rm = chapter 04 - market relationships – classic and special.pptx

8/12/2019 RM = Chapter 04 - Market Relationships Classic and Special.pptx

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Chapter 04

Relationship Marketing

Redwan Salam


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The classic DyadThe relationship between the supplier and the customer

The classic TriadThe customersuppliercompetitor triangle

The classic networkDistribution channels

The relationship via full-time marketers and part-time marketers works

The service encounterinteraction between customers and service provider

The many headed customers and the many headed supplier

The relationship to customerscustomer

The close versus distant relationship

The relationship to dissatisfied customers

The monopoly relationshipthe customer or supplier as prisoners

The customer as Memberconcept

The non-commercial relationship

The green relationship

Chapter Content


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Market Relationships - Classic

Classic market relationships

Supplier and customer

The customer - supplier - competitor triangle

Network - distribution channels


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The Classic Dyad

The relationship between the one who sells something and the one who buys

something forms the classic dyad of marketing, a two party relationship.

This is the parent relationship of marketing where supplier and customer.

Caring for existing customers used to be second to attracting new customers.

Today, keeping, caring for and developing existing relationships gets priority.

Court your own customers before you start courting somebody elsescustomers.


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The Classic Dyad

Real selling is not making sales but making customers. Relationship

with customers should be as follows:

If you are good to your customers, they will keep coming back

because they like you.

If they like you, they will spend more money.

If they spend more money, you want to treat them better.

If you treat them better, they will come back and the circle starts

again.


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The Classic Dyad

Permission Marketing

The thought behind permission marketing is that customers have

scarce time and do not want to be disturbed unnecessarily.

Therefore, customers are asked for permission, something that an

interactive relationship makes possible.

Tag lines like, Noadvertising, thank you!or No junk mail!can be

conveyed.


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Data Mining

- Data mining is a systematic process which may use advanced

models and techniques to store and analyze patterns of customer

and their purchasing behavior and develops hypotheses and

suggestions for strategies.

- Data mining offers an opportunity to see structures and links that

might be converted into implementable knowledge to better

customize and target its messages, goods and services, boost its

competitive power and increase customer retention.

The Classic Dyad Overcoming

Shortcomings


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Up-selling

- Up-selling means that selling more of the same kind of product to a

customer usually buys.

- For example, customer is having a meal at a restaurant with a glass of

cola. Now, selling more cola to that customer will be called up-selling.

Cross-selling

- Cross selling means that selling more to a particular customer of different

relevant product types s/he is currently buying.

- For instance, selling sim card with the sell of a smart phone or selling

home insurance who already have car insurance with the insurance

company.

The Classic Dyad Overcoming

Shortcomings


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A cornerstone of the market economy is the presence

of several suppliers in each market. Competition

arises, consisting of a triad of players:

- The customer

- The customerspresent supplier

- Competing suppliers

The Classic Triad


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Pendant of Marketing Equilibrium

Competition

Collaboration

Regulations/Institutions

- Competition is desirable whenever it is efficient.

- The focus on collaboration is the most important contribution from RM, with an

impact on both marketing management and economics and that collaboration

in a market economy needs to be treated with same attention and respect as

competition.

- There is no known market that has functioned without regulations and

institutions, nor one that functions without competition and collaboration.

Marketing

Equilibrium

Regulations & Institutions

The Classic Triad Marketing

Equilibrium


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Deregulation

Deregulation is the act or process of removing or reducing state regulations.

It does not mean abandoning all regulations rather a search for more

adequate laws and institutions which are supportive to constructive forces of

society and hold back destructive forces.

Reregulation

When new or additional regulations are enacted after an industry or sector is

deregulated, this is referred to as reregulation. The term can also refer to the

process of reversing deregulation in regions where deregulation turns out to

be impractical or unmanageable.

Since 1980s, this has been a leading strategy around the world.

The Classic Triad


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Privatization

Privatization is the process of transferring ownership of

a business, enterprise, agency, public service or public property

from the public sector to the private sector.

Hypercompetition

Competition may become hypercompetition in unregulated

markets which can lead to severe price competition, streams of

bankruptcies, impaired quality and sell of dangerous products.

The Classic Triad


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There are necessary elements of the market economy that

competition and the free market forces do not master.

They can be worded in two paradoxes:

1. Regulations are needed to secure that free competition

will not be curbed.

2. The goal of competition is to get rid of competition.

- So, regulations are not restrictions only guidelines for

doing things.

The Classic Triad Need for

Regulations


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Physical distribution is the most obvious network in marketing; it

constitutes a classic network. The common designations today are:

- Supply chain

- Channel management

- Logistics

Distribution networks are numerous, complex and interwoven.

