Future of the Relationship Marketing

Subject: Marketing
Pages: 7
Words: 2135
Reading time:
10 min
Study level: PhD

Introduction

For a long time, few businesses made effort to understand and highly value customers, especially with the need to retain them, but this scenario is fast changing in the modern world, as businesses embrace themselves for fierce competition and economic hardships of the 21st century. Today, globalization, technology, and fierce competition appear to cooperate in exerting pressure on businesses to the device and re-strategize their business policies (Roig, Garcia, Tena, and Monzonis, 2006). Businesses across sectors have realized that to survive in modern markets arrangements, they require long-term and mutually beneficial relationships with their customers (So and Speece, 2000). As a result, every effort is being made to incorporate proper relationship marketing management systems that work and reward the business (Eiriz and Wilson, 2004; Hennig-Thurau and Hansen, 2000).

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Relationship marketing constitutes a concept that modern industries cannot ignore or operate without (Egan, 2003). The banking industry constitutes one key area where relationship marketing is being established, as competition, challenges, globalization, and desire for growth remain defining elements in the industry (Roig, Garcia, Tena, and Monzonis, 2006). What is evident in the modern world is that customers in different sectors have become more knowledgeable, sophisticated, and assertive, and exhibit a preference for tailor-made and innovative products and services. Unlike in the past, these customers look for remedies that fit their business models and plans, hence do not just go for any available solution (Ricky 1992). As a result, it has become important for banks to establish strong relationships with their dynamic customers to ensure these customers derive maximum benefits from banks’ solutions. Therefore, the simple question that can be asked is, ‘what is the future of RM?

What is known about relationship marketing?

Relationship marketing constitutes a concept that has been evolving since the 1960s and today characterizes the modern business environment (Gronroos, 1994). RM was pioneered by Leonard Berry (Berry, 1983) and later other researchers have investigated the concept deeply and widely (Ford 1998; Gronroos, 1990; Kolter, 1992; Morgan & Hunt, 1999 cited in Sin et al., 2002; Moller and Halinen, 2000; Egan, 2006; Little and Marandi, 2003). Berry (1983) perceives observes that businesses faced with new challenges need to shift their focus to clients and establish long-term and meaningful relationships with clients (Moller and Halinen, 2000). Harker (1999) further sees RM to reflect aspects of birth, development, maintenance, temporality, interaction, outputs, and emotional content (cited in Harker, 2006).

Gronroos (1991) identifies the need why sellers have to put more focus on clients and establish cooperation and collaboration relationships that are long-term in nature; create a bond of interest, confidence, and respect (Palmer, 2002; Gummersson, 1994). Such relationships have the potential of increasing market efficiency for the seller. Further, Buttle (1996) regards RM to largely deal with “development and maintenance of mutually beneficial relationships with strategically significant markets.” As a result, it is Gronroos’s (1994) definition of RM that exhibits greater validity given its foundation on enriched research methodology (Harker, 2006). According to the definition, RM businesses that succeed are seen to possess that ability to put in place interactive relationships with critical clients and subsequently enhance such relationships with possibilities of terminating when profitable objectives have been achieved by both stakeholders (Harker, 1999 cited in Harker, 2006).

Different schools of thought have emerged over some time as the evolution of RM remains dynamic and inevitable. The earliest among these schools of thought include the Nordic school which regards RM to constitute service defining seller-buyer markets. The emphasis of this school of thought is on the need of businesses to create and maintain long-term commercial relationships with customers while ensuring the objectives of both parties are achieved. Gummersson (1994) reinforces the thinking of this school when the author defines RM in terms of relationships, networks, and interactions. According to the author, the success of a business in a modern environment is premised on the ability of the business to establish productive relationships with a wide array of stakeholders to the business (Gummersson, 1994).

