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Relationship Marketing: a Choice for Enterprises to Challenge the Operating Environment SUN Huimin, OUYANG Xiaozhen School of Economics and Management,Wuhan University, Hubei, Wuhan, 430072,china [email protected] Abstract The changes in marketing environment bring about constantly changes and progresses in marketing theory and practice. According to the views of Christopher Martin, the processes of marketing development can be summarized as period of consumer marketing, period of industrial marketing strategy, period of the non-profit department and social marketing, period of service marketing, period of relationship marketing and the management the relationship between customers. Based on the work of clearing out the theory of relationship marketing and the definition of relationship marketing, the viewpoint of this paper is that relationship marketing is a choice for enterprises to meet the challenges of the marketing environment. The changes from the marketing environment require enterprises to transfer the strategies from transaction to relationship, from the satisfaction and loyalty of customers to the values of customers, from attracting new customers to attracting new customers and retaining old customers simultaneously, from the limit of customers’ markets to concerning the internal as well as external marketing, from the quantity of sale to the quality, customer service and marketing. Key words marketing environment, relationship marketing, value of customers, challenges of environment In the development of marketing theory, people found that each step of the development of marketing theory is directed related with the dynamic development of environment. The facts of the development of marketing theory are all based on the practice activities. The marketing practice is a positive behavior that enterprises have adopted since the changes of marketing environment brought about pressures to the enterprises. The development of the Relationship Marketing theory is just growing up under the pressures of this turbulent marketing environment, so relationship marketing is considered to be a result of the changes of marketing environment in this paper. 1 Introduction Marketing Theory developed from the period of consumer marketing to industrial marketing, to the non-profit sector and social marketing, and then services marketing and the development of the management of customers’ relationship, now it comes to Relationship marketing theory. The essential change is the management of attaching importance on the success of transaction to the relationship, focusing on enhancing the value of relationship. All these marketing practices and the development of theory have been an impact on the researches of relations in and after the 1990s. “During this period, there is a diversification in marketing theory and a development in relationship marketing theory. ” [9] (2005 John Egan, P6), [11] (Christopher, 2005, the foreword), see figure 1. As the professor in Texas & M University, the former President of American Marketing Association, Leonard L. Berry once said in one of his articles which is about the history and status quo of relationship marketing that “Relationship marketing, had been sealed in the mass concept of marketing, has become the main trend of marketing studies, more and more scholars have studied this issue.” [11] (Christopher, 2005, the foreword) 1375 Figure1 changes of Relationship marketing The focus of marketing strategy The development of consumer marketing strategy The development of industrial marketing strategy Relationship marketing The development of the marketing strategy of the non-profit and social service institution The development of service marketing The produce and the development of CRM source 1950 : Paynen,1998,2003; Christopher ,2005; John Egan 2005) [5] [11] 1970 [9] 1990 2000 2 Relationship Marketing and Service Marketing Entering the 1980s, it is not a problem for enterprises to improve the technology of product, to develop economics and to manufacture the products on mass scale, however, the market has become increasingly sophisticated and competitive, and customers demand for diversification. In the goods market, the most important instrument, portfolio management strategy and its 4P’s model, for enterprises to open the market has showed its limitations. New marketing ideas like social marketing concepts and service marketing have emerged in this environment. Lots of enterprises have gradually shifted the emphasis of marketing from simply to increase market share to “the quality of the market share”. Concept of marketing has changed to “the establishment of a profitable and lasting relationship with selected customers”. [11] (Christopher, 2005, pp2)Leading by this new ideas, one major work of marketing is to provide the suitable products and services to each customer, in another word is the market-oriented marketing which is pursued by enterprises. The concept of relationship marketing appeared in the marketing theory of industrial and service enterprises. The first use of relationship marketing is a Harvard professor namely Theodore Levitt who use it in one of his early articles called “AFTER THE SALE IS OVER” that is about the marketing strategy of industrial