TITLE OF JOURNAL: Relationship marketing: strategic and tactical implications
BY: Christian Grönroos
SOURCE: Vol.34 No3 1996 pp.5-14
This journal article discusses the logic of the re-emerging relationship approach to marketing and presents key strategic as well as tactical implications for a firm attempting to apply a relationship marketing strategy. Notes that major changes in the business philosophy may be required if relationship marketing is truly to be adopted. Otherwise the firm may just be paying lip-service to the new philosophy. Using direct marketing techniques and developing partnerships alone are not sufficient. Relationship marketing requires much more than that.
According to this journal article, first I will touch on the relationship marketing as a philosophy and its definitions, and then clarify the strategic as well as tactical issues in relationship marketing to some extent.
The relationship marketing philosophy
There are the definitions of relationship marketing based on the different scopes and different philosophy from the marketing mix management approach.
First, a rather comprehensive definition states that: “Relationship marketing is to identify and establish, maintain and enhance relationship with customers and other stakeholders, at a profit, so that the objectives of all parties involved are met and this is done by a mutual exchange and fulfillment of promises”.
This definition statement emphasizes that the key aspects of a marketing approach are not only getting customers and creating transactions (identifying and establishing) are important, but also maintaining and enhancing ongoing relationships; that not only giving promises is the responsibility of marketing, but also the task of fulfilling promises; and that profitable business relationships rely on the capability of a firm to develop trust in itself and its performance among its customers and other stakeholders. At the same time, a marketing approach should lead to a trusting relationship between the parties involved.
Besides that, Bitner states that the need for a firm to manage not only the task of giving and fulfilling promises but also the task of enabling the fulfillment of promises if marketing is to be successful.
Another relationship marketing definition by Gummesson points out three key aspects of relationship marketing. He defines “relationship marketing as a marketing approach that is based on relationships, interactions and networks”.
Grönroos states that the relationship marketing can be formulated as a generic marketing definition: “Marketing is to manage the firm’s market relationships”. This definition includes the fundamental notion of marketing as a phenomenon basically related to the relationships between a firm and its environment. It points out that marketing includes all necessary efforts required to prepare the organization for, and implement activities needed to manage, the interfaces with its environment.
Strategic issues in relationship marketing
The three strategic issues in relationship marketing were identified as:
1. Defining the firm as a service business
2. Managing the firm from a process management perspective
3. Developing partnerships and networks
All three issues will be briefly and separately discussed in this section.
1. Defining the firm as a service business
A manufacturer, wholesaler, retailer, a service firm or any supplier should know and understand the long-term needs, desires and expectations of customers better and offers added value on top of the technical solution embedded in consumer goods, industrial equipment or services.
Notes that customers do not only look for goods or services, they demand a much more holistic service offering including everything from information about how best and most safely to use a product, to delivering, installing, updating, repairing, maintaining and correcting solutions they have bought. And they demand all this, and much more, in a friendly, trustworthy and timely manner.
2. Managing the firm from a process management perspective
Activities which provide value to customers such as the core product itself, advertising the product, delivering the product, taking care of complaints and recovering mistakes and quality faults, maintaining the product, billing routines, product documentation, etc. Therefore, the whole chain of activities has to be co-ordinated and managed as one total process.
Moreover, from profitability and productivity perspectives only activities which produce value for customers should be tolerated in the process. Besides, relationship marketing as lean management principles requires a process management perspective in which strengthen relationship building and management.
3. Developing partnerships and networks
Notes that manufacturers and service firms will frequently find that they cannot supply customers with the total offering needed on their own, and that it would be too expensive to acquire the necessary additional knowledge and resources to produce the required elements of the offering themselves.
Hence, it may be more effective and profitable to find a partner to supply the complementary elements of the offering needed to develop a successful relationship with a customer. Basically, partnerships and networks of firms are formed horizontally and vertically in the distribution channel and in the supply chain.
Tactical issues in relationship marketing
Three tactical elements of a relationship marketing strategy were identified in the beginning of the article:
1. Seeking direct contacts with customers
2. Building a database
3. Developing a customer-oriented service system
All three issues will be briefly and separately discussed in this section.
