Transcript Relationship Marketing

Relationship Marketing
M. B. A.
University of Arkansas
at Little Rock
Marketing Strategy
A Quick Review
The Strategist’s Three
Primary Questions
1. What business should we be in?
- External assessment that includes: market and
industry analysis (opportunities & threats)
2. What do we bring to the table?
- Internal assessment that includes: core
competencies and distinct competencies
(strengths and weaknesses)
3. Is there a good fit between our business
and our capabilities?
Core Competency
Definition
A firms core competencies revolve around
technology (knowledge of how to do things).
A firm has a core competency when they are
able to integrate multiple streams of technology
in coordinating diverse production skills (harmonizing technologies) in order to better organize work to deliver VALUE. A core competency
provides the firm with the means to differentiate
itself.
Core Competency Vs.
Distinct Competency?
Core
Competency
Value
Proposition
Product
Mix
Distinct
Competencies
Wal-Mart’s core competency is in 1)acquiring and
2) processing products for re-selling at retail.
What is their distinct competency?
What does Porter mean by
“positioning”?
Sources of competitive advantage
C
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p S
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Broad
Target
Narrow
Target
Low Cost
Differentiation
Cost
Leadership
Broad
Differentiation
Cost
Focus
Focused
Differentiation
What You Should Know
(Yes, it’s on the test!)
SWOT Analysis
Strength
Weakness
Opportunity
Threat
Distinct Competency
Competitive Advantage
D.C. and S.C.A.
DC
Strengths
SCA
Opportunities
DC = Subset of strengths
SCA = Collision of DC
and subset of opportunities
Relationship Marketing
Now, on to Relationship Marketing!
Marketing Strategy
Continuum
Transaction
Marketing
On-off Exchanges
Brand Management
Short-term
Mass Communications
Isolated Market
Research
Relationship
Marketing
Focus
Time Perspective
Primary
Communication
Customer Feedback
Mechanism
Mass Markets
Market Size
Market Share
Criterion for Success
Ongoing Exchanges
Customer Management
Long-term
Personal
Communications
Ongoing Dialogue
Markets-of-One
“Mind Share”
(Share of Customer)
Relationship Marketing:
Definitions
Narrow focus: “an integrated effort to
identify, maintain, and build up a network with
individual consumers and to continuously
strengthen the network for the mutual benefit of
both sides, through interactive, individualized
and value-added contacts over a long period of
time.”
Broad focus: “all marketing activities
directed toward establishing, developing, and
maintaining successful relationships.”
Relationship Marketing
Definitions
Middle Ground: “the ongoing process of
engaging in cooperative and collaborative
activities and programs with immediate and
end-user customers to create or enhance
mutual economic value at reduced cost.”
Implication of Definition to
Practice or Rel. Mktg.
Manufacture
r
Wholesaler
Retailer
Consumer
Narrow Relationship
Marketing Process
Interactions
Customization of the
Marketing Mix
Learning about
Customers
1.
2.
3.
4.
1. Knowledge Acquisition
2. Customer Differentiation
Interactions
Product/Services
Communications
Channels
Price
Broadened Relationship
Marketing Process
Formation
Management &
Governance
Performance
Evaluation
Evolution
Broadened Relationship
Marketing Process
Formation
Purpose
-Inc. effect.
-Improve effic.
Management & Governance
Performance
Role Specification
Communication
Programs
-Relational selling
-Retention mktg.
-Co-op agreements
-Strategic partnerships
Partners
-Criteria
-Process
Common Bonds
Planning Process
Process Alignment
Employee Motivation
Monitoring Process
Evolution
-Enhancement
-Termination
Relationship Performance
-Financial
-Marketing
-Strategic
-Operational
-General
Industrial Buying Realities
Fewer vendors
Continued emphasis on quality
Information overload
Cost containment
TRUST
The belief by one party that
the other party will fulfill
its obligations.
How is TRUST formed?
Capability
Dependability
Concern for Other Party
Strategic Relationship Benefits
Buyers:
Sellers:
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Relationships Type Grid
Relationship
Type
Relationship
Glue
Nature of
Relationship
Switching
Costs
Relationship
Link
Functional
Inertia
Cooperation
Low
Systems
Relational
Above +
Trust
Accommodation
Medium
Personal
Strategic
Above +
Idiosyncratic
Investment
Coordination
High
Organizational
Relationships Type Grid
(Continued)
Relationship
Type
Mutual
Concern
Organization’s
primary goal
Organization’s
Primary task
Interaction
Objective
Functional
Low
Avoid/Solve
operational
problems
Order
processing
oversight
Systems
efficient
Relational
Medium
Identify/Solve
tactical and/or
operational
problems
Develop
organizational
relationships
Personal
effectiveness
Strategic
High
Identify/Solve
strategic issues
Organizational
integration
Organizational
efficiency and
effectiveness
Some Criteria for Strategic
Relationships
1.
2.
3.
4.
5.
Sales volume
7. Entry into new market
Sales potential
technology or manuCurrent profitability
facturing process
Future profitability 8. Impact on product mix
Strong customer
9. Industry visibility and
service needs
image
6. Strong customer 10. Ability to work with
interest in vendor
quality and performance
Nurturing Strategic
Accounts
High level of organizational integration
Possible location of seller in customer’s
facility
Person-to-person relationships
Keep common values and culture in place
Financial integration
So, what’s the payoff?
A Loyal Customer Base!
What did you expect?
Why Loyal Customers are
More Profitable
Annual Customer Profit
Price premium
Referrals
Cost savings
Revenue growth
Base profit
Acquisition cost
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