit' or
'suitability' exists in some strategy literature. Fit stems from the concept of 'matching' or
'aligning' organizational resources with environmental opportunities and threats (Bahee
1992; Henderson and Venkatraman 1999; Venkatraman 1989, Venkatraman and Camillus
1984). It is an attempt to find the best way to form a sustainable business strategy by
considering the various components of the organization, which must fit together to produce
optimal performance (Donaldson 2001; Drazin and Van de Ven, 1985; Ginsberg and
Venkatraman, 1985; Venkatraman, 1989). Thus, to achieve optimal performance on B2B
technology adoption in Thailand, it is important for firms to adopt technologies that are
suitable in the cultural context. This research defines 'cultural fit' as the extent to which an
individual is culturally view competition and the use of technology in their culture. Figure 1
provides a graphical illustration of the concept of cultural fit.
Cultural fit can also be used to investigate how technology is transferred from
Western countries so that it can fit into the receiving country, which in this case is Thailand.
Figure 2.2 is a graphical illustration of cultural fit from Hewett et al. (2006) which states
that national culture is an important factor in the relationships established in B2B
relationships. Due to the notion of B2B technology and cultural fit, this study focuses only
on the influence of Thai national culture on business-to-business communication and
relationships in Thailand.
Savanik, John, and Prem (2010), in their empirical study results show that the use
(utilization) of technology developed from the aspect of technical service quality (B2B), is
moderated by user/customer cultural-fit factors as depicted in Figure 2 as follows:
The cultural-fit in the study of Savanik, John, and Prem (2010) consists of:
1) Personal relationship (Hofstede, 1991; Komin, 1991; Lu and Heng, 2009);
2) Long term r e l a t i o n s h i p ( Hofstede and Bond, 1998; Komin, 1991;
Vatanaksadakul and D'ambra, 2006);
3) Inter organizational trust (Hofstede, 1991; Komin, 1991; Ratanasingam and Phan,
2003);
4) Ability to communicate in English (Gipson, 1997; Tetiwat and Huff, 2003);
5) Western cultural influences (Komin, 1991; Richins and Dawson, 1992).
