Marketing

A Relationship Perspective

Svend Hollensen, Marc Oliver Opresnik

• Publisher: WSPC (US)
• Year: 2019
• ISBN:
  9781944659646
• Edition: 2
• Topic: Business
• Subtopic: Marketing
• Index: Business

Marketing: A Relationship Perspective is back for a second edition and continues to set a benchmark for achievement in introductory marketing courses across Europe. It is a comprehensive, broad-based, and challenging basic marketing text, which describes and analyzes the basic concepts and strategic role of marketing and its practical application in managerial decision-making. It integrates the 'new' relationship approach into the traditional process of developing effective marketing plans. The book's structure fits to the marketing planning process of a company. Consequently, the book looks at the marketing management process from the perspective of both relational and transactional approach, suggesting that a company should, in any case, pursue an integrative and situational marketing management approach. Svend Hollensen's and Marc Opresnik's holistic approach covers both principles and practices, is drawn in equal measure from research and application, and is an ideal text for students, researchers, and practitioners alike.

Contents:

• Preface to the Second Edition
• Fundamentals of Relationship Marketing
• Situational Analysis in the Marketing Planning Process
• Strategy Formulation in the Marketing Planning Process
• Marketing Mix in the Marketing Planning Process
• Implementation and Controlling in the Marketing Planning Process
• References
• About the Authors
• Subject and Companies Index

Readership: Students and professionals in the field of marketing and customer relationship management.Marketing;Relationship Marketing;Situational Analysis;Marketing Planning Process;Strategy Formulation;Marketing Mix;Implementation and Controlling0 Key Features:

• This marketing text integrates the 'new' relationship approach in the traditional process of developing effective marketing plans. Compared to other marketing management books this text will attach more importance to the following themes:
  • Buyer-seller relationships
  • Buyer-seller interaction on a global scale
  • Creating competitive advantage through relationships together with other companies
  • Cross-functionalism
• New to the Second Edition:
  • New content — There is a new chapter on marketing research with more in-depth coverage to the tools and processes in the framework of analysing data for the marketing management planning process
  • New case studies, exhibits, and examples — These include advertisements, brand-new case studies and mini cases in the form of marketing exhibits to prompt the reader to apply principles learnt
  • Supplementary materials

Fundamentals of Relationship Marketing

1

Learning Objectives

After studying this chapter you should be able to:

• understand the evolution of relationship marketing (RM)

• define RM

• describe what part loyalty schemes play in relationship development

• name the different cost drivers associated with customers acquisition and customer retention

• discuss the benefits of relationship longevity

• explain the drivers of relationship management

• describe RM’s context within marketing management

• understand why marketing planning is so important

• discuss the process of marketing planning

• describe the concept of the business mission

• describe rewards and problems associated with marketing planning

1.1 The Evolution of Relationship Marketing

Although relationship marketing (RM) is rising as a new phenomenon, relationship oriented marketing practices date back to the pre-industrial era. In this section, we trace the history of marketing practices and illustrate how the advent of mass production, the emergence of middlemen, and the separation of the producer from the customer in the industrial era led to a transactional focus of marketing. Now, due to technological advances, direct marketing is staging a comeback, leading to a relationship orientation.

Even though marketing practices can be traced back as far as 7000 B.C. (Carratu, 1987), marketing thought as a specific discipline was borne out of economics around the beginning of the 20th century. As the function gained momentum, and developed through the first three quarters of the twentieth century, the focus was on transactions and exchanges. However, the development of marketing as a field of study and practice is undergoing a re-conceptualization in its orientation from transactions to relationships (Webster, 1992). The emphasis on relationships as opposed to transaction based exchanges is likely to redefine the domain of marketing (Sheth, Gardener and Garett, 1988). Indeed, the emergence of a relationship marketing school of thought is imminent given the growing interest of marketing professionals in the relational paradigm.

The paradigm shift from transactions to relationships is related to the return of direct marketing both in business-to-business and business-to-consumer markets. As in the pre-industrial era once again direct marketing, albeit in a different form, is becoming popular, and consequently so is the relationship orientation. When producers and consumers directly deal with each other, there is a larger potential for emotional bonding that transcends economic exchange. They can understand and appreciate each others’ needs and constraints better, are more inclined to cooperate, and thus, become more relationship oriented. This is in contrast to the exchange direction of the middlemen (sellers and buyers). To the middlemen, especially the wholesalers, the economics of transactions are more important, and therefore, they are less emotionally attached to products. Indeed, many middlemen do not physically see, feel, touch products but simply act as agents. The disconnection of the producers from the users was a natural outgrowth of the industrial era. On the one hand, mass production forced producers to sell through middlemen, and on the other, industrial organisations, due to specialization of corporate functions, created specialist purchasing departments and buyer professionals, thus separating the clients from the producers. However, today’s technological advancements that permit producers to interact directly with large numbers of users, and because of a variety of organisational development processes, such as empowerment and total quality programs, direct interface between producers and users has returned in both consumer and industrial markets, leading to a greater relational orientation among marketers. Academic researchers are reflecting these trends in marketing practice, and searching for a new paradigm of the discipline that can better describe and explain it.

RM attempts to involve and integrate customers, suppliers and other infrastructural stakeholders into a firm’s marketing strategy and activities (McKenna, 1991; Shani and Chalasani, 1991). Such involvement results in interactive relationships with suppliers, customers or other value chain partners of the corporation. An integrative relationship approach assumes overlap in the plans and processes of the interacting parties and suggests close economic, emotional and structural bonds among them. It reflects interdependence rather than independence of choice among the parties; and it emphasizes cooperation rather than competition and consequent conflict among the marketing actors. Thus, development of RM points to a significant shift in the axioms of marketing: from competition and conflict to mutual cooperation, and choice independence to mutual interdependence.

