Example research essay topic: Level Of Customer Relationship Marketing - 1,082 words

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"Relationship marketing is an approach to the market which emphasis a 'relationship' rather than a 'transaction approach' to business" (Tap, 1998) Recently there has been a shift from the more short-term traditional transaction approach to marketing, to long-term relationship between suppliers and customers especially within the service sector. (Buttle, 1996) The significance of relationship marketing is that it is more about customer value and satisfaction than making a fast buck. (Kotler, 2000) (Refer to appendix, 1 for models for relationship marketing) "The fundamental principle upon which relationship marketing is founded is that the greater the level of customer satisfaction with the relationship - not just the product or service - then the greater the likelihood that the customer will stay with us." Relationship marketing concentrates on structuring relationships with customers and then having the advantage to target them with relevant parts of the marketing mix i. e. promotion. (web 1999) (Refer to appendix 2, for articles on relationship marketing, Financial Times article on relationship marketing by Barbara Kahn, Defining customer relationship marketing and management & ECCS- The European Centre for Customer Strategies) The transaction approach is more likely to be a one off or short term approach where it finishes with point of sale. The relationship approach is much more likely to be long term where the company establishes potential and efficient relationships with a customer so that they can cater to the customers demands and needs. (Kotler, 2000) Marketing transaction approach Marketing relationship approach Directed at individual sales Directed at customer retention No customer contact Constant customer contact More attention to product / service More attention to customer benefits Not much regard for customer service High level of customer service. No responsibility for meeting customers Very responsive to meeting Production staff are only concerned All staff are concerned with quality of about quality of product / service product / service Transactional approach is to make profits by just selling and having little customer contact.

Relationship marketing is much more customer orientated. Marketers focus and continuously give their attention to key accounts, which are highly profitable. (Kotler, 2000) The Pareto effect points out that 20 % of customers account for 80 % of business. Companies should therefor identify their most important customers, provide them with a high quality service, and utilise marketing strategies and plans to implement this. (Brassington & Pettitt, 1997) There are different ways to build up relationship marketing with the customer. Reactive marketing, this is where a customer buys a product and the salesperson persuades the customer to telephone back with their questions or complaints.

Accountable marketing is where the salesperson telephones the customer after they have purchased a product / service to see whether they are satisfied with their purchase / service . The customer is asked whether there are any improvements, which could be made to the product / service . This helps the product / service provider to improve their performance in the future. (Kotler, 2000). BMW always phone you up shortly after they have serviced your car and ask you questions about the service to improve the quality of future services. Sometimes the customer can contact the suppliers i.

e. Kellogg's provide a customer service telephone number that customers can phone up. This is common practice in America there is a toll free number on the package of many products. (Kotler, 2000) (Refer to appendix 3, (BAA, Achieving world class performance), article about customer satisfaction and long term relationships & for relationship marketing through banking, (First direct, Creating intelligent relationships with customers) Relationship marketing can reap long term monetary benefits from customer retention. It costs five times more to attract a new customer than to retain an existing customer. (Buttle, 1996) Attracting new customers can be a costly expense for some small businesses. Organisations that use relationship marketing to build long-term relationships will have satisfied clients who will come back and repurchase goods or services. However it can take time i.

e. a credit card company needs to retain a new customer for over two years before reaching the break-even point. If a customer is no longer happy with a company and defects to the competition and tells other customers of their dissatisfaction, the company could loose a lot of revenue. (Buttle, 1996) Reasons for defecting are lower priced substitutes; better service offered elsewhere and competitor products / services are superior. Companies should observe the rate of customer defection, why they have defected and then take measures to reduce it. (Kotler, 1996) The transactional marketing mix approach is, in gaining revenue from any customer without having to form a relationship with them. (Buttle, 1996) This can be defined in the definition of marketing from the American Association of Marketing and the Chartered Institute of Marketing, UK "Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organisational goals. ." (web 2000) "Marketing is the management process responsible for identifying, anticipating and satisfying customers requirements profitably" (web 2000) There has not been much evidence that customers wish to commit themselves to long-term relationships with suppliers. (Barnes, 1995, Blois, 1995, author Buttle, 1996) However Gronoos disagrees and suggest that marketing should not end in a transaction it should develop into a longer-term relationship. " Marketing is to establish, develop and commercialize long term customer relationships so that the objectives of the parties are met. This is done by a mutual exchange and keeping of promises. ") (Gronoos, author, Morgan, 1996, p 16) Retaining customers and targeting new customers for retention can be done through loyalty card schemes/ clubs. Sainsburys have a drinks club; they produce a monthly magazine with offers and competitions for customers who have joined the drinks club.

The used money off vouchers will give Sainsburys an indication of customer preference. (Refer to appendix 4 for Sainsburys drinks club magazine. ) The loyalty card is a useful marketing tool that gathers spending information about the cardholders. (Jardeine, 2000) There are incentives and special offers for cardholders. Many companies have loyalty card schemes (Sainsburys Reward card, Boots Advantage card and Tesco club card). Ownership of a supermarket loyalty card can determine where a customer shops. (Gordon, 2000) The aspect of a loyalty card is that it forms a relationship between a store and a customer. (Hunt, 2000) However, some supermarkets now believe that people would rather buy discounted goods than have a supermarket loyalty card. One of the big sup...

Research essay sample on Level Of Customer Relationship Marketing