enterprises. He once suggested that “the real value of the relationships between clients and suppliers should be reflected after sale”. He also believes that”suppliers need to shift the focus from the works of sales to the provision of longingly satisfied services to customers”. [4] (Theodore Levitt, 1983) Therefore, this article is considered to be a landmark one in the field of relationship marketing [11] (Christopher, 2005, the foreword).The Scholars from the Texas Agricultural University represented by Leonard L. Berry do researches about relationship marketing from the perspective of service. Berry defined the relationship marketing in his symbolic article (“relationship marketing" is also a landmark work) as that “relationship marketing is to attract, maintain customers and to improve the relations with them in agencies provides various kinds of services.” [5] (Adrian Payne, 2003, pp29) believed that to attract customers is only the first step in the process of marketing. Besides, to consolidate relations, to form the general customers into loyal ones and to provide good service to each clients are all parts of marketing. His article has aroused people to realize that it would have positive reflect on enterprises’ external marketing if they had the internal business culture to attach importance to the relations with customers. It has given several strategic proposals about how to build the good relationship with customers and believed that the essence of relationship marketing is “to maintain and improve the relations with existing customers”. Jackson, Barbara Bund emphasized the importance of “Winning and Keeping Industrial Customers: The Dynamics of Customer Relations” in her article, and discussed for the enterprises how to strengthen 1376 the relationship with customers sustained after sales [2] (Jackson, Barbara Bund, 1985, pp195). It believed that relationship marketing lead the relations between products and customers in the value chain. It attached importance to the relationship management with a view to providing higher-value to customers. Furthermore, it had been emphasized to establish, maintain and consolidate a sustainable relationship between enterprises and other stakeholders, and to cultivate and maintain good relationships with customers has become the basic guarantee for success of marketing. 3 Three mainstream of Relationship Marketing Theory In an increasingly complex and mature marketing environment, the various relationships have an incremental impact on sales. A large number of scholars widely concern for relationship marketing including Christopher Martin, Adrian Payne, David Ballantyne and Christian Grönroos. Philip Kotler advocated that the relations between enterprises and public should also be included in the area of marketing [12] (Philip Kotler, 2001, clones). Meanwhile, Evert Gummesson had summarized 30 different types of marketing [1] (Evert Gummesson, 1994, pp5~20). A variety of models have been designed by scholars from Britain and America to expound multiple market relations from different angles. It has been divided by the research results of relationship marketing into three mainstreams: Britain and Australia (UK-Australia) Schools, the Nordic School and the North American Schools. [11] (Christopher, 2005, the preamble) UK-Australia Schools are mainly based on the studies of Martin • Christopher, Adrian Paynen and David Ballantyne, and emphasize that the management of quality and concepts of service marketing should be closely linked to economics of customers’ relationship, do researches on strategy alliances and partnerships as well as the essence of relationships in marketing. The research of the IMB has a colossal impact on the relationship marketing. The members have composed massively specialized article and the books related with the industrial market. And the most representative work are: P.W.Turnbull and M.T.Cunnigham-"International Marketing and Purchase"; h.Hakansson- "Manufactured products International Marketing and Purchase"; D.Ford- "commercial market analysis: Interaction, relations and network"; B.Axelsson and G.Easton-"industry network: The reality new viewpoint"; D.Ford et al-"Commercial relation Management" and so on. America school advocated that carries on the strengthened education interior of enterprise to enhance managerial and administrative expertise. The research by Leonard Berry and the Theodore Levitt has the representation. In brief, the relationship marketing is doomed to become a global research idea. In the late 90s, the relationship marketing's theory also unceasingly developing, has formed perfect system, Christian Grönroos make more comprehensive limit in the fundament of the Professor Berry defines. He believed that “the relational marketing's goal needs to discover, establish and maintain with customer. Certainly, in some situations, if needed, we will also interrupt relations with certain customer, in order to satisfy other customer's economy or other needs well. This goal will be realized through the pledge and the fulfillment process” [7] Grönroos 2002 pp18 . Gummesson believed that the relational marketing core's characteristic is to build the relationship marketing on the relationship, the network and the interaction, moreover the relational marketing exists in the