Chartered Institute of Customer Relationship Management

Assignment: Post Graduate Diploma In Customer Relationship Management (PGDCRM)

MODULE: Relationship Marketing

DUE DATE: 18 February 2022

LECTURER: DR M. T. Nkosi

Maneta Linnys Dzauma

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TABLE OF CONTENTS

Question Description Page

a Relationship Marketing VS Traditional Marketing 3

b “In Relationship Marketing, Long-term relationships pay,” 5

c Relationship Marketing an independent Philosophy! 8

d relevance of relationship marketing to developing countries 12

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QUESTION a.

How different is Relationship Marketing from Traditional Marketing? (10marks)

Traditional marketing is transaction based, in such cases the customer is seeking short-
term gains or a single purchase and they usually make use of multiple sources of supply,
they switch frequently among suppliers and buys motivated by price. Relationship
marketing on the other hand the company sells to customer now and in future in a
superior way, particularly if a committed relationship is established (Kotler, 2003.) It is
based on creating, maintaining and enhancing strong long-term relationships between
buyers and sellers and is based on trust and commitment.

Traditional marketing aims to seek new customers, the focus is mass marketing
customers are treated as statistics or decimals. Mass promotion and mass distribution are
said to be cost effective and the general feeling is that it is costly to treat customers,
especially ordinary customers as individuals. Each customer is addressed as an individual
in relationship marketing, which is distinctly epitomised in the expression of one-on-one
marketing (Peppers, Rogers and Dorf 1998) and there is continuous customer contact.
There are relational exchanges between parties who have an exchange history and plans
for future interaction. This will involve integrating transactions into relations, structuring
and maintaining relational exchanges, and designing and coordinating marketing
activities among strategic partners.

In traditional marketing, the customer belonged to and was the sole responsibility of an
Organisation’s marketing department alone with all activities happening in that
department. Relationship marketing has developed as an organisational approach and
management thought. Several of an organisation’s departments are involved with external
customers, from the Marketing, sales and distribution to after sales service, quality as
well as the finance department are involved with the customer and their orientation

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towards the customer interaction is fashioned around the organisation’s Relationship
Marketing strategy.

One of the Core Values and beliefs of Relationship marketing is Collaboration and joint
value creation, that is collaboration between Customers and Suppliers and joint teams in
R&D, finance, Marketing, ICT, Procurement etc forming a seamless organisation. Thus
joint value creation, partners in collaboration create value together in a network of
relationships of stakeholders, here the consumer of the product or service is adding value
only when it is consumed or used and for services the production, delivery, and
consumption are in part concurrent events. On the other hand the traditional view is that
the supplier creates value thus the value-added as popularised by Porter (1985) The value
chain. In the traditional sense consumption is destruction therefore the consumer is
excluded from adding value.

From a traditional perspective of Marketing the Provider is viewed as an expect and the
customer as a cost a view contrary to that of relationship marketing values, the customer
is knowledgeable, with the changing times customers today know the power that they
hold. The internet has not only brought customers closer to the organisation but to other
customers. Information, discussions, feedbacks and opinions are visible and available to
one and all almost instantaneously, thus social networking a medium an organisation
cannot afford to ignore. With such phenomenon as the customer redress the Customer has
become powerful in the market place.

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QUESTION b.
“In Relationship Marketing, Long-term relationships pay,” what is your view to this
assertion?

Customer satisfaction over a long period of time drives high customer loyalty. Loyal
customers tend to be profitable, their profitability stems from various cost savings within
the organisation, if a customer is happy with the way they are treated and valued by an
organisation they will devote most of their spending to it and be a referral source for new
customers. There is an adage that 20% of your customers account for up to 80% of the
profits (Knox, 1998) the Pareto principle. Cateora (1997) opines that it is always good
that a company focuses its resources on the best customers instead of the price shoppers.

