An Outline for Relationship Marketing - Essay Example

 An Outline for Relationship Marketing Introduction With the present state of globalisation and the development of shared market across the world, it is very important for brands to have recognition and be accepted as a part of the local scenery as much as any small business would be (Harker and Esan, 2006). While this situation is often the one marketing executives strive for, it is often found that customers have different relationships with different brands and it is the strongest relationship between company and client which survives even when the product quality has suffered or the competition has offered a better alternative (Tenser, 2006). What is Relationship Marketing? To keep the relationship alive, relationship marketing becomes essential. This does not mean that the company should be ‘best friends’ with the client, rather it signifies the idea that a company should use a marketing system in which the marketing stress is placed on creating a long term relationship with customers which comes with the promise of repeat business rather than individual sales (Stone & Woodcock, 1995). This process involves a perceptive understanding of the client’s needs as the customers go through their lifecycle with the company and the satisfaction of those needs as the customer experiences them. Relationship marketing is based on the concepts of marketing but it uses cross functional teams that cut across various departments in a company to provide excellent and complete services to the clients. Rather than have the client go to different locations to get the pricing, service, promotions and other elements of the marketing mix, the entire marketing process can be handled by a team which comprises of various members of the company to provide multiple points of contact for customer groups (Peck et. al., 1999). Therefore the current trends in relationship marketing also consider the establishment of a system which is similar to customer relationship management. This is done because the focus is on satisfying the needs of the customer rather than the needs of the company. The Product and the Lifecycle In such a process, the product and the product lifecycle take differing positions of importance since different types and elements of marketing must be used as the customer and the product itself goes through various phases of maturity. Since the topic of relationship marketing is quite vast, it has been successfully applied to everything from consumable food items (Normandy & Sanders, 2004) to high end luxury cars (Stone et. al. 1996). While a chocolate might have a smaller life as a product, a good car remains with the buyer for several years if not several decades yet the idea of relationship marketing remains the same i.e. the continual satisfaction of the needs of the customer as the relationship expands and builds upon solid foundations (Cohen, 2004). Relationship Marketing at Mazda The products offered by Mazda are for a specific section of the business market since Mazda is pushing the system of fleet sales under which all the cars operated by a company come from a single dealer and a single manufacturer. This is a not a recent undertaking for Mazda since their customer support and business services centres have been active for many years. However, the personal service and the relationship which is to be established between the business, the dealer and the manufacturer is something which is very new in the competitive car industry (Cochran, 2006). The steps taken by Mazda represent the best elements of B2B relationship management where the origins of relationship marketing come from (Stone & Woodcock, 1995). Instead of merely attracting businesses and clients to the company, Mazda is looking for ways to continue a business relationship and to make sure that fleet replacement plans do not turn into automobile manufacturer change plans. While both short and longer term marketing related plans could be used in this situation (Parvatiyar & Sheth, 2001), Mazda is taking a long term approach to relationship marketing towards corporate clients with the addition of fleet service contracts and replacement parts plan for cars and trucks bought by their clients at discount rates which offer financial advantages to their business clients (Mazda, 2005). Business to Business Fundamentally, once a business has decided to switch its fleet to Mazda or to establish a new fleet of cars from a Mazda dealership, the company steps in with personal service levels which are very important for the people responsible for running the business as well as keeping the fleet running. For fleet customers, Mazda offers a special customer relationship counter as well as lounge facilities for business customers at the dealership where business clients are provided internet access and plasma screens while their cars are being serviced or just taken for a quick wash (Mazda, 2005). Such relationships and amenities provided to the business clients are important for the company since they help retain clients (Harker and Esan, 2006). Retention becomes essential in a market where the buyer has a number of choices available to him/her and this is certainly applicable in the automobile industry where every major company produces cars for nearly every segment (Tenser, 2006). Ford or Honda could easily supply the same types of cars, trucks, vans, runabouts and luxury models that are produced by Mazda therefore the selection