Research Korner: Relationship Marketing

Relationship Marketing

Marketing Coursework   Relationship Marketing   Introduction             Relationships are essential in the various aspects of life, whether in romance, family, or in business, for this becomes the foundation of good interrelations with one another. Making good relationships benefit many individuals, including many business organizations. This also becomes one of the good foundations of companies and organizations to attain growth and profit in the market, for their relationships with their customers, shareholders, and employees become strong and established, if each individual would strive to make good interrelationships. With the fast-changing world today, many gadgets and technologies have become a means for many individuals to enhance their relationships with the use of the Internet and the World Wide Web. With the innovation and evolution of technology, many business organizations are able to identify and focus on the needs of their customers, which enhance customer value in terms of marketing. In addition to this is the use of other factors in marketing, such as traditional marketing, selling, and database marketing, which are responsible for enhancing and developing good relationships with customers. In this paper, the factors concerning customer value within relationship marketing will be evaluated. Customer value will be discussed to how the customer perceives potential benefits in their relationship with the business organization.   Customer Value and Relationship Marketing              (1991) reports that positioning begins with the customer, for customer thinks about products and companies in relation to other products and companies, and what really matters is how existing and potential customers think about a company in relation to its competitors. Customers set up a hierarchy of values, wants and needs based on empirical data, opinions, word-of-mouth references, and previous experiences with products and services, and use this information to make purchasing decisions (1991). Today, the importance of market positioning depends on not only the products, services, and needs of the customers, but on the company’s competitive strategy, pricing, packaging, distribution, service, support and communications, such as the use of advanced technologies. This is why, traditional positioning strategies are inadequate because they do not consider technology and change to be significant factors, and because building and sustaining customer relationships is never their central aim. They believe that a static, impersonal customer and marketplace exist, where technologies, products and customer perceptions change very slowly (1991). In contrast, dynamic positioning strategies are very different, for it is based on manipulation of the customer’s mind, on using a bag of marketing tricks to entice the customer into awareness of a company’s desired position, which is company centered than customer centered. This strategy is applicable in a complex, fast-changing industry, where radical changes are occurring everyday. These changes become a response to the fact that products evolve, markets change, competitions change, and new technologies emerge. This is why new and established companies are constantly trying to innovate and improve their products and services ( 1991). In addition to this, are the company’s continuous strategies of improvement in terms of customer value, for these are important in sustaining relationship marketing.             It has been reported that relationship marketing is a form of marketing, in which emphasis is placed on building longer term relationships with customers rather than on individual transactions, involves understanding the customer’s needs, and emphasizes in providing a range of products and services to existing customers as they need them ( 2006). Relationship marketing is important for it enables many companies to become permanently established in the market and provide longer-term service and products to new and existing customers. With relationship marketing, the company not only can serve their customers, but also generate profit and company gain for a longer period. The application of relationship marketing also provides the consumers with great value to their money, which gives the company a good reputation in the market, for the company relies on building a strong and long-lasting personal relationship with their customers.             However, the concept of relationship marketing will not be complete without the existence and influence of customer value.  (2003) provided several definitions of customer value. First, customer value is what the customer believes that a product or service provides in a certain use situation. Second, it is an implicit comparison between what the customer receives from the provider and what the customer provides in time, effort, and money, where the frame of reference is not just the price tag on the product, but also the ease and convenience in the acquisition and use of the product and the entire interactive experience the customer has with the firm. Third, is that customer value can be shaped by attitudes, opinions, and behaviors of others, such as friends, family, media, the providing firm, and other competitors in the industry as well as in substitute industries. Lastly, is that customer value determines customer satisfaction and the likelihood of brand or firm loyalty, where the cause-effect relationship could be affected by comparisons with competitors and other substitutes (2003). Moreover, many firms focus on the product rather than on the customer, but when the focus is on the customer, the business is defined in terms of customer value, not in terms of product, for the product is viewed as a customer solution and experience, which is the most fundamental definition of any business firm. If firms are focused on the customer, they ought to see themselves in the role of providing solutions, not products, which leads to giving importance for customer value (2003). By focusing on customer value and customer’s perspectives, business organizations can identify their mission and values, and can better understand their strengths and sources of competitive advantage, for business firms are better positioned and more effective in allocating resources and efforts both strategically and operationally, if they are better situated to understand what would be considered superior customer value ( 2003).   Factors concerning Customer Value             In line with the advantages in determining customer value are several factors, which are important to identify in response to providing value-added and high-quality products and services to the consumers. Important factors include perceived value, service quality and value, and social and emotional value in terms of brand loyalty. These factors are related to marketing and technological means, which also determine the effectiveness and success of the company in the market.             It has been reported that customer perceived value could be related to a single purchase of a good or a service, or to a relationship between a supplier and a customer, or even to a net or network of such relationships ( 2004). Professional services are always customized, which creates a need for the parties to interact intensively in every phase of their joint value creation, thus, are often bought within relationships. In business relationships, two exchange partners coordinate a number of activities in a way that it increases their interdependence, thus, raising their joint productivity and creating value (2004). If the customer has a positive or pleasant perceived value towards a product or service, then most likely, consumers purchase that specific product regularly. However, if the customer has a negative perceived value towards a product or service, then consumers will be patronizing other brands from other industries. The role of communication and technology somehow determines the building up of the consumer’s perceived value, as more consumers today rely on what different media can say about a specific product or service. A good venue for developing perceived value is through the Internet, representing a state of pure competition, where there exist many buyers and sellers and a lot of market information on which to base decisions in purchasing or patronizing a product or service (2004). In addition to the influence of the Internet and the World Wide Web is the influence brought about by other means of communication, such as the television, radio, and printed media. Moreover, the perceived value factor of consumers determines relationship marketing, for with this perceived value, the company can base the innovation and features of their products to satisfy their customers and attain customer loyalty. This is a way of responding to the needs of their customers, for taking note of their perceived value regarding a product or service would mean listening and paying attention to their needs.                        