Approaches to Relationship Marketing :Approaches to Relationship Marketing Advanced Marketing Analysis Presentation 11.11.08 Luke Abbott Joseph Beyamaowei Avril Collier Richard Hickey Aine Connellan


Slide 2:The four approaches to relationships


Six Market Framework: Customer Markets :Six Market Framework: Customer Markets Most important element out of the six. Transaction vs. relationship marketing. Five times cheaper to retain customers Kotler et al. (1996). New customers are still vital to a business however a balance is needed. Customer loyalty important. Must offer service quality that exceeds expectations.


Kotler’s 10 Critical Players in Relationship Marketing :Kotler’s 10 Critical Players in Relationship Marketing Kotler argued that a firm’s success depends increasingly on carrying out effective marketing thinking in its relationship with TEN critical players: 1 Suppliers 2 Distributors Immediate Environment 3 End users 4 Employees 5 Financial firms 6 Government 7 Media Macro-Enviornment 8 Allies 9 Competitors 10 The General public


Slide 5:Hunt & Morgan (1994) 10 Partnerships with 4 Partnership Groups


Main Features of the 30R Approach :Main Features of the 30R Approach Gummesson (1997) 30R Approach Definition: RM is marketing seen as relationships, networks and interaction. RM characteristics: value for parties involved i.e customers (created through interaction process between suppliers, customers, competitors). Advantages to a Firm: Increased customer retention and duration and increased marketing productivity. Tangibility & Operational Aspects: 30R is an attempt to make RM tangible and operational. Mega & nano relationships. Relationship Portfolio & Marketing Plan: These are the relationships a company intends to work with.


Main Features of the 30R Approach :Links to Management: RM is more than marketing management in the sense that it is not limited to a marketing or sales department; the marketing plan becomes part of the business plan. Generalizability: RM can be applied to all kinds of companies and offerings however the relationship portfolio and the application is always specific to a given situation. Main Features of the 30R Approach


Analysis of the Approaches :Analysis of the Approaches There are similarities between the approaches that need to be explained: They all agree that the internal market is an essential element of RM with each category incorporating a category got employee or internal relationships. The first two approaches focus on the parties with which relationships are established (Tuominen, 1997) The third approach goes further as it involves the relevant parties but also certain properties of relationships. Basic customer-supplier method ineffective. RM more effective.


Internal Markets :Internal Markets Origins: to ‘sell’ service jobs “attract, develop, motivate & retain” Why? Better satisfy customers Frontline staff = Face Investment Integration


Internal Markets :Internal Markets How to Implement: Empowerment Create Ownership Support Activities Feedback Benefits:


Referral Markets :Referral Markets Name of a prospective customer from a third party, a referral is better than a lead as more information is known about the perspective customer 2 types of Referral markets: Existing customers, friend- of -a –friend, e.g. Littlewoods. Business to business-e.g. Dentists to orthodontist.


Customer Referrals :Customer Referrals An existing relationship has been established, the customer is happy with the service, product provided. The relationship needs to be nurtured, and maintained. Rewards and bonuses, important to remember that every referral won’t be a sale but it is still a referral! A bad review is as effective as a good one Examples of referrals by customers hairdressers, restaurants, banks.


Business to Business referrals :Business to Business referrals Ever growing alliance, people behind the company “Comparison Level” Competitive advantage Needed when entering into a new, unknown market .e.g. using a referred solicitor in a foreign country


Recruitment markets :Recruitment markets Seeking the right employee to the right job Portraying the correct image externally and portraying the right culture internally Sources of recruitment External agencies Friend referral, rewards schemes Choosing the medium that suits the company best.


Influence Marketing :Influence Marketing External Markets can have an influence over an organisation and can impact both on their operations and status. Donaldson & O’Toole (2002) Influence markets are groups that have the potential to influence an organisation significantly. Payne (1999)


Influence Marketing :Influence Marketing Unions and Industry bodies Political, Government and Regulatory User and Evaluator groups Competitors Business press and Media Environmental groups Financial and Investor groups


Influence Marketing :Influence Marketing Unions and Industry bodies Aerlingus & Siptu Political, Government and Regulatory Alistair Darling & Shell Petrol


Influence Marketing :Influence Marketing User and Evaluator groups UKPIA Oil Refining & HSE Competitors Asda & Tesco


Influence Marketing :Influence Marketing Business press and Media Russell Brand & Andrew Sachs


Influence Marketing :Influence Marketing Financial and Investor groups Greepeace & Kingworth Power Station


Financial & Investor groups :Financial & Investor groups Financial Regulator & Boulton Capital Partners, Gothard Capital Partners, Omega Capital Management.