kind of widespread network containing the sales enterprise, the market and the society. The relational marketing's goal is to establish the win-win relations between the enterprise and the customer, moreover to create the value together, which has surmounted the traditional special function and the criterion boundary” [7] Grönroos 2002 pp28 . Around The 21st century's, electronic commerce is mature and popular day after day because of the convenience, the efficiency, the selectivity, the personalization, the informationization, which are more inferior than other any kind of marketing pattern. In 1999 Philip Kotler proposed a different method. He thought that “the marketing combination has represented the seller viewpoint, and simultaneously suggested that the marketing should take the consumer as the guidance to understand 4Ps. Therefore, 4Ps turning to 4Cs, request company satisfies the need of consumer's efficiency, the conveniences and the communication convenient.” [9] John Egan 2005 pp18 .4C is composed by Customer’s wants and needs, Cost to satisfy wants and needs, Convenience to buy, Communication. The price turned into the ( , , ) ( ( , ) 1377 , , ) cost (consumer's cost), retailing turned into the convenience, the product and the service turns into the consumer to need with the desire, the promotion turn into the communication. .in 2002 Christopher et al. revise their own authority works "the relational marketing: The product quality, the customer service and the market marketing merge into one organic whole", and have given the new limitation by "the relational marketing: For benefit related side creation value". In that period massive relationship marketing work has been published and has formed a complete theoretical system. The business also realizes the value of the relationship marketing and considers from the custom relationship management to the relationship marketing idea 4 The changes of relationship marketing and marketing environment The relational marketing, formed in the 1980s, was not accidental. It is a kind of marketing theory which it was summarized through analysis by enterprise's marketing thought, the marketing strategy and the marketing motion. It has happen to agreed with modern enterprise's marketing practice, as soon as its passing through, it has obtained widespread and the swift development. Along with the change of the marketing environment, the marketing theory brings the marketing key change to urge the marketing theory unceasing development. Just as John Egan describes in the book "the Relationship Marketing - Analysis Marketing's Relational Strategy”, the environment actuate the marketing, which have been changed or is changing, simultaneously, in the future will undoubtedly be changed. [9] John Egan 2005 pp31 The marketing environment urged three shifts of the marketing center: Namely from core product center to human resources center, again to service center[7] Grönroos 2002 pp20 . The enterprise must make the response to the marketing environment change, which is a strategy choice to deal with the marketing environment challenge, who early proposed to pay equal attention to the seller and buyer simultaneously, which obtained acknowledgment and the support of the international academic. , ) ( ( , ) , 4.1 The changes of marketing environment request the enterprises’ marketing shift from the enterprise transaction marketing to relationship marketing As previously stated, the traditional mode of marketing, referring primarily to Marketing Portfolio Management Strategy and 4P's model, whose core is the transaction, stressed the one-time transactions, only considering the short-term interests and the market share of the enterprises. To assert that the product value is created by suppliers and only worth through buyer’s exchange can be recognized. Only focusing on trading relations of the customers’ target market, the traditional mode from static perspective analyze and investigate market in order to meet the market. In the fierce market competition, in the face of increasingly picky customers, the demand for diversity and individuality, less customer loyalty, economic globalization, the rapid development of information technology, the popularity of network technology and so on, The traditional mode of marketing lose its past charm. Relationship marketing theory building on the basis of interactive relationship among service providers (goods provider), industry buyers, and customs replace that of the micro-economics of the marketing mix and 4P's theoretical model. Every aspect has not been fully taken account of by its interpretation of the traditional concept of the "4Ps" marketing portfolio theory, containing the establishing and maintaining the enterprises, customer relations and the relations to other parties. Relationship Marketing have reflected the fact that it represents a fundamental change in the way of thinking: the marketing is a phenomenon. In a complex and mature market, the influence of various relationships is getting bigger in the Performance Marketing. It is the core that the relationship of the marketing is, “the focus shift from transaction between the supplier and customer” Adrian Payne 2002 pp5 . Enterprise must concern the focus from on the successful transaction to on the building