V l creation Value ti and dstrategy t t i implementation l t ti

RelationshipMarketing

A d Agenda
Th TheCh Changing i F Focusi inMarketing M k i TraditionalversusRelationshipMarketing Approach TransactionalversusRelationship pMarketing g RelationshipMarketing:principleand orientation TheroleofRMtocompetitivemarketing strategy

 amerchant As h youd db betterh haveaf friend i d i in everytown

AnancientMiddleEasternproverb

Th Changing The Ch i Focus F of fMarketing M k ti

Customer relationship focus Competitiveposition focus MarketingMix focus Sales Market k focus dominant Production focus Product focus Product Dominant Time
Pre1800s 1920s 1950s 1970s 1980s 1990s 2000+ Source:Christopheretal(1991)

Service d i dominant t

Comple exity

T di i Traditional lM Marketing k i A Approach h

MarketingMix(4Ps)Approach
Product Price Place Promotion P ti

 Itassumesallsegmentsofcustomersare similarandmaybetreatedinastandardized way Itassumesconsumersarepassiveabsorbersof marketinginformation Itassumesshorttermandoftenoneoff transactionsbasedaroundtheexchangeof goodsformoney

Source:Christopheretal(1991)

ProblemswithTraditionalMarketing Approach

D fi iti of Definition f R Relationship l ti hi M Marketing k ti

Perspective Berry(1993)froma serviceperspective Jackson J k (1985) from f an industrialmarketing perspective BerryandParasuramen (1992)fromaservice perspective Gronos ( (1995) ) froma networkperspective Definition RelationshipMarketingisattracting, maintainingandmulti serviceorganizationsenhancingcustomerrelationship Marketing M k ti concentrated t t d t towards d strong, t l lasting ti relationshipwithindividualaccounts Attracting Attracting, developingandretainingcustomer relationships To identify yandestablish, ,maintainandenhance relationshipwithcustomersandotherstakeholders,at profitsothattheobjectivesofthepartnersinterestare met,andthisachievedbyamutualexchangeandfulfillment ofpromises Source:Christopheretal(1991

GeneralModelofRelationship Marketing
Focusesonarelationshipratherthantransactional approachtomarketing Understands d d the h economicsof fcustomerretention Highlightsthecriticalroleofinternalmarketingin achieving gexternalmarketing gsuccess Extendstomorediversemarket Recognizesthequality,customerservicesand marketing k ti need dto t be b closely l l integrated i t t d Ensuresthatmarketingisconsideredacrossfunctional context

TheTransactionaltoRelationship Marketing
Emphasisonall market k tdomains d i and d customerretention RELATIONSHIP MARKETING

Emphasison customeracquisition q

TRANSACTIONAL MARKETING

Functionalitybased Marketing

Crossfunctionality basedMarketing

Source:Christopher, RelationshipMarketing,2002

TransactionalMarketing
Focusinvolume Emphasizes h product d features f Shorttimescale Littleemphasis p oncustomer services Moderatecustomercontact Primaryconcernwithproduct quality

RelationshipMarketing
Focusonprofitable retention h customervalue l Emphasizes Longertermtimescalers High g customerservice emphasis Highcustomercontact Concernwithrelationship quality

PrinciplesofRelationshipMarketing
MaximizingCustomerLifetimeValue(CLV)isa fundamentalgoalofRelationshipMarketing
Thefutureflowofnetprofitdiscountedbacktothe present

Focusing gmarketing gactiononmultiple p markets

SixMarketsModel

Itmustbecrossfunctional
Marketingistooimportanttobelefttothe marketingdepartment(DavidPackard)

Th R The Relationship l i hi M Marketing k i Orientation

Quality

RELATIONSHIP MARKETING Customer Service Marketing

Source:Christopheretal(1991)

BenefitsRMtothefirms
Towinanewcustomerismoreexpensive p thanto itistotoretainanexistingcustomer Establishedcustomerstendtobuymore(shareof wallet) Satisfiedcustomersaremorelikelytoreferothers (reducecostofacquisition) Loyalcustomerscanbelesspricesensitiveand maybelesslikelytodefectduetopriceincreases Retainingcustomersmakesmarketentrydifficult forcompetitors

TheRoleofRMtoCompetitive MarketingStrategy
Valueasthecentralroletodevelopand implementrelationshipmarketingstrategy Stakeholdersinteractionprocess Key K value l activities ti iti

The h Role l of fCustomerValue l

CustomerPerceiveValue(CPV)
Isthedifferencebetweentheprospective customersevaluationofallbenefitsandallthe costsofanofferingandtheperceivedalternatives.

Customerstendtobevaluemaximizers

ComponentofCustomerValue
Product P d Attributes Service Attributes

Perceivedbenefit Perceivedsacrifice
Transaction cost LifeCycle Lif C l Cost

Expected Customer Value

Risk

Source:CustomerValueToolkit,1st Edition,byE. Naumann andR.Kordupleski,1995

TheValueProcess
ValueDetermination ValueCreation ValueDelivery ValueAssessment

RelationshipValueManagement Framework
Customer retention Employee recruitment Customer satisfaction

Customers: Customermarkets Referral R f lM Market k

Value assessment

Value determination

THE VALUE PROCESS

Valuedelivery

Value creation

Employees: InternalMarket Recruitment markets

Employee retention

Employee satisfaction

Customer attraction

Stakeholder retention

Externalstakeholders: Shareholders Otherinfluencemarkets Suppliersandalliancemarkets

Stakeholder satisfaction

Stakeholder engagement

Source:Christopher, RelationshipMarketing,2002

ChoiceofRelationshipStrategy
ThreegenericstrategiesidentifiesbyTreacy and Wierseman:
Operationalexcellence
Providingcustomerswithreliableproductsorservicesat competitivepricesandminimalinconvenience

Productleadership
Providingproductsthatcontinuallyredefinethestateofart

Customerintimacy
Sellingthecustomeratotalsolutionnotjustaproductor service

R f References
Chistopher,Martin,AdrianPayneandDavidballantyne (2002).Relationship Marketing,creatingstakeholdervalueButterwor.thHeinemann. Harwood,Tracy,T.GarryandABroderick(2008).RelationshipMarketing: Perpectives,DimensionsandContext,McGrawHill. N Naumann, E. E A And d R R.Kordupleski K d l ki (1995). (1995) Customer C t Value V l Toolkit, T lkit 1st edition. diti South S th WesternCollege\publishing.

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