This
special edition of Journal of Relationship Marketing is based on the
proceedings of the 11th Annual Colloquium in Relationship Marketing,
held at Cheltenham, UK. This saw the gathering of some of the leading academics
who have been associated with the development of Relationship Marketing. The
conference theme of “Refreshing the challenge of Relationship Marketing” seemed
timely, in view of the growing depth and breadth of theory about buyer-seller
relationships, set alongside a sometimes skeptical audience of businesses who
may not have seen the pay off from relationship development, and consumers for
whom relationships may be unsought.
One of the features of the
Colloquium was a motion debate that "Relationship Marketing theories are
overstated in relation to their importance to business". The debate sought
to focus attention on the continuing quest of marketing academics to develop
theories of Relationship Marketing, alongside the sometimes questionable
success of attempts to implement the principles.
The motion
was vigorously promoted by two proposers and challenged by two opposers.
An audience of 54 academics was asked to vote on the motion before and after
the debate. On a likert scale ranging from 1 (strongly disagree) to 5 (strongly
agree), the average score before the debate was 4.1. Through the power of
debate, this score rose to 4.3 when the same measure was taken immediately following the conclusion of the debate, suggesting that leading
academics in the field had apparently convinced themselves of the shortcomings
of their area of academic specialization.
How could
it be that a collection of some of the top academics in the subject could be so
critical of the theory base of Relationship Marketing, which they have
contributed extensively to? Could the audience have been underplaying the status of
the considerable body
of theory which
Relationship Marketing has developed? Were academics suggesting that Relationship Marketing
really isn’t of great practical importance to practitioners? Or were they just cynical about the
ways in which
practitioners had adopted it?
Relationship
Marketing has been mutating with subtle changes in language appearing in
published material and training courses, for example “Customer Relationship
Management”, "database marketing", "direct marketing" and
"customer loyalty". “Customer experience” appears to be a more recent
semantic shift and offers academics an opportunity to
integrate the currently disjointed streams of theory on the
emotional relationships that individuals have
with a brand
and the interpersonal relationships that have
been the focus
for Relationship Marketing. For practitioners, who are
increasingly appointing "customer experience managers", the customer
experience may lie somewhere between the intellectual over development and
operationally under specified field of Relationship Marketing, and the short
term, operationally driven customer relationship management.
Like many
new ideas within the domain of marketing, Relationship Marketing emerged as a
"new" paradigm, only to attract increased critical attention as the
assumptions of the emergent paradigm came open to challenge. “Relationship
Marketing” has been described as a “popularized buzzword” (Coviello et al,
1997, p 26); while many have criticized the lack of an integrated underlying
theory of Relationship Marketing (e.g. Gummeson, 1987). The crucial point is
that while relational concepts have become even more firmly embedded in models
of buyer behavior, “Relationship Marketing” as an integrating and underpinning conceptual framework has become
increasingly challenged. There should be little surprise at this process of emergence
and criticism, reflecting Gladwell’s model of how new ideas emerge and are
subsequently challenged by a new emerging orthodoxy (Gladwell 2000).
Is Relationship Marketing, in
the words of Christopher, Payne and Ballantyne an "idea whose time has come" (Christopher, Payne and Ballantyne
1991) or an idea that
is approaching its "use by" date? Given the rising level of self-critical introspection
by academics and
practitioners of Relationship
Marketing, now is
the time to refresh the challenge
of defining relationships
within marketing. This special issue of Journal of Relationship Marketing presents
six of the most thought-provoking papers
presented at the colloquium, which each raised important
issues about the direction in which
Relationship Marketing should develop
One reason for the alleged shortcomings in
theories of Relationship Marketing
may arise from a focus among many
researchers on what Ehrensal (1999) has described as the “science of administration”,
rather than a critical evaluation of theory. The early development of
Relationship Marketing tended to draw mainly
- though by no means exclusively – on the extant marketing literature,
at the expense of the depth and breadth of literature in sociology and
psychology. Wensley (1999) noted that some of the current debates in marketing
had occurred in sociology 20 years previously. Some of the most interesting
advances in marketing theory have occurred at the borders with other
disciplines rather than within the confines of marketing
The
positivist approach to researching buyer-seller relationships – dominant among
US researchers - has tended to
emphasize the measurement and imputation of
values to relationships. This has complemented the
European approach,
which has tended
to conceptualize and seek a deeper understanding of the
meaning of marketing
relationships.. It has been
suggested that the positivist tradition of marketing academics – especially
within the US - may explain why relatively few academic Relationship Marketing
articles have been written from a sociological perspective (Burton, 2001). This
special edition combines approaches from both research perspectives.
In their article published
in this special issue, Pels and Saren remind us that managers selectively choose,
from a jungle of existing theories, those theories
that most closely describe their own world views and ideologies. Managers use
theories and knowledge claims that are consistent with their own frame of
reference, It follows that if we look for relationships in business, what we see may be a social
construction based upon
our own notion of what a relationship
should be.
