Relationship Marketing

Relationship marketing has become a dominant form of marketing theory in recent times. It has evolved from other forms of marketing and has countless benefits for businesses that use the relationship strategy. It is limitless in the type of businesses it can be adopted by with new technology and media making it even more popular.

The study of marketing is one that has been fixed on an evolving range of marketing segments over the last fifty years or so. A look at the progress of the changing focus of marketing shows a considerable shift in thinking. In the 1950's marketers were mostly focused on consumer goods, while the 1960's saw a shift towards industrial markets. In the 1970's effort was focused on non-profit or societal marketing, while in the 1980's the services sector received increasing attention. This leads us to the 1990's and through to the present where relationship marketing is the new focus of marketing. This new form of marketing has seen a shift from a transaction focus to a relationship focus (Martin, 1991).

There is much debate over what is the real meaning of relationship marketing, with different authors having differing views as to what are the key concepts that make up relationship marketing. This is mainly due to the relatively new emergence of the term as a major form of marketing theory (Harker, 1999)

One definition comes from the Chartered Management Institute and they describe relationship marketing as 'the building of long-term, loyal, committed and profitable relationships with potential and existing customers through communication and the provision of quality goods and services'(n.a. 2005).

The concept can often be described as a developmental process that evolves through a six stage process: prospect (a potential customer); customer (sale is made); client (repeat sale is made); supporter (regular customer); loyal customer (regular customer who actively supports the organisation); and partner (customer working in partnership with the organisation). (n.a. 2005)

In basic terms 'Relationship marketing refers to all marketing activities directed toward establishing, developing, and maintaining successful relational exchanges'. (Morgan & Hunt, 1994)

While relationship marketing as a term has only been around for a short time the actual concept has been around for a lot longer. The concept can be dated back to the days when a salesman kept the names and telephone numbers of clients in a little black book and often included the birthdays of the client's family members (Bergeron, 2001). This argument is developed further by Batterley, (2004) who says that businesses have always had a relationship with their customers. The local corner shop has always known and recognised its customers and their preferences, 'known that Mrs Jones prefers Anchor butter and she usually shops on Tuesday, so made sure there's some Anchor butter tucked away under the counter if need be for when Mrs Jones comes in' (Batterley, 2004).

Relationship marketing has becoming increasingly important for businesses today. This can be accredited to factors such as the smudging of boundaries between markets or industries, an increasing division of markets, shorter product life cycles, rapid changing customer buying patterns and more knowledgeable and sophisticated customers. Firms are also considering the adoption of relationship marketing strategies as critical for sustaining a competitive advantage (Wong, 2001).

One area that uses relationship marketing extensively is companies that are involved in e-marketing. Relationship marketing or customer relationship management as it is sometimes referred to concentrates on using information about customers to develop marketing strategies that develop and maintain long-term customer relationships. This focus is made easier in e-marketing because of the marketers capacity to target individual customers. Online retailers such as Amazon or eBay are excellent examples of companies using the relationship they have with the customer to maintain the loyalty. These companies analyse the customers purchase history and suggest products that they think the customer will like according to their previous purchases. This is aimed at increasing the customer's share of purchases with the company rather than a share of the total market. (Pride et al, 2007)

The retail industry is one of the areas where relationship marketing is most beneficial.

This type of marketing allows retailers to form a close relationship with customers, while giving them the opportunity to understand the customers' lifestyles and purchasing habits. Through this form of marketing retailers are able to focus their offers, add new scope to transactions using buyer information and also learn from the transactions. This allows the retailer to collate information on their customers into a database and use it in a way that will maintain their customer base while also trying to attract new customers. (Gordon, 1994)

A perfect example of the value of relationship marketing to a business is a person buying a car. They might have been motivated to buy a car as a result of promotional activity by the car manufacturer, only to be highly disappointed by the following lack of interest by the dealer in maintaining the car and satisfactorily rectifying faults that occurred within the warranty period. The consumer may be further upset when they seek to obtain redress directly from the manufacturer and find the manufacturer is totally uninterested in having any dialogue with them. (Martin, 2002) This company obviously doesn't use relationship marketing and as a result the customer is not likely to buy another vehicle from them.

Relationship marketing is not simply being employed by retail or manufacturing businesses, but it is also very common in the service industry. The banking industry uses relationship marketing to present their financial packages to its customers. These companies need to identify the customers they need to market their services to which is usually done using databases (Dauer, 1991). A leading example of a financial company doing this is a credit union with $300 million in assets used their customer database to determine the most appropriate customers to market a new bonus rate to. By using the database the company identified 1800 customers, while the cost was limited to just over $400. The end result for the company was an extra $4 million in sales in just four days (Dauer, 1991)

It may come as a surprise but another area where relationship marketing is resulting in many benefits is libraries. Most people will not think of a library when they think of marketing, however libraries are