RELATIONSHIP MARKETING

Relationship Marketing

Relationship Marketing

Introduction

A number of terms have been used as substitutes for relationship marketing or to describe similar concepts (Buttle, 1996). These include direct marketing, database marketing, customer relationship management, data driven marketing, micromarketing, one-to-one marketing, loyalty based marketing, segment of one marketing, customer partnering, dialogue marketing and interactive marketing. All this suggests that RM is also an umbrella philosophy for relational approaches in marketing. To succeed in RM, a company must have both a flow of new customers and there must be a restriction on customers exiting(Harwood & Broderick 2008:52-92).

At the core of relationship marketing is exchange, that is profitable to parties involved in the exchange. The concept of exchanges as it applies to relationship marketing can be viewed at from either a transaction cost analysis approach or a social exchange theory approach. Transactions are distinguished into discrete transactions and relational transactions. Relational contract law governs relational transactions. In classical contract law that governs discrete transactions identity of parties is not relevant; however this is not true in relationship marketing. (Manning & Reece 2007: 15)In relational contracting the reference point shifts from the agreement (as in classical contract law), to the relation itself as it has developed over time. There might be or might not be an original agreement and if there is, there may not be any great deference to it. In a relational transaction, the contractual gaps between parties are reduced, as the relation becomes stronger and stronger.

As a practice, Relationship Marketing differs from other forms of marketing in that it recognizes the long term value of customer realtionships and extends communication beyond intrusive advertising and sales promotional messages.

Buy in of Customer Attention.

Discussion

Exclusivity to the other party is also seen as a signal of commitment. Further the relationship dyad has been examined from perspective of a strong buyer facing a large number of small suppliers(Harwood & Broderick 2008:52-89) . It has been shown that relational norms do play a role in serving as a governance mechanism to safeguard against opportunistic behavior in the presence of transaction specific assets. It has also been shown that in case of a relationship dyad between a strong supplier and a large number of small buyers relational norms do not play a significant role.

Functionality

It must be valuable; it must be rare among competitors; it must be imperfectly imitable; there must not be any strategically equivalent substitutes for this resource skill. Sources of SCA leads to positional competitive advantage (differentiation and low cost). Sustainability of positional advantages leads to superior long-term market and financial performance. Formulating competitive marketing strategies also involves, recognizing relationships between elements of the marketing mix as well as assessing the impact of competitive and market conditions on marketing mix formulation. A model(Tuominen 2004:207) has been outlined of the relationship between product quality levels, promotion expenditures and prices and assesses the impact of industry structure on the formulation of marketing mix. Relationship marketing serves as a moderator for the sustenance of positional advantages and influences the ...