The Advantages and Disadvantages of Relationship Marketing - Essay Example

Difference between Relationship marketing and traditional marketing "Difference between Relationship marketing and traditional marketing" What is the difference between Relationship marketing and traditional marketing The difference between relationship and traditional marketing may come out to be trivial. However, at its core lie main theoretical differences that have compounding effectuates when practiced in the real world. Before we can interpret the advantages and disadvantages of relationship marketing we must understand the conflict. Traditional Marketing: Traditional marketing is centred on getting the message out. The more people you expose your message to the more people that will buy your product. It is a number game that tells something like 1% of all visitors will buy your product. Relationship Marketing: Relationship marketing is more about making a customer relationship and encouraging consumers to have a broader purchase rate and more satisfaction with their products. Typically relationship marketing is pitched towards long-term growth. Let us say that an organization such as newspaper has just spent thousands of dollars on getting people through the door. Since the newspaper has not thought about relationship marketing the visitors make one buy and are never seen or heard from again. The newspaper continues to spend huge amounts of money in order to attract customers and has very little repeat business. Relationship marketing is all about the repeat business. Relationship marketing is a cost-effective method that finds to retain visitors (Goldglantz, 2007). The advantage of relationship marketing is that it aids retain the successes the newspaper has already attained. For example, a huge amount of visitors can be converted to a huge amount of return visitors. These return visitors can be examined for characteristics and traits. The disadvantage is that relationship marketing that seems inward (to current customers) does not attract new customers on a large scale. The advantage of traditional marketing is that it draws its net wide like a fisherman hoping to attain as many customers as possible. The broader the net the more fish and more markets we can dab into. The disadvantage of traditional marketing is that most organizations (newspapers) cannot simply keep paying high advertising costs to assert an expedient customer flow. Relationship and traditional marketing can be best applied when in conjunction. One exploits new markets and draws in first-time visitors while the other retains the customers as long as possible. The best the relationship, the best the sales results of the newspapers (Hunter & Perreault, 2007). Thus newspapers should conceive developing their marketing program so that it attains sales on the front end and the back end. Here we are considering two organizations. One organization use relationship approach with their customers and the other organization use traditional approach with their customers and here we are considering organization as a newspaper. First, describe the different activities of that newspaper which is using relationship approach with their customers. Relationship marketing: Definition: Relationship marketing is defined as the building of long-term, loyal, committed and economic relationships with potential and existing customers through communication and the provision of quality products and services. Relationship marketingis a type ofmarketingdeveloped from direct response marketing campaigns carried out in the 1970s and 1980s which emphasizes customer retention and satisfaction, rather than a dominant focus on point-of-sale proceedings. Relationship marketing is different from other forms of marketing in that it recognizes the long term value to the business firm of keeping customers, as opposed todirector "Intrusion" marketing, which focuses upon accomplishment of new clients by targeting majority statistics based upon prospective client lists. Development: Relationship marketing concerns to a long-term and mutually beneficial arrangement wherein both the buyer and seller focus on value improvement with the goal of providing a more satisfying exchange. This access attempts to transcend the simple purchase-exchange method with customer to make more meaningful and richer contact by providing a more holistic, personalized purchase, and use the expenditure experience to create stronger ties. According to Liam Alvey (Berry 2001, p 146) relationship marketing can be used when there are competitive product choices for customers to choose from; and when there is an ongoing and periodic will for the product or service. The practice of relationship marketing has been alleviated by several generations ofcustomer relationship managementsoftware that allow tracking and examining of each customer's preferences, activities, tastes, likes, dislikes, and complaints. For instance, a newspaper asserting a database of when and how repeat customers buy their newspaper, the options they choose, the way they finance the purchase etc., is in a strong position to develop one-to-one marketing extends and product benefits. Approaches: Satisfaction: Relationship marketing depends upon the communication and accomplishment of consumer requirements solely from existing customers in a mutually beneficial exchange usually involving permission for contact by the customer through an "opt-in" system (Gale et al 1994, p 23).With particular materiality to customer satisfaction the relative price and quality of news published in a newspaper alongside customer service normally determine the amount of sales to create more and more advertisements as compared to the other competing newspapers. Although customers targeted via relationship marketing may be