Introduction:

All relationship marketing activities are ultimately evaluated on the basis of the companys overall profitability. However, as a firms profitability is influenced by a number of variables largely independent of relationship marketing activities, it seems appropriate to conceptualize relationship marketing outcomes on a more concrete level when investigating possible antecedents. Two constructs are referred to in the marketing literature as key relationship marketing outcomes: customer loyalty and (positive) customer word-of-mouth communication.

This body of research has found customer loyalty of Dell Corporation, to positively influence profitability through cost reduction effects and increased revenues per customer. With regard to cost reduction effects, it is widely reported that retaining loyal customers is less cost intensive than gaining new ones and that expenses for customer care decrease during later phases of the relationship life cycle due to the growing expertise of experienced customers. Customer loyalty is also reported to contribute to increased revenues along the relationship life cycle because of cross-selling activities and increased customer penetration rates (e.g., Dwyer, Schurr, and Oh 1987). Positive word-of-mouth communication, defined as all informal communications between a customer and others.

This paper aim to show the significance of Relationship Marketing of the Dell Company, Loyalty program with the advent of Internet removing the dealers cost and allocating the same resources to relationship marketing. We will also provide empirical, theoretical analysis and evolution from transactional to relationship marketing. (Park, 2003)

Please Note: This paper will be guiding principles for researcher to conduct further analysis for intricate Relationship marketing as this does not limit itself for businesses to take the queue from, instead the case will show and highlight the basic understanding and importance of relationship marketing to meet the bottom line.

Relationship Marketing Evolution:

Below Fig-1 we will go through with The Sixth Market Model, in regards with chosen company and provide insight critics with underlying theoretical underpinnings.

Fig-1: The Sixth Market Model The emergence of Relationship Marketing as a separate academic domain of marketing in the 1980s and 1990s becomes more comprehensible from a historical perspective. Researchers argue that Relationship Marketing represents a paradigm shift in marketing from its previous focus on transactions, in which firms use the 4P model to manage marketing-mix variables (Gronroos 1994, p. 4; Sheth and Parvatiyar 2000). Prior to the industrial age, most exchange occurred in local markets, where farmers and craftspeople (producers) sold their products directly to end users. Producers represented both manufacturers and retailers, and embedded relationships between producers and consumers provided the trust and business norms necessary to conduct the transaction because few Institutionalized protections existed. Similarly, relationships led to confidence among traders in the transactions of goods not locally produced. (Sheth and Parvatiyar, 1995) offer numerous examples of trade, which would only occur among groups with ongoing relationships, such as among traders along the historical silk route, that built trust over time and examples of the use of family names in specific industries that branded relational trust. Thus, though the terminology and specific academic focus on

Relationship Marketing are relatively new, the underlying importance of relationships for understanding exchange performance absolutely is not. Mass production and consumption during the industrial revolution changed the dynamics between producers and consumers. Producers took advantage of the economies of scale associated with mass production to produce a large volume of goods at low cost, but these voluminous goods also required transportation, storage, and sales across a larger geographic area and customer base to dispose of them.

Many consumers relocated to manufacturing centers and cities, away from agricultural areas, which required the transportation and storage of goods to support these new population centers. Moreover, mass production generated the need for aggressive sales and promotions to create sufficient demand for the increased volume of goods. In aggregate, industrialization led to new industries, or middlemen, focused on transportation, storage, selling, and retailing. As these new channels competed for business, often with similar or indistinguishable products, exchanges became more transactional and pricing grew to represent a more, if not the most, salient component of the offering. Institutional and functional economists operating against this backdrop investigated the functions performed by wholesalers and retailers in an exchange to develop early marketing thought (Alderson 1965).

However, in the age of light-year speed exchange of billion of bit every second around the globe industrial revolution becomes information revolutions. Therefore, academia though process has changed dramatically. In case of Dell Company, applying The Sixth Model, has become new reality, to compete with competitors aggressively. Following section describes the pivot for Dell to be successful company.

When Michael Dell was a freshman at the University of Texas in 1983, he sold disk drive kits and random access memory chips in Austin, Texas for earning additional money. In April 1984, he decided to establish a corporation named Dell Computer Corporation to sell PCs Limited brand computers.