The discipline of marketing grew out of economics, and the growth was motivated by lack of interest among the economists in the details of market behaviour, in particular those related to the functions of the middlemen (Bartels, 1976; Houston, Gassenheimer and Maskulka, 1992). It coincided with the growth in the number of middlemen and the importance of distribution during the industrial era.

Unlike mainstream economists of the late nineteenth century, who were more preoccupied with public policy and economic effects of market institutions, early marketing thinkers had operational interests. The process of marketing was thought to cause additional forms of utility including time, place and possession utilities to the consumer (Macklin, 1924).

Thus, marketing as a discipline got organized around the institutional school of thought, and its main concerns centred around the tasks performed by wholesalers and retailers as marketing institutions.

Although the institutional thought of marketing was later modified by the organisational dynamics viewpoint, and marketing thinking was influenced by other social sciences, such as psychology, sociology and anthropology, exchange remained and still remains one of the central principles of marketing (Alderson, 1965; Bagozzi, 1974; Kotler, 1972). Formal marketing theory developed around the idea of exchange and exchange relationships, placing considerable emphasis on outcomes, experiences and actions related to transactions.

However, the relationship orientation of marketing is not an entirely a new phenomenon. If we look back to the practice of marketing before the 1900s, we find that relationship orientation to marketing was fairly prevalent. In short, current popularity of RM is a reincarnation of the marketing practices of the pre-industrial era in which producers and consumers interacted directly with each other and developed emotional and structural bonds.

The relationship orientation in marketing continued into the early years of the Industrial Revolution and the appearance of capitalism. Fullerton (1988) describes some of the efforts adopted by marketers during this period to build and maintain relationships with buyers. Marketing practices were also vastly individualized, relationship oriented and custom-made.

In the industrial era the market conditions gave rise to forceful selling and the development of marketing organisations that were willing to bear the risks and costs of inventory ownership and storage. Wholesalers, distributors and other marketing intermediaries assumed the role of middlemen who, on the one hand, stored the excess production of manufacturers, and, on the other hand, helped in locating and persuading more buyers to purchase. So vital became this function that early marketing thought was developed on the concept of distribution and the creation of time and place utilities. It was also around this time that the term ‘marketing’ itself was added to the lexicon as a noun opposed to its earlier use as a verb (Petrof, 1997). Among highly influential writers of the period Ralph Starr Butler and Arch W. Shaw are considered important to the evolution of the new marketing discipline. Ralph Butler (1882-1971) believed marketing was all about organisation, planning and the management of relationships. It was also in this period that theories developed that were later to become known as the commodity approach (focusing on all marketing actions involved in a particular product category), the institutional approach (focusing on describing the operations of a specialized type of marketing agency) and the functional approach (focusing on the purposes served by various marketing activities) (Wilkie and Moore, 2003). This period also gave rise to modern marketing practices, such as sales, advertising and promotion, for the purpose of creating new demand to absorb the oversupply of goods.

Thus emerged the transactions orientation of marketing whereby marketers became more concerned with sales and promotion of products and less with building enduring relationships. This shift was further accentuated during the Great Depression of 1929, when the oversupply of goods in the system heightened the pressure on marketers to sell their products. Thus the transaction orientation has been a major influence in marketing thought and scholastic research throughout the industrial era. During the height of the industrial period, marketing practices were aimed at supporting mass consumption. Developed out of the need to support the mass production machinery, the emphasis was aimed at increasing the sale of products and services. Marketing was considered successful only when it resulted in a transaction. Measures of marketing performance were linked, as is still the practice today in many corporations, to sales and market share.

Aided by the managerial school of marketing thought, two important developments occurred in the later period of the industrial era.

The first development was the marketer’s realization that repeat purchase by customers was important, making it necessary to foster brand loyalty. Several marketing scholars also became interested in repeat purchase and brand loyalty behaviour as early as World War II (Churchill, 1942; Womer, 1944; Barton, 1946). This research was further advanced in the buyer behaviour theory of Howard and Sheth (1969), wherein they examined repeat purchase behaviour and brand loyalty. In order to achieve a brand image, brand differentiation and effective advertising, different marketing techniques emerged. In a seminal work, McCarthy presented the ‘marketing mix’ in the framework of the ‘4Ps model of marketing’ (price, product, promotion and placement). Although this concept retained many of the key elements of the functional school it did shift the perspective toward the marketing management approach. In this respect, the development of market segmentation and targeting became imperative tools for marketing planning. In the face of competition, marketers realized the benefits of focusing on specific groups of customers for whom they could tailor their marketing programs and effectively differentiate themselves from their competitors (Peterson, 1962).

The second significant change was the development of administered vertical marketing systems (McCammon, 1965), whereby marketers not only gained control over channels of distribution, but also developed means of blocking competitors from entering into these channels. Vertical marketing systems such as franchising permitted marketers to extend their representation beyond their...

Table of contents

• Cover
• Halftitle
• Title
• Copyright
• Preface to the Second Edition
• Detailed contents
• 1. Fundamentals of Relationship Marketing
• 2. Situational Analysis in the Marketing Planning Process
• 3. Strategy Formulation in the Marketing Planning Process
• 4. Marketing Mix in the Marketing Planning Process
• 5. Implementation and Controlling in the Marketing Planning Process
• References
• About the Authors
• Subject and Companies Index