large, accuracy of communication and overall relevancy to the customer remains higher than that of direct marketing, but has less expected for generating new leads than direct marketing and is limited toViral marketingfor the acquirement of further customers. Retention: A key principle of relationship marketing is the retention of customers through different means and practices to assure repeated trade from pre-existing customers by satisfying requirements above those of competing other newspapers through a mutually beneficial relationship (Gordon 1999, p 336).This technique is now used as a means of counterbalancing new customers and opportunities with current and existing customers as a means of more and more profit and counteracting the "leaky bucket theory of business" in which new customers gained in older direct marketing oriented businesses were at the expense of or coincided with the loss of older customers.This process of "churning" is less economically workable than retaining all or the majority of customers using both direct and relationship management as lead generation via new customers needs more investment. Application: Relationship marketing and traditional (or transactional) marketing is not mutually scoop and there is no need for a conflict between these two marketing. A relationship oriented marketer still has options at the level of practice, according to the situation or condition variables. Most firms mix up the two approaches to match their portfolio of products and services. Virtually all products have a service component to them and this service component has been getting greater in recent decades. Advantages and Disadvantages of Relationship marketing: Relationship marketing has its own advantages and disadvantages. It advantages consists of enhance in loyalty of the customer, greater levels of satisfaction for the customer of the newspaper, increase in long-term profits and betterment of the awareness of interaction with the newspaper. Its disadvantages may consist of the following. First, it may imply in considerable capital investment with no guarantee of return. Secondly, it may necessitate expenditure on up-to date technologies like electronic point of sale instrumentation or customer database. And, it may cause important changes in the culture of the organization before the real implementation of the relationship marketing. Traditional Marketing: Definition: Generally the basic of any marketing is making new customers and retain existing customer. It is a project to create awareness of consumers in product / company / services by making their brand popular using different marketing techniques. For successful marketing, quality product and customer services are very important or significant. The other important factors are demography, market needs, target market and many more factors need for complete market research to create successful marketing strategy. Marketing is an intelligent and creative technique that involves advertising, distribution and selling. Understanding customers requirement and fulfil their requirements is the base of success for any marketers. The marketing mix constitutes of Product, Price, Promotion and Placement. Traditional marketing is so high-priced. It requires long time and budget to get success. Till the date it is conceive as proven marketing technique for promoting any newspaper or advertisement in it. In traditional marketing the different Medias are used for marketing products such as Television, Radio, Print [newspaper, magazines etc.], Outdoor and many additional media. Traditional Marketing is very efficient, time-tested and proven means to make business or product popular. The disadvantage of traditional marketing is it is very expensive and requires traditional marketing is an ideal for any advertisement's promotion but on international level it is consider as most costly medium (Leonard Berry, 1999). Four Ways Traditional Market Research Can Kill Innovation: In almost all organizations (newspapers), market research is a critical part of the innovation process. Market research helps organizations (newspapers) identify attractive opportunity areas, equate innovation initiatives, and fine-tune their strategic approach. It is a pity then those newspapers frequently stumble when using market research to guide innovation decisions. It is not that market researchers are bad people. Almost all the market researchers are beneficial, thoughtful people. The tools of market research are when used in a proper manner, useful tools. But something comes off the tracks when innovation-seeking newspapers organize, execute, and use market research. The four biggest faults with traditional market research approaches are: 1. Talking to the incorrect customers. It is been more than a decade sinceClayton Christensenexplained how the root of the innovator's dilemma is a myopic focus on the most demanding customers in the market. Yet, many newspapers still spend a disproportionate amount of their time trying to understand the wants and needs of existing, demanding customers. Innovation opportunities almost always come from apprehension a company's worst customers or customers it doesn't serve. 2. Always interrogative the wrong questions.Many newspapers will ask customers, in essence, what do you needAcademicsand professionalsare more fluent than explained how customers can't dependably answer that question. The focus has to be on the trouble the customer is facing and even that can be tricky because customers can't always formulate problems that aren't directly targeted by existing solutions. 3. Having the wrong people represent the data.Often, senior leaders will take decisions established on summary market research accounts. They trust on crucial filtering decisions by line managers and market research firms who might miss (or intentionally screen out) significant signals. Decision-makers demand to experience the raw data to make sure signals don't get lost in translation. 