From Marketing Mix

to Relationship
Marketing: Towards a
Paradigm Shift in
Marketing
Christian Gronroos
Swedish School of Economics and Business
Administration, Finland.

The purposc of this paper is to plicilY of the model seduces leach- ed as one emerging new marketing
discuss the nature and sometimes ers to toolbox thinking instead of paradigm for the future. In faCI. in
negalive consequences of the dom- constantly reminding them of the services marketing and industrial
inating marketing paradigm of fact that marketing is a social marketing the panldigm shift from
today. marketing mix management. proce.~s with far more facets than markeling mix management to
and fUrihermore to discuss how thaI. AS a consequence. relationship marketing has already
modem research imo. for eJCample. researchers and markeling man- laken place in large parts of the
industrial marketing and services agers are also constrained by the world.
marketing as well as customer simplislic nature of this marketing Finally. by using the notion of a
relationship economics shows that approach. It is noted that market- marketing slrategy continuum. 1I
anOlher approach to marketing is ing theory and customers are the numlx:r of consequences of a rela-
required. This development is sup- victims of today's mainstream tionship-type marketing strategy
ported by evolving trends in busi- marketing thinking. for the focus of marketing. pricing.
ness. such as slralegic parmer- Relationship building and man- qualily managemem. imemal mar-
ships. alliances and networks. This agemem are found 10 be an under- keting and intraorganisational
emerging new approach revolves lying facet in the modem research development is discussed. The
around relationship building and into industrial marketing and ser- possibility to develop a general
management. However. a detailed vices marketing. This is the case marketing theory based on lhe
discussion of the nature of lhe rela- especially as far as the European relationship building and manage-
tionship marketing paradigm is interaClion and network approach ment approach is brieny comment-
beyond the scope of this report. of Industrial markcling and the ed upon.
It is condudt:d that the simplici- Nordic School approach to ser-
ty of the marketing mix manage_ vices marketing are concerned. Key words: Marketing Iheor)',
ment paradigm with ils 4P model Other approaches to these areas relationship marketing.
has turned it into a straitjackel for poinl out lhe importance of rela- paradigm shift
marketing researchers. educalOrs liunship building as well.
and practitioners alike. The sim- Relationship marketing is suggest-
A,'ia - AU)'lra/i« M«rkeli"8 Jounw./ 10/. 2. No. I ·9
 A Paradigm Shift in matic that it, no doubt, can be and promotion - entered the mar-
described as a paradigm shift (cf. keting textbooks at that time
Marketing Kuhn 1962). Marketing (McCarthy 1960). Quickly they
The marketing mix manage- researchers have been passionately also became treated as the unchal-
ment paradigm has dominated convinced about the paradigmatic lenged basic model of marketing,
marketing thought, research and nature of marketing mix manage- so totally overpowering previous
practice since it was introduced ment and the 4 P model. [2] To models and approaches, such as
almost forty years ago. Today, this challenge marketing mix manage- for example, the organic function-
paradigm is beginning to lose its ment as the basic foundation for all alist approach advocated by Wroe
position.[l] New approaches have marketing thinking has been as Alderson (1950 and 1957) as well
been emerging in marketing heretic as it was for Copernicus to as other systems-oriented
research. The globalisation of busi- proclaim that the earth moved. [3] approaches (e.g., Fisk 1967 and
ness and the evolving recognition The purpose of this report is to Fisk & Dixon 1967) and parameter
of the importance of customer discuss the nature and conse- theory developed by the
retention and market economies quences of the dominating market- Copenhagen School in Europe
and of customer relationship eco- ing paradigm of today, marketing (e.g., Rasmussen 1955 and
nomics, among other trends, rein- mix management of the manageri- Mickwitz 1959) that these are
force the change in mainstream al school (cf. Sheth, Gardner & hardly remembered even with a
marketing. Garrett 1988) and how evolving footnote in most textbooks of
Relationship building and man- trends in business and modern today. Earlier approaches, such as
agement, or what has been labelled research into, for example, indus- the commodity (e.g., Copeland
relationship marketing, is one trial marketing, services marketing 1923), functional (e.g., Weld
leading new approach to marketing and customer relationship econom- 1917), geography-related regional
which eventually has entered the ics demand a relationship-oriented (e.g., Reilly 1931) and institutional
marketing literature (e.g., Jackson approach to marketing. schools (e.g., Duddy & Revzan
1985a, Gummesson 1987a, 1987b, Relationship building and manage- 1947) have suffered a similar fate.
1990 and 1993b, Dwyer, Shurr & ment are found to be an underlying Only a few models from these
Oh 1987, Gronroos 1989a, 1989b , facet in the research into these approaches have survived.
1991 and 1992, Christopher, Payne areas. Relationship marketing is American Marketing Association,
& Ballantyne 1991, and suggested as one new marketing in its most recent definition states
Blomqvist, Dahl and Haeger paradigm, and a number of conse- that "marketing is the process of
1993). A paradigm shift is clearly quences for marketing and man- planning and executing the con-
under way. In services marketing, agement of a relationship-type ception, pricing, promotion and
especially in Europe and Australia marketing strategy is discussed distribution of ideas, goods and
but to some extent also in North based on the notion of a marketing services to create exchange and
America, and in industrial market- strategy continuum. Finally, the satisfy individual and organiza-
ing' especially in Europe, this par- possibility to build a general theo- tional objectives" (emphasis
adigm shift has already taken ry of marketing based on the rela- added) (AMA Board 1985).
place. Books published on services tionship approach is discussed. A Eventually the 4 P's of the mar-
marketing (e.g., Gronroos 1982 further discussion of the nature of keting mix became an indisputable
and 1990, and Berry & the relationship marketing para- paradigm in academic research,
Parasuraman 1991) and on indus- digm is, however, beyond the the validity of which was taken for
trial marketing (e.g., Hakansson scope of this report. granted (Kent 1986, and Gronroos
1982, Turnbull & Valla 1986 and 1989a and 1990a). For most mar-
Ford 1990) as well as major
Marketing Mix and keting researchers in large parts of
research reports published are the Four P's the academic world it seems to
based on the relationship market- Marketing the way most text- remain the marketing truth even
ing paradigm. books treat it today was introduced today. Kent (1986) refers to the 4
A major shift in the perception around 1960. The concept of the P's of the marketing mix as "the
of the fundamentals of marketing marketing mix and the 4 P's of holy quadruple ... of the marketing
is taking place. The shift is so dra- marketing - product, price, place faith ... written in tablets of stone"

