Relationship Marketing of Services

8/3/2019 Relationship Marketing of Services

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Relationship MarketingRelationship Marketingof Servicesof Services

Group Members:Group M

embers: Susan Connell

Louise Considine

Justin Farrell

Jacinta Smith


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Introduction Intense rivalry led to shift from transactional to

relational marketing

relationship marketing is to identify and establish,

maintain, and enhance relationships with

customers and other stakeholders, at a profit, so

that the objectives of all parties are met

(Grnroos, 1990, p. 10).


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Implications:

Transactional Relationship

Time perspective: Short term focus Long term focus

Price elasticity: Sensitive to price Less sensitive to price

Dominating quality

dimension:

Quality of output

(technical quality)

Quality of interactions

(functional quality)

Measurement of

customer satisfaction:Monitoring market share

(indirect approach)

Managing customer

base (direct approach)

Customer information

system:

Ad hoc customer surveys Real-time customer

feed back systemsInterdependent between

marketing operations

and personal:

Interface or no or limited

strategic importance

Interface of substantial

strategic importance to

success

The role of Internal

Marketing:No or limited importance

to success

Substantial strategic

importance to success

Differences between TM and RM


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Organisational

Benefits

Cheaper to keep

existing customers

than to attract newclients

Reduced costs

80:20 rule

Not all customers have

equal value

Lifetime value of

customers

Overcomes risk &ambiguity of

complex services

Confidencebenefits

Social rewards

Consumer

Advantages


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Goals of Relationship Marketing ..build and maintain a base of committed

customers who are profitable for the

organization (Zeithaml and Bitner, 2003,p.158).

Acquisition, retention & enhancement

Relationship marketing ladder of loyalty


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RM Ladder of Loyalty Relationship of partner

Actively recommends you

Supports you passively

Repeat business, but

passive or negative attitude

Carried out one transaction

Potential customer


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Appropriateness of RM Does the customer want a relationship?

Is the customer segment profitable enough to

justify the expense?

Will forming a relationship with a customer orcustomer segment adversely affect the company,

its employees or other customers?


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Implementation

A review of the relationship marketing literature suggests a lack

of knowledge and action surrounding the issue of implementation

of relationship marketing strategies.

This lack of action can be attributed to:

1. The failure to recognise thesynergy and interdependency between

relationship marketing and niche marketing.

2. The lack of use of relationship marketing.

3. The lack of top management commitment to change the company

to successfully implement relationship marketing strategies.


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Approaches to Implementation Berry (1983):

1. develop a core service aroundwhich to build a customerrelationship.

2. customise the relationship tothe individual customer.

3. augment the core service withextra benefits.

4. price services to encouragecustomer loyalty.

5. market to employees so that

they, in turn,will perform well forcustomers.

Shani and Chalasani (1992):

1. Pursue a niche marketing

strategy to identify a gap in

the market.

2. Build up a customer

database.

3. Focus on relationshipmarketing activities.


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Approaches to Implementation contd..

Voss and Voss (1997):

suggest, successful implementation of a relationship marketing program

requires a complement of marketing strategies that satisfy and motivate

customers through the four phases of relationship development (p. 290).

(awareness, exploration, expansion and commitment)

Dodge and Fullerton (1997):

1. choose the right customers i.e. the profitable ones.

2. find ways to deliver superior value to these customers.3. personalisation of the relationship

Successful when the marketer and the customer abandon their adversarial

role behavior in favor of some form of partnership or alliance (Dodge and

Fullerton 1997, p. 5).


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The reasons why relationship marketing failsNelson and Kirkby (2001) believe there are seven key reasons:

1. Data is ignored

2. Politics rule

3. The IS organisation and business users cannot work together

4. There is no plan

5. Relationship marketing is implemented for the company and notthe customer

6. A flawed process is automated

7. No attention is paid to skill sets


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To Conclude

Emerged due to awareness of the importance of relationships in services andof increasing consumer expectations.

Relationship marketing is reforming the way service firms are conductingbusiness.

In order to remain competitive companies must embrace the philosophy ofrelationship marketing.

Relationship marketing is beneficial to both organisations and customers.

It is essential for a company to segment its customers on the basis of theirprofitability, as resources should be allocated on this basis.

There is no universal remedy for implementing relationship marketing

strategies successfully.

Documents

Relationship Marketing of Services