Page 26 - DMGT408DMGT203_Marketing Management

Unit 1: Marketing: Scope and Concepts

Notes

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Self Assessment

State whether the following statements are true or false:

13. Customer is the ratio of perceived benefits and costs that the customer has to incur in
acquiring that product or service.
14. Customer value and brand loyalty are unrelated.

15. The concept of value chain was developed by Philip Kotler.
1.5 Partnering to Build Customer Relationships

Companies in developed countries and many businesses in developing countries aim to satisfy
customer needs and build lasting relationships. The issue focuses on reliability and trust between
customer and organisation. As a result of this customer focus, a whole new subject, customer
relationship management is now studied in marketing courses. According to Jagdish N. Sheth
and Rajendra Sisodia, the term 'relationship marketing' refers to long-term and mutually
beneficial arrangements wherein both buyer and seller focus on value enhancement through
the creation of more satisfying exchanges. This approach attempts to transcend the simple
purchase exchange process with customers to make more meaningful and richer contacts by
providing a more holistic, personalised purchase, and use or consumption experience to create
stronger ties.

The new approaches to marketing such as experiential, permission, and one-to-one marketing can
all be seen as means of creating stronger relationships with customers. The emphasis is on
developing long-term bonds with customers by making them feel good about how the firm
interacts or does business with them by giving them some kind of personal connection to the
company. Real relationship-marketing programme is much more than the use of database
marketing to target customers more precisely. Its purpose is that each customer must feel she/he
has received something in return for being a member of the partnership. Firms have found that
Internet is an inexpensive, efficient and more productive means to extend a firm's customer
services. Internet permits firms to ask consumers if they permit the company to send them targeted
e-mail ads, promotions, or messages, before actually doing so. Some airlines, hotel chains, credit
card businesses, and big retailers, etc., use relationship marketing techniques by awarding points
to committed customers that can be used to obtain additional goods or services from the concerned
company. To put it differently, relationship marketing is all about building trust between the
company and its customers and keeping promises. These factors increasingly strengthen the
customer dependence on the organisation, as a result of which the customer's confidence grows,
while the company better understands the customer and her/his needs and wants. Ultimately, this
helps in cementing the relationship and encourages cooperative problem solving.
Relationship marketing is based on the principle that current customers are the key to long-term
business success. According to Frederick F. Reichheld, the importance of customer retention can
be judged by observing some of the following benefits it provides:

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