10 • Asia - Australia Marketing Journal Vol. 2, No.1

(p. 146). For an academic ferent means of competitions was included; or his followers misinter-
researcher looking for tenure and soon labelled the 4 P's (McCarthy preted McCarthy's intentions. In
promotion, to question it has been 1960). many marketing textbooks organ-
to stick out his or her neck too far. The marketing mix is actually a ised around the marketing mix,
Prospective authors of textbooks, list of categories of marketing vari- such as Philip Kotler's well-known
who suggest another organisation ables, and to begin with, this way Marketing Management (e.g.
than the 4 P's solution for their of defining or describing a phe- 1991), the blending aspect and the
books, are quickly corrected by nomenon can never be considered need for integration of the 4 P's
most publishers. As a result, empir- a very valid one. A list never are discussed, even in depth, but
ical studies of what the key market- includes all relevant elements, it such discussions are always limit-
ing variables are, and how they are does not fit every situation, and it ed due to the fact that the model
perceived and used by marketing becomes obsolete. And indeed, does not explicitly include an inte-
managers have been neglected. marketing academics every now grative dimension.
Moreover, structure has been vastly and then offer additional P's to the In the 1950s in Europe,
favoured over process considera- list, since they have found the stan- researchers within the so-called
tions (Kent 1986). In marketing dard "tablet of faith" too limit- Copenhagen School approached
education teaching students how to ed.[4] It is, by the way, interesting marketing in a similar way to the
use a toolbox has become the total- to notice that after the 4 P's defi- notion of the marketing mix, based
ly dominating task instead of dis- nitely were canonised sometimes on the idea of action parameters
cussing the meaning and conse- in the early 1970s new items to the presented in the 1930s by von
quences of the marketing concept list almost exclusively are put in
Stackelberg (1939). Arne
and the process nature of market the form of P's.[5] Advocates of
Rasmussen (1955) and GBsta
relationships. Marketing in practice the marketing mix management
Mickwitz (1959) developed what
has to a large extent been turned paradigm sometimes have suggest-
became known as parameter theo-
into managing this toolbox instead ed that service should be added to
ry, which was a dynamic market-
of truly exploring the nature of the the list of P's (e.g., Lambert &
ing mix approach linked to the
firm's market relationships and Harrington 1989 and Collier
product life cycle and where the
genuinely catering to the real needs 1991). This would be disastrous,
parameters were integrated by
and desires of customers. because it would isolate customer
means of varying market elastici-
service as a marketing variable
How Did the from the rest of the organisation, ties. Moreover, Mickwitz also stat-
just as has happened with the 4 P ed that the demand side has to be
Marketing Mix connected to the supply side in a
marketing mix variables. It would
Emerge? effectively counteract all attempts managerial marketing theory. This
A paradigm like this has to be to make customer service the was done using an economic
well founded by theoretical deduc- responsibility of everyone and not approach rather than a behavioural
tion and empirical research; other- of a separate department only. approach. Parameter theory was a
wise much of marketing research In fact, the 4 P's represent a sig- much more developed model than
is based on a loose foundation and nificant oversimplification of the 4 P version of the marketing
the results of it questionable. The Borden's original concept, which mix notion. Unfortunately, it never
marketing mix developed from a was a list of twelve elements not received enough international
notion of the marketer as a "mixer intended to be a definition at all. attention, and eventually it was
of ingredients" (Culliton 1948). Moreover, the elements of this list overwhelmed by the 4 Ps that were
The marketer plans various means would probably have to be recon- much easier to comprehend and
of competitions and blends them sidered in any given situation. teach. Today, the key aspects of
into a "marketing mix", so that a McCarthy either misunderstood parameter theory, dynamism and
profit function is optimised, or the meaning of Borden's market- an integration of consumer behav-
rather satisfied. The "marketing ing mix when he reformulated the iour and managerial decision mak-
mix" concept was introduced by original list in the shape of the ing, are pointed out as important
Neil Borden in the 1950s (e.g., rigid mnemonic of the 4 P's where research topics (cf. Sheth, Gardner
Borden 1964), and the mix of dif- no blending of the P's is explicitly & Garrett 1988).

Asia - Australia Marketing Journal Vol. 2, No.1· 11

 Probably Borden's original idea for whom something is done) the 1991 and Kent 1986). Many mar-
of a list of a large number of mar- views implicit in the 4 P approach keting-related phenomena are not
keting mix ingredients that have to is that the customer is somebody to included (Moller 1992). Moreover,
be reconsidered in every given sit- whom something is done!" as Johan Arndt (1980 and 1985)
uation was shortened for pedagogi- (emphasis added) (p. 4). To use a has concluded, marketing research
cal reasons and because a more marketing metaphor, the marketing remains narrow in scope and even
limited number of marketing vari- mix and its 4 P's constitute a pro- myopic, and methodological issues
ables seemed to fit typical situa- duction-oriented definition of mar- become more important than sub-
tions observed in the late 1950s keting, and not a market-oriented stance. "Research in marketing
and in the 1960s by the initiators or customer-oriented one (see gives the impression of being
of the short list of 4 standardised Gronroos 1989a and 1990a). based on a conceptually sterile and
P's. These typical situations can be Moreover, although McCarthy unimaginative positivism.... The
described as involving consumer (1960) recognises the interactive consequence ... is that most of the
packaged goods in a North nature of the p's, the model itself resources are directed toward less
American environment with huge does not explicitly include any significant issues, overexplaining
mass markets, a highly competitive interactive elements. Furthermore, what we already know, and toward
distribution system and very com- it does not indicate the nature and supporting and legitimizing the
mercial mass media. However, in scope of such interactions. status quo" (Arndt 1980, p. 399).
other markets the infrastructure is The problems with the market- Unfortunately, far too little has
to varying degrees different and ing mix management paradigm are changed in mainstream marketing
the products are only partly con- not the number or conceptualisa- research since this was written
sumer packaged goods. tion of the decision variables, the over a decade ago.
Nevertheless the 4 P's of the mar- p's, as the American Marketing The usefulness of the 4 P's as a
keting mix have become the uni- Association and the authors of general marketing theory for prac-
versal marketing model or even most publications criticising the tical purposes is, to say the least,
theory and an almost totally domi- marketing mix management para- highly questionable. Originally,
nating paradigm for most acade- digm argue. Rather, the problem is although they were largely based
mics, and they have had a tremen- of theoretical nature. The 4 P's and on empirical induction and earlier
dous impact on the practice of the whole marketing mix manage- lists of marketing functions of the
marketing as well. Is there any jus- ment paradigm are, theoretically, functional school of marketing (cf.
tification for this? based on a loose foundation, which McGarry 1950), they were proba-
was demonstrated in a recent bly developed under the influence
The Nature of the Journal of Marketing article by van of microeconomic theory and
Marketing Mix Waterschoot and Van den Bulte especially the theory of monopo-
Any marketing paradigm (1992). They conclude: "To our listic competition of the 1930s
should be well set to fulfil the mar- knowledge, the classification prop- (e.g., Chamberlin 1933), in order
keting concept, i.e., the notion that erty(-ies) or rationale for distin- to add more realism to that theory.
the firm is best off by designing guishing four categories labelled However, very soon the connection
and directing its activities accord- 'product', 'price', 'place' and 'pro- to microeconomic theory was cut
ing to the needs and desires of cus- motion' have never been explicat- off and subsequently totally for-
tomers in chosen target markets. ed. ... Though casual observation gotten. Theoretically, the market-
How well is the marketing mix fit of practitioners, students, and text- ing mix became just a list of P's
to do that? books suggests a general consen- without roots.
One can easily argue that the 4 sus to classify marketing mix ele- Even in the area of consumer
P's of the marketing mix are a bad ments in the same categories, the goods marketing in North America
fit to fulfil the requirements of the lack of any formal and precise some doubt concerning marketing
marketing concept. As Dixon and specification of the properties or mix management has been
Blois (1983) put it, " ... indeed it characteristics according to which expressed. Regis McKenna (1991),
would not be unfair to suggest that marketing mix elements should be a respected marketing consultant
far from being concerned with a classified is a major flaw." and writer, concludes in a discus-
customer's interests (ie: somebody (p.85)[6](See also Van den Bulte sion about the decline in North