- Sometimes they are efficient and fast, providing the shortest route

to market and sometimes they are slow, inefficient and replete with

detours and broken chains.

The Classic Network


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Domain of distribution channel:

- Physical distribution of consumer goods

- Distribution of industrial goods

- Distribution of services and information

- Distribution of people and even living organisms

The Classic Network


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Network Marketing

- Network marketing is a system for marketing goods and

services which is usually based on contacts with friends and

friends of friends.

Multi-level Marketing (MLM)

- MLM offers a network of collaborating one-man firms who

support each other.

- Youare in business for yourself, but not by yourself.

The Classic Network


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Logistics

- The concept of logistics concerns the flow of goods, all the way

from the extraction of raw material, manufacturing of components

and assembly, to finished goods in the store and their arrival at

households.

-

Logistics requires a holistic understanding of a business operation.

It is a matter of making processes more effective, so that

manufacturing and delivery are performed straighter and faster

and on time, keeping costs and capital employed down.

The Classic Network


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The Hub-and-Spoke System

- First introduced by FedEx and DHL in 1970

- Enables company to carry smaller packages from different smaller

locations to other smaller locations via a hub.

- Hubs are the centers for connections around the world

The Classic Network


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Market Relationships - Special

Special market relationships

Full-time marketers and part-time

marketers

Customer and service provider

Many-headed customer and many-

headed supplier

Relationship to the customer's

customer

Close versus distant relationship

Dissatisfied customer

Monopoly relationship: customer or

supplier as prisoner

Customer as "member

Electronic relationship

Parasocial relationships, with

symbols and objects

Noncommercial relationship The green relationship

The law-based relationship

The criminal network


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Relationship via FTMs and PTMs

The marketing function is spread throughout the firm, and the

marketing and sales department may even play a limited role in the

total marketing effort.

- Perhaps there is not even a marketing and sales department.

Instead, each and everyone is involved in marketing.

We can identify two types of marketers.

- Full-time marketers and part-time marketers.

- These are not only found within the company, but also in its

environment


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Full-time marketers (FTMs)

- Full-time marketers and sales people are those who are hired for

working marketing and sales tasks.

- FTMs are found in the marketing and sales departments and

among external providers of marketing services.

Part-time marketers (PTMs)

- Part-time marketers and sales people are all others in the company

and those in its environment that influences the companys

marketing.

Relationship via FTMs and PTMs


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External services:They contribute to differentiation and uniqueness, and

ultimately competitiveness. Mainly focused on

o Before sales service

o After sales service

Internal services: Supportive to marketing. Like secretarial service,

computer services, legal services, canteen & health service etc

Besides customers, suppliers, investors, media and other stakeholders and

opinion leaders are also considered as influencing PTMs component.

PTMs FunctionManufacturing

Organization


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Service provider organizations such as management

consultants, CPAs (certified public accountants), lawyer and

architects etc

In small professional firms, partners and senior professionals

are the PTMs and

In large professional services firm, there is usually a

specialized marketing and sales department including

experienced professionals.

PTMs FunctionService Organization


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The Service Encounter

The interaction between customers and provider is referred to as the

service encounter, or in popular management jargon moment of

truth. The provider and customer create value together.

This encounter becomes increasingly more popular for all types of

enterprises, both those who are habitually called manufacturing

companies and those who are services companies


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The following interactive relation can be defined in the service encounter, as seen

from a customer perspective:

Interaction between providerscontact personnel (front line) and customer: Contact

between Doctor & a patient, Ad agencysaccount manager & marketing manager.

Customer-to-customer interaction (C-to-C): Dance club, celebration of national

achievement in sports.

Interaction between service cape, between the customer and the providersproducts

and physical environment: Super store (Location of products, lay out of super store,

convenience of parking).

Interaction between the customers and the providers service system: Interaction

between human being and systems like between customer and banking system

(ATM or Internet banking). The system should be user friendly.

The Service Encounter


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The Relationship to Dissatisfied

Customer

When customers are dissatisfied they have the following options:

Exit: The customers leave for a competitor, or stop buying the

goods or services temporarily or permanently.

Voice: The customers speak their mind and demand correction

(spreads negative word of mouth).

Loyalty: The customers remain loyal for lack of alternative

suppliers or prohibitive switching costs, ideological reasons etc.

All these options are used by customers.


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Recovery is more important than settling a claim, it is the

restoration and strengthening of a long term relationship.

Complain management is becoming a discipline of its own.

A positive way of dealing with the errors must be designed into

the customer relationship.

In USA and Japan, customer delight is not only meeting

customer expectations but also giving a little extra.

Immediate solution to the problem of a customer can make

them satisfied and loyal to the product or service of the

organization.