1. Seeking direct contacts with customers
Manufacturers or retailers should develop systems which provide them with as much information about their customers as possible. Therefore, advertising campaigns, sales contacts and complaints situations can be made as relationship-oriented as possible. Besides, one should always use available face-to-face contacts with customers, or means provided by information technology, to get as close as possible to the customers.
2. Building a database
Establishing a database consisting of necessary customer information files is needed. Furthermore, a well prepared, updated, easily retrievable and easy-to-read customer information file is needed to make it possible for the employee to pursue a relationship-oriented customer contact. Moreover, a good database will be an effective support for cross-sales and new product offerings.
In addition, databases can be used for a variety of marketing activities, such as segmenting the customer base, tailoring marketing activities, generating profiles of customer types, supporting service activities and identifying high-likelihood purchasers. A customer information file for relationship marketing purposes should also include profitability information, so that one knows the long-term profitability of the customers in the database.
3. Developing a customer-oriented service system
The firm has to understand how to create and manage a total service offering, i.e. manage service competition, the value-generating processes of the organization have to be designed to make it possible to serve customers and produce and deliver a total service offering. In other words, the firm has to know service management.
Four types of resources are central to the development of a successful service system; customers, services, employees and time.
Customers take a much more active role as the perceived quality of the service offering depends partly on the impact of the customer.
The service system is, to a growing extent, built on technology. Computerized systems and information technology used in design, production, administration, service and maintenance have to be designed from a customer-service perspective.
The success of relationship marketing is dependent on the attitudes, commitment and performance of the employees. Furthermore, the success on the external marketplace requires initial success internally in motivating employees and getting their commitment to the pursuit of a relationship marketing strategy.
Time is also a critical resource to manage. Customers have to feel that the time they spend in the relationship with a supplier or service firm is not wasted. Hence, good managed time induces cost-effectiveness for all parties in a relationship.
BY: Christian Grönroos
SOURCE: Vol.34 No3 1996 pp.5-14
This journal article discusses the logic of the re-emerging relationship approach to marketing and presents key strategic as well as tactical implications for a firm attempting to apply a relationship marketing strategy. Notes that major changes in the business philosophy may be required if relationship marketing is truly to be adopted. Otherwise the firm may just be paying lip-service to the new philosophy. Using direct marketing techniques and developing partnerships alone are not sufficient. Relationship marketing requires much more than that.
According to this journal article, first I will touch on the relationship marketing as a philosophy and its definitions, and then clarify the strategic as well as tactical issues in relationship marketing to some extent.
The relationship marketing philosophy
There are the definitions of relationship marketing based on the different scopes and different philosophy from the marketing mix management approach.
First, a rather comprehensive definition states that: “Relationship marketing is to identify and establish, maintain and enhance relationship with customers and other stakeholders, at a profit, so that the objectives of all parties involved are met and this is done by a mutual exchange and fulfillment of promises”.
This definition statement emphasizes that the key aspects of a marketing approach are not only getting customers and creating transactions (identifying and establishing) are important, but also maintaining and enhancing ongoing relationships; that not only giving promises is the responsibility of marketing, but also the task of fulfilling promises; and that profitable business relationships rely on the capability of a firm to develop trust in itself and its performance among its customers and other stakeholders. At the same time, a marketing approach should lead to a trusting relationship between the parties involved.
Besides that, Bitner states that the need for a firm to manage not only the task of giving and fulfilling promises but also the task of enabling the fulfillment of promises if marketing is to be successful.
Another relationship marketing definition by Gummesson points out three key aspects of relationship marketing. He defines “relationship marketing as a marketing approach that is based on relationships, interactions and networks”.
Grönroos states that the relationship marketing can be formulated as a generic marketing definition: “Marketing is to manage the firm’s market relationships”. This definition includes the fundamental notion of marketing as a phenomenon basically related to the relationships between a firm and its environment. It points out that marketing includes all necessary efforts required to prepare the organization for, and implement activities needed to manage, the interfaces with its environment.