12 • Asia - Australia Marketing Journal Vol. 2, No.1

America of advertising, the flag- digm is not very useful either (see, tion obtained from market research
ship of traditional marketing, that for example, Piercy 1985 and reports and market share statistics.
"the underlying reason behind ... 1992, and Gronroos 1982 and Frequently such marketers act
(this decline) ... is advertising's 1990a; compare also Webster without ever having to encounter a
dirty little secret: it serves no use- 1988). The psychological effect on real customer.
ful purpose. In today's market, the rest of the organisation of a The marketing department con-
advertising simply misses the fun- separate marketing department is, cept is obsolete and has to be
damental point of marketing - in the long run, often devastating replaced by some other way of
adaptability, flexibility, and respon- to the development of a customer organising the marketing function,
siveness" (p.13). Undoubtedly, this orientation or market orientation in so that the organisation shall have
is to take it a little bit to the a firm. A marketing orientation a chance to become market orient-
extreme, but the point is well taken. with, for example, high-budget ed. A traditional marketing depart-
An interest in turning anonymous advertising campaigns may be ment will always, in the final
masses of potential and existing developed, but this does not neces- analysis, get in the way of spread-
customers into interactive relation- sarily have much to do with true ing market orientation and an
ships customers is becoming market orientation and a real interest in the customer throughout
increasingly important (see, for appreciation for the needs and the organisation (compare Piercy
example, Rapp & Collins 1990, desires of the customers. The exis- 1985 and 1992, and Gronroos
McKenna 1991 and Clancy & tence or introduction of such a 1982 and 1990a).
Shulman 1991). department may be a trigger that Sometimes the term marketing
makes everybody else lose whatev- has become a burden for the mar-
Consequences of the er little interest in the customers keting function. Managers as well
Marketing Mix they may have had (Gronroos as their subordinates in other
Managing the marketing mix 1982). The marketing department departments and functions do not
makes marketing seem so easy to approach to organising the market- want to take part in the marketing
handle and organise. Marketing is ing function has isolated marketing function. But according to the rela-
separated from other activities of from design, production, deliver- tionship marketing approach and
the firm and delegated to special- ies, technical service, complaints contemporary models of industrial
ists who take care of the analysis, handling, invoicing and other marketing and service marketing
planning and implementation of activities of the firm. As a conse- they do undoubtedly belong to this
various marketing tasks, such as quence, the rest of the organisation function. The use of the marketing
market analysis, marketing plan- has been alienated from marketing. mix management paradigm and the
ning, advertising, sales promotion, Therefore, it has made it difficult, 4 P's has made it very difficult for
sales, pricing, distribution and often even impossible, to turn mar- the marketing function to earn
product packaging. Marketing keting into the "integrative func- credibility. Some firms have solved
departments are created to take tion" that would provide other this problem not only by down-
responsibility for the marketing departments with the market-relat- scaling or altogether terminating
function of the firm, sometimes ed input needed in order to make their marketing departments but
together with outside specialists the organisation truly market ori- also by banning the use of the term
on, for example, market analysis ented and reach a stage of "coordi- marketing for the marketing func-
and advertising. Both in the mar- nated marketing" (compare Kotler tion (compare Gronroos 1982).
keting literature and in everyday 1991, pp. 19-24). Perhaps we even need this kind of
marketing vocabulary the expres- Furthermore, the marketing spe- semantics.
sion marketing department, an cialists organised in a marketing
organisational unit, is used as a department may get alienated from
Contemporary
synonym for marketing function, the customers. Managing the mar- Theories of Marketing
which is the process of taking care keting mix means relying on mass .In most marketing textbooks the
of the fulfilment of customer needs marketing. Customers become marketing mix management para-
and desires. However, the organi- numbers for the marketing special- digm and its 4 P's are still consid-
sational approach inherent in the ists, whose actions, therefore, typi- ered the theory of marketing.
marketing mix management para- cally are based on surface informa- Indeed, this is the case in much of

Asia - Australia Marketing Journal Vol. 2, No.1· 13

the academic research into market- Mattsson 1985 and Kock 1991.). In The Marketing of Services
ing, especially in North America such a network the role and forms In the early 1970s the market-
but also to a considerable extent in of marketing are not very clear. All ing of services started to emerge as
other parts of the world as well. exchanges, all sorts of interactions, a separate area of marketing with
However, since the 1960s alterna- have an impact on the position of concepts and models of its own
tive theories of marketing have the parties in the network. The geared to typical characteristics of
been developed. As Moller (1992) interactions are not necessarily ini- services. In Scandinavia and
observes in a recent overview of tiated by the seller - the marketer Finland the Nordic School of
research traditions in marketing, according to the marketing mix Services, more than research into
"from the functional view of mar- management paradigm - and they this field elsewhere, looked at the
keting 'mix' management our may continue over a long period of marketing of services as something
focus has extended to the strategic time, for example, for several that cannot be separated from
role of marketing, aspects of ser- years. overall management (see Gronroos
vice marketing, political dimen- The seller, who at the same time & Gummesson 1985). In North
sions of channel management, may be the buyer in a reciprocal America research into service mar-
interactions in industrial networks; setting, may of course employ mar- keting has to a much greater extent
to mention just a few evolving keting specialists, such as sales rep- remained within the boundaries of
trends" (p. 197). Some of these resentatives, market communication the marketing mix management
theories have been based on stud- people and market analysts but in paradigm, although it has pro-
ies of the market relationships of duced some creative results (e.g.,
addition to them, a large number of
firms in specific types of indus- Berry 1983, Berry & Parasuraman
persons in functions which accord-
tries. In this· section, the emerging 1991). Gronroos brought quality
ing to the marketing mix manage-
theories and models of the interac- back into a marketing context[7]
ment paradigm are non-marketing,
tion/network approach to industrial by introducing the perceived ser-
such as research and development,
marketing and the marketing of vice quality concept in 1982
design, deliveries, customer train-
services will be discussed. The (Gronroos 1982). He introduced
ing, invoicing and credit manage-
growing interest in focusing on the concept of the interactive mar-
ment, has a decisive impact on the
customer relationship economics keting function (Gronroos 1979
marketing success of the "seller" in
and the long-term profitability of and 1982) to cover the marketing
the network. Gummesson (1987a,
customer retention and market impact on the customer during the
economies will also be touched and 1990a and b) has coined the
consumption or usage process,
upon. term part-time marketers for such where the consumer of a service
The Interaction and Network employees of a firm. He observes typically interacts with systems,
Approach To Industrial that in industrial markets and in ser- physical resources and employees
Marketing vice businesses, the part-time mar- of the service provider. In France,
The interaction/network keters typically outnumber several Eiglier and Langeard (cf. 1987)
approach to industrial marketing times the full-time marketers, i.e., developed the servuction concept
was originated in Sweden at the marketing specialists of the to describe this system of interac-
Uppsala University during the marketing and sales departments. tions. These interactions occur
1960s (see, for example, Furthermore, he concludes that between the customer and employ-
Blankenburg & Holm 1990) and "marketing and sales departments ees who normally are not consid-
has since spread to a large number (the full-time marketers) are not ered marketing people, neither by
of countries. Between the parties able to handle more than a limited themselves nor by their managers,
in a network, various interactions portion of the marketing as its staff and who do not belong to a mar-
take place, where exchanges and cannot be at the right place at the keting or sales department.
adaptations to each other occur. A right time with the right customer Nevertheless, they are part-time
flow of goods and information as contacts" (Gummesson 1990, p. marketers.
well as financial and social 13). Hence, the part-time marketers In many situations long-lasting
exchanges takes place in the net- do not only outnumber the full-time relationships between service
work. (See, for example, marketers, the specialists; often providers and their customers may
Hakansson 1982, Johanson & they are the only marketers around. develop. Gronroos (1980 and