His business model based upon the idea that intermediaries can be surpassed in the business to the mutual benefit of both, his company and the customer. The Direct Model Relationship Marketing was created. Success confirmed his business model. Now, the company is represented in almost every country in the world and is even manufacturing in four continents. (Park, 2003)
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Today Dell is the worlds leading computer company with a market share of almost 19% (Dell Computer Corporation 2011). In 2005 Dell employed 34,600 people worldwide and generated net revenue of more than $31 Billion (Dell Computer Corporation 2011). Dells top competitors are Hewlett-Packard, IBM, Fujitsu and NEC in the personal computer market, which constitutes Dells main market. Dells customer relationships still remain the focus of companys activities. The six-market model (Christopher, Payne & Ballantyne 1991) therefore places the customer market in the centre, surrounded by the other five markets. Michael Dell emphasizes the significant status of customers to the companys business by stating Finding ways to get close to your customers is critical to your success. (Dell, 1999).

In an Interview he called this strategy virtual integration with customers (Magretta 1998). He affirms that Dell Computer Corp. detaches the partnership function from the marketing department, making everybody in the company responsible for fostering the relationship to its customers.

Dell organizes its business around three main customer segments: large corporate customers also called relationship customers, home and small businesses (transaction customers) and the public sector. Interestingly Dell uses relationship marketing terminology to characterize these segments (Kraemer et al 2000, p.8).

Hence the company approaches each segment differently and customized to the specific needs. The worlds largest computer manufacturer mainly utilizes two communication channels, the Internet and call centres. Dell assigns sales and telephone service representatives to individual relationship customers, whereas each sales representative is dedicated to only one customer. Premier Dell.com is the procurement portal for large customers. The websites are customized allowing all registered customers to communicate faster with Dell, to place orders online and to request technical support 24 hours a day. Moreover Dell enhanced those functions by offering accounting, support and planning modules and with that they take over part of the clients IT Management function.

Mutual value is created as resources are set free in the buying company which can be allocated better in its core competence, as well as for Dell as it becomes an integral part of its customers value chain. This results in strong bonds between both partners and to consult Porters Five Forces, Dell minimizes the threat of substitution (Porter 1979). The Direct Model plays a central role in Dells success in maintaining valuable relationships with their customers. As Dell deals directly with their customers they have huge opportunities to gather timely customer response. This response in turn provides the company with precious feedback. The underlying marketing strategy is, knowledge-based and experience-based marketing. The feedback helps Dell to constantly revise their products in order to meet best customers requirements.

This advantage is especially applicable to the companys large corporate customers. But the Direct Model certainly gives Dell an information lead over its competitors.

Tailor-made products are only one part of Dells customer relationship efforts. As already mentioned above the company tries to be an integral part of the customers value chain. Therefore it adapts to processes where necessary instead of imposing its way of doing business on their customers. Dell offers a good example for this. As the mayor IT provider for Boeing Dell connects to Boeings procurement system EDI, making it easier for Boeings staff and saving them change-over cost. (Park, 2003)

Research on the profitability of customers showed that loyal customers are not necessarily profitable (Reinartz & Kumar 2000). The Company has a clear customer strategy by concentrating on what Dell call scalable business, namely customers with whom revenues can be increased stronger than expenses. Hence the biggest piece of the companys revenue cake derives from the very large customer segment (Magretta, 1998). The so called Platinum Councils are another means of maintaining a close customer relationship. Dell organizes semi-annual meetings for their biggest customers inviting executives and technicians to discuss latest developments in technology and giving them the chance to exchange views and experiences.

All above listed examples draw a good picture of the way Dell intents to build and maintain a good relationship with their customers. It also becomes clear, that the company regards some customers more

relationship worthy than others, by analyzing customer value and segmenting. The largest customers even constitute a segment-of-one. Consequently relationship-building measures concentrate on these groups. This philosophy becomes obvious as Dell names its biggest customers relationship customers in opposing transaction customers. An important part of Dells external relationships and actually the most important column of the direct model are Dells relationships to suppliers. This business-to-business (B2B) relationships considered as vertical relationships, they integrate all, or part of the supply chain. In the following, it will be described how Dells supplier network developed over time and how Dell manages this network. Dells supplier relationships underwent an interesting development in the last 20 years. Early in its history, the company had more than 140 different suppliers. Over time, maintaining these many relationships proved to be too costly, and its complexity, decelerated time to market. Therefore, Dell redesigned its computers in a way, that different models utilize as many of the same components as possible (Zuckerman 1997 in Kraemer et al. 2000). Today, Dell only has about 30 suppliers provide 75 % of their material needs (Jacobs 2003). This involves that these suppliers are global suppliers, following their customer in new international production ventures, what literally means, that they build plants next to the Dell plant. (Dell 1999, p.178, 179).

To administer its supplier relationships, Dell applies a lean just-in-time pull concept, requiring suppliers to restock parts only as they are needed. This concept is quite sophisticated in practice, due to the fact that Dell has no mass production but produces build-to-order, which requires Dell and its suppliers, e.g., to have available special components at any time in unpredictable quantities (Kraemer et al. 2000, p.5).

