IMPORTANCE OF RELATIONSHIP MARKETING - Essay Example

?Table of Contents introduction 2 2. IMPORTANT VARIABLES IN RELATIONSHIP MARKETING 2 2 Commitment 3 2.2. Trust 3 2.3. Communication 4 2.4. Customer Satisfaction 5 2.5. Loyalty  6 3. DISCUSSION OF RELATIONSHIP MARKETING VARIABLES WITH RESPECT TO AIRLINE INDUSTRY 6 4. CONCLUSION 8 List of references 10 1. introduction Relationship marketing has become a critical part of business marketing for the last two decades (Palmatier, Dant, and Evans, 2006). Comprehensive definition of relationship marketing refers to exploiting long term positive impact on the business with optimum utilisation of resources. The businesses are required to develop consistent interaction; extensive networking leading to cooperation among all stakeholders. Intended outcome of relationship marketing is to create superior environment that share trust among all stakeholder (Shirshendu, Abdolreza, and Nada, 2009). Morgan & Hunt (1994) have stated with reasoning that successful relationship marketing has commitment and trust as key factors. Despite the focal importance these factors hold in relationship marketing, there are also other factors that enjoy considerable importance such as; satisfaction, involvement, dependency, proximity etc (Damperat and Colbert, 2007). Similarly, communication, loyalty, financial bonds are also among important variables that play considerable role in relation marketing (Sweidan, Al-Dmour, Al-Zu’bi, and Al-Dmour, 2012). To mention, there are many variables apart from mentioned ones that contribute to relationship marketing and success of the phenomenon. This report identifies and discusses some of the important relationship marketing elements including commitment, trust, communication, customer satisfaction, and loyalty. Furthermore the implications of these elements in the airline industry has been analysed with the help of the examples from Singapore Airlines. 2. IMPORTANT VARIABLES IN RELATIONSHIP MARKETING Relationship marketing variables, similar to business environment, vary across industries while certain factors play similar role across industries (Gronroos, 2004). Based on its growing importance and positive impact on businesses, marketers are more intended to identify effective variables in respective business domains to increase the value for its customers over and above the primary product and service (Smith, 2011). Discussed below is the critical assessment of selected variables: 2.1. Commitment Relationship marketing stands on two foundation pillars; with one being commitment while the other is trust (Finne & Gronroos, 2009). Commitment in general as well as in relationship marketing is intention of parties sharing commitment to continue relationship. Level of commitment varies with motivation level to continue the relation that is influenced by many factors (Dwyer, Schurr, & Oh, 1987). It encourages marketers to invest for preserved long term relationships in contrast to short-term attractive alternatives and undertake high risks based on the confidence (commitment) support from partners (Morgan & Hunt, 1994). Importance and strength in relationship from commitment can be gauged from the fact that variable performance has been the metaphor from marriage literature (Das, 2009). Moreover, with maturity of consumer behaviour domain, the identification of brand loyalty has moved from increased repetitive and continuous buying to commitment to buy same brand on every purchase along with controlling the potential customer (Chegini, 2010). Commitment variations are critical to be differentiated such as effective and calculative commitment both being important contributor are not influenced by each other; hence, they must be addressed in distinction according to the need instead of relying on single attribute to support entire commitment paradigm (Lehtinen, 2011). 2.2. Trust Trust is among the two key variables that form the core of relationship marketing and leads to the success of relationship marketing in association with large number of other factors (Ratnasingam & Pavlou, 2003). Dwyer and Tanner (2002) have defined trust as “the belief in the integrity, honesty and the reliability of another Person.” Marketer through relationship marketing attempts to develop trust of customer and stakeholders of the firm. Trust of different types is developed with distinguished scenarios. For instance, competence, contractual and goodwill trust to exist in the market of international buyers and sellers apart from widely discussed cognitive and behavioural trust component. Correct understanding of trust component is necessary to carry the relationship forward and misunderstanding in particular relationship can lead to relationships failure (Delgado-Ballester and Munuera-Aleman, 2001). For instance, the contractual trust is negatively affected in case the product or service of trade is not delivered as promised or contracted; hence leading to halt in the trading relations whereas existence of goodwill trust leads to second chance to supplier in case of any discrepancy (Bhattacharya & Sen, 2003). Therefore, firm must focus on strengthening the bond with respect to all trust factors and special attention to trust factor with mandated importance in respective domain. 