But what
about the notion that Relationship Marketing theories are unimportant to
business? Is there an unbridgeable gap between theory and practice? Academic marketers have been accused of
‘talking about increasingly narrow issues in an increasingly impenetrable
language to an increasingly restricted audience’ (McDonald 2003). Perhaps the
gap results from the difficulty of translating theory into practice, leading
some observers calling for more research into marketing
implementation rather than marketing strategy. Practitioners are most eager to
learn when confronted with change, and Relationship Marketing was a “big new
idea” of the 1990s which businesses were eager to learn more about. A reason
for much of practitioners’ (and academics’) current questioning of Relationship
Marketing may stem from the shallowness of much early research which inadequately
explored the sociological and psychological contexts of relationships, A
challenge for Relationship Marketing is to develop multi-disciplinary insights
into relationships which can be translated into operational relevance to
businesses.
The
academic discussion of Relationship Marketing has too often been polemic by
regarding Relationship Marketing and transaction marketing as mutually
exclusive domains . More recent
thinking has come to see transaction
marketing and Relationship Marketing as interdependent, with repeated
transactions contributing, behaviorally and attitudinally, to relationship
development. Ehrenberg has provided some new insights to the
transaction-relationship dichotomy by suggesting that loyalty to a brand can
develop instantly. In one study, new brands' average purchase frequency at
launch was seen to be already normal, i.e. at the same level as a year or two
later and at a level
similar to established
competitive brands. Traditional transaction marketing techniques of
introductory discounts and point of sale promotion appeared to have
successfully developed a relationship between customers and the products they
bought (Ehrenberg, and Goodhardt, 2000). In another study of a financial
services organization, the bank under investigation was not seen to engage in
effective transaction or relationship planning or
implementation but rather the managerial and organizational focus was on sales
and promotion. The terms
"transaction"
and "relationship" did not seem to appear in managers' vocabulary
(Walsh, Gilmore and Carson 2004).
In their paper, Pels and Saren note a distinction between the US based approach to relationships, which are seen as being an intensification of transactional marketing approaches, while from a European perspective, relationships derive from a series of transaction episodes. More recently, a third position-the Contemporary Marketing Practice -CMP- approach has emerged which argues that both paradigms can coexist. Pels and Saren argue that the transactional approach and the relational approach are strongly influenced by two different underlying worldviews, with different assumptions, understandings and philosophical bases. Our own epistemological framework influences the type of relationships that we see.
The recent
conceptualization by Vargo and Lusch of a "service dominant"
logic has implications
for the domain of Relationship Marketing. Vargo and Lusch have argued for the pre-eminence of an ongoing
service perspective, by means of ongoing interaction with a
product and the people who sold it. In
their conceptualization of economics systems, services form a focal point for value creation, and manufactured goods
merely support the
central value created
by a service orientation. Could
this service dominant
logic be extended
one stage further
by arguing that all economic activity
flows from relationships? In much the same way as service elements
comprise an important
element of even the most tangible manufactured goods,
relationships are present
in the manufacture
and distribution of
most products.
Growing interest in Mass Customization has
focused on the role of relationships. Proponents of mass customization point to the growing importance
of applying an experiential perspective of
consumer behavior, implying
that all companies need to understand the complex subjectivity involved
in consumption,
and should seek
to develop unique
formulations of products
which satisfy each
individual's needs (Addis
and Holbrook, 2001). For many products, there has been the tenancy to shift from mass marketing of a homogenous product to
anonymous buyers towards
customization of product to meet the needs of known individuals whose needs
have become apparent
through some form
of dialogue based relationship.
In their paper, Varey
and Ballantyne focus
on dialogue as a defining characteristic
of buyer-seller relationships.
They challenge Relationship Marketing’s hidden monological
assumptions, and position dialogical interaction at the heart of Relationship Marketing. They draw the conclusion that dialogue is
not so much a method of communication but an orientation to a
form of relationship. The application of interpersonal
communication theory is seen as useful for the process of positioning
Relationship Marketing as an essentially social phenomenon,. A dialogically induced shift in Relationship
Marketing theory and practice would require some rethinking of marketing’s
reliance on communication at a long
distance through mass communication channels to a homogenous audience . The evident
failure of many attempts at customer
relationship management may be based on a flawed model of dialogue between buyer and seller, which in reality has often been a one-way flow of fairly homogenous messages. In his paper, Henneberg notes that the "soft" aspects of customer
relationship management are the ones which typically fail, and these failures often focus
on inappropriate configuration
of dialogue between
the buyer and seller, in an environment which
is essentially systems
driven.
Harwood returns to the subject of dialogue
in the context of negotiation, and in a study based on 12
negotiations concerning the strategic development of
relationships, she
finds distinct patterns of verbal behavior at different
stages of relational development. it is noted that the quality of interaction is a controllable determinant
in satisfying customers, and it is suggested that up to two-thirds of information and
operational knowledge derives from informal face-to-face interactions.