14 • Asia - Australia Marketing Journal Vol. 2, No.1

1982) developed the customer costs (cf. Williamson 1979) has relationship with the producer and
relationship life cycle model, orig- been suggested by Gronroos marketer of a product is supposed
inally called the "marketing cir- (1992b). A mutually satisfactory to exist, other than with profes-
cle", to cover the long-term nature relationship makes it possible for sional sales representatives in
of the establishment and evolution customers to avoid significant some cases. Obviously, this view
of the relationship between a firm transaction costs involved in shift- of marketing does not fit the reali-
and its customers. Managing this ing supplier or service provider ty of industrial marketing and the
life cycle is a relationship market- and for suppliers to avoid suffering marketing of services very well.
ing task, although the term itself unnecessary quality costs. The concept relationship mar-
was not used at that time. Again, However, customer retention is keting[9] has emerged within the
the marketing success of a firm is not enough. Some long-lasting fields of service marketing and
only partly determined by the customer relationships, where the industrial marketing (e.g., Berry
"full-time marketers". In fact, the customers obviously are satisfied 1983, Jackson 1985a, Gronroos
"part-time marketers" of a service with what they get, are not prof- 1989a, 1989b, 1990~ 1990b and
provider may often have a much itable even in the long run, as 1991, Gummesson 1987a, 1987b,
more important impact on the Storbacka (1993) demonstrates in 1990, 1991 and 1993, Christopher,
future purchasing decisions of a a recent study in the retail banking Payne and Ballantyne 1991 and
customer than, for example, pro- industry (compare also Barnes & Blomqvist, Dahl & Haeger 1993).
fessional sales people or advertis- Cumby 1993). Therefore, segmen- The phenomenon described by this
ing campaigns (e.g., Gummesson tation based on customer relation- concept is strongly supported by
1987a and Gronroos 1990a). ship profitability analysis is a pre- on-going trends in modem busi-
The Interest in Customer requisite for customer retention ness (cf. Webster 1992). Gronroos
Relationship Economics decisions. To conclude, there is (1990a) defines relationship mar-
During the last few years there clear evidence that from a prof- keting in the following way:[lO]
has been a growing interest in itability point of view, intelligent "Marketing is to establish, main-
studying the economics of long- relationship building and manage- tain, and enhance relationships
lasting customer relationships. ment make sense. with customers and other partners,
Heskett (1987) introduced the con- at a profit, so that the objectives of
cept of market economies, by Relationship Building the parties involved are met. This
which he means achieving results as a Cornerstone of is achieved by a mutual exchange
by understanding the customers and fulfilment of promises" (p.
instead of by concentrating on Marketing 138). Such relationships are usual-
developing scale economies. The interaction and network ly but not necessarily always long
Reichheld (1993) gives an example approach of industrial marketing term. Establishing a relationship,
of this: "At MBNA (in the credit and modern service marketing for example with a customer, can
card business in the U.S.), a 5% approaches, especially the one by be divided into two parts: to attract
increase in retention grows the the Nordic School, clearly view the customer and to build the rela-
company's profit by 60% by the marketing as an interactive process tionship with that customer so that
fifth year" (p. 65). More similar in a social context where relation- the economic goals of that rela-
results from other industries are ship building and management are tionship are achieved.
reported in a study by Reichheld a vital comerstone.[8] They are in An integral element of the rela-
and Sasser (1990). Long-term rela- some respects clearly related to the tionship marketing approach is the
tionships where both parties over systems-based approaches to mar- "promise" concept, which has
time learn how to best interact keting of the 1950s (compare, for been strongly emphasised by
with each other lead to decreasing example, Alderson 1957). The Henrik Calonius (e.g., 1988).
relationship costs for the customer marketing mix management para- According to him the responsibili-
as well as for the supplier or ser- digm with its 4 p's, on the other ties of marketing do not only, or
vice provider. The relationship hand, is a much more clinical predominantly, include giving
cost theory which is based on liter- approach, which makes the seller promises and thus persuading cus-
ature on, for example, quality costs the active part and the buyer and tomers as passive counterparts on
(cf. Crosby 1979) and transaction consumer passive. No personalised the marketplace to act in a given