The Relationship to Dissatisfied

Customer


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Many-Headed Relationship

In B-to-Bincluding marketing via Whole seller and Retailers both

the Customer and the Supplier can be many-headed.

Companies are made up of individuals, and relationships between

companies have to be tied to people in order to become tangible

Supplier Customer

Relationship between the many-headed supplier and the many-headed customers

CEO

Marketing & Sales dept

R & D

Design dept

Factories

Installation dept

Finance/Accounts

Legal dept

CEO

Purchasing dept

Design deptPlanning dept

Quality inspection

Installation dept

Finance/Accounts


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In many-headed supplier and many-headed customer relationship,

people representing a variety of functions and expertise on both

sides participate in marketing and purchasing process.

For instance, Ericsson, the global market leader in cellular

technology, supply telephone system and switches to the major

telecom operators around the globe.



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Several employees are involved both from the supplier and buyer side. The

following stages for such relationships have been discerned:

Establishing Trust and Credibility:

For the new customers, the supplier must start by establishing an initial

contact with the customer and create credibility. Then professional and personal relationship need to be established with

key personnel in the buying organization.

Competitive Bidding:

During this stage, the tender is made and presented to the customer. Theidea behind tendering is to let the best man win.

Illegal means through facilitating payments may be needed in some cases

depending on the ethical condition. Mega relationships with lobbying

activities can play a role, and so the formation of alliances.



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Evaluation & Contact: Usually the law demand that evaluation of tenders must be made

without contact between the bidders and buyers.

Contact may be preceded by a letterof intent.

Planning, engineering and market adaptation:

This stage embraces planning the execution of the contact and

fitting the equipment to an individual customers specific

technical requirement. On going RM.

Production:

Quality inspection by the buyer and taking proactive activities by

the supplier to ensure on time delivery.



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Delivery and Installation:

Collaboration between the installation team and the customers

employees is important in this stage.

After sales:

In this stage supplier must make customer satisfied. This stage is

an opportunity for further sale.

Conclusion and Evaluation:

It is desirable to reflect over a completed deal and learn for the

future, both what was good and bad.

Should a supplier who sells different products use different

salespeople for these, even if those employees who do the purchasing

in the customer organization are the same?



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Relationship to Customers Customer

In B-to-B customers are using received deliveries as input to whatthey deliver to their customers.

It can be the same product.

Can go through further manufacturing or assembly.

Can be equipment or facilitating goods and services.

In that case, the supplier can chose their mission to be helping

customers to do business with their customers.

Suppliers must then understand the customerscustomer.

The importance of understanding the customerscustomer is also

imperative when it comes to consumer goods and retailing.

Example: The supplier of super shops, Software solution.


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Close vs. Distant Relationship

The ultimate objective of marketing is earning profit through providing

superior value to the customers.

To do so, marketers needs to maintain a proper value creation

chain/network with each value stick.

But the basic problem is access to customers, competitors and

others. The relationship to customers can be close or distant.

The close relationship is direct and personal.

And the distant relationship is indirect and impersonal with market

survey reports as intermediaries.


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Proximity: Supplier

Customer

Distance: Supplier

Customer

The interaction with customers is the single most important

source of marketing knowledge and the cry for more market

research is often a sign of failure.

Market research

Close vs. Distant Relationship


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Monopoly RelationshipCustomer or Supplier asPrisoners

Economic theory talks about MONOPOLYwhen there is only one supplier,

MONOPSONYwhen there is only one customer.

Monopoly is an accepted jargon for power and power misuse. It is an

unbalanced relationship, where one party has unlimited, or almost

unlimited control over the other party.

Example:

Before introducing mobile phone in Bangladesh, the activities of BTTB

was more or less monopolistic relationship with the customers.


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Customer as Member

Sometime the supplier enlists some of the customers as their

member and provide them best service than the others.

Membership is used commercially to reinforce customers loyalty

and to promote long term relationship. If you buy a Harley-Davidson, the king of motor cycle, you become

a member of Harley OwnersGroup (HOG), with 360,000 members

spread around the globe in 1000 local chapters.

The club offers insurance, emergency assistance, contests,

magazines, and most important the opportunity to make friends

and hit the road with other H.


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Green Relationship

The green relationship concerns the companys way of handling

environment and health issues in its offerings and relationship that

are created to specific individuals and communities of individuals.

The green relationship in a broader sense in ethics and good

citizenship, which may partly be perceived as contrary to

commercial interests.

Cause related marketing has, however, become a term for doing

good in society, but is primarily part of sponsorship and public

l ti ith th f b ti th bli i

rm = chapter 04 - market relationships – classic and special.pptx

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