Gronroos 2000 relationship marketing orientation

Relationships and Relationship Marketing: An Interdisciplinary Perspective | bgi bgi -

gronroos 2000 relationship marketing orientation

The paper shows that the concept of relationship marketing is in the early stages of . Grönroos () let relationship marketing to be the general definition of. new paradigm (Sharma & Sheth, ; Sheth, ). Kuhn () concept of relationship marketing in the service context, and defined it as “attracting, maintaining Moreover, Grönroos () defined the term of relationship marketing as. Schools - Christian Grönroos, (),"Defining Marketing: A Market-Oriented Approach", European labelled relationship marketing, is one leading new Relationship selling and customer loyalty: an empirical investigation.

The purpose of this reflective paper is to articulate the way in which relationship marketing can converge theoretically and be implemented successfully in practice. I suggest that in order to re-invigorate the paradigm we need to seek convergence in theory where diversity previously existed. I propose that if we conceptualise relationship marketing as three key strategic organisational components that when successfully integrated and operationalised by organisations, will converge to produce an effective relationship marketing paradigm in both theory and in practice.

This paper reflects on the implementation of a relationship marketing consultancy programme with a national service provider in the UK health and fitness industry, and how this programme was informed by the academic literature from the relationship marketing paradigm. Developing a Relationship Marketing Strategy in Practice: The Contextual Setting The research was undertaken with one of the UKs top providers in the health and fitness industry.

Whilst the host organisation had a national chain of clubs, the research was conducted at their premier club, located on the South Coast of England, with the view of rolling out a successful programme in the future. However, whilst the club had been successful in generating new business, the industry had started to become an increasingly turbulent and competitive environment.

The industry growth of the late 's had attracted a flood of new entrants and resulted in a saturated market place where service providers were exposed to falling profit margins, deteriorating share prices, acquisition and merger activity, and for some providers, falling into administration during the period of this research. In this case, the researcher acted as a peer consultant Vincewho gathered data, provided analysis, recommendations for change initiatives and reflected on the success or failure of these initiatives with the Chief Executive 4 John Oliver and his management team.

A programme of action research lasting two years was devised, in conjunction with the Chief Executive of the company, who wanted to ensure that he and his management team did not become complacent with their recent success. The central theme of this programme was focussed on their service provision and devising a strategy aimed at building robust customer relationships and subsequent retention. The Practical Problems of having a Fragmented Paradigm As mentioned earlier, relationship marketing theory is fragmented with literature dominated by a plethora of conceptual frameworks and theories that Egan described as being essentially held together by faith.

In his review of relationship marketing literature Harker found twenty-six different definitions of relationship marketing, from which we can conclude, that this diversity in explanation and lack of theoretical replication, is indicative of a subject area in a pre-paradigm stage of development.

Unfortunately, this conclusion helps neither academics nor practitioners in understanding the nature of relational strategies and certainly did not provide me with much confidence when discussing the implementation of a coherent relationship marketing strategy with the Chief Executive of a national health and fitness provider.

However, in my review of relationship marketing literature certain themes started to emerge which did provide me with the confidence to enter into a consulting arrangement on the subject. For example, Howlett and Rogers provided a useful context suggesting that organisations consider customer relationships as part of their overall business philosophy and that their corporate strategy should place the customer at the very centre of organisational culture, processes and operational activities.

Whilst this context was useful, it did make me reconsider the project. My original idea that a relationship marketing strategy would be self contained and perhaps restricted to customer service and marketing operations would now have to become the centre piece of organisational strategy, and as such, was going to be a far bigger job than first anticipated. Over an extended period of time reading literature, conducting primary research within the organisation, implementing operational, marketing, service and other change management initiatives, I began to get a real sense of the true nature of relationship marketing.

Key themes in literature and practice emerged that enabled me to conceptualise relationship marketing at a strategic, operational and tactical level. The Need for Convergence 5 exchange relationships. These bodies of knowledge and their convergence forms the basis of this paper. When this convergence in theory and practice is successfully integrated and implemented by an organisation, this could lead to an effective relationship marketing strategy that increases customer retention.

In essence, an effective relationship marketing strategy has three fundamental components that are discussed under the terms; Organisational Customer Focus, Customer Management Focus and Customer Knowledge Focus see Figure 1 below. Apart from being informed by the work of Howlett and Rogers and their customer centric approach to business philosophy, this new conceptual framework draws inspiration from the service orientated view of marketing promulgated by the Nordic School in so far as it considers any relational programme as being central to, rather than being distinct from, other organisational decisions, functions and processes.

Convergence in Relationship Marketing Organisational Customer Focus This part of the conceptual framework acknowledges the importance of the holistic organisational view of relationship marketing and its diversity. At a strategic level, the importance of customer retention and its significance to corporate profitability has been well documented by many authors including; Rosenburg and CzepielReichheld and SasserButtleand Payne who found a significant relationship between customer retention and company profitability.

This causal relationship has, however, been disputed by the likes of Reinartz and Kumar who found that greater returns in profitability are not necessarily achieved through longevity in the relationship, but can be derived from effective cost and price management. Creating an organisational climate that is customer focused has been extensively covered in marketing literature under the notion of market orientation. This premise suggests that an understanding of customers will enable organisations to identify future competitive advantages and the degree of organisational change required to realise these opportunities.

Vargo and Lusch argue that marketing has evolved and converged into a paradigm where service provision, and not goods, are the unit of economic exchange and that organisations increasingly focus their mission and value proposition on customer centricity and relationship building. Payne, Christopher, Clark and Peck support the customer centric proposition and argue that culture was a fundamental determinant of an organisations ability to deliver a superior service to its customers.

