MANAGEMENT OF CUSTOMER RELATIONSHIPS

Management of Customer Relationships

Table of Content

Introduction3

Task 1:4

The six markets model4

Marketing mix limitation5

Account Based Customer marketing5

Relationship marketing7

Customer relationship satisfaction7

Customer loyalty7

The link between loyalty and profitability8

Profitability segmentation in banks9

Task 2:9

Mobility Marketing10

Viral marketing10

Guerrilla Marketing11

Conclusion and recommendation11

References13

Introduction

To define relationship marketing is to distinguish it from the micro-economic paradigm. At its centre is the concept that customers have continuing value over and above that of individual and discrete transactions. The focus is, therefore, on the relationship rather than the transaction. An early definition of relationship marketing is provided by Grönroos (1990, p. 7):

The role of relationship marketing is to identify, establish, maintain and enhance relationships with customers, at a profit, so that the objectives of all other parties involved are met; and that this is done by a mutual exchange and fulfilment of promises.

Further objectives of relationship marketing include the delivery of sustained or increasing levels of satisfaction, and the retention of those customers by the maintenance and promotion of the relationship (Christopher, 1996; Ravald and Grönroos, 1996).

The reality, however, is that not all customers want or require a relationship with their supplier (Blois, 1996; Jackson, 1985). It is suggested that there exists a continuum of relationships from transaction-based to relationship-based (Dwyer et al., 1987; Easton, 1990; Grönroos, 1994b, 1996; Webster, 1992). Thus, the contrast between relationship marketing and transactional marketing(- otherwise known as traditional, conventional, or 4Ps 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, 1997, p. 456).

Even if relationship marketing has not attained the status of a paradigm, it is at least a well-ordered and distinct concept. However, “there are no nice neat stages” (Turnbull et al., 1996, p. 148) in its development, and it has yet to acquire “uncontested status or meaning” (Buttle, 1996, p. 13). Mattsson (1997) comments on the unrelated nature of the various streams of work in the area and the lack of co-ordination among them, which he describes as “scientific myopia”.

Whitley (1988) and Gopinath and Hoffman (1995) argue that management research becomes fragmented when there is a lack of co-ordination and dialogue between research streams, epistemological differences in approach, varying demand for rigour and relevance, and incompatible recognition and reward systems. They also demonstrate that this is not a unique feature of the field of marketing, so it is not too surprising that different explanations are to be found.

Task 1:

The six markets model

The “six markets” model is arguably the most comprehensive of the three approaches concerned with relationships with traditional outlined above, in that each of the six market domains may be sub-divided in a manner which can cover all major groups (Payne and Holt, 2001). In the following sections of this article we describe the development and subsequent refinement of the model, the development of a planning framework to enable its implementation as a practical management tool, and ...