Customer Retention – A Strategic Process to Retain Existing Customers
It is difficult to exactly define customer retention as it is a variable process. A basic definition could be ‘customer retention is the process when customers continue to buy products and services within a determine time period’. However this definition is not applicable for most of the high end and low purchase frequency products as […]
The Relationship between the Board of Directors and the Management
The relationship between the board of directors and the management cannot be described as just being that of a relationship between an employee and his or her manager. Though the board oversees the decisions taken by the management and ratifies them along with acting as the final arbiters of the strategic direction and focus that […]
Some Pitfalls to be Avoided in Strategic Management
It needs to be remembered that strategic management and strategic planning are intricate and complex processes that take the organization into unchartered territories. Hence, they do not provide a readymade prescription for success nor do they promise instant solutions to all problems that the organization is facing. Instead, strategic management and strategic planning are processes […]
Customer Modeling – Meaning and its Different Aspects
Customer modeling is the process of predicting and forecasting behavioral aspects of customers’ future perspectives. The process includes identification of marketing and campaigning targets and optimizing predictive analysis. Following are the broadly discussed aspects of customer modeling: Response modeling – Modeling enhances the organization’s knowledge on each individual customer and identify if the customers under […]
Core Competencies – An essential for Organizational Success
What is Core Competency? Core competency is a unique skill or technology that creates distinct customer value. For instance, core competency of Federal express (Fed Ex) is logistics management. The organizational unique capabilities are mainly personified in the collective knowledge of people as well as the organizational system that influences the way the employees interact. […]
The world of business has altered a great deal in the last few decades or so, globalization and information technology has produced a young breed of well-informed customers. And so the marketing theory has also undergone changes. Service based industry is now at the forefront in the economic evolution.
Therefore, to sustain a loyal customer base relationship marketing along with other marketing mix forms base of the new marketing world.
Today’s companies want to use relationship marketing to improve customer loyalty, and generate profits.
Marketing is defined as an organization function which creates set of process through which company creates, communicates, manages and delivers value to customers. The portion of customer management forms the foundation of the relationship marketing. Relationship marketing looks to utilize tools of traditional marketing in creating long term value for customers. Relationship marketing theory proposes that as company delivers value to customer, strength of its relationship with the customer will improve and increasing the customer retention.
Scope of Relationship marketing is as follows:
From above it is clear that relationship marketing overlaps with other marketing strategies like service marketing, branding, channel marketing etc. However the differentiation comes in focus of other strategies for example service marketing focus is on intangible services, channel marketing looks at the interaction between channel partners. But relationship marketing looks at enhancing company performance by focusing on improving various relationships.
Relationship marketing’s focus is on improving relationships with supplier market, internal market, referral market, customer market and business market.
Internal markets: company’s culture, values and belief create the internal market. It includes people, process and groups.
Supplier Market: the various suppliers and vendor on which company is dependent to create its final product make up the supplier market.
Referral Market: Satisfied customer, professional advisors, etc. from the referral market. The satisfied customers are motivated bunch who through word of mouth promote the company.
Business Market: the external business environment forms business market for the company. They play a significant role in determining the success of the company.
Customer Market: this market consists of not only the end user, but also intermediaries who purchase products from the company.
The above mentioned markets form basis various relational exchanges around which relationship marketing is developed.
The existing and unresolved conflicts between the various markets and company play a pivotal role in determining long term success of the company. If any conflict remains unresolved it can lead to complete breakdown of commercial interactions between all market players. Therefore, it is necessary for the company to align its business process with relationship marketing strategy. The company has to create culture and formal systems where conflict customer issues are resolved.
A common understanding between all the players about their role and responsibility through relationship marketing helps in long term value for the customer.
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