The second factor is service quality and value. In understanding customer value, improving service quality and value is important, being an element of customer focus and service orientation. In order for the company to deliver customer value, it must strive to aim at customer satisfaction, to achieve customer loyalty. Firms design a product concept based on their understanding of the customer’s expectations, and then configure their value-creating assets accordingly in an operations design, which determines the customer experience. Thus, customer value must be closely aligned with customer expectations, and this can be achieved by continuously improving, developing and innovating a company’s products and services (2003). Through the influence and role of communication means, the service quality and value of a product or service can be altered. This includes the assessment of the media on the reliability and quality of the product or service, which determines its success in the market. In relation to relationship marketing, the improvement in service quality and value of a product or service would enable the company and customers create a good and lasting relationship, for the customers provide solutions to the problems of the consumers, and in turn, the consumers provide the company profit through continuous loyalty and patronage.             In line with this, a study done by  (2005), which aims to examine the relative impact of service quality on service value, customer satisfaction, and customer loyalty, including positive word-of-mouth communication, proves the positive impact of good service quality and value to relationship marketing. The first implication of their study is that the greater the tangibles, assurance, and sensory dimensions of service quality, the greater are the perceived service values by the customers. The second result is that the greater the empathy dimension of service quality, the greater is the customer satisfaction. Third, the greater the service value, the greater are the customer satisfaction, the positive word-of-mouth communication, and continuous patronage of the customers. Lastly, the greater the customer satisfaction leads to greater positive word-of-mouth communication and patronage of the customers (2005). This study proves that with good service quality and value, consumers have positive response regarding a product or service.             The third factor is the social influence in terms of brand loyalty. Brand loyalty is the consumer’s conscious or unconscious decision, expressed through intention or behavior, to repurchase a brand continually, and occurs because the consumer perceives that the brand offers the right product features, image, or level of quality at the right price (2002). The different aspects present in society, such as media, advertising and communications, influence brand loyalty. With the advancement of technology, advertising brands is not anymore a hard task, so many companies invest on making advertisements to introduce their brands in the market. Because most consumers are exposed to the different means of communication media, many consumers base their judgments and decisions in purchasing and patronizing a specific product or service.             In relation to relationship marketing, companies can easily introduce their products and services to the public through the different advertising media. Companies can express their aim of targeting the needs of their customers by properly and effectively advertising their products and services. This is why, companies should always strive to improve and develop their products and services, because the society can easily detect the qualities and characteristics of products through the advertising media. Through good customer value, companies can attain brand loyalty from their consumers, as a consequence of implementing an effective relationship marketing strategy with the consumers.             The last factor is the emotional value of consumers in terms of brand loyalty. It has been reported that emotional loyalty occurs on one of two pathways, each with its own threshold (1999). The first pathway suggests that emotional loyalty is born out of a consumer’s personal relationship with a brand, and this relationship may very well start through the satisfaction of a functional need or an expressiveness need. Consumers cross the threshold from a mere brand relationship into emotional loyalty when they “animate” the brand, and relating to it in the same way they relate to human beings ( 1999). The second pathway is the formation of a strong user community around the brand, where the consumer crosses the threshold to emotional loyalty when membership in the brand’s user community becomes an end in itself. In essence, the emotional value of consumers toward a product or service depends on certain circumstances when they have found attachment to the product or service. This attachment well depends on customer value, which in turn creates good interrelationships between the producers and the consumers. In addition, the key to creating value from emotionally loyal consumers is to manage simultaneously their purchase behavior and their influence on others, for the halo effect created by this small consumer segment can be used to expand the value of the brand, create line extensions, or build a beachhead into other categories (1999). The company must make sure to maintain the good and high quality of their brand to ensure the public of their perceived value and in turn, the brand loyalty and continuous patronage of their consumers.   Conclusion              Relationship marketing is important in the aim of many business organizations to identify customer needs and provide answers or solutions to their problems. In having a good relationship with customers, the company can continue innovating solutions to serve consumers and establish the company in the market. In line with relationship marketing, is the concept of customer value, which is important to determine and evaluate to successfully and efficiently provide the needs of the consumers. Customer value can be influenced by several factors, namely, perceived value, service quality and value, and social and emotional value in terms of brand loyalty.             Perceived value determines the success of a product or service, because with a positive perceived value of consumers creates a positive effect in the value of a product or service. Similarly, a good service quality and value helps generate a good profit for the company. In addition, the society has a big influence on brand loyalty, with the role played by the different advertising media. Likewise, emotional loyalty affects relationship marketing, for with the continuous patronage of consumers on specific products or services, the company can cater to their needs. With relationship marketing, customer value can always be determined by the company, which is essential in their aim to efficiently providing their consumers with good and high quality products and services.

Relationship Marketing

Marketing Coursework Relationship Marketing Introduction Relationships are essential in the various aspects of...