Relationship Marketing: Important Business Strategy

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Relationship marketing focuses on the lifetime value of the customer rather than the value of a single transaction, the orientation of relationship marketing is on obtaining a share of the customer not a share of the market (Peppers and Rogers, 1994). The underlying assumption being that establishing and maintaining relationships with customers will foster customer retention (Gwinner et al., 1998), customer share development (Verhoef, 2003), and increased profit and recovery when a problem occurs (Barnes, 1997).

Therefore Relationship marketing is one of the basic and important business strategy especially in service industry which deals with how customers can be satisfied with the service they gain and how the company or firm maintain their relations with their customers for long period of time so it deals with creation of customer loyalty and this leads a great role in the profitability of the company.

McGarry (1951) argued that having long-term, continuous relationship between buyer and seller that develop a bond of mutual interest, confidence and respect can reduce marketing cost by 10- 20 percent. In this view, long-term collaboration between the seller and buyer is seen as a mechanism to increase marketing efficiency and leads to profitability of the company from the seller’s point of view and due to increasing customer satisfaction so relationship marketing is a key to customer satisfaction and this leads in creating customer loyalty.

The relationship marketing perspective is based on the notion that on top of the value of products and/ or services that are exchanged, the existence of a relationship between two parties creates additional value for the customer and also for the supplier or service provider. (Gro¨nroos, 2000). An on-going relationship customer security, a feeling of control and a sense of trust, minimized purchasing risks, and in the final analysis reduced costs of being a customer. Relationship marketing includes all activities directed towards the establishment, development and maintenance of exchange relationships (Morgan and Hunt, 1994) from this literature it is clear that RM is the main business strategy which leads an organization to maximize profit by reducing cost and increasing customer satisfaction.

In the last decade of the 20th century, relationship marketing has been seen as the mainstream of thought in planning a marketing strategy both in industrial marketing and consumer marketing (Tseng, 2007). To Morgan and Hunt (1994), relationship marketing is defined as all the marketing activities that are designed to establishing, developing, and maintaining successful interactive relationship with customers and this leads to create loyal customer.

From the above scholars we can understand that, relationship marketing is a business strategy which can deal about mutual benefits of customers and service providers and it can express in goods, services, delivery systems, financial solutions, material administration and the transfer of information.

Service Quality

Quality is the totality of features and characteristics of a product or services that bear on its ability to satisfy stated needs (Kotler, 2002). In today’s business environment, the role of quality cannot be underestimated or overlooked by any company. Quality is rapidly being a major factor in a customer’s choice of services. Without a doubt, quality plays an important role sustaining the long-term profitability and survival of a company (Russell and Taylor, 2000 as cited in Farah, 2011) so quality is the basic concern of service providers and plays a crucial role in the competitive world since it plays avital role is satisfying customers.

Service quality is a function of the differences between expectations and performance along the quality dimensions Parasuraman et al, (1985). Roest and Pieters’ (1997) also share a similar definition that service quality is a relativistic and cognitive discrepancy between experiences based norms and performance concerning service benefits. So service quality focus on meeting the customers‟ needs and requirements, and how well the service delivered matches the customers‟ expectations of it.

In recent years, greater emphasis has been placed on the need to understand the role of expectations, given the fact that consumers‟ expectations of quality are increasing, and people are becoming more sensitive and critical of the quality of service that they experience.(George and Shirley, 1996) form this concept it is clear that service quality is not only the concern of the service providers it is also on the perceptions of the customer on the service or goods they get so it is difficult to address easily it needs to meet or exceed the perception of customers.

Service quality focus on meeting the customers‟ needs and requirements, and how well the service delivered matches the customers’ expectations. In recent years, greater emphasis has been placed on the need to understand the role of expectations, given the fact that consumers‟ expectations of quality are increasing, and people are becoming more sensitive and Customer loyalty is a customer’s likelihood to choose a particular brand with reference to his or her past purchased goods or services they get. This behavioral definition of loyalty captures the outcomes of both attitudinal commitment and habitual buying. The term ‘customer loyalty’ is used to emphasize that it is a characteristic of customers, rather than characteristics of brands (Zhang, 2010) .

From the above authors we can understand that the quality of a service is measured by the service they get from the company either to meet or exceed the expectations of the customer and the customer which gains a service what they perceived or exceed their expectations most probably they are loyal to the company so service quality deals with customers satisfaction with the service they get from the service providers so it is means or ways to get loyal customer.

Service loyalty is more reliant on the development of interpersonal relationships as opposed to loyalty with tangible products (Macintosh and Lockshin, 1998). Intangible attributes such as reliability and confidence on the image brand may play a more important role in building or maintaining loyalty in a service context than in a product context (Dick and Basu, 1994). These well-established differences between tangible and intangible products lead to a generalized expectation and perceptions that results for maintaining loyalty in a service setting might differ from those in a goods setting.

Customer satisfaction is an abstract concept and is actually happening of the state of satisfaction will vary from person to person and product service in a competitive market where business compete for customer; customer satisfaction is considered as key element of business strategy (Gitman & Carl, 2005). It is easy to conclude that customer satisfaction is characterized as the customer’s evaluation of a product or service as far as that product or service meet or exceed the customer’s needs and it can differ from customer to customer according their previous knowledge’s, expectations and perceptions. So it is the way to get loyal customer because if a customer is satisfied by the service or product which they get from the company it can purchase or get service repeatedly and this leads to customer loyalty.

Customer royalty according Lovelock (1996), describe customer loyalty as the willingness of a customer to continue patronizing a firm’s goods and services over a long period of time and on a repeated and preferably exclusive basis, and voluntarily recommending the firm’s products to friends and associates. Oliver (1999) defined loyalty as a deeply held commitment to rebuy or re utilize a preferred product/service consistently in the future, thereby causing repetitive same-brand purchasing, despite situational influences and marketing efforts having the potential to cause switching behavior. Even though different scholars define Customer loyalty in different words there is one common concept that is repeatedly purchasing of a product or a service from the same company voluntarily and that leads to loyalty so if a company or firm have loyal customers which creates though previous services or goods they serve it can survive and make profit for a long period of time.

Cite this paper

Relationship Marketing: Important Business Strategy. (2020, Sep 25). Retrieved from https://samploon.com/relationship-marketing-important-business-strategy/



How can relationship marketing improve the operations of a business?
Relationship marketing can improve the operations of a business by fostering customer loyalty and repeat business through personalized communication and tailored offers. This can lead to increased revenue, reduced customer acquisition costs, and a positive brand reputation.
Is relationship marketing a marketing strategy?
Yes, relationship marketing is a marketing strategy. The goal of relationship marketing is to build long-term relationships with customers and create loyalty.
What are the strategies of relationship marketing?
There are many strategies of relationship marketing, but some common ones are building customer loyalty, creating customer advocates, and providing excellent customer service.
What are the three strategies of relationship marketing?
ADHD can cause problems with inattention, hyperactivity, and impulsivity.
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