Research Papers

Relationship Marketing Research Paper

Reliability has a lot to do with this controlling customer behavior. It is apparent that reliability is the best way to obtain customer loyalty. The term used by marketers in order to define this relation building process is known as relationship marketing. It is one of the cornerstones of developing customer loyalty in an organization. Besides, in order to develop customer loyalty, the organization’s management should understand the elements of quality evaluation, since they also are important if an organization wants to have constant and loyal customers.

Relationship marketing involves creating, maintaining and enhancing strong and valued relationship with the customers.1 This bond encourages consumers to do their market choices voluntarily by engaging in an ongoing relationship with a marketer of a specific product. It is a way marketers attempt to develop customer loyalty. Organizations develop loyal clientele by forming and solidifying long-term customer alliances based on reliability and trust. Activities to build and solidify lasting trust relationships: diligently attending to consumers’ needs, providing high-quality customer input for purposes of product design, and maintaining open and effective communication. The goal of relationship marketing is to deliver long-term value to consumers in order to achieve a high rate of customer satisfaction, relationship revenue.

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Carlson Marketing Group defines relationship marketing as a business strategy that proactively builds a bias or preference for an organization with its individual employees, channel partners, and customers, resulting in increased retention and performance. It is more than a promotional tactic; it is a long-term strategic marketing endeavor that is based on developing and fostering strong relationships. And just as relationships are formed on commitment and trust, relationship marketing is a resource-rich strategy that eventually leads to increased customer retention and loyalty.

“Today, marketing is more than just a transaction, more than just making a sale.”2 When you continue to maintain relationships with your customers, they will continue to buy your products. Currently reliability is very important. Everyday, consumers are swamped with various ads for different products. When a consumer is faced with so many different decisions, reliability is a way to guarantee loyalty. In relationship marketing, relationships are formed when organizations sell their products to their consumers. In marketing, relationships are either long-term or short-term.

Long-term relationships are usually the ones that result in customer loyalty, while short-term relationships are generally used just to make the current sale. Such facts reinforce that relationship marketing is not merely a trend but a key component in maintaining a solid, revenue-generating customer. Acquiring and maintaining loyal customers translate into lower marketing costs, more referrals, increased spending per customer, and most importantly, insight into performance improvement.

Relationship marketing reminds organizations that customers are vital long-term assets who must be nurtured and not simply harvested. Reliability in general and product reliability in particular, is a difficult construct to explicate and measure. Reliability means consistently performing the service dependably and accurately. Portraying the reliability and consistency with which the product is delivered can take two routes. The first involves emphasizing the technological superiority and dependability of the process by which the good is produced – a high-tech approach. The second concerns the consistent and dependable performance of the personnel – a high touch approach.

Although these alternatives are by no means mutually exclusive, nevertheless the relative importance of each route differs according to the level of development of the market. Developed economies have taken long strides in terms of developing breakthrough technological innovations and in terms of manipulating those scientific innovations in a multitude of ways so as to be used in facilitating every day operations.

Firms utilizing such state-of-the-art technology should take advantage of the generally high level of education and affluence of their customer base, which can comprehend the benefits of such technologies and can afford the costly technology in exchange for higher performance, quality and dependability. Continuous improvement is the key to providing reliable product. Organizations in developed countries are constantly faced with intense competition and customers with higher expectations and lower tolerance, and therefore there is a relentless pursuit of continuous improvement in product quality. Customers in developing countries have lower quality expectations and therefore a wider zone of tolerance for ineffective products compared with customers in developed countries.

Consequently, the pressure from the customers and the competition is often minimal in developing countries. The highly advanced and reliable communication infrastructure in developed countries presents various alternatives through which the customer/supplier connection is possible.3 Among these possible alternatives, non-personal contact modes, such as telephone, facsimile, electronic mail, and telex, rank highest in terms of both ease of contact and timely access.

Unfortunately, the majority of developing countries are still plagued with limited or unreliable communication networks, thus boosting the relative importance of direct personal contacts between the customer and the product supplier. The premise of “knowing the customer” serves as the underlying basis. In relationship marketing all conceivably viable ideas are implemented to make “the customer the king”. There are essentially three levels of relationship marketing.

