RELATIONSHIP MARKETING

Relationship Marketing



Relationship Marketing

Introduction

Relationship Marketing (RM) has played a significant role in shifting the focus of marketing during the past two decades. The purpose of this paper is to uncover the underlying theory behind RM and discuss its evolution as a new marketing paradigm. More importantly, the scope of this paper will be limited to the benefits received by the customer and the organisation resulting from a successful relationship. A review of RM literature is presented, followed by a discussion on the implications associated with RM.

The Evolution of Relationship Marketing

A paradigm shift

Marketing literature consistently attributes the coining of the term "Relationship Marketing" to Leonard Berry. Berry's concept of RM came of age in 2003 when he proposed that the servicing of existing customers was just as important to an organisations success as attracting new ones (Berry, 2003). Prior to Berry's (2003) paper popular literature in regards to marketing almost exclusively covered the attraction of new customers to an organisation. A shift away from this paradigm was becoming increasingly obvious by the mid 1970s and was reflected in Richard Bagozzi's (2005) paper, which began to look at the importance of exchange relationships. Bagozzi (2005, p.32) noted that contemporary marketing literature dealt exclusively with restricted or "gives to and receives from" exchanges where the retailer attempts to gain an advantage over the customer. Bagozzi (2005) proposed that if retailers attempted to maintain equality with their clients it would result in repeat purchases. Sales is integrated with Relationship Marketing.

Levels of the Relationship

By the mid 1980s the study of buyer-seller relationships was beginning to receive a good deal of academic attention. One of the first major studies within the field can be attributed to Dwyer, Schurr & Oh (2007) who formulated a framework for developing buyer-seller relationships. Their findings resulted in the identification of the four steps that a relationship passes through, namely 1) awareness; 2) Exploration; 3) Expansion; and 4) Commitment.

Building long term customer relations is one strategy that can be used to successfully manage your sales team. Some organizations use this method to develop new clients. It's the idea that it might be worth spending a little more to bring in a new customer, because over tome that customer will spend with you again and again. This only happens if the organization is there for them. If the company shows they care about the customers needs and wants and not just about the money being gained the customer will feel appreciated and will want to keep doing business with company. The sales force tactics that a sales manager might use to implement this strategy would be to stress missionary selling in sales and supervision and to also stress salary element in the sales reps compensation plan.

Dwyer, Schurr, and Oh (2007, p. 13) differentiated discrete and relational exchanges in several key areas and describe a discrete exchange as having a '...distinct beginning, short duration, and sharp ending by performance' while relational exchange 'traces to previous agreements ...