“Wining companies are more productive in acquiring, keeping and growing customers”
Kolter It is obvious that loyal customers are valuable, they guarantee repeat purchase and
multiple brand purchases from the firm, thus to say they buy more and a broader range of
products this leads to more sales and low marketing costs.

Delighted customers will not defect and loyal customers speak to others and recommend
by word of mouth. That is a customer comments positively about the organisation to
others, relational bonds, feelings of gratitude, positive attitudes drive the motivation and
willingness to provide requested and unrequested referrals. Word of mouth also provides
an indicator of customer loyalty, only customers with strong, trusting relationships are
likely to risk their reputations by advocating a seller to another potential customer, thus
an existing customer influences friends from church, work and family to be customers.

Long-term relationships enhance customer behaviours that are beneficial. Cooperative

behaviours, these are coordinated, complementary actions between partners to achieve a
mutual goal. If a customer obtains its portion of the created value before the seller then
the seller must wait for the reciprocal benefit or vice versa. Commitment encourages
parties to remain in their valued relationships and bonds, even if the reciprocity is

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delayed or non-equivalent. This creates value beyond what an individual firm could do on
its own. Cooperation increases customer’s flexibility and ability to adapt to seller’s
requests for changes, information or reciprocation

Empathetic behaviours, this is having greater likelihood to be influenced by perceptions

of their seller’s position. Customers in a strong relationship may attribute service failures
to external causes that the seller cannot control therefore reducing the consequences of
those failures on their purchase behaviour. Their sensitivity to and empathy for the
organisation’s difficult may also prevent them from imposing price reduction pressures
that are common responses to service failure.

Long term relationships generally pay and the annual return per customer grows with the
longevity of the relationship. An organisation must retain employees and investors,
without a stable relationship it becomes impossible to pursue long term customer
retention strategies (Reichheld, 1996). This is aligned to the total relationship marketing
approach in which relationships flourish in broad network context.

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QUESTION c

“Relationship Marketing is not wholly an independent Philosophy ....it is the way

Marketing is practiced that needs a rethink” is this new Philosophy universally
applicable? (10 marks)

Relationship Marketing has evolved as a discipline that helps the business to look beyond
transactions to long term business associations, with an aim to deepen and strengthen its
revenue streams on long term basis. It is viewed as a core corporate philosophy on which
business strategy is built up on. It is reflected in all the marketing disciplines including
branding, advertising, promotions, public relations as well as through all sales channels
and networks the company use to reach out to Markets and Customers.

Growth of Relationship Marketing as a discipline and practice gained popularity post

industrial era. Organisational Philosophy shifted from profits products and markets to
customer first. Customer focus and relationship became the organisational focus; this led
to many new business trends like TQM, new channels for marketing and sales.

There is an established contrast between traditional marketing and relationship marketing,

a company practising relationship marketing would like to sell to the customer now and
in future in a superior way, particularly if a committed relationship is established (Kotler,
2003).

Short term street smarts and excessive greed, which are characteristics of much marketing
practice and internal manoeuvring have no place in relationship marketing. Hakansson
and snehota (1995) aver that “what makes the economy of relationships so special is
indeed that a relationship has functions (has economic consequences) for several actors
and thus that the outcomes of different relationships are interdependent ... \thus it isnot
enough for an actor to be concerned just about itself in order to successful, as is

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suggested in all recommendations based on market. It therefore requires the other party to
think of the other party as a partner and not as an adversary.

Relationship marketing has become the foundation on which companies build their core
values and ethics, it defines the framework for the company to reach out and orient
themselves to outside markets, to the end customer as well as business partners, the
suppliers and vendors too. Relationship marketing is not limited to Customers and
Suppliers alone, it extends its scope to cover the internal employees with an effective way
to reach out and lure best talent as well.