The first level is based on financial incentives, such as price discounts, given to the customers to retain the market; the second level is where organizations combine financial and social benefits, emphasizing staying in touch with clients, learning about their wants and needs, customizing the relationship, etc.; the last level solidifies this relationship with structural bonds in addition to social and financial bonds. One of the major determinants of product quality and reliability is timely and adequate response. Employees should be willing and able to deliver timely and substantive response to enquiries and complaints of customers. The relative importance of timely versus substantive response differs between developed and developing markets.

Such differences arise as a result of the relative value with which time is regarded in each of these markets.4 Customers of developed countries place a higher value on time compared with those of developing countries. Thus merely responding to a customer’s enquiry or satisfactorily resolving a customer’s complaint – a goal that is generally regarded as sufficient in its own end in developing countries – tends to fall short of meeting a customer’s expectations of quality of service in a developed country. In a developed economy, these tasks should be addressed and resolved swiftly. Reflecting competence of the firm could be centralized on the organization as a whole or on the contact personnel.

In developed markets, competence of individual employees is of a relatively higher importance. Such markets place high regard on individual initiative and achievement and are better targeted by emphasizing the unmatched skills of the service personnel. On the other hand, communicating the quality of the product with customers in developing countries is better achieved by focusing on the competence of the organization providing the product. Expertise and skills are to be reflected in the organization. Another cultural factor that supports such strategies is power distance.

Developed economies are characterized with a small power distance, whereby both superiors and subordinates of an organization regard one another as “people like me”.5 Hierarchy in organizations reflects nothing more than inequality of roles that is established for convenience. Thus employees are generally regarded as competent in their own role or domain. However, developing economies are characterized by a large power distance. Employees at different levels of the organization are regarded as unequal in roles, power and skills.

Since customer satisfaction with the product is largely dependent on his/her interaction with the provider, the number, appearance, and behavior of employees in the product environment can induce either approach or avoidance behavior. Reliable products encourage favorable word-of-mouth communication. However, more detailed and complex information needs to be provided about the benefits of product to customers in the developed countries, since their level of education and their cognitive structures are well suited for such elaborations. Customers in developing countries are generally satisfied with acceptable performance of the service in terms of the core benefits it promises to offer.

In general, these consumers are highly functional in their choice criteria partly owing to personality factors which are in turn shaped by higher level influences such as values, meanings, culture and philosophy of life. On the other hand, customers in developed countries are generally satisfied only when the service offers extended benefits beyond the functional. These extended benefits tend to be more intangible than the core service. Maslow’s needs hierarchy can explain this. Developing countries’ product needs are of a lower order compared with those of developed countries, which are of higher order.

Thus, while a service supplier in a developing country is preoccupied with communicating the quality and value of the service per se, a supplier in a developed country takes the extra effort to present added benefits such as lifestyles and sensory experiences. Given these dimensions of service quality, it is important for international marketing managers to understand the various environmental, economic and socio-cultural factors that influence developed and developing economies, and how these affect considerations in service quality evaluation.

The environmental differences between developed and developing countries can have varying influences on service quality determinants. Therefore multinational corporations marketing services in different countries should not adopt a standardized marketing approach. There is a need to understand the environmental differences between countries differing in terms of economic development and to emphasize the various dimensions of service quality accordingly. It is important to identify similarities across service industries in order to facilitate services marketing management.

To this end, six major non-exclusive, service classifications or frameworks, have been identified, focusing respectively on service as a process, mode of service delivery, nature of demand, customization, attributes of the service experience and nature of the relationship between service provider and customers (Dandecker, p. 147).

The conclusion from these frameworks is that not all services pose the same challenges to consumers or the same strategic opportunities for service providers, but the challenges and opportunities earlier identified from the discussion of service characteristics remain. Inexperienced consumers, particularly those with communication difficulties, are likely to experience significantly greater difficulties than mainstream experienced consumers in the selection of product providers and in consuming products, basically because of a reduced ability to receive and convey risk-reducing information. Understanding of these greater difficulties and their implications requires the recognition of the role that groups may play as references for inexperienced consumers and, by implication, the appraisal of word-of-mouth communications.6 Word-of-mouth is the main way consumers gather information about products.

Consumers gain much of their information about product providers from fellow consumers who are more knowledgeable about the marketplace. This factor, too, tends to cause consumers to maintain long term-relationships with service providers. There may, indeed, be social pressure on an individual member of a community to patronize a given product provider. A good quality of product must, however, be maintained. If it is not, consumers are likely to defect to other product providers. Developing customer loyalty based on product reliability in organization is not that easy, however it is the only way to ensure profitable and efficient functioning of the company.

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