Asia - Australia Marketing Journal Vol. 2, No.1· 15

 way. A firm that is preoccupied the trustor and who is the trustee; approach in several books on ser-
with giving promises may attract more likely, for example in a sim- vices marketing (e.g., Gronroos
new customers and initially build ple two-partner relationship, both 1990a and Berry & Parasuraman
relationships. However, if promis- partners are in both positions. 1991) and industrial marketing
es are not kept, the evolving rela- Also, the relationships are often (e.g., Hakansson 1982, Jackson
tionship cannot be maintained and more complex than mere exchange 1985b, Turnbull & Valla 1986,
enhanced. Fulfilling promises that relationships. Ford 1990 and Vavara 1992). In a
have been given is equally impor- Relationship marketing is still growing number of articles rela-
tant as means of achieving cus- in its infancy as a mainstream mar- tionship issues are addressed (e.g.,
tomer satisfaction, retention of the keting concept, although it has Jackson 1985a, Gummesson
customer base, and long-term prof- established itself as an underlying 1987a, Dwyer, Shurr & Oh 1987,
itability (compare also Reichheld paradigm in modern industrial Sonnenberg 1988, Gronroos
& Sasser 1990). Calonius also marketing and services marketing. 1989a, 1990b and 1991 Copulsky
stresses the fact that promises are Its importance is recognised to a & Wolf 1990, Czepiel 1990,
mutually given and fulfilled. growing extent, however. Philip Congram 1991, Ferguson &
Another key element is trust. Kotler (1992) concludes in a recent Brown 1991, Kotler 1991 and
"The resources of the seller - per- article that "companies must move Webster 1992). The importance of
sonnel, technology and systems - from a short-term transaction-ori- relationship building is advancing
have to be used in such a manner ented goal to a long-term relation- even into books from the world of
that the customer's trust in the ship-building goal" (p. 1).[11] consumer goods marketing. There
resources involved and, thus, in the Frederick Webster (1992), another the existence of mass markets
firm itself is maintained and prominent American opinion without any natural direct cus-
strengthened" (Gronroos 1990b, p. leader in marketing, comes to a tomer contacts for the firm causes
5; compare, for example, Swan, similar conclusion in a recent certain new challenges. Market
Trawick & Silva 1985). In a recent analysis of the current develop- communication is a central means
study of relationships on the mar- ments in business and in market- of reaching customers, and the
ket for one industrial service, ing: "There has been a shift from a focus on relationship building
Moorman, Deshpande and transactions to a relationship leads to an interest in emphasising
Zaltman (1993) define trust as "... focus" (p. 14), and "from an acad- dialogues and creating, for exam-
a willingness to rely on an emic or theoretical perspective, the ple, advertising campaigns that
exchange partner in whom one has relatively narrow conceptualization facilitate various types of dia-
confidence" (p. 3). This definition of marketing as a profit-maximiza- logues with identified customers
means, first of all, that there has to tion problem, focused on market (see, for example, Rapp & Collins
be a belief in the other partner's transactions or series of transac- 1990). In the future, this marketing
trustworthiness that results from tions, seems increasingly out of paradigm most certainly will be a
the expertise, reliability or inten- touch with an emphasis on long focal point of marketing research,
tionality of that partner. Secondly, term customer relationships and thus positioning itself as a leading
it views trust as a behavioural the formation and management of marketing paradigm not only in
intention or behaviour that reflects strategic alliances" (p. 10). In his services marketing and industrial
reliance on the other partner and analysis he does not, however, marketing but in most or all mar-
involves uncertainty and vulnera- include what has been published keting situations. In the rest of this
bility on the part of the trustor. If on relationship marketing issues in article, some marketing and man-
there is no vulnerability and uncer- Europe. agement consequences of a rela-
tainty trust is unnecessary, because So far, there seems to be only tionship building and management
the trustor can control the other two books for textbook purposes approach will be discussed.
partner's actions. (Moorman, that are based on this emerging
Deshpande & Zaltman 1993; see paradigm (Christopher, Payne &
The Marketing
also Zaltman & Moorman 1988) Ballantyne 1991 in English and Strategy Continuum
One should, however, bear in mind Blomqvist, Dahl & Haeger 1993 in The major problem with the
that in many relationship market- Swedish). However, relationship marketing mix and its 4 P's has
ing situations it is not clear who is marketing is clearly the underlying been their position as the major, in

16 • Asia - Australia Marketing Journal Vol. 2, No.1

many situations as the only accept- through the use of the 4 p's of the other panies as well. although only
able marketing paradigm. marketing mix. As Reichheld customers are discussed in this
Relationship marketing must not observes, "blJilding a highly loyal comeu). At the other end of the
become such a straitjacket. customcr base cannot be done as continuum is transaction market-
However. developing enduring an add-on. It must be intcgral to a ing. where the focus of marketing
customer rel:uionships and :LChiev- company's basic business strategy" is on one transaction at a time
ing exchanges in sueh relation· (p. 64). lienee. it should be useful (compare Jackson 1985). Thus
ships through a relationship mar· to think about possible marl::eting IItarketing rcvolves around creat-
kcting approach (d. Houston & approaches or strategies along a ing single transactions or
Gasscnheimer 1987) is not another marketing strategy cominuum.[ 121 exchanges at a time and not around
addendum to marketing mix man- Relationship marketing is placed at building long-term relationships.
agement. Rather. it is a different one end or the continuum. Here The continuum and some marlcet-
approach as compared to achieving the general roeus is on building ing and management implications
exchanges in isolated transactions relationships with customers (and are illustrated in Figure I.

Figure I

THE MARKETING STRATEGY CONTINUUM: SOME IMPLICATIONS

Transaction Relationship
The Stratcg)' Continuum ••
~--,M:::"C~:·':'iC",g,- :M:':':k:":i"Cg,- ••

Time perspective Short-tenn focus lAlng-tenn rocus

Dominating marketillg function Markcting mix Interactive markcting (supported
by marketing mix activities)
Price elasticity CustunLCrs tend to be more Customers tend to be Icss
scnsiti\'e to price sensitive to pnce
Dominating quality dimension Quality of output Quality of interactions
(technical quality dimension) (functional quality dimension)
is dominating grows in imponance and may
become dominating
Measun:mem of custolllcr Monitoring market shan: Managing the customer base
satisfaction (indirect approach) (dil"C(;t approach)
Customcr infunnation systcm Ad hoc customer satisfaction surveys Real-time customcr reed
back system
Intcrdependency between Interface or no or limited strategic Interfacc or substantial strategic
marketing. operations imponat>Ce imponance
and personnel
The role of mtcmal marketing Internal marketing of no or limitcd Internal marketing of substantial
importance to succcss strategic importance to success

The Product Continuum "~-,o------,--,--o------,--,---,--o--,----'

Cunsumer packaged Consumer Industrial Services
goods durablc.s goods

Source: Gronroos. C.. The Markcting Strategy Continuum: Towards a Marketing Concept for the 1990s.
Managcntent Decision. Vol. 29. No, I. 1990. p. 9.