To make this complex process work, the supply chains of Dell and its suppliers are neatly interwoven, and can therefore be called virtually integrated. This means Dell shares inventory data, design-databases, quality data, technology plans as well as daily production requirements openly with its. (Park, 2003)

Dell also heavily focused on Internal Market. Moreover, in the traditional marketing approach the internal market did not play an important if any role, whereas relationship marketing sees the importance of the internal customer. The employee is regarded as an enabler to enhance external market place performance (Ballantyne, Christopher & Payne 1995, p.15). To put it more drastically, if internal marketing is neglected then external marketing suffers or fails. (Egan 2001, p. 149)

The internal market consists basically of the employees. They are important for marketing, as a firms employees are the ones who create and foster trust and relationship with the customers. Hence, there needs should be regarded, (Shershic, 1990, p. 45) argues, meeting the needs of the employees is the basis to meet the customers needs.

Furthermore, The way in which Dell conducts itself in the Recruitment Market is similar to the way it conducts itself in the Customer, Supplier and Internal Markets i.e. through the use if the use of the Direct Model. From the groups research into Dell it is clear that the Direct Model is employed in selecting candidates, for instance non-university candidates can only apply online through Dells website, whereas Dell does carry out road-shows at universities to make students aware of employment opportunities at Dell and specifically to attract the highest caliber of students i.e. MBA and undergraduates and masters through recruiting on-campus at selected universities.

Secondly, this section will deal with Dell and the Referral Market. According to the Cranfield School of Management organisations need to consider both existing customers and intermediaries as sources of future business (Relationship Marketing: Marketing Multiple Markets 2000). This is due to the fact that satisfied customers will recommend and refer a companys product(s) to others, in effect becoming advocates for the organization. It is therefore important that an organization such as Dell cultivates this market through excellent service delivery in order to retain satisfied customers, which will encourage them to refer Dell to other potential customers.

To ascertain the factors that affect Dell and the way that Dell conducts itself in the Influence market and the Referral Market was difficult as there was limited information to be found in terms of these markets. However, the relationships that are conducted in the Influence and Referral market are more rather implied in the sense that Dell relies on partnerships and its reputation to corner these markets.

Transactional and Relationship Marketing:

Source: Christopher, Martin, Adrian Payne and Davidballantyne. (2011). BINUS. Available: http://cms.binus.edu/datapage/file/bbs/RelationshipMarketing.pdf. Last accessed 20 April 2012.

Transactional marketing and relationship marketing a two different approaches taken by the marketers for the marketing and promotion of the organizations products and services, but the main difference between these two approaches is; transactional is wholly concerned about the promotion and selling of the product with little or no concentration over customer value and satisfaction, and try to make new customer every time, on the other hand relationship marketing is all about building and maintaining the long-term customer relationships, creating a sense of loyalty by providing the valued product and services for mutual benefits.

As marketing has entered the 21st Century, a significant change is taking place in the way companies in general and Dell Corporation in particular, interact with customers. The traditional view of marketing as a simple exchange process, a concept that might be termed transaction-based marketing, is being replaced by a different, longer-term approach.

Traditional marketing strategies focused on attracting consumers. The goal was to identify prospects, convert them to customers, and complete sales transactions. But todays company such as Dell realize that, although it remains important, attracting new customers is truly an intermediate step in the marketing process.

Dell Corporation must focus on establishing and maintaining mutually beneficial relationships with existing customers. It raises the scope of external marketing relationships to include distributors of Dell Company such as (FedEx, UPS). (Park, 2003)

Successful relationship marketing programs must adapt quickly to changing consumer sentiment, and their efficient, iterative nature enables this agility. Dell quickly waded into relationship marketing following the infamous Dell Hell criticism by collecting online customer feedback and interacting with customers via its chief blogging officer. The capability was developed in response to a crisis, and it quickly paid dividends. When one poster suggested that the company add Microsofts former operating system, XP, as an option to be installed on new Dell computers (which, for a brief period, came loaded with the new Vista operating system only), the company noted that the comment had been approved by more than 14,000 other visitors in less than two months, and it began offering XP as an installation option.

An effective relationship marketing program does not require a large, expensive and time-consuming business system software implementation. Platform-agnostic capabilities can be developed, tested, measured, adjusted and built upon. These building blocks can be deployed effectively and efficiently. Therefore, Dell Hell, was just created for that purpose, to listen to consumers concerns and frustrations and address it in timely manner. (Park, 2003)

Conclusion:
Dells, Relationship marketing would be much easier if a tactic could be deployed and then put on autopilot for months. But it would also be much less effective given the realities of the social media evolution, for example, a volatile economy, and the adoption of smart devices and ubiquitous connectivity.