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QUESTION d.
How practical and relevant are the values of relationship marketing to developing
countries such as Zimbabwe? (20 marks)

Value is considered a core constituent of Relationship Marketing which allows a firm to

create a competitive advantage and enhance its performance. Relationship Marketing is
business Philosophy designed to assist the organization to maintain a competitive
advantage, reduce costs and increase profitability by solidifying customer loyalty. In
short relationship marketing is perceived to represent a genuine focus-shift by which
marketers move away from concentrating on individual sales toward building value-laden
relationships with their exchange partners (Kotler, 1991).

Each customer is an individual, relationship marketing favours one to one approach of

marketing. A customer can be kept as an individuals or customers can be made members
of communities according to their wants and need. This is applicable in the context of
developing countries like Zimbabwe with the use of IT and CRM techniques. This is
evident in relationships that frequent flyers have with their airlines like Air Zimbabwe or
Fast Jet, or Ethiopian Airlines who allow them convenience in booking flights and spare
no efforts to ensure their customers enjoy comfortable journeys each time every time.
OK Zimbabwe, OK Mart and Bon Marche have several loyalty programs where members
enjoy collecting points and after a while can redeem them for gifts of specified items or
an amount of shopping.

Collaboration and Joint value creation, these relationships can be enjoyed between
Customers and Suppliers. Partners in Collaboration create value together for example
Apple has authorised resellers for their products in Zimbabwe like the Solution Centre in
Highlands Harare and iClik in Borrowdale Harare these are fundamentally the best
technology shop in Zimbabwe if one is looking for quality. In coherence to the Apple
philosophy, all the products they sell are premium and the customer experience is great.
What's best, if one is an Apple fan, is that these Apple Partners receives Apple's new
products only a few days after their release, so Apple customers will never miss a beat!

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Long term relationships pay, the longer the relationship to a customer, the higher the
profit will be, reduced costs and fewer customer defects hence increased customer share
and increased profitability by solidifying customer loyalty. With intense competition
among commercial banking sector, banks are practising relationship marketing strategies
in maintaining a competitive advantage in Zimbabwe. FBC bank have taken a deliberate
move to engage their customers, to know them understand and build solid and sound
relationship a move that has become a cornerstone of their success. This enhances
commitment on the part of the customer who find themselves buying more of FBC’s
products, buying through their lifetime and their family members are likely to buy as
well. Customers who opened savings accounts are offered and encouraged to take
personal loan with the bank, for the safety and security of their properties they are offered
insurance products and together with the motor vehicle insurance they can conveniently
pay for their vehicle licence using electronic banking platforms. This gives the customer
convenience to get their insurance and vehicle licence without leaving their home or
office avoiding long queues that characterise vehicle licencing banking halls. FBC
bankassuarance will bring the insurance and vehicle licence to the customer.

Organisations employ methods to manage relationships within the business, Human

Resources personnel are trained to build effective relationships with employees. Total
Quality Management has been the most popular tool Companies have used to build
seamless bridge between internal customers. The same stress placed on customer
satisfaction in external marketing is just as appropriate and just as necessary in internal
marketing. Premier Service Medical Investments (PSMI), in the business of healthcare
services, the quality of service they sell to their customers is determined in large measure
by the skills and work attitudes of personnel producing the services. PSMI endeavours to
attract, retain and motivate its quality personnel in form of medical practitioners and
ancillary service staff to encourage them to improve their capability to offer quality
services to their patients and clients. This is in a bid to offer service that consistently meet
the quality requirements of their target market and continue to build strong customer
relationships.Long term relationships play a pivotal role in Zimbabwean businesses.
Reichhels (1996) avers that high turnover of employees, downsizing and early

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retirement-which have characterised the 1990s-deprive an organisation of human
intellectual capital, including internal and external relationships.

Hakansson and Snehota state that (1995); pp.384-385): “what makes the economy
of relationships so special is indeed that a relationship has functions (economic
consequences) for several actors and thus the outcomes of different relationships
are interdependent...... Thus it is not enough for any actor to be concerned just
about itself in order to be successful, as is suggested on all recommendations
based on the market theory.”

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