Relationship

Marketing

Case:
RM thinking helps turn around SAS

When Jan Carlzon took on the role of President at Scandinavian

Air Services (SAS) in 1980, the business was in trouble. Airline
companies were struggling with excess capacity in a stagnant
market.most airlines were responding by cutting costs. But
Curlzon argued that cost-cutting ultimately ended up hurting
customers and demoralizing employees. Instead, he proposed
that spending be increased in customer service initiatives. His
strategy was simple in a stagnant market he set out to
increase revenue by becoming the best airline in the world for
the frequent business traveler.
Everything that Carlzon did was aimed at improving the customer
experience. Carlzons policies not only turned around SAS, they
ushered a in a whole new way of thinking about the way in which
businesses developed their marketing

An iterative learning
process..
Companies
interact with
their customers
and learn who
they are, what do
they want, how
much they buy
and how much it
costs to serve
these customers

Example: Cellular
Phones
Stage 1:
Preliminary information collected during
the first purchase to make
recommendations
Stage 2:
Based on the calling patterns and bills
make refined recommendations and offer
better deals that the customer cannot
refuse.

An iterative learning
process..

Companies learn to tailor their offerings to

suit the requirements of profitable
customers

Rise of Relationship Marketing

It was the result of the development

of a number of separate management
areas that were the subject of
interest to marketing academics

Marketing of Services
Customer Service Quality
Customer Retention studies
Industrial Marketing
Supply chain management
Total Quality Management

The Nordic School

Among those who were
instrumental in
developing the concept
of RM were
Evert Gummesson at
Stockholm University,
and

Christian Gronroos at
the Swedish School of
Economics

Transactional Marketing
The focus of this approach is on individual
transaction and does not concern
continuous relationship with customers
Does not contain a strategic long-term
perspective
The thrust is on gaining more and more
new customers rather than retaining
existing customers

Relationship Marketing
Focuses on continuous multiple
transactions rather than isolated individual
transactions
Focuses of this approach centers around
developing hard core loyal customers with
the idea of retaining them forever
A high degree of customer contact,
commitment and services are maintained

ELEMENTS OF RELATIONSHIP
MARKETING
Firms build long-term relationships by gathering information about their
customers, analyzing and using the data to modify the marketing mix,
monitoring interactions with customers, and using knowledge of customers
and their preferences to orient every part of the organization.

INTERNAL MARKETING
Internal customersemployees or departments within the organization
whose success depends on the work of other employees or departments.
Internal marketing managerial actions that enable all organizational
members to understand, accept, and fulfill their respective roles in
implementing a marketing strategy.
Effective internal marketing also increases employee satisfaction.

In essence.
Transaction-based marketing - Buyer
and seller exchanges characterized by
limited communications and little or no
ongoing relationship between the
parties
Relationship Marketing - Development,
growth, and maintenance of long-term,
cost-effective relationships with
individual customers, suppliers,
employees, and other partners for
mutual benefit
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Why is RM important?
It costs five times as much to attract a new
customer as it does to keep a current one
satisfied.
It is claimed that a 5% improvement in
customer retention can cause an increase
in profitability of between 25 and 85
percent depending on the industry.
Likewise, it is easier to deliver additional
products and services to an existing
customer than to a first-time buyer.

Select views on RM
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 (Grnroos, 1990).
RM attracts, maintains and enhances
relationships ..(Leonard Berry, 1983).

customer

a tool to turn current and new customers into

regularly purchasing clients and then progressively move
hem through being strong supporters of the company and
its products to finally being acive and vocal advocates for
the company (Christopher et al., 1990)
RM is marketing based on interaction within networks of
relationships (Gummesson, 2002).

Thus.
Relationship Marketing has emerged
as a new approach enabling
marketers with brand new tools and
techniques to reach, acquire, retain
and expand their customer base
Marketing designed to create,
maintain, and enhance strong
relationships with customers and

other stakeholders

Relationships .
Should be based on trust.
Should be mutually beneficial.
Develop over time and should be
managed accordingly.