Slide 22:Supplier and Alliance Markets Supplier markets: Suppliers are the providers of a physical resource to the business. Typically they are characterised as the upstream source of raw materials, components, products, or other tangible items that flow into a business. Alliance markets: Alliance partners are essentially suppliers too except that what they supply are competencies and capabilities that are knowledge based rather than product based. Payne (1999)


Slide 23:Development of Supplier Relationship Marketing - Companies have moved from having a large number of suppliers to having a small number that they then develop a close relationship with Toyota are widely regarded as being the industry thought leaders on Supply Chain Management. In Japan, Toyota has about 300 first tier suppliers while many western car-makers will have 2,000. Toyota have only five missing, defective, or late parts out of every one million. They are assembling 3,000 parts into a car every 60 seconds. The book Lean Thinking was written about Toyota’s success. Womack and Jones (1996)


Slide 24:Following Toyota’s example The book became required reading among Tesco’s head management who were trying to add value to their value chain. Using Toyota as the example Tesco now have one of the most efficient Supply Chain systems in the world. Tesco are constantly mining the data they receive in-store and informing their suppliers of what they require. The key idea here is that by working closely with their suppliers, both Tesco and Toyota have cut down on waste and unneeded expense. In doing so they create value within their value chain and this can then be passed onto their customers. The success of this strategy relies on the good relationships developed between the businesses and their suppliers. A manufacturer who does not share information with its suppliers cannot expect the best possible service from those suppliers. They may in fact end up creating extra costs for those suppliers which will be passed down the value chain to the consumer. Jones and Clarke (2002)


Slide 25:Alliances The idea of an alliance is to bring skills or competencies into the business that may not already exist. Alliances can be formed between few or many partners so long as the basis of the alliance is shared strategy determination. Many examples are beginning to emerge where alliances are formed to exploit particular market opportunities.


Slide 26:Outsourcing to gain Competitive Advantage In order to achieve competitive advantage businesses should focus solely on the activities within its value chain where it can add value to the product or where it can perform the activity cheaper than any another business can. If it cannot add value or perform the task cheaply then the company should look to outsource that particular activity to a company that can. (Porter, 1985)


Slide 27:Strategic Outsourcing: Case Study MediaMarket – Ireland’s leading media monitoring company. Companies provide MediaMarket with a list of keywords that they then monitor for across all Irish media.


Slide 28:Situation One of the services MediaMarket offer is to monitor all radio broadcasts across the country. This involved employing people to sit in their homes, generally housewives, and tune in to the local radio station and transcribe and record everything that was said. If a relevant keyword came up the client would be notified and a tape or transcript could be sent for if required.


Slide 29:Problems Very expensive, loss leader Labour intensive Slow process (tapes being posted) Workers isolated and not managed No digital record of what was being broadcast


Slide 30:Solution: Outsource activity to Innodata, a world leader in “knowledge process outsourcing” – located in the Philippines Employees listen to an online web stream, nearly all radio stations now have this facility Employees transcribe every word spoken on news broadcasts The transcript can be immediately emailed back to Dublin where it can be searched for keywords


Slide 31:Benefits Cheap labour All work managed and performed under the one roof No need to invest in the technology needed to perform the task or in any research and development. Achieving competitive advantage on a task that was a loss leader. Difficulties Mediamarket’s broadcast service completely beholden to another company. Language difficulties at the beginning Service level agreements must be maintained


Technology in Relationship Marketing :Technology in Relationship Marketing Take a holistic approach Automate efficient systems Solve a genuine problem Offer more, not less, control Optimise basic technologies Combine high tech with high touch (Berry 1995)


Types of Technology :Types of Technology The internet How to encourage interaction between brand & consumer? How to encourage consumers to return to your website? Barriers?


Technology :Technology Social networking sites


Technology :Technology Social Networking & Brands Travel Bag


Technology :Technology Blogs Internal, External, Moblogs RSS Feeds, Bookmarks Podcasts MP3/MP4 download Internal Markets Aer Lingus Online Players Group Collaboration Projects Nine Sigma Innovation Exchange


Technology :Mobile Marketing What is it? Joe Biden Terminate-A-Mate Dexter Link Technology


Relationship Marketing :Relationship Marketing Case Studies


Slide 39:What the experts came up with


Slide 40:Halloween themed viral marketing campaign Targets existing customers Supported by You Tube video, a microsite, and Facebook, http://www.stmarysghost.com/ Encourages customers to forward the message on to friends Aimed at target audience of 15-24 year olds Accompanied by a video showing how the uses of the phone


Slide 41:A loyalty programme designed to help fans save money Fans save for gift vouchers by shopping in designated stores Gift vouchers can be redeemed against Portsmouth merchandise Season ticket holders automatically signed up Other fans can sign up through the website Shows Portsmouth want to help fans wherever they can


Slide 42:Pepsi launched innovative digital marketing campaign Using very modern ‘quick response code’ mobile phone technology Customers are brought to a website where they can download free gifts for their mobile Campaign allows Pepsi to communicate with their customers in an innovative way Campaign may allow Pepsi to garner further information on who their customers are


Questions? :Questions?