2.3. Communication Communication plays a key role in building relationship of organisation within its internal as well as external organisations (Rensburg & Cant, 2003). Effective communication, as stated by Rouse and Rouse (2002), is status when message is received and understood by the receiver is interpreted the same way as intended by the sender. Specific to relationship marketing, communication is a process adopted by organisation to derive brand value from customers (Duncan, 2002). Importance of effective communication is similar for internal as well as external customers. Appropriate to state would be effective communication is more important to internal customers as external customers reach the company through this segment. Further, planned communication for customers as central process of relationship marketing using distinctive media can be used to develop valued relationship. As an example, adhering to customer comments and complaints on the social media has benefitted business greatly with awareness of actual perception of customer about business along with risk it possesses (Palmatier, Jarvis, Bechkoff, & Kardes, 2009). 2.4. Customer Satisfaction Business success is directly proportional to its ability to satisfy customers. Moreover, to assert its importance dissatisfied customer takes with it other existing and potential customers. Hence, entire business in general and marketing activities in specific are aimed to satisfy customers. Customer satisfaction along with other variables develops brand identification that leads to word of mouth and repurchase as Kuenzel & Halliday (2008) established in the study. Profitability and organisational growth are indirect and powerful relationship with customer satisfaction given goods and service are capable to generate value to customers (La and Kndampully, 2004). Therefore, the relationship can be strengthened with customer meeting the distinctive needs. Abasnejad and Hosein (2008) have stated that customer satisfaction is a combination of three segments; first, product hardware and conformity of the product with stated and perceived expectations. Second, the software characteristics of product such as elements of interaction with ease of purchase etc while the third category that derives customer satisfaction includes overall reputation and image variables of brand within internal and external customers of brand. Growingly investments from businesses are increasing to fetch the loyalty by satisfying customer with giving more personalised attention specifically to dissatisfied customers. Such as increasing investment in social media interaction has been intended to explore the level of services customer expect as cost to their satisfaction; hence, strengthened relationship marketing getting hold of actual satisfaction level of customers (Oakley & Bush, 2012). 2.5. Loyalty  Loyalty variable is among the most studied variables in the domain of marketing. Marketers are intensely involved in exploring the impact of factor that has the most dominant impact on developing loyalty for their respective product or service (Kanagal, 2009). Further, maturity in the domain of organisational relationship is increasingly acknowledging the importance of employee loyalty to organisation and its direct relationship with customer loyalty along with only focused factor customer loyalty (Martensen and Gronholdt, 2006). Loyalty itself is driven by large number of factors some of which have already been discussed above. Such as communication, satisfaction is intended to develop loyalty. Further, to gain the benefit of employee loyalty businesses are considering investment in career development of employees etc. Employee loyalty financial focused for gaining the successful relationship marketing also benefits business from reduced burden from employee turnover etc (Alrubaiee & Al-Nazer, 2010). 