Strategic issues in relationship marketing
The three strategic issues in relationship marketing were identified as:
1. Defining the firm as a service business
2. Managing the firm from a process management perspective
3. Developing partnerships and networks
All three issues will be briefly and separately discussed in this section.
1. Defining the firm as a service business
A manufacturer, wholesaler, retailer, a service firm or any supplier should know and understand the long-term needs, desires and expectations of customers better and offers added value on top of the technical solution embedded in consumer goods, industrial equipment or services.
Notes that customers do not only look for goods or services, they demand a much more holistic service offering including everything from information about how best and most safely to use a product, to delivering, installing, updating, repairing, maintaining and correcting solutions they have bought. And they demand all this, and much more, in a friendly, trustworthy and timely manner.
2. Managing the firm from a process management perspective
Activities which provide value to customers such as the core product itself, advertising the product, delivering the product, taking care of complaints and recovering mistakes and quality faults, maintaining the product, billing routines, product documentation, etc. Therefore, the whole chain of activities has to be co-ordinated and managed as one total process.
Moreover, from profitability and productivity perspectives only activities which produce value for customers should be tolerated in the process. Besides, relationship marketing as lean management principles requires a process management perspective in which strengthen relationship building and management.
3. Developing partnerships and networks
Notes that manufacturers and service firms will frequently find that they cannot supply customers with the total offering needed on their own, and that it would be too expensive to acquire the necessary additional knowledge and resources to produce the required elements of the offering themselves.
Hence, it may be more effective and profitable to find a partner to supply the complementary elements of the offering needed to develop a successful relationship with a customer. Basically, partnerships and networks of firms are formed horizontally and vertically in the distribution channel and in the supply chain.
Tactical issues in relationship marketing
Three tactical elements of a relationship marketing strategy were identified in the beginning of the article:
1. Seeking direct contacts with customers
2. Building a database
3. Developing a customer-oriented service system
All three issues will be briefly and separately discussed in this section.
1. Seeking direct contacts with customers
Manufacturers or retailers should develop systems which provide them with as much information about their customers as possible. Therefore, advertising campaigns, sales contacts and complaints situations can be made as relationship-oriented as possible. Besides, one should always use available face-to-face contacts with customers, or means provided by information technology, to get as close as possible to the customers.
2. Building a database
Establishing a database consisting of necessary customer information files is needed. Furthermore, a well prepared, updated, easily retrievable and easy-to-read customer information file is needed to make it possible for the employee to pursue a relationship-oriented customer contact. Moreover, a good database will be an effective support for cross-sales and new product offerings.
In addition, databases can be used for a variety of marketing activities, such as segmenting the customer base, tailoring marketing activities, generating profiles of customer types, supporting service activities and identifying high-likelihood purchasers. A customer information file for relationship marketing purposes should also include profitability information, so that one knows the long-term profitability of the customers in the database.
3. Developing a customer-oriented service system
The firm has to understand how to create and manage a total service offering, i.e. manage service competition, the value-generating processes of the organization have to be designed to make it possible to serve customers and produce and deliver a total service offering. In other words, the firm has to know service management.
Four types of resources are central to the development of a successful service system; customers, services, employees and time.
Customers take a much more active role as the perceived quality of the service offering depends partly on the impact of the customer.
The service system is, to a growing extent, built on technology. Computerized systems and information technology used in design, production, administration, service and maintenance have to be designed from a customer-service perspective.
The success of relationship marketing is dependent on the attitudes, commitment and performance of the employees. Furthermore, the success on the external marketplace requires initial success internally in motivating employees and getting their commitment to the pursuit of a relationship marketing strategy.
Time is also a critical resource to manage. Customers have to feel that the time they spend in the relationship with a supplier or service firm is not wasted. Hence, good managed time induces cost-effectiveness for all parties in a relationship.
In conclusion, as I have read this article thoroughly, I can deduce that the definition of relationship marketing and its philosophy defined by those people who are recognized as expert in the marketing field. Moreover, I do understand the strategic as well as tactical aspect of developing and implementing a relationship marketing strategy.