.
Relationship
Marketing strategies have often been justified as a means
of improving a company’s financial performance, and Reichheld’s early paper on
the effects on profits of increased customer retention has frequently been
cited as a justification for a switch from transaction to Relationship
Marketing (Reichheld 1996). There have been numerous subsequent attempts to
demonstrate the financial effects on a company’s profitability of ongoing
buyer-seller relationships (e.g. Reinartz, and Kumar, 2003; Ahmad and Buttle, 2001)
Relationship Marketing remains challenged by evidence that customers
who are satisfied with their relationship may nevertheless not return to a company (Brady and Cronin, 2001;
Gerpott et al, 2001). A problem with much academic research into Relationship
Marketing is that satisfaction and quality have been correlated with behavioral intention rather than actual
behavior. However, the dangers of predicting actual behavior on the basis of
intention has been noted (e.g. Newberry, Klemz, and Boshoff 2003). In the light
of increasing levels of competition in most services markets, behavioral
intention based on loyalty generated through good service can easily be broken.
This has been attributed to a number of factors, including: greater choice and
information available to customers; the “commoditization” of many categories of
services, and increased levels of competition
Numerous scholars have sought to define and measure relationship
quality, either as a conceptual entity in itself, or as a component of service
quality more generally. In one study, relationship quality was defined as a higher-order construct of
cooperation, adaptation, and atmosphere, and was shown to have a positive
impact on service quality (Ka-shing and; Ennew, 2004). However, the link between relationship quality
and profitability is not clear. This is partly because the link between quality
and profitability has increasingly been questioned. While many studies have
found that better service providers have a significantly higher return on
equity than poorer providers (e.g. Bates, Bates and Johnston 2003), more recent
attention has turned to “return on investment” rather than “total quality
management” as an objective for profit maximization (Barnes Fox, and Morris, 2004). In a study by Cronin and Taylor
(1992) service quality did not appear to have a significant positive effect on
intentions to purchase again. Passikoff (1997) cites a Juran Institute study
which indicated that less than a third of top managers of US’ largest
corporations believed that their customer satisfaction programs yielded any economic benefit.
It is also
questionable whether some characteristics of a relationship generate satisfaction
in customers while others generate dissatisfaction (Galloway, 1999). It has not
been clearly demonstrated whether improvement in one element will generate
satisfaction, but its absence, or reduction will not generate dissatisfaction.
Conversely the failure to achieve a standard in another element may generate
dissatisfaction in the customer, though its presence will not necessarily
generate satisfaction and repeat purchase.
The
published empirical evidence on returns from Relationship Marketing has tended
to be short term and focused on narrowly defined database activity, rather than
firms' investments in the total brand relationship (Reinartz, and Kumar 2003).
The apparent paradox remains of many service organizations who undertake little
Relationship Marketing activity, but command high levels
of profitable loyalty. As an example, the greatest growth in the airline sector
has been amongst no frills "budget “ airlines who have eschewed relationship based loyalty programs
and high levels of customer service in return for very low fares as a point of
difference with established "full-service" airlines. It has been
reported that as a sector, the rate of return on no-frills airlines is higher
than for full-service airlines (Airline news 2004).
Henneberg: in
his paper notes that only 20 percent of US financial institutions that have
introduced customer relationship management increased their profitability as a result and
this view of CRM as a generally unsuccessful strategy is shared by many
consumers.
The pursuit of Relationship Marketing metrics is quite timely, but again, a diversity of approaches
can be noted. CRM systems typically generate a
lot of data which can be used inductively to
build models of consumer behavior, or
deductively to test
assumptions and theories. Complex statistical
models must be used in conjunction
with more qualitative
approaches if a full understanding of
consumers’ relationships with a company are to be gained. As an example, the retailer Tesco is widely reported to have used it us extensive database, which combines sales data and loyalty program data, to identify a correlation in its stores between sales of beer and sales of nappies (diapers). Cross-sectional
data and longitudinal
data gave a measure of one aspect of its customers’ relationship with
the company, but the data alone offered no explanation of causation. For this, further qualitative
research was required. Through qualitative
research, the
company eventually found
that the male in
a household was
offering to do a good turn by going to the store to buy diapers, when in reality, he saw this as an excuse and an opportunity
to get out of the house to buy beer. But should it have taken such an extensive
program of data collection
and analysis to gain this knowledge? The owner of the typical Irish pub has known for a long time that consumers often need
an excuse to visit the pub, hence the appearance of post offices and grocery
stores that are
incorporated into the
pub. The Irish pub owner has used its relationship with customers
and a sound understanding of consumer
behavior to configure their product offer in a way that Tesco could only achieve with the
help of a huge database. The challenge of Relationship Marketing is to recreate in large
organizations the informed and flexible relationships which have been at the
heart of many small businesses’ practices.
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