Another school of thought regards RM as the need businesses have to ensure customer value is achieved and enhanced about products. According to this school of thought, customers require superior deliverable values about products and services. As a result, quality and service constitute the major aspect that businesses should construct their long-term relationships with clients and other stakeholders (Palmer, 2002). The Industrial Marketing and Purchasing school constitutes another group of thinkers who perceived RM to occur and persist within the perspectives of symbiotic long-term relationships that largely develop and strength based on key aspects of interaction, networking, adaptation, and partnerships (Lynch, 1996).

Modern business dealings are further perceived to be relationship exchange undertakings that are promoted and enhanced between buyer and seller. Accordingly, appropriate relationships that bring meaningful benefit to the buyer and seller builds on the need for commitment and trust between involved stakeholders (Gordon, Pires, and Stanton, 2008). Further communication and sharing of values are seen to be critical to the maintenance of these relational exchange experiences. As a result, buyer and seller relationships are regarded to be effective through cooperation, adaptation, and interdependence bonding relationships (Gordon, Pires, and Stanton, 2008).

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Gaps in Relationship Marketing Theory

The field of RM is expanding and this can be attributed to continued research activities in the theoretical development of the field knowledge. As a result, it is possible today to explain and apply RM concepts based on different available theories and frameworks. Nevertheless, the theories developed expose some weaknesses, which should inform future research work. For example, convectional RM theories provide a blurred picture between RM and key marketing focal aspects such as marketing mix and 4Ps. Further, a disconnect appears to exist between RM theories and the wider organizational theory of the business. This particular incident is what contributes to the current ‘chaotic confusion’ raging in the field as to whether RM reflects marketing-oriented management or remains merely a promotion package within the wider field of marketing management (Egan, 2003).

Importance of Relationship Marketing

Gilbert and Choi (2003) observe that companies have to contend with the fact that modern-day marketing strategies are gradually shifting from developing, selling, and delivering products to more rewarding and lasting marketing strategies. According to the author, the modern business will grow based on the presence of mutual and long-term satisfying relationships with the customers. Lynch (1996) note that the growth and sustainability of businesses, as the market dynamics emerge will result from businesses possessing the ability to develop, satisfy, and retain customer base over a relatively long period. Adamson, Chan, and Handford (2003) note that the global environment is becoming dynamic, challenging, and uncertain, forcing businesses to understand their customers and competitors well to create a more satisfying and profitable future for the business (Halinen, 1997; Handford, 2003).

So and Speece (2000) sees RM in financial markets to be inevitable especially given the fluidity and dynamic nature of banking behaviors and as a result, there is a need for long-term customer relationships. Relationship marketing as opposed to traditional transactional marketing is perceived to be the best strategy that businesses such as financial institutions can adopt to thrive despite fierce competition in the field (Gordon, Pires, and Stanton, 2008). According to the author, companies have to pursue long-term relationships with their stakeholders and this can be possible through the adoption of a relationship marketing orientation (RMO) strategy. According to this strategy, businesses should initiate long-term and rewarding relationships with their customers, by pursuing and cultivating trust, communication, bonding, reciprocity, empathy, and shared values (Gordon, Pires, and Stanton, 2008).

Relationship marketing in retail banking is premised on the need to bring about and increase customer satisfaction, which in turn leads to the development of long-term relationships (Molina, Martin-Consuegra, and Esteban, 2007). According to this understanding, businesses in the modern world cannot run away from the fact that customers are looking for diverse satisfaction hence businesses have to increase customer satisfaction, ensure customers are retained for long-term businesses activities (Wong and Kanji, 2001). Given all these concerns, RM is emerging as an appropriate avenue in which many organizations have no escape but to remain faithful to customer needs and satisfaction through aspects of quality improvement, methods of handling customer complaints, and situational factors (Molina, Martin-Consuegra, and Esteban, 2007).