long-term, the interests of the customer relationship, that is, the enterprise and other parties establish the ties on the economic, technical and social aspects. Moreover, enterprise pay more attention to the maintenance and consolidation of consumers’ relationship, the concerns of the long-term customer relations and customer loyalty, also to create value with consumers and obtain stable value with key ( , ) 1378 , , members in order to maintain the long-term marketing and operational performance. Marketers, through constant commitment and giving each other high-quality products, excellent service and fair prices, achieve the relationship marketing. Relationship marketing can also reduce transaction costs and time. Relationship marketing can also reduce transaction costs and time. [12](Philip Kotler,2001,pp17). Similarly, in Kotler’s review, relationship marketing, that the ultimate result is building the company's unique assets, is a marketing networks. Network marketing establish the mutually beneficial business relations by the company and all of its interests - customers, employees, suppliers, distributors, retailers, advertising agents, academics and others. This is not in competition between companies, but between the entire network. Changes in the global economy resulted to a certain extent the conflicting nature in relationship marketing: To become effective global economic competitors, must become a trusted partner in the enterprise network. Therefore, competition and cooperation is no longer opposite, in order to be competitive, the cooperation is needed; Effective cooperation can enhance our competitiveness. Hence, Tim Ambler suggests that, relationship marketing emphasis on cooperation rather than competition, the core task of the marketing is the parties to cooperation, cooperation is a win-win situation, the relationship is brand and a network which composed by sellers, buyers and concerned users, while competitors is involved with the relation network, or with a part of the relation network. [13] Deichang Han Fei Yao 2006 pp48 ( 、 , , )。 4.2 The changes of marketing environment require enterprises to transfer their attention from the customer satisfaction and the customers’ loyalty to the customer value The customer constitutes one of marketing environment important attributes, in fact, no matter is the marketing practice or the marketing theory revolves the customer to write an essay. Since the 1970s, the scholar and the enterprise superintendents has sought unceasingly the new marketing method complied with the situation change. In order to win customers' favor, from taking the product as the center which purely pays great attention the product quality to taking the customer as the guidance which strives for customer's satisfaction and loyalty, until the 90s, the statement of value concept, has pushed marketing idea to a brand-new altitude. Enterprise who pays great attention to the customer satisfactory regard how to make the customer satisfied when purchase oneself product and the service, but pay less attention to the competitor and the customer. This relation between enterprise and customer is static and unilateral, the folk remedy “tries to please”, through which to gain product loyalty of the existing customer; but the enterprise who pays great attention on both the customer value and the competitive power is based on own value localization, providing the goal customers the surpassing value. Simultaneity, the customer prefers to maintain the interactive relation with the enterprise in order to obtain the biggest sensation value. Therefore, in the enterprise, winning over the customer’s satisfaction and loyalty is a merely marketing tactical question, but creating the customer value to gains the lasting competitive is an advantage strategic question. To pay great attention on the customer value is not denial to the, customer's satisfaction and loyalty, but to expand and develop the customer's satisfaction and loyalty under the new marketing environment, which provide a brand-new idea and the method to carry on the strategic choice f and promoted own competitive power or the enterprise. This is a new origin the enterprise to gain the competitive advantage.” [11] Xuefeng Ren et al 2001 Philip Kotler calls the customer value (CV) as the Customer Demisable Value. “The Customer Demisable Value refers to difference between the total customer value and the total customer cost. The total customer value is a series of benefits which obtains from some specific product or the service. But the total customer cost is the customer's estimate expense which this product or the service causes from time to time in the appraisal, obtaining and use.” [12](Philip Kotler,2001,pp43) Thereinto, the total customer value has included the product value, the service value, the personnel value and the vivid value; The total customer cost has included the monetary value, the time cost, the energy cost and the physical strength cost and so on. 30 years ago Peter Drucker observes that, company's most important task is “creating the customer”, thought that “the ideal marketing will produce the customer who already prepares to purchase and the lef is how advantageous for the customer to obtain these products or the service.”