4. Making the false decisions based on market research data.I havewritten beforeabout the dangers of making decisions based on what are assure to be faulty projections. Using early-stage market research as an input into innovation decisions is great. Treating market research into non-existent markets as gospel almost always assures struggles. Of course, market research done in the right way can be improbably actionable and useful for innovation. It is a matter of using the right approaches in the right contexts. Part of the problem, I suspect, is that the market research method at many newspaper has been honed to aid support the core business. Newspaper seeking to create new growth businesses need to radically re-think the way they approach and use market research, or suffer the results. Conclusion: Now we can conclude that Relationship Marketing is all about keeping onto pre-existing customers as well as attaining new ones; while existing customers persist loyal if the value of the product/service that they receive is enough high; while loyal customers can also act as counsellors of this product/service. Yet remarkably, many start-up new newspapers managed to disregard these simple business concepts, and as a consequence lost the customers that they had fought so hard to attain in the first place. It is at times like this that 'success' and 'survival' actually do equal the same thing, but if Relationship Marketing is infused into the company of that particular newspaper culture to begin with, then situations or conditions like these can be avoided. How the newspapers attract the readers Many newspapers re-launch their weekend edition, elaborating it considerably with added features, news and sport aiming to attract more readers. Because during the weekend newspaper sales traditionally increase, newspapers apply a promotional and distributional reinvention combined with top notch journalism. Besides, many newspapers experience an immediate boost in their sales by launching Saturday magazine inserts that feature a vast variety of topics and fulfils all the tastes. Involving readers through a Q&A column is a worthful tool for retaining reader interest and defining newspaper content. Relationship between the reader and the newspaper is the key to keep readers interested in the newspaper by opening the door for them to share their problems, take a short poll, win award prizes by taking an active in contests related to a topic of interest and submit articles in exchange for a by-line. In that way, readers are both invited and boosted to become an integral factor of the newspaper, the silent force behind the editorial and the buying force on the sales figures. However, the most important of all changes comes from the deep down. The big change begins from the newsroom. Authentic information is always what readers look for, either in print or online media. Besides, newspapers need to remould the format of their content to entice new readers while maintaining the high standards of the core value of their information. In that way, they will attract to younger demographics, aiming to convert them to daily readers, while keeping the customer base of loyal readers. Conclusively, the increasing loss of audience connotes that newspapers have to modify their content and format a great deal more than they had originally planned or their fiscal health cannot be corroborated. As readers become more convoluted and demanding, newspapers need to come up with innovative ways to engage them in the process and at last, retain them (Barbara, 2001). How to create more advertisements With newspaper advertising, Consistent Advertising = Familiarity = Trust = Customers. People won't buy from you until they have confidence in you. That trust and assurance takes time to establish. To be successful with newspaper advertising, you need perseverance, patience, and a budget to keep the newspaper advertising running to build that trust. Our ad should appear in the same place in the newspaper at least weekly for an indefinite period [forever]. Expect to run the newspaper advertising for two months before an increase in sales take place. It takes some time to have trust. And if you depart, you have to initiate all over again. Newspapers get the biggest share of advertising gross in U.S. Almost 22% of all ad dollars go to newspapers. Over 85% of that money is spent by native advertisers. Attention is all things in the newspaper advertising. The ad must stand out from [different with] all of the others on the page. Bourgeois ads won't even get noticed. You need to make your customers squirm, or cringe, or laugh, or cry. You need them excited, gladdened, and ready. You can use direct response newspaper advertising, and you create professional advertisements using expert marketing techniques (Theodore, 2000). References: 1. Berry, Leonard (2001).Relationship Marketing. American Marketing Association, Chicago. p.146. 2. Gale, B.T., Chapman. R.W. (1994)Managing Customer Value: Creating Quality and Service That Customers Can SesssseNew York: Free Press. P 23. 3. Gordon, Ian (1999).Relationship Marketing: New Strategies, Techniques and Technologies to Win the Customers You Want and Keep Them Forever. John Wiley and Sons Publishers. p.336. 4. Theodore Levitt (2000). "How to create more advertisements" (New York: Free Press, 1983).p. 234. 5. Barbara Bund Jackson (2001). "How the newspaper attract the readers," Harvard Business Review, LXIII (November-December 1985), p. 120-28. 6. Leonard Berry (1999). "Traditional Marketing," in Perspectives on Services Marketing (Chicago, Illinois: American Marketing Association, 1983).p 87-90. Read More