What is Relationship Marketing?

by · July 14, 2013

 

Relationship Marketing & Brand Loyalty

In a competitive and globalised world, understand your target audience by interacting with your customers is essential to success. Nevertheless, engaging your customer by just satisfying them with improvements in the core product seem to be ineffective and entail higher amount of money (Harwood, Garry and Broderick, 2008). However, developing stronger relationships with your current customers lead to enhance customer loyalty through reciprocal benefit. Therefore, what is relationship marketing? the important of customer loyalty management within relationship marketing strategies seems to be essential to understand this concept. In order to explain this concept better, this article will implement a theoretical evaluation of what relationship marketing actually means and the influence of customer brand loyalty reviews. First of all, what is relationship marketing as well as the benefits of developing a close relation with your current customers will be described. Customer loyalty literature will be discussed in order to highlight the potential implication for ant industry to build strong relationships. This main section will be also used as a reference to understand customer brand loyalty. To finish off this paper, the conclusion will reflect the future of relationship marketing.

What is Relationship Marketing & its Benefits

What is relationship marketing? According to Grönroos (1994) state, relationship marketing is defined as “identifying and establishing, maintaining and enhancing and when necessary also terminating relationships with customers and other stakeholders, at a profit, so that the objectives of all parties are met, and that this done by a mutual exchange and fulfilment of promises”. In other words, when a firm adopts a relationship marketing strategy, the main idea behind this is to accomplish and emphasis a close, honest and reciprocal interaction between the firm and its current customers (Neeli and Berry, 1997). This mutual beneficial relationship provides firms with a better understanding of customer’s experiences as well as customers’ needs and desire (Barnes, 1994). Consequently, companies are able to enhance relationship marketing strengthens by solving problems and accommodating needs in order to move up repeat customers and supporters towards advocates and partners (Harwood, Garry and Broderick; 2008).

What is Relationship Marketing | Creative Blog Marketing

In terms of financial benefits, developing a strong relationship marketing strategy provides firms with greater profitability (Morgan and Hunt, 1994). Most authors agree in focussing marketing efforts on remaining customers who have already tried the product/service rather than seeking new ones (Barnes, 1994). Developing a long-term relationship strategy provides better benefits than short-term strategy due to keeping customers happy seem to be better deal than turning over customer’s opinion (Reichheld and Sasser, 1991). Furthermore, strong relationships reduce risk and uncertainty and thus, stress due to the reciprocal information transferred, which made both parts more predictable. Moreover, the added value provided to the product or service package such as social exchange or customer care lead to create better competitive advantage among competitors (Harwood, Garry and Broderick; 2008).

The Important of  Brand loyalty

Customer brand loyalty definition

In terms of relationship marketing, customer brand loyalty is considered as the final outcome of a long-term relationship between partner dyads rather than a short-term relationship (Cater and Cater, 2008). As a consequence of this, a great range of advantages is brought to both implicated parts through continuing  positive attitude and repeated purchases by loyal customers, which also bring substantial benefits to firms (Barnes, 1994). According to what theoretical researchers have found, loyal customers become fewer prices sensitive, are more likely to try additional purchases, require less assistance due to the previous knowledge and also spread more positive and stronger recommendation by word of mouth (Agrawal, Gaur and Narayanan, 2012).

As observed in literatures, customer brand loyalty theory has not seemed to be clearly defined by a specific conceptual model due to experts argue different perspectives on this concept (Fisk et al, 1993). However, most authors approve satisfaction, perceived quality, communication, conflict handing, frequencies of purchase, perceived value, corporate image, emotions, trust and commitment as key aspects that influence and determining customer loyalty, which is one of the major goals of firms (Agrawal, Gaur and Narayanan, 2012; Berry and Parasuraman, 1991). Where Satisfaction, trust and commitment are considered the common denominator to understand what is relationship marketing and brand loyalty.

What is Relationship Marketing | Creative Blog Marketing

(Agrawal, Gaur and Narayanan, 2012)

Therefore, in order to find how determine customer loyalty, various authors have used a combination of two dimensions such as satisfaction and quality, image perceived and customer value or brand image and satisfaction (Dunn and Wrigley, 1984; Hur et al., 2010; Andreassen and Lindestand, 1998). However, other authors affirm that customer loyalty also depend of the industrial context variables and so, is subject to the market conditions. For instance, in a low-involvement industry such as soft drinks customers perceive satisfaction and value as direct influencers. However, in a high-involvement industry such as automotive, customers seem to perceive brand image and quality value as main influencers (Cater and Cater, 2008).

From Relationship Marketing to Brand Loyalty

Evaluating customer satisfaction as a result of quality and value perceived, Spake, Beatty, Brockman and Chrtchfield (2003) have found that customer satisfaction have an impact on customers’ trust and commitment, which seem to affect directly to customer brand loyalty. Therefore, there is a positive association between satisfaction and the final concept of customer loyalty. Nevertheless, increasing satisfaction does not mean a proportional increase on customer loyalty. In fact, only 15% of satisfied customer will remain loyal, which means, 85% of satisfied customer may switch the brand or product (Buttle, 1999). Consequently, it seems to be important for marketer to identify the most satisfied customers in order to construct a long-term relationship based on trust and commitment. Therefore, customer loyalty strategies and tactics have to be implemented at the climax of the relationship life cycle and keep this relation on over time (Little & Marandi 2003).

To accomplish this, a holistic perspective of mathematical model helps to identify ideal customers by recognising the natural relationship of measurement dimensions, which is no longer supported by traditional loyalty measurement such as amount of purchases (Loyalty builder, 2003). However, identify potential and longevity strengths in relationships seem to be crucial for profitably purpose (Little & Marandi, 2003). For example, in the sexual health industry, people perceive this as an embarrassing conversation, so less-open-mind customers are less likely to built a relationship with brands in this area.