3. DISCUSSION OF RELATIONSHIP MARKETING VARIABLES WITH RESPECT TO AIRLINE INDUSTRY Relationship Marketing plays a key role in airline industry for two basic reasons; first, importance of relationship marketing within general business conduct while second, fact of being service industry so it has level of interaction with customer is highly important. Singapore Airline, one of the most prominent airlines in the world, has developed its business model understanding the true spirit of relationship marketing. Resultantly; Singapore Airline has been scoring profitability since inception and with frequent winning for the international awards for top customer and in-flight quality service (Kaufman, 2010). Success of Singapore Airline when evaluated is found in true alignment with factors of relationship marketing, specifically with ones discussed in the underlying assignment. Singapore Airline’s commitment to its customers and employees in terms of service and quality has led business entitled to be preferred one as compare to competitors. For instance, Singapore Airline to ensure committed relationship development with customers constantly and closely evaluates performance of its competitors. Such performance orientation commitment leads to trust and loyalty building of customers. Moreover, Singapore Airline acknowledges the importance of internal customers and their respective loyalty; provides its employees opportunity for career development. To strengthen the relationship of employees with organisation, Singapore Airline also gives considerable importance to the innovative suggestions from employee for improving customer service; hence, developing two way relationship. The Loyalty of employees is enhanced by appreciating with rewards such as “Transforming Customer Service Award”. This and other such efforts and rewards benefits Singapore Airline in multiple domains. For instance, encouraging employees strengthen relationship by increasing commitment, communicates importance of service to employees and enhances satisfaction of employee. Moreover, to align the diverse employee base with strategy the internal communication strategy is also complemented by publishing newsletters etc. While on other hand, increased employee efforts have resulted in superior services to customers; building trust of customers on services of Singapore Airline and hence, leads to customer loyalty. Since all the stated factors as well as other relationship marketing factors are interconnected; such as satisfaction being an antecedent of loyalty while loyalty is important factor in developing commitment; therefore, combining the impact of these factors leads to benefits in multiple-folds. Further, adhering to importance of relationship with internal customers (employees) along with external ones, result in sustainable relationship development. Singapore Airlines in order to succeed in the competitive airline industry has employed relation marketing mechanism for employees along with service and quality oriented relationship for its service customers. Hence, reaping the combined benefit of direct relationship marketing with customers as well as benefit from positive waves generate from employees to provide superior customer service. 4. CONCLUSION Relationship Marketing has gained a dominant position in marketing and business literature. Its importance can be gauged from fact that form of relationship marketing as Customer Relationship Marketing (CRM) is now being identified as strategic goal in business (Jang, 2010). Apart from trust and commitment that are given focal importance in relationship marketing, there are other factors such as communication, loyalty and satisfaction that play key role in relationship marketing. Moreover, each factor lends support to other factor finally leading to success of relationship marketing. Therefore, based on the stated role of these factors relationship marketing literature asserted due importance; hence, guiding marketers to address in large to gain the successful relationship marketing (Ostergaard & Fitchett, 2012). Variables of relationship marketing if employed in correct plan can lead business entitled to winning awards (Corsaro & Snehota, 2010). The notion provide accurate for defining the status of Singapore Airlines that has frequently managed to win the quality service awards. Singapore Airlines with consistency applied the relation marketing mechanism across board and developed bonding with customers as well as employees. Singapore Airlines won the trust, loyalty, commitment and satisfaction of customers as well as employees by oral and actions communicating bottom line of its business vision of delivering high-quality service. List of references Abasnejad, A.V,and Hosein V. S.