Relationship Marketing

Abstract:

The purpose of this assignment is to discover what is the difference between Traditional Marketing (that is the market idea is to maximizing the efficiency and volume of individual sales for a short time) and Relationship Marketing (the market that is interested to develop strong connections with customers for a long time, by keeping the product in a continuous change process), from examples and theory the readers will be able to understand why Relationship Marketing is a better approach than Traditional Marketing for the companies.

Introduction

The term of “marketing” connotes to most people a function peculiar to business firms. Marketing is seen as the task of finding and stimulating buyers for the firm’s output. It involves product development, pricing, distribution and communication; and the more progressive firms, continuous attention to the changing needs of customers and the development of new products, with product modification and services to meet these needs. But whether marketing is viewed in the old sense of “pushing” products or in the new sense of “customers satisfaction engineering it is almost always viewed an discussed as a business activity (Kotler, Levy, 1969)

The old definition of marketing was only, defining it as a process of buying and selling, but now the focus is being shifted from its buying and selling perspective to it being more customers focused and described as “the art of creating and maintaining customers.” ( O’shaughnessy, 1995, Pg4)

Marketing is to establish, maintain and enhance long-term customer relationships at a profit, so that the objectives of the parties involved are met. This is done by the mutual exchange and fulfilment of promises. (Gronroos 1990)

If the 1950s was the era of mass-marketing, and the 1970s the era of market segmentation, then the 1990s represent the genesis of personalized marketing, in which knowledge about individual customers is used to guide highly focused marketing strategies. The change is driven by several conditions: more intense, often global, competition, more fragmentation of markets, generally high level of products quality which is forcing companies to seek competitive advantage in other ways. ( Buttle, 1996).

It was Philip Kotler who said :”Authentic marketing is not the art of selling what you make but knowing what to make. It is the art of identifying and understanding customers needs and creating solutions that deliver satisfaction to the customers, profit to the producers and benefit to the stakeholders”

Traditional Marketing is not popular among the masses. Many companies take a relationship marketing approach. Most companies believe in the importance of maintaining strong customer relationship through , personal selling, customer follow ups. Building relationships is vital for customer retention which is why most companies are leaning that way. The world of business is evolving to make relationships crucial because of the amount of competition that there is in many industries. A company must look internally to decide which method is best for them.

Traditional marketing

Traditional marketing is a form of market based on a single “point of sale” transactions, his main idea is to maximizing the efficiency and volume of individual sales rather than developing relationship with the buyers, traditional marketing is a short-term relationship. Traditional marketing laid great emphases on the argument that customer pays more attention on the characteristics of the product than on the product itself. Traditional Marketing:

• Focus on single sale

• Orientation on product features

• Short time-scale

• Little emphasis on customers commitment

• Moderate customers contact

• Quality is primarily a concern of production

(Christopher, Payne, Ballantyne, 1997)

For example: A wood company that is selling kindling sticks and logs, this company is using traditional marketing because she is not interested in having a long-term relationship with the customer only for a season relationship. The company is more based on the four P approach “His approach is based on the four traditional elements of marketing, sometimes referred to as the four P's:

• Product -- Creating a product that meets consumer needs.

• Pricing -- Establishing a product price that will be profitable while still attractive to consumers.

• Placement -- Establishing an efficient distribution chain for the product.

• Promotion -- Creating a visible profile for the product that makes it appealing to customers. “ (Buttle, 1996)

The products that company is selling is what people needs for the winter time, the price is very low but is profitable for the company. This company has adverts put in different newspaper but with different prices is depends of the country areas where is selling the products they offer delivery to the customers too they do also door to door sale, her main interest is to sell as much wood fire that the company can. ”Pricing decisions should take into account profit margins and the probable pricing response of competitors. Pricing includes not only the list price, but also discount, financing and other options such as leasing.” (Schewe, Charles and Hiam). The company is not interested if the customers are not pleased with the product quality because they knows that it will be all the time others new customers buying wood fire from them, the company believe that they can reach enough of the market with the price and that the customer loyalty is not major fact. “Transactional marketing focuses on maximizing the profit of the company by recruiting more and more customers to purchase the firm’s product” (Vilcox, Mohan, 2007) A big reason of the decline in sales was the late response to the needs and the orders of the customers. Last year the company almost fail because she could not honour the orders and she lost many customers, than she started selling the logs and sticks by approaching door to door strategy. Recognises that quality, customer service and marketing need to be much more closely integrated “Illustrates how the traditional marketing mix concept of the 4P’s does not adequately capture all the key elements which must be addressed in building and sustaining relationships with markets. Ensures that marketing is considered in a cross-functional context. (Christopher, Payne and Ballantyne, 2002).