1. CHAPTER TWO Characteristics of RM
Relationship Marketing Management Ed Little and Ebi Marandi Thomson Learning©

2. Learning Objectives What is a relationship?
CHAPTER 2 – Characteristics of RM
Learning Objectives
What is a relationship?
Relationship Marketing (RM) Vs. Transactional Marketing (TM)
Definition and main components of RM
The main aim of RM
Applicability to different markets
Relationship Marketing Management Ed Little and Ebi Marandi Thomson Learning©

3. Relationship Management in Banking Industry

4. Source: www.atomicbox.com

5. What is RM?
“An alternative strategy to the traditional marketing mix approach, as a means of obtaining sustainable competitive advantage and the best way to retain customers in the long run.”
“The processes involved and how far within the micro and macro environments of a company relationship marketing should be applied are under debate, and will continue to be for some time to come.”
Little & Marandi, 2003

6. What is RM? Marketing, in relational terms means:
CHAPTER 2 – Characteristics of RM
What is RM?
Marketing, in relational terms means:
“To establish, maintain and enhance relationships with customers and other partners, at a profit, so that the objectives
of the parties involved are met. This is achieved by mutual exchange and fulfillment of promises.”
Gronroos 1997
Relationship Marketing Management Ed Little and Ebi Marandi Thomson Learning©

7. CHAPTER 2 – Characteristics of RM
What is a relationship?
“..just merely a series of transactions where supplier & buyer do not really know each other does not constitute a relationship.”
“..voluntary repeat business between a supplier and a customer where the behaviour is planned, cooperative, intended to continue for mutual benefit and is perceived by both parties as a relationship.”
Little & Marandi 2003
Relationship Marketing Management Ed Little and Ebi Marandi Thomson Learning©

8. Stakeholders Internal markets Influence markets Customer markets
CHAPTER 2 – Characteristics of RM
Stakeholders
For RM to be successful, a long term and mutually trusting & committed relationship with other stakeholders is also required.
Internal
markets
Influence
markets
Customer
markets
Referral
markets
Employee
markets
Supplier
markets
Christopher, Payne & Ballantyne 1991
Relationship Marketing Management Ed Little and Ebi Marandi Thomson Learning©

9. Transactional marketing (TM)
CHAPTER 2 – Characteristics of RM
Transactional marketing (TM)
Focus on single sale
Orientation on product features
Short time scale
Little emphasis on customer service
Limited customer commitment
Moderate customer contact
Quality primarily a concern of production
Based on Christopher et al 1991
Relationship Marketing Management Ed Little and Ebi Marandi Thomson Learning©

10. Deciding who to have a relationship with…….
Table 2.1 :Textbook, Gronroos, 2000

11. Relationship Marketing (RM)
CHAPTER 2 – Characteristics of RM
Relationship Marketing (RM)
Focus on customer retention
Orientation on product benefits
Long time scale
High customer service
High customer commitment
High customer contact
Quality is the concern of all
Conditions: the nature of the service, the consumer & the situation
Characteristics of nature: importance, variability, complexity & involvement
Industry: Banking, insurance & hairstyling services
Based on Christopher et al 1991
Relationship Marketing Management Ed Little and Ebi Marandi Thomson Learning©

12. Movement of salad tomatoes through a traditional marketing system, Dominican Republic, 1975

13. CHAPTER 2 – Characteristics of RM
What is true loyalty?
“A customer’s willingness to continue patronising a firm
over the long term, purchasing and using its goods and services
on a repeated and preferably exclusive basis, and voluntarily
recommending the firm’s products to friends and associates.”
Lovelock et al 1999
Relationship Marketing Management Ed Little and Ebi Marandi Thomson Learning©

14. Characteristics of RM (Gronroos,1996)
CHAPTER 2 – Characteristics of RM
Characteristics of RM (Gronroos,1996)
Long term orientation, win-win situation is the key feature, collaboration & creation of mutual benefits
Commitment and fulfillment of promises ie:DHL service
Customer share, not market share ie: private bankers
Customer lifetime value (note that maintaining customer can be expensive, so long-term customers should be carefully selected)
Two-way dialogue & communication (treat customers as strategic partners built via networking & interaction)
Customisation (traditional marketing of ‘one size fits all’ no longer applies; RM creates value added services & products – but how???)
Relationship Marketing Management Ed Little and Ebi Marandi Thomson Learning©

15. Approaches to customisation
CHAPTER 2 – Characteristics of RM
Approaches to customisation
Collaborative (used when customers cannot easily articulate their requirements, and where size, fit, functionality, performance are highly desirable features.)
Adaptive (ie: interchangeable mobile phone cover)
Cosmetic (ie: printing of customer’s name or logo on a standard product like T-shirt)
Transparent (a situation where unique goods or services are offered to customers without informing them explicitly that the offering has been customised ie: e-catalogue clothing retailer.
Relationship Marketing Management Ed Little and Ebi Marandi Thomson Learning©

16. The RM-TM continuum RM TM Low customer anxiety High customer anxiety
CHAPTER 2 – Characteristics of RM
The RM-TM continuum
RM TM
High customer anxiety
High degree of contact
Importance of confidence, social
and special benefits
Customers in favour of relationships
Low customer anxiety
High contact unnecessary
Standard product
Customers not seeking
relationships
Relationship Marketing Management Ed Little and Ebi Marandi Thomson Learning©

17. Levels of RM Tactical (tools for promotion)
CHAPTER 2 – Characteristics of RM
Levels of RM
Tactical (tools for promotion)
Strategic (customer are tied in by a mixture of legal, economic, technological, geographical and time bonds)
Philosophical (focusing on customer needs and operating from a genuine customer orientation platform, concentrating on customer relationship life cycle)
Palmer 1996
Relationship Marketing Management Ed Little and Ebi Marandi Thomson Learning©

18. Benefits of RM Suppliers Customers Added value Increased loyalty
CHAPTER 2 – Characteristics of RM
Benefits of RM
Suppliers
Added value
Increased loyalty
Cross-selling (customer share)
Premium pricing
Lower promotional costs
Customers
High quality service
Customised products
Reduced anxiety
Feeling valued
Relationship Marketing Management Ed Little and Ebi Marandi Thomson Learning©

19. CHAPTER 2 – Characteristics of RM
Disadvantages of RM
Loss of control – in resources, activities and intentions
Indeterminateness – relationship are subjected to change via historical experience, present exchanges and future expectation
Resource demand - investment and maintenance cost
Preclusion of other opportunities – priortise the use of limited resources.
Unexpected demands – linkage of networks bring with it obligations or expectation by others of specific behaviours.
Belois 1998
Relationship Marketing Management Ed Little and Ebi Marandi Thomson Learning©

20. Stage one: Making the case for RM Stage two: Identifying critical RM
Relationship Marketing Management
Stage one:
Making the
case for RM
Stage two:
Identifying
critical RM
success factors
Stage three:
Developing RM practices
Planning
Ethics
Monitoring
Implementing
Stage four:
Adapting to
context-specific
conditions

21. CASE
You travelled to Hong Kong with your best friend. You book a 4 star hotel room via BOOKING.com, an online hotel intermediary. Upon arrival at HAPPY HOTEL, you found out that the hotel was overbooked. The front desk staff explained that the system might have experienced temporary failure that led to the hotel overlooking your booking. YOU ARE VERY DISSAPOINTED.
What is a relationship and how do you know if you are in one? Do you consider yourself in a relationship with HAPPY HOTEL?
If you are the manager of HAPPY HOTEL what are the action steps should you follow, given that the situation happened already?