Page - 1

The Emergence of Relationship Marketing (RM)

The marketing mix management paradigm has dominated marketing thought, research and practice since it was introduced almost 50 years ago. Today, this paradigm is beginning
to lose its position. New approaches have been emerging in marketing. The globalization of business and the evolving recognition of the importance of customer retention and market economies and of customer relationship economics, among other trends, reinforce the change in mainstream marketing.

Marketing is no longer just about developing, selling and delivering products. It is increasingly more concerned with the development and maintenance of mutually satisfying long-term relationships with customers (Buttle, 1996). RM is based upon the premise that it makes economic sense to satisfy and retain customers, as the strength and duration of the relationship is directly proportional to the resultant profitability. This contemporary interest in maintaining customers is reforming marketing with an emphasis on the creation of value and the building of relationships. This new marketing refocusing has been explored in consumer services marketing. The thrust has been to examine different aspects of customer satisfaction, relationship strength, relationship longevity and customer relationship profitability. The acceptance of relationship marketing is based upon the emerging body of research, which indicates how customer retention leads to increased profitability. This has prompted companies to treat their customer base as individual assets in themselves. Moreover, if a company builds and maintains good relationships with customers, it cannot be easily replaced by the competitors and, therefore, provides for a sustained competitive advantage.

After the post-industrial or service economy, most of the developed world is now entering a new, information economy. Perhaps it was natural, then, that the new developments first appeared in the maturing service industries of the 1970s and 1980s. Berry et al. (1983) surveyed the factors and developments in service marketing that later gave rise to RM. These factors include the combined impact of low growth rates and deregulation, resulting in "everyone getting into everyone else's business". This naturally meant increased competition. According to the writers, this forced companies to think more in terms of "keeping customers" as opposed to only "winning new customers".

According to Berry et al. (1983) a customer relationship is best established around a "core service", which ideally attracts new customers through its "need-meeting character". However, creating customer loyalty among the old customers is one of the main goals of RM. The authors also mention "frequent flyer" programmes and other incentive programmes intended to encourage customer loyalty by rewarding it.

Next

Anuraag Mittal is B.Com. (Hons) & M.Com. (Specialization in Marketing) from Delhi University, PGDBM (Marketing & HRM) & M.Phil. (Management) from Bharati Vidyapeeth. Also done Ph.D. from CCS University, Meerut. He is currently working as Reader in Department of Management, Delhi Institute of Advanced Studies (DIAS). He is the co-author of the book titled, "Case Studies in Management".