[3](Peter Drucker,1973,pp65) To implement the customer relation management and to regard ( , ) 1379 the marketing as integer of the customer life cycle where to maintain it cause the enterprise and the customer benefit satisfied. According to the relational idea, the enterprise marketing's core goal is to creates and supports the customer expense and the process of using product (service)in the interactive relations, namely for the customer creating the sensation value process. The customer relation management emphasize the thoroughly understanding about customer's demand, the hope and the anticipation value. The elementary object of relation marketing to enhance the customer “lifelong the value”. [11] Christopher et al 2005 pp5 “lifelong the value” will be possibly currency formal of money, after the enterprise transform between the net profit and the net present value in the future. The relational marketing's key point lies in making the related customer and the client realize the maximization value from beginning to end. ( , , ) 4.3 The changes of marketing environment request enterprises from attracting the new customers to attracting the new customers as long as retaining the old customers simultaneously In the past, the enterprise often paid great attention in the new customer's gain, hoping that the growth of the market share could provide stable passenger flow for the enterprise. even if in the high growth rate of population, in the high profession growth or in the less intense competition marketing environment, along with the substitute appearance, the buyer strength strengthen, the new competitor to join and the potential market development difficulty to enlarge, the customer's gain will become more difficult. Grönroos who analyzes the customer loyalty and enterprise's profit ability relations said that:” it is a basic rule that the cost of striving for a new customer is 5~6 times than that of maintain an old customer. The loyal customer will bring to the enterprise very obvious profit.” [7] Christian Grönroos 2002 pp96 But further research discoveries by Heskett, Sesser, Schlesinger et al, the customer loyalty rises five percentage points, enterprise's profit has the increase rate of 25%~85%.[8] James L.Heskett W.Earl Sesser Leonard A.Schlesinger 2001 pp65 . After the empirical study, Karl Albrecht and Ron Zemke draw the important conclusion:”the value to detain a customer must be higher than the expenditure to processes a Complaint.” [10] Karl Albrecht 2004 pp18 We also knew that not all customers can bring the similar profit for the enterprise, according to the different customer’s different characteristic, the enterprise need nimbly design and the develop the relationship marketing strategy, even establishes “one to one” marketing. The relationship marketing fully considered economic efficiency by detaining the customer, which causes the enterprise to mix the fund and the resources balanced in the operative activity so as to attract and detain the customer. Then the relationship marketing strategy's gravity by originally pays great attention to win the customer and detain the customer simultaneously. , ) , , , ) ( ( ( , , , , ) 4.4 The changes of marketing environment request enterprises to transfer their focus from only the customer market to both the internal and the external marketing The relationship marketing emphasized that the internal marketing is significant to the success of the exterior marketing. The internal marketing is one kind of essential relational marketing strategy [6] Adrian Payne 2002 pp105 . The internal marketing's beginning admit that the staff is organization's internal market and the customer, which are enterprise's a kind of strategic resources[7] Grönroos 2002 pp253 . Their manner and the enthusiasm have direct or the indirect influence to the customer relations. In consumption environment, staff's performance is the sale performance, the marketing duty not only needs to encourage the customer of the exterior market to purchase, but also must encourage the achievement performance of the internal personnel. When internal customers have good performance, the exterior market's customer will increase the possibility to purchase. Therefore, the internal marketing is the premise to the success of managing the customer relationship; the staff is the important attribute of enterprise success management, enterprise's exterior marketing realizes through the success of the internal marketing. The relationship marketing stressed that to regard the marketing activity as the overall behavior is the enterprise multi-departments coordination and cooperation. The marketing activity completed from the past by the sole department to by the trans-departmental coordination and cooperation, which had reflected that the traditional multistep pattern depending ( , , , ) ) ( 1380 , enterprises' marketing department to complete the method now had already met troublesome. what new relational marketing theory emphasis is that multi-department of enterprise carry on overall marketing plan, while no longer relied on some or several departments to carry on the marketing activity independently. The relational marketing strategy takes seriously with keys “market” to establish and to expand the relations, It regard the interior market the, simultaneously also takes seriously with