Relationship Marketing of Services

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Introduction. Intense rivalry led to shift from transactional to relational marketingrelationship marketing is to identify and establish, maintain, and enhance relationships with customers and other stakeholders, at a profit, so that the objectives of all parties are met" (Grnroos, 1990, p. 10).

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Relationship Marketing of Services

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1. Relationship Marketing of Services Group Members: Susan Connell Louise Considine Justin Farrell Jacinta Smith

2. Introduction Intense rivalry led to shift from transactional to relational marketing “relationship marketing is to identify and establish, maintain, and enhance relationships with customers and other stakeholders, at a profit, so that the objectives of all parties are met” (Grönroos, 1990, p. 10).

4. Organisational Benefits Cheaper to keep existing customers than to attract new clients Reduced costs 80:20 rule Not all customers have equal value Lifetime value of customers

5. Goals of Relationship Marketing ..“build and maintain a base of committed customers who are profitable for the organization” (Zeithaml and Bitner, 2003,p.158). Acquisition, retention & enhancement Relationship marketing ladder of loyalty

6. RM Ladder of Loyalty Relationship of partner Actively recommends you Supports you passively Repeat business, but passive or negative attitude Carried out one transaction Potential customer

7. Appropriateness of RM Does the customer want a relationship? Is the customer segment profitable enough to justify the expense? Will forming a relationship with a customer or customer segment adversely affect the company, its employees or other customers?

8. Customer Profitability Segments Used to segment customers based on estimated profitability to the company

9. Implementation A review of the relationship marketing literature suggests a lack of knowledge and action surrounding the issue of implementation of relationship marketing strategies. This lack of action can be attributed to: The failure to recognise the synergy and interdependency between relationship marketing and niche marketing. The lack of use of relationship marketing. The lack of top management commitment to change the company to successfully implement relationship marketing strategies.

10. Approaches to Implementation Berry (1983): 1. develop a core service around which to build a customer relationship. 2. customise the relationship to the individual customer. 3. augment the core service with extra benefits. 4. price services to encourage customer loyalty. 5. market to employees so that they, in turn,will perform well for customers. Shani and Chalasani (1992): 1. Pursue a niche marketing strategy to identify a gap in the market. 2. Build up a customer database. 3. Focus on relationship marketing activities.

11. Approaches to Implementation contd.. Voss and Voss (1997): …suggest, “successful implementation of a relationship marketing program requires a complement of marketing strategies that satisfy and motivate customers through the four phases of relationship development” (p. 290). (awareness, exploration, expansion and commitment) Dodge and Fullerton (1997): 1. choose the right customers i.e. the profitable ones. 2. find ways to deliver superior value to these customers. 3. personalisation of the relationship Successful when… “the marketer and the customer abandon their adversarial role behavior in favor of some form of partnership or alliance” (Dodge and Fullerton 1997, p. 5).  

12. The reasons why relationship marketing fails Nelson and Kirkby (2001) believe there are seven key reasons: Data is ignored Politics rule The IS organisation and business users cannot work together There is no plan Relationship marketing is implemented for the company and not the customer A flawed process is automated No attention is paid to skill sets

13. To Conclude… Emerged due to awareness of the importance of relationships in services and of increasing consumer expectations. Relationship marketing is reforming the way service firms are conducting business. In order to remain competitive companies must embrace the philosophy of relationship marketing. Relationship marketing is beneficial to both organisations and customers. It is essential for a company to segment its customers on the basis of their profitability, as resources should be allocated on this basis. There is no universal remedy for implementing relationship marketing strategies successfully.

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