AS;(l- Au,,·tm!ill Mllrketing )QurlJa/ Vol. 2. NQ. f • 17

 Various types of goods and ser- unit of analysis is a single market keting function. This marketing
vices can be placed along the con- transaction. Profits are expected to function can also be described as
tinuum as indicated by the bottom follow from todays /s exchanges, the marketing activities outside the
part of Figure 1. The exact place although some times some long- marketing mix. It involves people
and corresponding marketing term image development occurs. In who thus have dual responsibili-
approach cannot, of course, be relationship marketing the time ties. Their main duties are in oper-
located. This is indicated by the perspective is much longer. The ations or some .other non-market-
arrows. Marketers of consumer marketer does not plan primarily ing tasks. However, they also per-
packaged goods will probably ben- for short-term results. His objec- form a crucial marketing task,
efit most from a transaction-type tive is to create results in the long because of their vital customer
strategy. run through enduring and prof- contacts. They have responsibili-
Service firms on the other hand, itable relationships with cus- ties as "part-time marketers". In
would normally, but probably not tomers. In some cases, single relationship marketing, interactive
always, be better off by applying a exchanges may even be unprof- marketing becomes the dominating
relationship-type strategy. itable as such. Thus, relationships part of the marketing function. Of
Manufacturers of consumer pack- as such are equally much the units course, elements of the marketing
aged goods have mass markets but of analysis. mix are important here as well, but
no immediate contacts with their Marketing Focus to a much lesser degree and merely
ultimate customers, while service Because of the lack of personal supporting interactive marketing
firms almost always have such contacts with their customers and activities.
contacts, sometimes on a regular their focus on mass markets, firms In transaction marketing there is
basis, sometimes only at discrete pursuing a transaction-type strate- not much more than the core prod-
points of time. Therefore, the gy will probably benefit most from uct, and sometimes the image of
interface between the firm and its a traditional marketing mix the firm or its brands, which keeps
customers is expanded far outside approach. The 4 P model will give the customer attached to the seller.
the marketing department of mar- guidance in most cases; and this When a competitor introduces a
keting and sales specialists. model was indeed originally devel- similar product, which is quite eas-
In consumer durables the cus- oped for consumer packaged ily done in most markets today,
tomer interface is broader than for goods marketing where transaction advertising and image may help
consumer packaged goods, and a marketing is most appropriate. keeping the customers, at least for
pure transaction-type strategy is For a firm applying a relation- some time, but price usually
not the only naturally available ship strategy, the marketing mix becomes an issue. A firm that
option. Industrial goods, ranging often becomes too restrictive. The offers a lower price or better terms
from mass-produced components most important customer contacts is a dangerous competitor, because
to complex machines and projects, from a marketing success point of in transaction marketing the price
would probably fit best between view are the ones outside the realm sensitivity of customers is often
consumer durables and services. of the marketing mix and the mar- high. A firm pursuing a relation-
However, in many industrial mar- keting specialists. The marketing ship marketing strategy, on the
keting situations the customer rela- impact of the customer's contacts other hand, has created more value
tionships are similar to many ser- with people, technology and sys- for its customers than what is pro-
vice situations, and here no dis- tems of operations and other non- vided by the core product alone.
tinctions between the industrial marketing functions determines Such a firm develops over time
marketer and service marketer can whether he or she (or the organisa- more and tighter ties with its cus-
be made on the continuum. tional buyer as a unit) will contin- tomers. Such ties may, for exam-
The time perspective of market- ue doing business with a given ple, be technological, knowledge-
ing differs depending on where on firm or not. All these customer related or information-related, or
the continuum a firm is. As trans- contacts are more or less interac- social in nature. If they are well
action marketing means that the tive. As has been said earlier, in handled they provide customers
firm focuses on single exchanges services marketing literature, the with added value, something that
or transactions at a time, the time marketing effects of these interac- is not provided by the core product
perspective is rather short. The tions are called the interactive mar- itself. Of course, price is not unim-

18 • Asia - Australia Marketing Journal Vol. 2, No.1

portant but is often much less an ious types (technological, informa- ket share. A service firm and many
issue here. Thus, relationship mar- tion, knowledge, social, etc.). industrial marketers, on the other
keting makes customers less price Hence, the second quality dimen- hand, who more easily could pur-
sensitive. sion, how the interaction process is sue a relationship marketing strate-
Customer Perceived Quality perceived, grows in importance. gy, have at least some kind of
The quality customers' perceive When several firms can provide a interactions with almost every sin-
will typically differ, depending on similar technical quality, managing gle customer, even if they serve
what strategy a firm uses. the interaction processes becomes mass markets. Thus, customer sat-
According to the model of total imperative also from a quality per- isfaction can be monitored directly.
perceived quality developed within ception perspective. Thus, in rela- A firm that applies a relationship-
the Nordic School of services (e.g., tionship marketing the functional
type strategy can monitor customer
Gronroos 1982, Lehtinen 1986 and quality dimension grows in impor-
satisfaction by directly managing
Gummesson 1993a), the customer tance and often becomes the domi-
its customer base (Gronroos
perceived quality is basically a nating one. Of course, this does
1990a). Managing the customer
function of the customer percep- not mean that the technical quality
base means that the firm has at
tions of two dimensions: the can be neglected, but it is no
impact of the outcome or the tech- longer the only quality dimension least some kind of direct knowl-
nical solution (what the customer to be considered as one of strategic edge of how satisfied its customers
receives), and an additional impact importance. are. Instead of thinking in anony-
based on the customer's perception Monitoring Customer mous numbers, or market share,
of the various interactions with the Satisfaction management thinks in terms of
firm (how the so-called "moments A normal way of monitoring people with personal reactions and
of truth" (Normann 1984) are per- customer satisfaction and success opinions. This requires a means of
ceived). The former quality dimen- is to look at market share and to do gathering the various types of data
sion is sometimes called the tech- ad hoc customer satisfaction sur- about customer feedback that is
nical quality of the outcome or veys. A stable or rising share of constantly, every day, obtained by
solution, whereas the latter dimen- the market is considered a measure a large number of employees in
sion is called the functional quality of success and, thus, indirectly of large numbers of customer con-
of the interaction process customer satisfaction. When the tacts. In combination with market
(Gronroos 1982). customer base remains stable, mar- share statistics, such an intelli-
A transaction marketing ket share is a good measurement of gence system focusing on cus-
approach includes no or minimal satisfaction. However, very often tomer satisfaction and customer
customer contacts outside the prod- one does not know whether it in needs and desires forms a valuable
uct and other marketing mix vari- fact is stable, or whether the firm source of information for decision
ables. The benefits sought by the is loosing a fair share of its cus- making.
customers are imbedded in the tech- tomers, which is replaced by new
Consequently, in a relationship
nical solution provided by the prod- customers by means of aggressive
marketing situation the firm can
uct. The customer will not receive marketing and sales. In such situa-
build up an on-line, real-time
much else that will provide him tions, following market share sta-
information system. This system
with added value, other than per- tistics only may easily give a false
impression of success, when in will provide management with a
haps the corporate or brand image
in some cases. Hence, the technical fact the number of unsatisfied cus- continuously updated database of
quality of the product, or what the tomers and ex-customers is grow- its customers and continuous infor-
customer gets as an outcome, is the ing and the image of the firm is mation about the degree of satis-
dominating quality-creating source deteriorating. faction and dissatisfaction among
in transaction marketing. For a consumer packaged goods customers. This can serve as a
In relationship marketing the marketing firm, which typically powerful management instrument.
situation is different. The customer would apply a transaction market- In a transaction marketing situa-
interface is broader, and the firm ing strategy, there are no ways of tion it is impossible, or at least
has opportunities to provide its continuously measuring market very difficult and expensive, to
customers with added value of var- success other than monitoring mar- build up such a database.

