The a potential partnership. Relationship management can be defined

The field of relationship marketing can be viewed as a
sub-are of market focused management. At the most simple level, relationship
marketing strategy prescribes that it is more effective to invest in long-term
customer interactions than to rely on a series of potentially unrelated,
one-time exchanges. There are multiple stakeholders to consider and
organisations must make certain that value is provided for all members of a
potential partnership.

Relationship management can be defined as am approach
to establish, maintain and enhance long-term associations with customers and
other stakeholders (Koiranen 1995 add). A key
assumption is that all parties will be able to meet their objectives through
the relationship. Relationship marketing is an attractive concept because it
links together many seemingly unrelated stands of marketing thought. Some of
these stands include: customer relationship management, sales management,
strategic thinking, legal relationships, promotional strategy, database
marketing, B2C marketing, B2B marketing and affinity marketing. Each of these
approaches has the potential to offer valuable benefits to both buyers and
sellers. However, Relationship marketing is hard to implement in practice.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

Advantages and disadvantages with Relationship
management.

Relationship management makes a lot of sense. It seems
much more efficient to establish long term relationship with someone than to
pursue individual potentially unrelated exchanges.

Relationship management seems like a promising way to
create competitive advantage. By exchanging information and forging (synonym) a partnership with the customer, the seller
has an opportunity to form a close bond with the customers. This close bond can
be potentially advantageous to both parties and the strategy work best when
both buyers and sellers are interested in achieving benefits over the long-run
(Ganesan, 1994 – add source in Reference list).

There are important differences between B2B and B2C
marketing (Zinkhan and Cheng 1992 add to reference list).
By nature, business customers have more motivations to create a partnership
with the seller. The individual consumer can offer money, positive word of
mouth and loyalty overtime. In addition to these aspects, a business
organisation can offer such items as profit sharing.

Since b2b marketing often involves purchase volumes
that are quite large, it is feasible for the seller to invest considerable
resources to customize the product or service. In exchange, the customer is
willing to cooperate in forging a true relationship. Source
relationship marketing: theory and implementation.

Buyers form judgements about the value of marketing
offers and make their buying decision based on these judgements. Satisfaction
with a purchase depends on the products performance relative to the
expectations. Expectations are based on the customers past buying experiences.
Although a customer-centred firm seeks to deliver high customer satisfaction
relative to competitors, it doesn’t attempt to maximize customers’
satisfaction. In addition to customers, the company has many stakeholders
including employees, dealers, suppliers and stockholders. Spending more to
increase customer satisfaction might divert funds from increasing the
satisfaction of these other partners. Hence it should focus on satisfying both.

In industrial marketing, Jackson refers to
relationship management oriented toward strong lasting relationship with
individual accounts.

According to the paper, relationship management refers
to all marketing activities directed towards establishing, developing and
maintaining successful relational exchanges

5.4 Commitment-trust theory

source the commitment trust theory of relationship
management

Though there are no doubt many factors that contribute
to the success or failure of specific relationship management efforts, we
theorize that the presence of relationship commitment and trust is central
(synonym: essential). These are the reasons why. These two encourage marketers
to 1) work at preserving relationship investments by cooperating with exchange
partners. 2) resist attractive short-term alternatives in favour of the
expected long-term benefits of staying within existing partners. Therefore,
when both commitment and trust (not just one or the other) are present, they
produce outcomes that promote efficiency, productivity and effectiveness. In
short, commitment and trust lead directly to cooperative behaviours that are
conductive to relationship marketing success.

Relationship commitment (as defined in the paper) o an
exchange partner believing that an ongoing relationship with another partner is
so important as to warrant maximum efforts at maintaining it, that is the
committed party believes the relationship is worth working on to ensure that it
endures indefinitely. A common theme emerges from the various literature on
relationships: parties identify commitment among exchange partners as key to
achieving valuable outcomes for themselves and they endeavour to develop and
maintain this precious attribute in their relationships. Therefore, we theorize
that commitment is central to all the relational exchanges between the firm and
its various partners.

We conceptualize trust as existing when one party has
confidence in an exchange partner’s reliability and integrity. The literature
on trust suggests that confidence on the part of the trusting party results
from the firm belief that the trust worthy party is reliable and has high
integrity which are associated with such qualities as consistent competent,
honest, fair, responsible and helpful.

Relationships characterized by trust are so highly
valued that parties will desire to commit themselves to such relationships
(Hrebiniak 1974 add). Indeed because commitment entails vulnerability parties
will seek only trustworthy partners. Social exchange theory explains this
causal relationship through the principle of generalized reciprocity which
holds that “mistrust breed mistrust and as such would also serve to decrease
commitment in the relationship and shift the transaction to one of more direct
short-term exchanges.

The need for relationship marketing stems from the
changing dynamics of the global marketplace and the changing requirements for
competitive success. Somewhat paradoxically, to be an effective competitor
nowadays requires one to be an effective co-operator in some network of
organisations. So what are the requisites for being a successful co-operators?
The commitment-trust theory maintains that networks characterized by
relationship commitment and trust engender cooperation (in addition to
acquiescence, a reduced tendency to leave the network, the belief that conflict
will be functional and reduced uncertainty). All these “qualitative outcomes”
contribute to overall network performance. We posit that relationship
commitment and trust develop when firms attend to relationships by: 1)
providing resources, opportunities and benefits that are superior to the
offerings of alternative partners. 2) maintaining high standards of corporate
values and allying oneself with exchange partners having similar values 3)
communicating valuable information including expectations market intelligence
and evaluations of the partner’s market performance; 4) avoiding malevolently
taking advantage of their exchange partners. Such actions will enable firms to
enjoy sustainable competitive advantages over their rivals in the global market
place.

x

Hi!
I'm Angelica!

Would you like to get a custom essay? How about receiving a customized one?

Check it out