Management Decision, Vol 35 Issue 4 Date 1997 ISSN 0025-1747

Defining relationship marketing: an international perspective

Adrian Palmer

University of Ulster, Magee College, Londonderry, Northern Ireland

Keywords: Governance, International marketing, National cultures, Relationship marketing

Type of Article: Wholly theoretical

Relationship marketing has emerged as a big new idea for many Western companies. Relational, as opposed to transactional exchange is the norm in many

countries. However, an exchange method which has worked well at home may fail in a culture with different values. While companies may reconfigure their product

and promotion for a foreign market, failure to adapt methods of exchange may bring about a marketing failure. Reviews the complexity of cultural priorities and

makes suggestions for methods by which firms can sensitively adapt the basis of their relationship with customers.

Quality Indicators: Readability**, Practice Implications*, Originality**, Research Implications**

Introduction

The search continues among scholars to develop a general theory of relationship marketing which is useful in explaining a

wide range of buyer-seller relationships. Without such a theory base, many would argue that relationship marketing will

remain little more than a topic of marketing. Are we justified in seeking to develop a general theory of universal

applicability (Grönroos, 1994), or should we recognize that what counts for a relationship is very much conditioned by the

cultural context in which it takes place?

While Western academics have been excited by recent developments in relationship marketing, are we not simply

reinventing a pattern of doing business which has been the norm in Western societies for many years and is still the norm in

many Far Eastern countries? At an implementation level, is there a possibility that universal prescriptions for relationship

marketing may fail in overseas markets where a buyer-seller relationship means something quite different from its meaning

in a firm’s domestic market?

There is now an extensive literature to guide companies in the development of a marketing mix strategy in overseas markets

in a manner that meets the needs of those markets. However, less attention has been given to the sensitive adaptation of

exchange mechanisms to meet the needs of overseas markets. Given the growing trend towards globalization of markets, and

the increasing deployment of organizations’ employees overseas, it is important that employees, organizational structures

and processes are sympathetic to the exchange needs of a market.

Relationship marketing and economic development

Economies in an early stage of development are characterized by small-scale production processes and relatively local

markets in which relationship development between producer and consumer is relatively easy to achieve. Buyers are able to

learn through personal experience of the abilities, consistency and reliability of a supplier, while suppliers are able to adapt

simple production methods to the needs of individual customers who are known personally. Many studies have shown how

liking by one party of the other is important in the development of close interpersonal and business relationships (Friedman

et al., 1987; Moorman et al., 1992). In economies at an early stage of development, liking is judged on the basis of

face-to-face contact and, from this, trust is developed. Through personal knowledge and trust, a supplier is also able to judge

the creditworthiness of each customer.

With the development of mass production methods, producers are able to achieve economies of scale in production and,

through price advantage, to encroach on the traditional markets of smaller, less efficient producers. Relationship building

based on personal knowledge and liking based on face-to-face contact becomes more difficult. Consumers shift their liking

from the personal characteristics of the producer to the abstract concept of the brand.

Branding emerged as a means of providing reassurance of consistent quality to spatially dispersed customers who, because

of the use of intermediaries, had no direct relationship with the manufacturers of their products. In effect, a brand became a

substitute for a personal relationship. There is a suggestion that, in developing economies, rapid urbanization and

industrialization removes social structures which are an important means by which individuals identify themselves. The

craving for brands can be seen as restoring an individual’s ability to acquire an identity.

More recently, it has been suggested that in mature markets, consumers increasingly evaluate products on the basis of the

quality of relationship with the supplier (Christopher, Payne and Ballantyne, 1991). It is no longer sufficient to offer better

merchandise, or even better levels of service. When markets become saturated, better quality of relationships can give

competitive advantage (for example, the marketing of cars in the more developed economies has moved from an emphasis on

better design characteristics and brand image, to better service facilities and, subsequently, to superior relationships which

provide complete finance, maintenance and replacement facilities). Such relationships can be qualitatively different from

those prevalent in a pre- industrialized society. In the latter case, buyers may seek a relationship to satisfy lower order needs

(e.g. the security from buying from a trusted source or the need to belong to a social system of buying and selling). In more

developed economies, a relationship may be seen as a means by which an individual avoids the need to invest mental and

physical effort in procuring resources, preferring instead to invest such effort in more fulfilling activities. In developing

economies with less mature markets, the emphasis remains on better physical design and brand image.