Many of the examples cited in this paper reflect the importance of an iterative, integrated and flexible approach to relationship marketing for Dell, often in dramatic fashion. Dell, Effective relationship marketing programs of this era do not have to be as dramatic. Instead, they quietly cultivate trust through relevant communications across multiple channels with ever-increasing precision. These programs steadily replace incentive-fueled offers with value-added insights and information that fulfill Dell brands unique promise, says Erickson. They limit the risks that flourish in the new relationship marketing ecosystem, and help Dell exploit new opportunities.

Despite the opportunities flexible relationship marketing provides and the growing customer demand for these capabilities, Dell has yet to leverage this opportunity. It also reveals that Dell is trying, but just arent sure what to do. If you keep your head in the sand, because you arent sure which way to look, when you pull it out, you are going to be in trouble, concludes Peppers. Dell customers are out there building relationships with friends, co-workers and your competition, and if you arent at the party, dont expect an invitation in the future.

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References and Bibliography:

C. Jay Lambe Robert E. Spekman. (Revised October 1999). INTERIMISTIC RELATIONAL EXCHANGE: CONCEPTUALIZATION AND PROPOSITIONAL DEVELOPMENT. http://faculty.darden.virginia.edu/ebusiness_materials/interimistic.doc. Last accessed 19 April 2012. Ballantyne, D., Christopher, M. & Payne, A. 1995, Improving the Quality of Services Marketing: Service (Re) design is the Critical Link, Journal of Marketing Management, vol.11, pp.7-24. Christopher, M., Payne, A. and Ballantyne, D. 1991, Relationship Marketing, Butterworth Heinemann, London. Chistopher, Martin, Adrian Payne and Davidballantyne. (2011). BINUS. http://cms.binus.edu/datapage/file/bbs/RelationshipMarketing.pdf. Last accessed 20 April 2012. Dell, M. (1999), Direct from Dell-Strategies that revolutionized an Industry, HarperCollins Inc., New York. Dell Computer Corporation (2010), Fiscal 2011 in Review. D.G. Brian Jones and Eric H. Shaw. (2005). A history of schools of marketing thought. http://www.sagepub.com/clow/study/articles/PDFs/01_Shaw.pdf. Last accessed 21 April 2012. Egan, J.( 2001), Relationship Marketing Exploring Relational Strategies in Marketing, Pearson Educational Limited, Harlow. Kraemer, K.L., Dedrick, J., Yamashiro, S. (2000), Refining and Extending the Business Model with Information Technology: Dell Computer Corporation, The Information Society, vol.16, no.1, pp.5-21. Kristian Mller. (2006). The Marketing Mix revisited: Towards the 21st Century Marketing?. http://www.utwente.nl/mb/nikos/publications/ecpapers/constantinidescommentmarketingmix.pdf. Last accessed 21 April 2012. Magretta, J. 1998, The Power of Virtual Integration: An Interview with Dell Computers Michael Dell, Harvard Business Review, March-April, pp.72-84. May. (2007) , Responding to Crisis Using Social Media: Updating the Dell Hell Case Study are (sic) Dell Turning Opinion Around Market Sentinel, www.marketsentinel.com Accessed at 17 April 2012 Michael Antioco and Dr. Adam Lindgreen. (2003). Relationship Marketing in the Internet Age. Available: http://www.uclouvain.be/cps/ucl/doc/iag/documents/WP_45_Lindgreen.pdf. Last accessed 19 April 2012. Nagasimha Kanagal. (2011). Role of Relationship Marketing in Competitive Marketing Strategy. http://www.aabri.co9m/manuscripts/09204.pdf. Last accessed 18 April 2012. Park, A., Burrows, P. (2003), What You Dont Know About Dell, Business Week, 03 November, p.76.

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Continued: Porter, M. (1979), How Competitive Forces Shape Strategy, Harvard Business Review, 57, no.2, pp.137-45. Prof. Andrian Pyane. (2008 ). Relationship Marketing The Six Markets Framework. Available: https://dspace.lib.cranfield.ac.uk/bitstream/1826/2910/1/SWP%2035-93.PDF. Last accessed 19 April 2012. Reinartz, W., Kumar, V. (2002), The Mismanagement of Customer Loyalty, Harvard Business Review, July, pp.86-94. Robert W. Palmatie.R. (2008). Relationship Marketing. http://faculty.washington.edu/palmatrw/docs/MSI.RM.Book.pdf. Last accessed 19 April 2012. Sloan, P. (2003), Dells Man on Deck, Business 2.0, February.

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