Increasingly, a key goal of marketing is to develop deep, enduring relationships with all people or organizations that could directly or indirectly affect the success of the firmâ€™s marketing activities. Relationship marketing has the aim of building mutually satisfying long-term relationship with key parties â€“ customers, suppliers, distributors, and other marketing partners — in order to earn and retain their business. Relationship marketing builds strong economic, technical, and social ties among the parties.
Relationship marketing involves cultivating the right kind of relationships with the right constituent groups. Marketing must not only do customer relationship management (CRM) but also partner relationship management (PRM) as well. Four key constituents for marketing are customers, employees, marketing partners (channels, suppliers, distributors, dealers, agencies), and members of the financial community (shareholders, investors, analysts).
The ultimate outcome of relationship marketing is the building of a unique company asset called a marketing network. A marketing network consists of the company and its supporting stakeholders (customers, employees, suppliers, distributors, retailers, ad agencies, university scientists, and others) with whom it has built mutually profitable business relationships.
Increasingly, competition is not between companies but between marketing networks, with the prize going to the company that has built the better network. The operating principle is simple. Build an effective network of relationships with key stakeholders, and profits will follow.
The development of strong relationships requires an understanding of the capabilities and resources of different groups, as well as their needs, goals, and desires. A growing number of todayâ€™s companies are now shaping separate offers, services, and messages to individual customers. These companies collect information on each customerâ€™s past transactions, demographics, psychographics, and media and distribution preferences. They hope to achieve profitable, growth through capturing a larger share of each customerâ€™s expenditures by building high customer loyalty and focusing on customer lifetime value.
The ability of a company to deal with customers one at a time has become practical as a result of advances in factory customization, computers, the Internet, and database marketing software. BMWâ€™s technology now allows buyers to design their own models from variations, 500 options, 90 exterior colors, and 170 trims. The company claims that 80% of the cars bought by individuals in Europe and up to 30% of those in the United States are built to order. British supermarket giant Tesco is outpacing its rival store, Sainsbury, by using its Club card data to personalize offers according to individual customer attributes.
Rich, multifaceted relationships with key constituents create the foundation for a mutually beneficial arrangement for both parties. For example, tired of having its big rigs return empty after making a delivery as often as 15% of the time, General Mills entered a program with Fort James and a dozen other companies to combine one-way shipping routes into a cross-country loop via a tag-team of contracted trucks. As a result, General mills reduced its empty truck time to 6%, saving 7% on shipping costs in the process.