What is Relationship Marketing | Creative Blog Marketing

Moreover, customer loyalty is a complex and multidimensional construct. it measures the probability that customers coming back as well as how likely are to perform partnering activities (Bowen and Shoemaker, 2003). In order to accomplish an accurately measure of customer loyalty, scholars have been focussed on a combination of two main streams such as customer behaviour and customer attitude, which seem to be evaluated in different manners as the dynamic process of customer brand loyalty depict (Cater & Cater, 2008; Griffin, 1996, and Lam, Ahearne, Hu, Schillewaert; 2010 ).

What is Relationship Marketing | Creative Blog Marketing

 

On one hand, behavioural aspect is defined as customer’s wiliness to repurchase over time, which including purchases frequency and probability, as well as word of mouth. Authors such as Reachheld and Sasser (1990) have found that behavioural loyalty is a direct outcome of high level of customer satisfaction, which seeming to be indirectly influenced by quality and product cost (Cater and Cater, 2008). Moreover, researchers have found that behavioural loyalty is related to a rational and cognitive aspect as well as seem to be tied to firm’s aspect.  In fact, due to the number of experiences over time and maturity, cognitive association with products play a more important role for older customer.

On the other hand, attitudinal aspects are defined as customer’s psychological attachments, which including preferences, intention and disposition (Rauynuen and Miller, 2007). Researchers have found that attitudinal loyalty seems to be positively influenced by satisfaction when coming from personal interaction (Harwood, Garry and Broderick, 2008). In addition to this, attitudinal customer loyalty seems to be more related to emotional consideration as well as tied to individual level. Furthermore, relationships with brands seem to be more passionate with younger customer groups. Therefore, the level of effectiveness by emotional and social attachments in young customers seems to be stronger. Moreover, the creation of emotional bonds with the past entail to stronger associations with the product and thus, higher brand loyalty.

Measuring Customer Brand Loyalty

Once identify each target audience, developing specific strategies and tactic of customer brand loyalty or retention for both behaviour and attitudinal seems to be crucial to enhance customer brand loyalty. Hence, in order to accomplish this, a combination of both customer behaviour and customer attitude dimensions could be determine by measuring the level of loyalty as shows the image below (Hurt et al, 2010; Pritchard and Howard; 1997). As higher level of both behaviour and attitudinal, relationships become more stable (Cater and Cater, 2008)

However, as mentioned in the definition of customer brand loyalty, in order to become engaged and loyal to a brand or product, customers have also to keep the attitude and behaviour dimensions during a long-term period of time. Customers that are loyal by both behaviour and attitudinal will remain repurchasing products even if they perceive brand actions as unfair during a short-term period. Lam, Ahearne, Hu and Schillewaert; (2010) suggest that, regarding to the level of switching, attitudinal switching and actual behaviour switching as well as psychological switching drivers with the brand have to be considered for evaluation the relationship. Therefore, as the graph depict, stability and partner relationship will only be possible when customers perceive brand actions as fair over time (Keller, 2008).

What is Relationship Marketing | Creative Blog Marketing

(Keller, 2008)

Customer’s Switching, Interpersonal & Habits

Among the literature of customer’s switching, the differences between switching behaviour and customer loyalty represent a huge gap. Authors such as Ganesh, Arnold and Reynolds (2000) have determinate three main groups in relation to loyalty: stayers, satisfied and dissatisfied switchers. Although stayers and satisfied are more loyal than dissatisfied, these dissatisfied switchers are more loyalty to serves provider, which highlight the important of construct personal bonds.

Furthermore, according to anthropomorphic theories (Gilmore 1919; MacDougall 1911; Nida and Smalley 1959; Tylor 1874) in order to facilitate interactions between loyal customer and brands such as Durex, firms need to consider brand personality as potential implication to stay close to their customer due to a better fit between personality treats. In addition, partners are more willing to accept humanize and animated brands when entertaining with product. Therefore, interpersonal relationship seems to be essential to enhance loyalty when improvements in core product do not work (Olsen, Tudoran, Bruso and Verbeke, 2011). However, factors such as life style, life cycle, age, gender, family or cultures systematically influence relationships (Dion and Dion, 1996). In fact, for industries, find the best manner to implement relationship could be essential to keep the relationship over time. For example, customers with higher economic class may prefect higher perception of privacy due to social reputation (Olsen, Tudoran, Bruso and Verbeke, 2011).

Customer brand loyalty could be constructed by enhancing habits and routines when the product necessarily needs to be purchased frequently enough. Furthermore, the convenience of product and selling point locations seems to be essential to develop purchasing habits. Therefore, use these to construct partner relationship could be possible by developing engaged projects between dyads (Olsen, Tudoran, Bruso and Verbeke, 2011).

Discussion5 Comments

  1. [...] explained in previous posts about relationship marketing and brand loyalty, build a high quality relationship with your customer seems to be  essential for any e-commerce [...]

  2. Ahmed Wafik says:

    Very interesting research paper !

    I’m in a dire need for its pdf ( or any other format) file.

    Thanks

    • Juan Blas Gómez says:

      Hi Ahmed, unfortunately I have not the pdf available. But feel free to coming back here and check it out at any time you need it. Glad you like it :)

  3. What’s up mates, its great post regarding tutoringand entirely
    defined, keep it up all the time.

  4. I don’t even know how I stopped up here, however I believed this post used to be great.
    I do not recognise who you might be however definitely you are
    going to a well-known blogger if you aren’t already.
    Cheers!

Add a Comment