Leverin and Liljander (2006) see the inability of retail banks to function and experience growth in the absence of meaningfully established long-term relationships with customers. As a result, the authors observe that, for relationships to be rewarding and long-lasting, banks have to involve their customers in the production, distribution, and consumption of products and services where customers express personal interaction and are willing to participate in building relationship activities (Leverin and Liljander, 2006). RM should be created and promoted through stages where at every stage of relationship building, emphasis should be put on increasing customer satisfaction, increasing quality, and building loyalty, all framed on increased information exchange between stakeholders (Camarero, 2007).

Limitations to predictions about Relationship Marketing

The modern business environment remains dynamic and this can be linked to increasing consumer information and knowledge, globalization, changing consumer preferences, and the emergence of experience economy (Baron, Conway, and Warnaby, 2010). All these factors combine to make the business world dynamic and fluid but to appeal to and retain more customers, the business should embrace fresh strategies that are customer-centered in nature (Sheth, 2002). The modern world, specifically in business dealing is predicted will put more focus on relationships, cooperation, collaboration, and intensified buyer-seller interactions. Due to this, the creation and implementation of RM programs will be inevitable and this indicates the likelihood of RM persisting into the future.

The dominant theme emerging in the modern world is that business activities are gradually becoming victims to economic systems that reflect and advocate for value creation and relationship orientation on the products and services consumed by customers (Palmer and Bejou, 2005). The understanding is that new global systems are instituting in place, economic systems that reflect much of relationships, especially with the growth of mass customization (Vargo and Lusch, 2004). Therefore, irrespective of their nature, modern businesses are faced with circumstances they cannot run away from and these circumstances revolve around creating products and services that in nature reflect personal dialogue-based relationships (Palmer and Bejou, 200).

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Torrence (2001) sees development and success of RM in the future will emanate from cooperation and integration of both transactional marketing strategies and relationship marketing strategies. The author perceives that effective customer relationship marketing strategies cannot be realized in absence of reliable and successful transactional marketing information. This position is reinforced by Harker and Egan (2006) who explains that relationship marketing in the 21st century is boggled by debates about RM nature; ‘diffusion’ or perspectives of ‘focus’, and the author states that the modern world business environment requires RM that is interdependent and also integrate all aspects of marketing (Egan, 2003).

Gummersson (2002) emphasize the need for the modern organization, especially retail banks to embrace total relationship marketing strategies to realize the achievement of their long-term objectives. Accordingly, to this position, relationship marketing in the modern world rests on the ability to integrate an organization’s strategies, market needs and challenges, and the society in which the banks operate (Gummersson, 2002; Shajahan, 2006; Zinkhan, 2002). At the same time, created relationships should be diverse; and reflect social, economic, cultural aspects. This, therefore, requires modern aspects of RM to be largely inclusive and broad-based (Dwyer, Schurr and Oh, 1987; Ballantyne, Christopher and Payne, 2003).

Conclusion

The modern business world is changing at a faster rate and as this happens, businesses find it virtually impossible to divorce from increasing changes taking place across the globe. Given this scenario, the business now contends that future success depends on meaningful relationships, and as a result, there is a need for the creation of value-based relationships with key clients and stakeholders. Therefore, a new marketing paradigm is required and RM has been suggested as the way to go (Lindgreen and Swaen, 2005). According to this understanding, value exchange based on relationship orientation is what holds the success or failure of modern business entities. Nevertheless, there still exist gaps in theory, as the concept of RM becomes the essence of business activities in the new century and this requires future efforts of investigation. At the same time, as the debate continues to rage relationship marketing, with authors split on the ‘diffuseness’ and ‘focus’ base of RM, it is necessary to remain focused and faithful to tenets that build and constitute RM effectiveness. Continued research should therefore remain the bedrock of the field. Lastly, suspending all opposing views and lines of battles that exist about RM makes it important to establish that the success of modern businesses rests on the integration of both transactional marketing and relationship marketing with eyesight on technology (Bejou, 1997; Gilmore, 2003).

References

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