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Relationship marketing originates from many stems of research therefore varying interpretations of the term arise (Gummerson 1996). According to Gronroos (1991) "... the aim of relationship marketing is to establish, maintain and enhance relationships with customers and other parties, at a profit, so that the objectives of the parties involved are met. This is achieved by a mutual exchange and fulfilment of promises". Ravald and Gronroos (1996) took this further when suggesting "exchanges are not considered individually (transactional based) but becoming meaningful insofar as they are connected to another past or future episodes".
However, Yau et al (1999) stated concern about the exchange theory stating "...
It is still not clear whether the exchange theory can sufficiently explain the existence of relationships. In conjunction with most of theorists, Morgan and Hunt 1(994) defined relationship marketing as "all marketing activities directed toward establishing, developing, and maintaining successful relational exchanges". In later work Hunt (1997) said that relationship marketing can be seen as a means of gaining competitive advantage especially through the acquisition of intangible assets.
Primary findings indicate a regular positive response to literature of relationship marketing and its abilities in the business world.
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Findings that relationship marketing can help introduce successful strategies were put forward by Li and Nicholls (2000) who said "For most companies, the adoption of relationship marketing approach represents a strategic choice". The need for relationship marketing was stated by Paul (1998) "As the business environment changes and customers become more demanding, firms must practice relationship marketing to compete effectively". However, not all research supports the advantages of relationship marketing.
Those outside of the marketing world find marketers less than productive for the compensation they receive.
They feel marketers should eliminate their obsession with loving customers since it has become a distraction from the basics of selling and tracking the origins of sales success (Shaw 1999) and research by Moorman et al. (1992) was unable to support the hypothesised link between relational factors and client's use of marketing services. However, Smith (1991) conducted research which showed a positive correlation between relationship marketing and business performance.
His research studied direct marketing in the insurance sector and found that relationship marketing will help to maximise long-term profitability. Theorists also admit that much of what is written is untrue or substantiated, Gummerson (1996) stated that much of what is written on relationship marketing is theoryless. "a stack of fragmented philosophies, observations and claims which do not converge in the direction of emerging relationship marketing theory". He gives the example that relationship marketing is often presented as a new promotional package to be sold to the customer.
Most of the studies on relationship marketing were criticised as overly simplistic because of their use of a uni-dimensional perspective (Yau 1995). A common approach, which came under criticism, is researchers' use of only a single dimension such as trust, commitment or satisfaction to assess relationship marketing. For the purpose of this project, relationship marketing will be assessed of the following key characteristics; Relationship value, quality, customer satisfaction, commitment and management. Figure 2. 2 shows important variables on the process to building relationship (Rott 2000). 2. 1. 2 Relationship Quality and Value
Important issues remain poorly addressed in relationship marketing literature (Naude 2000), questions such as: "What are the features that distinguish successful relationships from unsuccessful ones? What is it that makes a relationship highly valued by those within it? " are poorly answered. Despite this lack of address and a variety of approaches used by authors, there has been some useful information to address the issues (Naude 2000). Their research showed that there is some face validity to the sentence "high quality relationships will create value and be regarded as successful by the parties in it".
A general definition of quality is "the totality of features and characteristics of a product or service which bears on its ability to meet/satisfy stated or implied needs; fitness for use". Gummerson (1987) identified relationship quality as one of four forms of quality encountered by customers. He stated "... high relational quality contributes to customer perceived quality and thus enhances the chances for a long term relationship". It has been suggested that relationship based strategies are required for developing a point of differentiation, and an effective way of achieving competitive advantage (Sheth 2001, Cravens 1998).
Crosby's work highlighted that relationship quality had a significant influence on the customer's anticipation of future commitment (1990). Despite these arguments, the need for more work in this area is highlighted by Mohr and Spekham (1994) who stated that "... an understanding of the characteristics associated with partnership success is lacking". They decided that the following areas are needed for successful relationships: commitment, coordination and trust, communication quality and participation, and conflict resolution through joint problem solving.