Asia - Australia Marketing Journal Vol. 2, No.1· 19

 The Strategic Importance of 1984, Compton, George, Gronroos know-how, information, social
Intraorganisational & Karvinen 1987 and Barnes contacts and a host of other ele-
Collaboration 1989). They have to be committed, ments of bigger or smaller magni-
The level of interdependency prepared and informed, and moti- tude are added to the relationship,
between functions and depart- vated to perform as part-time mar- so that it becomes more attractive
ments in an organisation depends keters. As Jan Carlzon of SAS and indeed profitable for the cus-
on whether the firm has chosen a noticed, "only committed and tomer (and other parties as well) to
transaction-type strategy or a rela- informed people perform" (see engage in an on-going relationship
tionship-type strategy. In transac- Carlzon 1987). This does not go with a given partner on the market-
tion marketing, most or all of the for the back-office and frontline place. All such elements are differ-
firm's customer contacts are relat- employees only. It is, of course, ent types of services. The more the
ed to the product itself and to tra- equally important that supervisors firm adopts a relationship market-
ditional marketing mix activities. and middle-level and top-level ing strategy, the more it has to
Marketing and sales specialists are managers are equally committed understand how to manage these
responsible for the total marketing and prepared. [13] The internal service elements of its market
function; no part-time marketers marketing concept states that "the offer. As we have concluded in
are involved. Thus, the internal internal market of employees is earlier contexts (d. Gronroos
interface between functions has no best motivated for service minded- 1990a; see also Normann 1984),
or very limited strategic impor- ness and customer-oriented perfor- managing services is to a substan-
tance to the firm. mance by an active, marketinglike tial degree, although of course not
In relationship marketing the approach, where a variety of activ- totally, different from traditional
situation is different. The customer ities are used internally in an management of manufactured
interface is much broader involv- active, marketing like and coordi- goods: "... every firm, irrespective
ing often even a large number of nated way" (Gronroos 1990a, p. of whether it is a service firm by
part-time marketers in several dif- 223; first introduced in English in today's definition or a manufactur-
ferent functions. This is the case, Gronroos 1982). er of goods, has to learn how to
for example, in most industrial Internal marketing as a process cope with the new competition of
marketing and services marketing has to be integrated with the total the service economy" (Gronroos
situations. A successfully imple- marketing function. External mar- 1990a, p. 7). We have coined the
mented interactive marketing per- keting, both the traditional parts of term service competition for this
formance requires that all parts of it and interactive marketing perfor- new competitive situation
the firm that are involved in taking mance, starts from within the (Gronroos 1990a). In conclusion,
care of customers collaborate and organisation. As compared to relationship marketing demands a
support each other in order to pro- transaction marketing situations, a deeper understanding of how to
vide customers with a good total thorough and on-going internal manage service competition than
perceived quality and make them marketing process is required to what is required of firms pursuing
satisfied. Thus, for a firm pursuing make relationship marketing suc- a transaction-type strategy.
a relationship marketing strategy, cessful. If internal marketing is
the internal interface between mar- neglected, external marketing suf- The Relationship
keting, operations, personnel and fers or fails. Approach as a
other functions is of strategic Service Competition
importance to success. The more a firm moves to the
Foundation for a
Internal Marketing as a right on the marketing strategy Theory of Marketing
Prerequisite for External continuum away from a transac- Marketing has never had a gen-
Marketing tion-type situation, the more the eral theory, although the manageri-
The part-time marketers have to market offer expands beyond the al school based on the marketing
be prepared for their marketing core product. Installing goods, mix management paradigm fre-
tasks. Internal marketing is needed technical service, advice about quently is treated as one. However,
to ensure the support of traditional how to use a physical good or a would it be possible to develop a
non-marketing people (Gronroos service, just-in-time logistics, cus- general theory of marketing, or
1982, and 1990a and b, George tomer-adapted invoicing, technical middle-range theories (Merton

20 • Asia - Australia Marketing Journal Vol. 2, No.1

1957), based on the relationship keting, a perspective that is the notion of the marketing mix and
marketing approach? In fact, common cause that no stakeholder other concepts and models become
notably in Europe, re1ationship- (consumer, seller, government, or one facet.
based theories of the middle range, social critic) can question. Indeed,
far beyond isolated empirical find- that perspective should really
Is There a Paradigm
ings or theoretical deductions, reflect what marketing is all Shift in Marketing?
have already been developed in about." (1988, p. 195). Although From a management point of
industrial marketing and services we do not agree with the statement view the 4 P's may have been
marketing. As far as a general the- that single market transactions are helpful at one time, at least for
ory is concerned, it is controversial the units of analysis, but rather the marketers of consumer packaged
whether such an overall theory can relationships themselves and their goods, before the use of various
be created. Referring to Shelby economic and noneconomic ele- means of competition became
Hunt's (1971 and 1976) criteria of ments (see footnote 8), we believe more organised. However, the 4
a general theory, Sheth, Gardner that this is a useful way of stating P's were never applicable to all
and Garrett (1988) in their what marketing should be and markets and to all types of market-
overview of the evolution of mar- what a theory of marketing should ing situations. The development of
keting schools argue that such a encompass. alternative marketing theories dis-
master theory indeed can exist. According to the Gronroos defi- cussed in previous sections of this
What is the potential of the rela- nition of relationship marketing article demonstrates that even from
tionship marketing perspective to (e.g. 1989a and 1990a), marketing a management perspective, the
serve as a foundation for such a is a process including several par- marketing mix and its 4 P's
theory? ties or actors, the objectives of became a problem.
Relationship marketing is sys- which have to be met. This is done However, in the bulk of text-
tems-oriented, yet it includes man- by a mutual exchange and fulfil- books and in much of the on-going
agerial aspects. A systems ment of promises, a fact that marketing research this paradigm
approach is well suited as a basis makes trust an important aspect of is still strong today. In a standard
for a general theory of marketing, marketing (cf. Gronroos 1990b). marketing text, services marketing,
because it makes it possible to Inherent in this definition is a view industrial marketing and interna-
include all relevant actors, environ- of the suppliers or service tional marketing, for example, are
mental influence, and even the providers interacting in a network touched upon in a few paragraphs
process nature of marketing (cf. with, among others, customers, or they may be presented in a
Sheth, Gardner and Garrett 1988). suppliers, intermediaries, and envi- chapter of their own. However,
The managerial facets facilitate ronmental actors. It is possible to they are always occurring as add-
actionable and normative elements include the behaviour of the actors ons, never integrated into the
that also are needed in such a theo- on the marketplace and in the non- whole text. "Books become com-
ry. Furthermore, Sheth, Gardner market environment and to analyse pilations of fragmented aspects,
and Garrett express the following the interactions and processes of like services marketing is being
views about the scope of market- the relationships in this system. piled on top of the original struc-
ing and the dominant perspective Furthermore, managerial decisions ture or relationship marketing get-
in marketing: " ... we need to and actions in the relationships are ting a small paragraph or footnote"
expand our understanding of mar- included. Relationship marketing (Gummesson 1993c, p. 257). Why
keting to incorporate the basic is also dynamic, because of its has the marketing mix manage-
tenets of marketing, that is, market process nature.[14] In conclusion, ment paradigm and the 4 P model
behaviour, market transactions as we think it is not unfair to say that become such a straitjacket for mar-
the unit of analysis, marketing as a the relationship building and man- keters? The main reason for this is
dynamic process of relationships agement approach to marketing, probably the pedagogical virtues
between buyers and sellers, and relationship marketing, has the of the 4 P's that makes teaching
the exogenous variables that influ- necessary ingredients for the marketing so easy and straightfor-
ence market behaviour.... What is development of a general theory of ward. The simplicity of the model
needed is a perspective that marketing. In such a theory the seduces teachers to toolbox think-
reflects the reason d'etre of mar- managerial approach with the ing instead of constantly remind-

