My Third Article Review

Topic: Making Relationship Marketing Operational

Writers: Evert Gummesson
Stockholm University, School of Business, Stockholm, Sweden

Volume: International Journal of Service Industry Management, Vol. 5 No. 5,
1994, pp. 5-20. © MCB University Press, 0956-4233

Relationship Marketing deals with direct market relationship between suppliers and customer . Relationship marketing (RM) is marketing seen as relationships, networks and interaction. Relationships need at least two parties – basically a supplier and a customer – who enter into interaction with each other.

RM is actually seeking its identity. According to Jackson (1985) sees RM as the opposite to transaction marketing where the industrial buyer shops around and one deal says little about the chance of a repeat purchase. For Berry and Parasuraman (1991), RM is a preferred approach to services marketing. Christopher et al. (1991) approach RM as the synthesis of marketing, customer service and quality management. Sheth (1994) defines RM as “…the understanding, explanation and management of the ongoing collaborative business relationship between suppliers and customers” and “…an emerging school of marketing thought.”

For Porter (1993), RM is “The process whereby the buyer and the provider establish an effective, efficient, enjoyable, enthusiastic and ethical relationship – one.…that is rewarding to both parties”. Grönroos (1990) contributes with a general definition of marketing with an RM angle: “Marketing is to establish, maintain, and enhance relationships with customers and other partners, at a profit, so that the objectives of the parties involved are met.

RM more focused to long-term interactive relationship between the provider and the customer, and long-term profitability. RM recognizes that everyone is a part-time marketer and that marketing is not confined to the full-time marketers of the marketing and sales departments (Gummesson, 1991). It recognizes that both the customer and the seller can be active. They should see each other as partners in a win-win relationship.

There are Thirty Types of Relationship Marketing

R1. The classic dyad: the relationship between the supplier and the customer. This is the parent relationship of marketing, the ultimate exchange of value which constitutes the basis of business.

R2. The many-headed customer and the many-headed supplier. Marketing to other organizations – industrial marketing or business marketing –often means contacts between many individuals from the supplier’s andthe customer’s organization.

R3. Megamarketing: the real “customer” is not always found in the marketplace. In certain instances, relationships must be sought with a “non-market network” above the market proper – governments, legislators, influencial individuals – in order to make marketing feasible on an operational level.

R4. The classic triad: the customer-supplier-competitor relationship Competition is a central ingredient of the market economy. In the competition there are relationships between three parties: between the customer and the current supplier, between the customer and the supplier’s competitors, and between competitors.

R5. Alliances change the market mechanisms Alliances mean closer relationships and collaboration between companies. Thus competition is partly curbed, but collaboration is necessary to make the market economy work.

R6. Market mechanisms are brought inside the company. By introducing profit centres in an organization, a market inside the company is created and internal as well as external relationships of a new kind emerge.

R7. The service encounter: interaction between the customer and front line personnel. Production and delivery of services involve the customer in an interactive relationship with the service provider’s personnel.

R8. Interfunctional and interhierarchical dependency: the relationship between internal and external customers. The dependency between the different tiers and departments in a company is seen as a process consisting of relationships between internal customers and internal providers.

R9. Relationships via full-time marketers (FTMs) and part-time marketers (PTMs). Those who work in marketing and sales departments – the FTMs – are professional relationship-makers. All others, who perform other main functions but yet influence customer relationships directly or indirectly, are PTMs. There are also contributing FTMs and PTMs outside the organization.

R10. Internal marketing: relationships with the “employee market”. Internal marketing can be seen as part of RM as it gives indirect and necessary support to the relationships with external customers.

R11. The non-commercial relationship. This is a relationship between the public sector and citizens/customers, but it also includes voluntary organizations and other activities outside of the profit-based or monetarized economy, such as those performed in families.

R12. Physical distribution: the classic marketing network. The physical distribution consists of a network of relationships which is sometimes totally decisive for marketing success.

R13. The electronic relationship. An important volume of marketing today takes place through networks based on IT. This volume is expected to grow in significance.

R14. Megaalliances. EU (the European Union) and NAFTA (the North America Free Trade Agreement) are examples of alliances above the single company and industry. They exist on government and supranational levels.

R15. Quality providing a relationship between production and marketing. The modern quality concept has built a bridge between technology and marketing. It considers the company’s internal relationships as well as its relationships to the customers.

R16. Personal and social network. The personal and social networks often determine the business networks. In some cultures even, business is solely conducted between friends and friends-of-friends.

R17. The two-dimensional matrix relationship. Oganizational matrices are frequent in large corporations, above all in the relationships between product management and sales.

R18. The relationship to external providers of marketing services. External providers reinforce the marketing function by supplying a series of services, such as those offered by advertising agencies and market research institutes, but also in the area of sales and distribution.

R19. The relationship to the customer’s customer. A condition for success is often the understanding of the customer’s customer, and what suppliers can do to help their customers become successful.

R20. The owner and financier relationship. Owners and other financiers can sometimes determine the conditions under which marketing works. The relationship to them may influence the marketing strategy.

R21. Parasocial relationships via symbols and objects. Relationships do not only exist to people and physical phenomena, but also to mental images and symbols such as brand names and corporate identities.

R22. The law-based relationship. A relationship to a customer is sometimes founded primarily on legal contracts and the threat of litigation.

R23. The criminal network. Organized crime is built on tight and often impermeable networks guided by an illegal business mission. They exist around the world and are apparently growing but are not observed in marketing theory. These networks can disturb the functioning of a whole market or industry.

R24. The mental and physical proximity to customers vs. the relationship via market research. In mass marketing the closeness to the customer is often lost and the customer relationship is based on surveys, statistics and written reports.

R25. The customer as member. In order to create a long-term sustaining relationship, it has become increasingly frequent to enlist customers as members of various marketing programmes.

R26. The relationship to the dissatisfied customer. The dissatisfied customer perceives a special type of relationship, more intense than the normal situation, and often badly managed by the provider. The way of handling a complaint – the recovery – can determine the quality of the future relationship.

R27. The green relationship. The environmental and health issues have slowly but gradually increased in importance and are creating a new type of customer relationship through legislation, the voice of opinion leading consumers, changing behaviour of consumers and an extension of the customer-supplier relationship to encompass a recycling process.

R28. The knowledge relationship. Knowledge can be the most strategic and critical resource and “knowledge acquisition” is often the rationale for alliances.

R29. The mass media relationship. The media can be supportive or damaging to the marketing. The way of handling the media relationships is often crucial for success or failure.

R30. The monopoly relationship: the customer or supplier as prisoners. When competition is inhibited, the customer may be at the mercy of the provider – or the other way around. One of them becomes a prisoner.