Relationship marketing is about targeting customers with the best long-term value (Rott 2000) and also about creating mutually beneficial relationships where both parties are gaining knowledge and understanding from the relationship and continuous learning and improvements are made which will increase the overall quality of any customer relationship. It is clear that high quality relationships hold a high value with consumers, which can favourably impact the chance of long-term relationships. 2. 1. 4. Customer Satisfaction It has been long thought that customer satisfaction was sufficient to promote customer retention (Naude 2000).
However further research indicates that: Satisfied customers may defect, and dissatisfied customers may remain loyal (Buttle 1999). It shows that a significant percentage of satisfied customers are not retained, taking their business elsewhere despite their satisfaction with products and services. Research by Reicheld (1993) points out that 65-85% of recently defected customers claimed they were satisfied or very satisfied with their previous suppliers. This research makes it a clear argument that customer satisfaction alone is not a cause of relationships between the buyer-seller.
Ulrich (1989) compounded this thought when stating: "Satisfied customers are pleased, humoured and fulfilled; committed customers are dedicated and faithful". An aspect of commitment is needed to bring the loyal customers into a relationship plan. Figure 2. 3 Shows the stages of the buyer-seller relationship 2. 1. 5 Trust and commitment In marketing literature there is a lack of clarity in the concept of trust (Blois 1999): however it can be described as "the willingness to rely on an exchange partner in whom one has confidence" (Moorman, Deshpande and Zaltman 1993).
Morgan and Hunt (1994) argue that trust is the cornerstone of relationship commitment, without it commitment flounders. Research by Geyskens and Steenkamp (1995) showed that trust brings about a feeling of security, reduces uncertainty and creates a supportive environment. An objective of marketing strategies is to change customer behaviour so that loyalty replaces the threat of defection to the increasing competitive products. This loyalty will come about through trust, which creates satisfaction and long-term association over and beyond any normal buyer-seller relationship.
Another way of increasing loyalty and trust is for both parties to make investments in the relationships. These investments can be intangible (e. g. knowledge) or tangible (e. g. property). Investments serve as exit barriers (Naude 2000). Commitment is the ability to maintain a relationship and it consists of three different components; sacrifice of some value, willingness to act in certain ways, and efforts to secure consistency and continuity in the relationship (Rott 2000). Commitment is important as it saves time and effort in looking for new partners.
In addition to trust, commitment is the second most important component of a relationship (Johansson et al. 2000). Rich (2000) said: "Many companies perceive that the best initial approach toward relationship marketing is investing in complaint handling procedures to demonstrate customer commitment resulting in customer loyalty". A study by Tax et al. (1998) found that satisfaction with complaint handling has a direct impact on trust and commitment as can override the initial negative experience if handled to the customer's satisfaction or delight.
This research concludes that increased trust and commitment has a direct impact on the likelihood of further collaborations, good relationships are based on the model of high trust and commitment between the involved parties. 2. 1. 6 Importance of management Successful relationships begin with internal commitment to relationship performance and success (Wilson 2000). Successful implementation of the relationship strategy can be brought about by a commitment by the key functions that support the delivery of value to the relationship.
In the case of Greenheart this is the owners of the company, Management has to allocate resources between different relationships in order to make sure each is successful. Existing customers should be maintained, new ones should be added, and unprofitable ones should be fired, whilst assessing its customer portfolio in order to understand what customers are contributing and what they will contribute in the future. It will then be easier for the company to see which are valuable relationships, and which are unprofitable (Ford 1998).
As Rich (1998) stated: management must not only accept the proposition of relationship marketing from an intellectual perspective, but should be willing to invest the necessary time, labour, and financial resources to make it an effective reality. 2. 1. 7 Relationship Marketing in Horticulture Unfortunately, except for some works in general horticulture relationship strategy literature, little attention has been paid to the specific garden nursery industry.
Therefore to date, there is a poor understanding of any role of relationships in garden nurseries. A lack of uptake of relationship marketing in the garden nursery market gives the case company a chance of taking a first mover advantage. This can be defined as when the initial occupant of a strategic position or niche gains access to resources and capabilities that a follower cannot match (Rott 2000). A company can attain a first mover advantage by acquiring resources and capabilities in a new market before competitors do (Grant 1998).
Exploring Relationship Marketing: Varied Perspectives and Key Elements. (2020, Jun 02). Retrieved from https://studymoose.com/relationship-marketing-3-new-essay
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