Relationship Marketing: Theory and Practice

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‘Relationships are mutually beneficial to both the customer and the organization.’ - Comprehensively discuss this statement -

Relationships are mutually beneficial

Executive summary
This literature review discusses if relationships between customers and organisations are mutually beneficial. Hereby, opinions and findings from different authors in the relationship-marketing field are highlighted and analysed. In the last two decades, increasing competition in the business environment has caused a shift from the traditional marketing strategy to a more relationship-based approach. Academics have stated different definitions about relationship marketing. However, most agree that the crucial determinants of relationships are trust, commitment, and satisfaction, whereas the desired outcome is a loyal customer. Furthermore, the purpose of relationships is a perceived advantage of both parties. From the company’s perspective, relationships can generate a higher level of profitability in the long run due to costs- and time- savings, cross-selling effects and useful information about customers. Consumers profit from psychological benefits such as confidence/trust and social benefits as well as from economical benefits such as special treatment or customisation. As relationships are initiated by organizations, mismanagement of relationships can cause disappointment, dissatisfaction or, in the worst case, switching of customers to competitors. A main finding of this study is that relationships between customers and organizations within a business context contain several theoretical benefits of relationship marketing opposed by numerous disadvantages and bad practical experiences. Hence, only under certain conditions both parties can experience mutual benefits. The research has been conducted through the study of journals, books and lectures, which suggest that relationship marketing is powerful in theory but not yet applicable in practice.


Relationships are mutually beneficial

Table of content
Page Executive summary 1.0 2.0 3.0 4.0 Introduction From market transaction to relationship exchange The role of the customer Establishing long-term relationships 4.1 4.2 5.0 Trust and commitment Satisfaction and Loyalty -i-1-2-3-4-4-5-6-6-7-9- 10 - 11 - 12 -

The concept of valued relationships 5.1 5.2 The company’s perspective The customers’ perspective

6.0 7.0 8.0 9.0

Disadvantages & negative influences of relationships Discussion Conclusion Resources


Relationships are mutually beneficial

Appendix A

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Appendix B

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Appendix C

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Appendix D

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Appendix E

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Appendix F

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Appendix G

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Appendix H

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Appendix I

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Appendix J

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Appendix K

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Appendix L

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Relationships are mutually beneficial



With the intensification of competitors in the market place, the need for firms to retain customers rather than recruit new ones is becoming essential in terms of enhance competitive advantage.

The scope of this literature review is to discuss if relationships between companies and customers provide advantages for both sides. To show this, the report covers a comparison between the traditional and the new approach, customers as different stakeholders in a company, factors which determine relationships, the purpose of relationships from the company’s and the customers’ point of view, disadvantages of relationships, the authors point of view, and a final conclusion.

The discussions in this report are based on relevant secondary data and frameworks of different authors. Moreover, it concentrates only on customers as individual consumers (B2C) and not as businesses (B2B) or internal customers.


Relationships are mutually beneficial


From market transaction to relationship exchange

Two major forms of exchange exist: the transactional approach,...
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