It is interesting to note that branding achieved prominence in the wake of the industrial revolution of the nineteenth century.

During that era, technology did not allow large-scale manufacturers to keep in touch with their final consumers hence the

resort to brand building and the use of intermediaries. Today, industrialization of goods manufacturing and service industries

allows large-scale production to be combined with one-to-one relationships between producers and consumers, through the

medium of direct marketing (Vavra, 1992). Information technology should, in principle, allow one-to-one relationship

marketing programmes to be implemented in developing economies without the need to invest in a costly infrastructure of

intermediaries and brands. However, a pure relationship marketing approach overlooks the need for reassurance and identity

which a brand can bring.

Exchange mechanisms

Exchange occurs within a framework of rules and norms. Governance systems can be placed on a continuum from being

predominantly legally based to predominantly morally based (Gundlach and Murphy, 1993). Many exporters fail in overseas

markets because they have not understood the basis of buyer-seller governance and the pre- requisites for turning

transactional exchange into relational exchange.

In many societies, shared ethical values form the dominant governance mechanism for relational exchange. There is, for

example, a presumption in many Far Eastern cultures that exchange partners will be faithful in delivering their part of a

bargain. A central feature of relationship marketing is its presumption of "win-win" situations for both the buyer and seller

in an exchange, in that the former benefits from improved continuity of supply and reduced risk levels and the latter through

improved long-term returns on investment, improved cross-selling opportunities and greater market stability (Peters and

Fletcher, 1995). In a culture where there is an underlying presumption that one party’s gain can only be achieved by

another’s loss, the principles of relationship marketing may fail to be fully exploited.

Before relational exchange takes place, there may be a lengthy period during which partners gain the social acquaintance and

trust of each other, as a prerequisite for business exchange to occur. There have been numerous analyses of the stages in the

development of trust that buyers pass through before they trust a seller (Morgan and Hunt, 1994; Schurr and Ozanne, 1985).

Trust may be an important means of governing exchange where the network of exchange partners is closed and a defaulter to

an exchange fears being shamed by their community. Many Western exporters have found it a time- consuming task to enter

this network of trusting relationships.

The industrialization of economies leads to the development of extensive impersonal relationships, and this may account for

the gradual replacement of moral governance with contractual governance. Relational exchange requires co-operation,

resting on a foundation of shared interests and mutually agreed rules of conduct and exchange out of which norms of

behaviour develop (Heide and John, 1992; Solomon, 1992).

Adapting exchange mechanisms to local markets

Relationship marketing is not the new paradigm that its proponents have often claimed. Holistic marketing approaches which

put customers at the centre of attention have preceded contemporary marketing theories which place emphasis on the

management of a marketing mix. It could be argued that the marketing mix emerged as a framework for marketing only after

organizations had grown to a point where traditional holistic relationship-based approaches became unmanageable in an

increasingly competitive marketing environment. Information technology may now be allowing firms to recreate closer

holistic relationships with customers as individuals. But technology alone cannot bring about changes in organizations’

approaches to doing business.

This is seen in the under-utilization of IT by Japanese companies to develop information-based customer relationships. In the

Japanese cultural context, relationship marketing has instead been interpreted as a long-term commitment to customers and

suppliers, based on principles of total quality management to improve customer care. In this interpretation, customer care

based on relationship development is seen as a core value- adding activity which permeates the whole organization and is

not confined to something called a marketing department.

The challenge for marketers is to develop exchange mechanisms which are appropriate to the needs of a society at its current

stage of social, economic and technological development. Although IT may now allow Western companies to develop new

types of information-based relationships with their customers, does this blueprint represent a paradigm shift which is

applicable in all markets? To what extent will traditional relationships between networks of buyers and sellers in many Far

Eastern countries break down in response to increasing competitive pressures? Or will many Western-style relationship

marketing practices which emphasize short-term tactical incentives be regarded with suspicion? Will less developed

countries follow the pattern of Western economies in the transition from relationship-based small-scale production based on

personal relationships, through branding back to a focus on quality of relationships? Or will information technology allow

for relationship building during the process of industrialization? More fundamentally, will the development of information

technology influence the exchange values of a culture?

Relationship marketing means different things in different cultures and marketers should be as wary of prescribing universal

solutions for exchange bases as they are of developing universal product and promotion policies for all markets.

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