decision remains with the buyer. Ongoing Service, Ongoing Relationship As Mazda offers a product where there is an ongoing need for service based on the mileage done by the car, the concept of relationship marketing is enforced since good service will mean continued business while bad service could end up losing the company a lot of money (Mercer, 1996). Additionally, there is also the need for replacement parts as well as replacement cars when the company feels that one or more of the cars in a fleet have lived out their usefulness. The combination of defensive and offensive plays made by Mazda have firmly established their system of relationship marketing since Fornell and Wernerfet (1987) confirmed that these two systems are necessary for any marketing campaign. In defensive terms, Mazda is providing their clients with top quality service as well as business amenities which would be very acceptable to clients coming from SMEs. Additionally, the defensive tactics would reduce the chances of customers going away to other companies by giving them something more that the competition (Lindsay, 2006). The offensive strategy for Mazda is simply to offer a comparison of how well they and their dealers treat business customers as compared to other companies offering similar services. This combination of defensive and offensive marketing makes up the marketing mix which is the basis of the relationship marketing plan which Mazda thinks would be most appealing to its customers. Mazda’s Offer Given that the services include seven working days for car servicing and free car washes for the life of the car, quite a few businesses would be interested in such positions for their fleet. This means that Mazda accepts the customer’s schedule to be the primary mover for the service requirements for their cars rather than to make the customers accept Mazda’s or the dealers’ terms for when the cars could be serviced or repaired (Mazda, 2005). Mazda declare service, especially personalised service to be very important for their SME business customers by saying: “Personal service, the introduction of innovative business concepts and the ability to ensure service, maintenance and repair work is retained within franchises are all crucial to corporate sales success, with Mazda aiming to expand relations with small and medium enterprises (Mazda, 2005, Pg. 1).” Of course such a declaration certainly means that companies like Mazda have to keep their word when it comes to service expectations of the clients. Without meeting and exceeding the customers’ expectations time after time, the company can not expect retention figures to be where they should be (Egan, 2001). The continued relationship between the targeted SME and the company itself can be sustained if the customer gets additional value from the relationship (Parvatiyar & Sheth, 2001). Most of the cars manufactured today can be serviced at nearly the same level from any licensed automobile workshop. Therefore unless Mazda provides additional benefits to their clients, they could easily take their business elsewhere (Cochran, 2006). Customer Retention Since the cost of retaining a customer is far lower than the cost of creating new markets (Stone & Woodcock, 1995), these corporate client gathering initiatives for Mazda make quite a bit of sense. By retaining customers and by continuing a relationship with the client at the point of sale, a business customer can be continually offered additional incentives to bring more customers to the company or to make personal purchases beyond the purchase they have made for the company fleet (Cochran, 2006). Mazda only has to acquire one business customer to sell several automobile units and they would be losing money if they do not try to sell additional cars to business customers. Additionally, Mazda would like to keep established relationships with business interests since such customers would be less likely to switch to other brands once they have established and accepted Mazda’s standards of service. A satisfied customer also increases the word of mouth value for the company (Egan, 2001); this can be very helpful when the entire company switches to a single manufacturer who supplies cars to everyone from middle management to senior directors and other executives of the company. Creating Additional Business With long term customers who have a good relationship with the company, Mazda will find it easier to sell them other equipment which a company might not be interested in otherwise (Harker and Esan, 2006). For instance, Mazda also makes industrial and specialist equipment which could be very useful for a company working in the construction business. Given that a company has a long established relationship with Mazda as the supplier and service provider for their cars, they would need less convincing to buy construction equipment or heavy trucks from Mazda if the relationship marketing experience has been positive. Even in terms of servicing the clients and the automobiles purchased by them, Mazda would be at an advantage since regular customers are cheaper to handle than those who have walked in for the first time (Little & Marandi, 2003). This is because due to the relationship established with long time customers, such customers are intimately familiar with the ordering or servicing system and would not need to be walked through the process or to be educated on Mazda’s systems. While this advantage is difficult to advertise to consumers, it is something