(2008). Establishment of loyalty in customers. Tadbir Journal, vol. 158, no. 3, pp. 29-32 Alrubaiee, L., & Al-Nazer, N. (2010). Investigate the impact of relationship marketing orientation on customer loyalty: The customer's perspective. International Journal of Marketing Studies, vol. 2, no. 1, p. 155. Bhattacharya, C., & Sen, S. (2003). Consumer-Company Identification: A Framework for Understanding Consumers’ Relationships with Companies. Journal of Marketing, vol. 67, no. 2, pp. 76-88  Chegini, M. (2010). Customer loyalty and value key dimensions interaction in organization. China-USA Business Review, vol. 9, no. 8, pp. 8-14. Corsaro, D., & Snehota, I. (2010). Searching for relationship value in business markets: are we missing something? Industrial Marketing Management, vol. 39, no. 6, pp. 986-995. Damperat, M., and Colbert, F. (2007). Exploring key relationship marketing variables between art organizations. Available from http://www.gestiondesarts.com/fileadmin/templates/main/PDF_Publications/Titulaire/AIMAC9_Demperat_Colbert.pdf [Accessed 6 December 2012] Das, K. (2009). Relationship marketing research (1994-2006): An academic literature review and classification. Marketing Intelligence & Planning, vol. 27, no. 3, pp. 326-363. Delgado-Ballester, E., and Munuera-Aleman, J. (2001). Brand Trust in the Context of Consumer Loyalty. European Journal of Marketing, vol. 35, no. 11/12, pp. 1238-1258 Duncan, T. (2002). IMC: Using Advertising and Promotion to Build Brands. Burr Ridge: McGraw-Hill/ Irwin Dwyer, F., and Tanner, J. (2002). Business Marketing: Connecting Strategies, Relationship and Learning. Boston: McGraw Hill. Dwyer, F., Schurr, P., & Oh, S. (1987). Developing Buyer-Seller Relationships. Journal of Marketing, vol. 51, pp. 11-27 Finne, A., & Gronroos, C. (2009). Rethinking marketing communication: From integrated marketing communication to relationship communication. Journal of Marketing Communications, vol. 15, no. (2-3), pp. 179-195. Gronroos, C. (2004). The relationship marketing process: communication, interaction, dialogue, value. Journal of Business & Industrial Marketing, vol. 19, no. 2, pp. 99 – 113 Jang, H. Y. (2010). The effects on CRM performance and relationship quality of successful elements in the establishment of customer relationship management: Focused on marketing approach. Journal of Global Academy of Marketing Science, vol. 18, no. 4. Kanagal, N. (2009). Role of relationship marketing in competitive marketing strategy. Journal of Management and Marketing Research, vol. 2, no. 1, pp. 1-17. Kaufman, R. (2010). How does Singapore Airlines fly so high? Available from http://www.upyourservice.com/blog/engaging-service-vision/singapore-airlines-customer-service-story/ [Accessed 6 December 2012] Kuenzel, S., & Halliday, S. (2008). Investigating Antecedents and Consequences of Brand Identification. Journal of Product & Brand Management, vol. 17, no. 5, pp. 293-304 La, K., and Kndampully, J. (2004). Market oriented learning and customer value enhancement through service recovery management. Journal of Managing Service Quality, vol. 14, no. 5, pp. 390-401. Lehtinen, U. (2011). Combining mix and relationship marketing. The Marketing Review, vol. 11, no. 2, pp. 117-136. Martensen, A., and Gronholdt, L. (2006). Internal marketing: a study of employee loyalty, its determinants and consequences. Innovative Marketing, vol. 2, no. 4, pp. 92-116 Morgan, R., & Hunt, S. (1994). The Commitment-Trust Theory of Relationship Marketing, Journal of Marketing, vol. 58, no. 3, pp. 20-38  Oakley, J., & Bush, A. J. (2012). Customer Entertainment in Relationship Marketing: A Literature Review and Directions for Future Research. Journal of Relationship Marketing, vol. 11, no. 1, pp. 21-40. Ostergaard, P., & Fitchett, J. (2012). Relationship marketing and the order of simulation. Marketing Theory, vol. 12, no. 3, pp. 233-249. Palmatier R. W., Dant R. P., and Evans K. R. (2006), Effectiveness of relationship Marketing - Meta-analysis, Journal of Marketing, 70, 4, 136-153. Palmatier, R. W., Jarvis, C. B., Bechkoff, J. R., & Kardes, F. R. (2009). The role of customer gratitude in relationship marketing. Journal of Marketing, vol. 73, no. 5, pp. 1-18. Ratnasingam, P., & Pavlou, P (2003). Technology trust: The next value creator in B2B electronic commerce. Seattle, Washington: International Resource Management Association Conference, May 21-23. Rensburg, RS, & Cant, M. (2003). Public Relations: South African Perspectives. South Africa: Heinemann Rouse, MJ., & Rouse, S. (2002). Business Communications: A Cultural and Strategic Approach. Australia: Thomson Learning Shirshendu, G., Abdolreza, E., and Nada, N. (2009). Relationship marketing: a critical evaluation of research streams. Proceedings of ASBBS, vol. 16, no. 1. Smith, M. (2011). The new relationship marketing: How to build a large, loyal, profitable network using the social web. Hoboken, NJ: John Wiley & Sons, Inc Sweidan, G., Al-Dmour, H., Al-Zu’bi, Z., and Al-Dmour, R. (2012). The effect of relationship marketing on customer loyalty in the Jordanian Pharmaceutical Industry. European Journal of Economics, Finance, and Administrative Sciences, no. 53, pp. 153-172 Read More