| Relationship Marketing Approaches in Services Marketing
Over the last years the focus of marketing has changed from transactional to relationship marketing because companies realized that is cheaper to keep old customers rather than attracting new ones. Also this shift has occurred because of the intense rivalry that can be noticed in every industry.
Besides its main goal of retaining customers and encouraging repeats, relationship marketing also creates value through relationships between buyers and sellers as well inside the organisation, or external with competitors, suppliers and distributors.
A develop definition of relationship marketing by Christian Grönroos in 1989 would be: The purpose of relationship marketing is to identify and establish, maintain and enhance, and when necessary terminate relationships with customers ( and other parties) so that the objectives regarding economic and other variables of all parties are met .This is achieved through a mutual making and fulfilment of promises. Transactional vs. Relationship Marketing
The well-known transactional marketing, developed in late 1950’s, is based on the concept of the four P’s as Borden argued in 1964. Many principals that are still popular among marketing practitioners and academics have their source in transactional marketing, but in nowadays business environment it has been created a paradigm shift from transactional marketing to relationship marketing, thereby marketing is evolving.
The transactional approach used in marketing focuses on discrete transactions, which now does not fit anymore between contemporary marketing practices. The main differences between relationship marketing and the transactional one can be easily observed in the table and figures below.
The Strategy Continuum
The Product Continuum
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 systems| Interdependent 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|
Grönroos (1994) as cited in: Hultman and Shaw (2003)
Grönroos affirms in 1994 that any firm, no matter which is its main business purpose, will be situated somewhere between the two extremes of the continuum, packaged goods and services. Depending on the fall along the continuum of the company’s offering, the firm chooses between the relationship and transactional approaches. The transactional approach would suit the most a marketing player dealing with packaged products while the relationship approach is suited for those marketing services.
As a relational firm, a company has to be committed to its customers, moving them out of anonymity just by tracking and focusing on sales but also creating multiple levels of relationships with the customers, whereas a transactional firm deals with anonymous buyers because the main interaction between customers and the firm is a salesperson. A relationship marketing approach implies quality on all levels and in all departments while in a transactional marketing the quality is just the concern of the production department. Importance of Relationship Marketing in Service Sector
The success of any industry...