they can come to appreciate on their own by spending time with the same seller (Drew, 2004). Rewards and Results The relationship marketing approach has given Mazda significant rewards and the results obtained since the program was started have been appreciated by the industry analysts as well as the company members. Mazda Motors has more than 150 dealerships across the country and all dealerships report rising figures for fleet related sales. Mazda reports that: Last year [2004] fleet sales were up almost 50 per cent on 2003 levels and in 2005 Mazda expects fleet sales to total about 18,000 units [this figure was exceeded]- around a third of total sales - and approximately 2,000 registrations up on last year's corporate business (Mazda, 2005, Pg. 1).” It must be noted that before taking this initiative and focusing on marketing towards businesses, Mazda only had 12 fleet specialist dealers across the country and their fleet sales were only a fraction of their total sales. By getting more dealers of Mazda to join into the fleet sales program, Mazda not only improved their own business, but also expanded their fleet dealership network to places where they previously could not penetrate. The dealers also have a lot to gain since by becoming fleet dealers, they increase their reputation in the area to a great extent (Mazda, 2005). Not All for One Although this program has its supporters, there are still many dealers in Mazda’s network of dealerships who have yet to establish a corporate presence in the market. Adam Pumfrey, the Fleet and Remarketing Director of Mazda Motors said that: "About half of our dealers have yet to secure any corporate business. However, they are sitting on a potentially lucrative business opportunity as companies that run fleets surround them. It is my aim to help them tap into that huge marketplace this year. By defining the fleet opportunity to them and by them discovering how some of our other franchises have secured both local small business opportunities and larger fleet success we can grow the Mazda brand together (Mazda, 2005, Pg. 1).” It seems that this is one of the weakest links in Mazda’s plan since universal fleet dealership would give their corporate customers an additional relationship bonus by which they could get their cars serviced even when they were in a different city. Such continued customer support is often easier to provide for tech companies (Ulfelder, 2003) where most of the customer services can be given over the telephone, but a car manufacturer requires a higher amount of investment before such levels of support can be provided. Conclusion Mazda has certainly been very successful in marketing their products and services to business customers and this statement is supported by their relationship marketing methodology and their sales figures which show that corporate sector sales have certainly improved in the past (Mazda, 2005). However, if Mazda wants to continue the same levels of growth for their company, they have to understand that continual expansion and betterment of services is needed for customers who have been with the company for a long period of time (Christopher et. al, 1991). This improvement will move them from customers to higher ends of the relationship chain. To do this, Mazda needs to focus on their dealers as well as their marketing mix which will let them be more oriented towards making relationships with customers from the corporate as well as the general public as they are already using techniques like viral marketing (Halliday, 2003). The cost of such adventures in the corporate sector is not really low since a fleet dealership has to invest large sums of money to create a first class lounge for business customers which incorporates an internet café, plasma TVs, armchairs and provide them hot or cold refreshments all day (Mazda, 2005). While such investments can not be made by every dealer, those who do provide such amenities have seen their business grow steadily. In fact, Mazda recognises that fleet based selling may not be the most profitable sales they can make but they are looking at the long term relationship and the connections they establish with SMEs in the area which could be beneficial to the company as well as get their newer products to a higher level of acceptability (Mazda, 2005). It seems that service and maintenance of the cars is something which is extremely profitable for the dealers while sales are what matter most to the company. By creating relationships and establishing a corporate customer base, both Mazda and its dealers reap great rewards and this system should be established by other companies as well. Works Cited Christopher, M. et. al. (1991). Relationship Marketing, BH. Cochran, C. (2006). Seven ways to keep customers front and center. Machine Design, 78(8), 65-65. Cohen, S. (2004). Performance improvement through relationship building. T+D, 58(7), 41-46. Drew, R. (2004). Marketing gets with the program. Computerworld, 38(21), 21-22. Egan, J. (2001). Relationship Marketing, Exploring relational strategies in marketing, FT Prentice Hall, Fornell, C. and Wernerfet, B. (1987). Defensive marketing strategy by customer complaint management: a theoretical analysis, Journal of Marketing Research, 9(11), 337-346. Halliday, J. (2003), Mazda goes viral to tout new models. Advertising Age, 74(45), 4-33. Harker, M. and Esan, J. (2006) The Past Present & Future of Relations Marketing. 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