Asia - Australia Marketing Journal Vol. 2, No.1· 21

ing them of the fact that marketing approach. However, even if market- is new perspectives, which are
is a social process with far more ing mix management is dying as more market oriented and less
facets than that. As a consequence the dominating marketing para- manipulative, where the customer
of this, researchers and marketing digm and the 4 P model needs to be indeed is the focal point as suggest-
managers are also constrained by replaced, this does not mean that ed by the marketing concept.
the simplistic nature of the 4 P's. the P's themselves, and other con- Most certainly relationship mar-
The victims are marketing theory cepts of the managerial approach keting will develop into such a
and customers. such as market segmentation and new approach to managing mar-
On the other hand, marketing is indeed the marketing concept,[15] keting problems, to organising the
more and more developing in a would be less valuable than before. firm for marketing, and to other
direction where the toolbox think- Relationships do not function by areas as well. Today it is still an
ing of the marketing mix fits less themselves. As McInnes (1964) exotic phenomenon on the out-
well. In industrial marketing, ser- said already three decades ago, skirts of the marketing map. In the
vices marketing, managing distrib- "the existence of a market relation future this will change. In fact, this
ution channels and even consumer is the foundation of exchange not a
change has already started.
packaged goods marketing itself a substitute for it" (p. 56). Only in
Marketing mix as a general per-
shift is clearly taking place from extreme situations, for example
spective evolved because at one
marketing to anonymous masses of when the computer systems of a
time it was an effective way of
customer, to developing and man- buyer and a materials provider are
describing and managing many
aging relationships with more or connected to each other in order to
marketing situations. Before the
less well-known or at least some- automatically initiate and execute
marketing mix there were other
how identified customers. In mar- purchase decisions, the relation-
keting research new approaches ship, at least for some time, may approaches. Now time has made
have been emerging over the last function by itself. In such situa- this approach less helpful, other
decades, although they have not tions one comes close to what than in specific situations. New
yet been able to overthrow the par- lohan Arndt (1979) called "domes- paradigms have to come. After all,
adigmatic position of the market- ticated markets", where "transac- we live in the 1990s, and we can-
ing mix. As has been advocated in tions ... are usually handled by not for ever continue to live with a
this article, an underlying dimen- administrative processes on the paradigm from the 1950s and
sion in these types of research is basis of negotiated rules of 1960s. However, bearing in mind
relationship building and manage- exchange" (p. 56). Normally, the long-term damages of the mar-
ment with customers and other advertising, distribution and prod- keting mix as the universal truth,
parties. uct branding, for example, will still we are going to need several
Marketing mix management be needed, but along with a host of approaches or paradigms. [16]
with its 4 P's is reaching the end of other activities and resources. Relationship marketing will be one
the road as a universal marketing However, what marketing deserves of them.

22 • Asia - Australia Marketing Journal Vol. 2, No.1

 Footnotes o<",,,rl,, p., p.r.,.", i~ '/lr l'IIKh.1IIi ....,"'... ,~, ~.1" Q~d ,.~ "/lu.' (II'.
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A.sill - A.u.nra/ill MarUling Jounw/\-W, 1, No. J • 23

 earlier ones in Gronroos 1989a and b. where the main activities are to create a essence, scientific management involves a
Normally, formal definitions cannot be database including existing and potential complete mental revolution on the part of
found in the literature. 1nstead authors customers, to approach these customers the workingmen engaged in any particular
offer descriptions, some of which are more using differentiated and customer-specific establishment or industry. .... And it
informative than others. 1n his discussion information about them, and to evaluate involves the equally complete mental revo-
of marketing for multi-service organisa- the life-term value of every single cus- lution on the part of those on the manage-
tions Berry (1983) views relationship mar- tomer relationship and the costs of creat- ment's side. ... And without this complete
keting as a strategy to attract, maintain ing and maintaining them. 1n most of these mental revolution on both sides scientific
and enhance customer relationships. Rapp description, only the relationship between management does not exist. " (Taylor
and Collins (1990) say that the goals of a supplier and its customers are included. 1947, testimony part, p. 27; emphasis
relationship marketing are to create and This seems to be too narrow a view of added). Relationship marketing can be
maintain lasting relationships between the relationship marketing. successfully implemented only if such a
firm and its customers that are rewarding 11 1n an interview in the Marketing Science "mental revolution" or cultural change
for both sides. Christopher, Payne and 1nstitute Review in 1991, Philip Kotler through "attitude management"
Ballantyne (1991) consider relationship states that "A paradigm shift, as used by (Gronroos 1990a) takes place in the
marketing an approach that aligns market- Thomas Kuhn ..., occurs when a field's organisation.
ing, customer service and quality, with an practitioners are not satisfied with the 14 Compare, for example, the dynamism of
emphasis on a focus on customer reten- field's explanatory variables or breadth. ... Howard's (1983) managerial theory of
tion, an orientation on product benefit, a What 1 think we are witnessing today is a marketing which also includes consumer
long time-scale, a high customer service movement away from a focus on exchange behaviour ingredients.
orientation, a high customer commitment - in the narrow sense of transaction - 15 The marketing concept is attributed to
and a high customer contact as well as on and toward a focus on building value- McKitterick (1957), and to Keith (1960)
the notion that quality is the concern of laden relationships and marketing net- and the Pillsbury Company. However, this
all. Blomqvist, Dahl and Haeger (1993) works. ... We start thinking mostly about customer-oriented approach to doing busi-
offer the following key characteristics of how to hold on to our existing customers. ness is, of course, nothing new. For exam-
relationship marketing: every customer is ... Our thinking therefore is moving from a ple, in a book on advertising and market
considered an individual person or unit, marketing mix focus to a relationship communication published in 1916 in
activities of the firm are predominantly focus." (pp. 1 and 4). Norway, the author, Romilla (Robert
directed towards existing customers, it is 12 We first introduced the concept of the mar- Millars), gives the following piece of
based on· interactions and dialogues, and keting strategy continuum with relation- advice: "Forsok at se paa tingen fra kun-
the firm is trying to achieve profitability ship marketing at one end and transaction dens side av disken (Try to look at the situ-
through the decrease of customer turnover marketing at the other end in 1991 in an ation from the customer's side of the
and the strengthening of customer rela- article "The Marketing Strategy counter" (Romilla 1916, p. 35). And
tionships. Gummesson (1993b) concludes Continuum: A Marketing Concept for the according to an old Chinese saying, "cus-
that relationship marketing is a strategy 1990s" in the Management Decision tomers are the precious things; goods are
where the management of interactions, (Gronroos 1991). A previous version only grass ". The industrial revolution and
relationships and networks are fundamen- mainly focusing on services was published scientific management, among other rea-
tal issues. There are also some more prac- in 1990 in the book Service Management sons, made managers and researchers lose
tice-oriented descriptions of relationship and Marketing (Gronroos 1990a). sight of it.
marketing: for example the one by 13 1t is interesting to notice that Taylor in his 16 Compare, however, Kuhn's (1970) discus-
Copulinsky and Wolf (1990) that states testimony about scientific management in sion of the possibility of simultaneously
that relationship marketing is a process 1912 explicitly states that " ... in its existing paradigms.

24 • Asia - Australia Marketing Journal Vol. 2, No.1

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