external relation, containing the customer, the supplier, to retail the channel, the influent market, to advertise for the market establishment widespread[6] Adrian Payne 2002 pp5 . Thus it has greatly developed implication and the scope of the traditional marketing, which requests the enterprise to carry on widely the definition and the attention t of entire condition’s various factors. ( , , ) 4.5 The changes of marketing environment request enterprise from increase the turnover of the market to enhancing the quality, the customer service and the marketing relationship closely. In the traditional consumable market, the market scale is very magnitude. It is impossible to establish the long-term interactive relations between the producer and the customer. But along with development of the information technology and data bank technology, the limitation of the interactive long-term relations between the enterprise and the customer eliminates gradually. It is very essential reality possible to maintain the long-time good relations with the customer. The market marketing activity precisely manifested “the value exchange relations” between the enterprise and the customer[11] Christopher et al 2005 pp9 . The product quality and the customer service are the primary factor to maintain the relationship. With service economy's arrival, the relationship becomes focus of the marketing model and the concept development, which obtained the widespread approval. The relationship marketing theory believed that the customer exchanges for corresponding value by his loyalty, this kind of value not only includes the tangible value which the product itself has, but also includes each kind of relatively intangible value related with the customer service quality. Therefore, we must stress that “the product quality, the customer service as well as the market marketing activity merges into an integer” [6] Adrian Payne 2002 pp6 , which is the basic policy of the relationship marketing. ( , , ) ( , , ) 5 Conclusion In sum, the marketing environment's change has had the huge influence to enterprise's marketing activity and the marketing theory. The relational marketing, no matter in the practice or in the theoretics, is the marketing environment product, which has represented the modern marketing theory progress and the important idea of the enterprise marketing strategy. The enterprise can obtain from this with the customer win-win result through the relational marketing, the recognition, the establishment, the maintenance and the consolidated the relationship with enterprise and the customer with other stakeholders, thus to form and gain the competitive advantages. The enterprise must create value maximization through the management of the customer relation. The relationship marketing theory advocated the brand-new management method that the enterprise should participate in the market competition as a whole, to thoroughly explore the relationship in the internal and external market. Therefore, the product quality, the customer service and the market marketing can be merged into an organic one. Certainly, the marketing environment will also bring about the new challenge for the marketing theory and the practice. The development and the progress of marketing theory can give the people a more optimistic prospect. References , 《 , : [1]Evert Gummesson Making Relationship Marketing Operational International Journal of Service Industry Management[J] Vol.5 No.5 1994 [2]Jackson, Barbara Bund Winning and Keeping Industrial Customers The Dynamics of Customer Relations [M]KY: Lexington Books. D. C. Heath and Company, 1985 》 , , 1381 [3]Peter Drucker, Management: Tasks Resposibilitis, Practices[M],New York:Harper&Row,1973 [4]Theodore Levitt“AFTER THE SALE IS OVER” [J]Harvard Business Review, SeptemberOctober,1983,87 93 [5]Adrian Payne , Zheng Wei translate, The Essence of Services Marketing [M] China Citic Press,1998,2003 reprinted:29 [6]Adrian Payne, Martin Christopher, Helen Pec,et al. Liang Qin translate Relationship Marketing for Competitive Advantage: Winning and Keeping Customers [M] China Citic Press 2002:5~6,105 [7]Christian Grönroos Han JingLun translate, Service Management and Marketing : A Customer Relationship Management Approach [M] Publishing House of Electronics industry,2002:253 [8]James L.Heskett W.Earl Sesser Leonard A.Schlesinger Niu Haipeng translate, The Service Profit Chain [M] Hua Xia Publishing Company 2001:65 [9]John Egan Lin Hong translate, Relationship Marketing—Exploring Relational Strategies in Marketing [M] Economy and Management Publishing House,2005:6~18,31 [10]Karl Albrecht, Ron Zemke Tang Guo translate Service American: Doing Business in the New Economy [M] China Social Science Press,2004:18 [11]Martin Christopher, Adrian Payne David Ballantyne Yi Wen translate Relationship Marketing: Creating Stakeholder Value [M] China Financial and Economic Publishing House,2005: 1~9 [12]Philip Kotler Mei Ruhe translate Marketing Management [M] China Renmin University Press New millennium version 2001:3~43 [13]Han Dechang, Yao fei, “Effect of Relationship on Relationship Marketing ”.Economic Management,[J]2006,1,48~51 [14] Ren Xuefeng, Li Kun, Gu Peiliang “Customer Value Strategy and Enterprise Competitiveness”. 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