This view has been a consistent theme in literature Schneider ; Ogbonna and Wilkinson ; Bowen and Lawler and is particularly relevant in the service marketing arena where this type of customer orientation is fundamental to the long term success of the organisation.

Jenkins also argues that organisations with a customer- based strategy can obtain a sustainable competitive advantage by learning from customers and subsequently meeting their needs and solving their problems. There is also more recent evidence Stum ; Dessler ; Lineberry and Trumble to suggest that an appropriate organisational culture has an essential role in gaining employee commitment, which in turn acts as a means to delivering superior customer satisfaction and ultimately customer loyalty.

gronroos 2000 relationship marketing orientation

The customer-centric concept suggested by Payne et al. Hartline and De Witt take this debate further, moving from the sometimes esoteric notion of organisational culture to consider the operational considerations of creating a customer centric service culture.

They proposed a number of key characteristics for the successful recruitment, selection and retention of effective service staff which could then lead on to creating an appropriate Relationship Marketing: The Need for Convergence 7 organisational culture.

Gronroos argues that relationship marketing has the ability to become relevant at a corporate level as long as companies focus on the customer and their requirements. Company-wide processes also need to be linked with customer needs in order to increase customer retention levels that are significantly higher than those of their competitors. Customer Management Focus This part of the conceptual framework draws upon the customer-supplier school of thought in so far as it concentrates on the dyadic nature of relational exchange between these partners.

The emphasis of this line of thinking has been concentrated on organisations ongoing relationship with their customers and their attempts to maximise profits. As mentioned earlier, the varied definitions of relationship marketing offer diverse perspectives of relational exchange, yet all have longevity of the buyer-seller relationship at their core.

For example, Ganesan and Evans and Laskin suggested that any relationship marketing strategy should focus on developing long-term relational exchange and repeat purchase. But how do you achieve this objective?

The answer to this question, again, raises a myriad of responses in literature, however, several strands of thinking can be considered. Morgan and Hunt ; Coulson and Lindgreen suggest that trust between exchange partners is fundamental to relationship longevity, whilst Moorman, Zaltman and Desphande ; Amine and Kolesar and Galbraith believe that a commitment between buyer and seller is the key to maintaining long-term relationships.

gronroos 2000 relationship marketing orientation

A more operational perspective is provided by a range of authors such as Christopher, Payne and Ballantyne ; Anderson and Sullivan ; Hallowell ; White and Schneider who propose that an organisation wanting to cultivate a relationship marketing orientation should aim to deliver consistent customer satisfaction. Bitner ; Bejou and Palmer and Edvardsson and Strandvick follow this theme by arguing that in a service context, the effective management of critical incidents is central to longevity in relational exchange.

There can be no doubt that these authors have made an invaluable contribution to a developing relationship marketing paradigm, particularly in underpinning the view that any relationship marketing strategy should seek longevity in the buyer-seller relationship in an attempt to maximise corporate profitability.

Yet the fundamental tenet of relational longevity 8 John Oliver was, in part, at odds with the work I did with the health and fitness company. The organisation had undertaken a strategic review of its corporate strategy eighteen months previous and had decided to move from being an elitist tennis club to a mid market health and fitness club that incorporated a tennis facility.

The results of this strategic market repositioning were deemed significant in terms of increasing the organisations membership numbers and market share but had lead to unforeseen consequences in terms of the members of the club who had been there for decades in some instances. These members complained bitterly about the influx of new members, limited access to tennis facilities and the direction the organisation was taking.

So much for buyer-seller longevity and profit maximisation! The problem with early relationship marketing literature is that it has promulgated the view that relational longevity is not only a fundamental principle of the paradigm, but an overriding one that should be sought at all costs.

The principle of Customer Management Focus is that organisations need to consider the buyer-seller relationship not only in terms of the tangible economic returns in the form of revenues and profits, but also, in intangible terms such as complaint activity.

Over the past few years the press have had a field day with British Telecom, Yorkshire Bank, Barclays Bank, Northern Rock and the Post Office for closing small provincial services because the costs outweigh the returns. If we look below these headlines we will see that an array of organisations proactively identify and terminate customer relationships that are, or will soon become, incrementally less attractive in financial terms.

The reality of relationship marketing, in this sense, differs from Relationship Marketing: The Need for Convergence 9 the academic discipline where the emphasis is on building and maintaining relationships compared to relationship termination. Whilst there is literature to support relationship termination there could usefully be more empirical research and debate about managing customers in a way that considers the circumstances when buyer-seller relationships should be developed or terminated by an organisation.

The central thrust of this part of the conceptual framework presented in this paper is that an organisation having a Customer Management Focus should aim to implement a relationship marketing strategy at an operational level, in order to build, maintain, and terminate when appropriate, customer relationships.

The implications for having a Customer Management Focus is that customers are not solely there to be marketed to, but, need to be managed in an effective and economic way. As Molm states, relational exchange partners enter a relationship to increase mutual gain, however, all relationships are subject to decreasing returns and will ultimately die. Customer Knowledge Focus There is a plethora of literature within the domains of relationship marketing, services marketing, interactive marketing and database marketing that promotes the use of customer data in marketing to and managing customers.

This body of literature concludes that buyer-seller relationships can be effectively managed and maintained using a range of customer relationship management technologies. However, the emphasis of this debate has mainly centred on technology and the cost efficiencies obtained by introducing such systems.

Binney and Vargo and Lusch made a good point when proposing that the differential use of information and subsequent management of customer knowledge will be a fundamental driver for success as organisations enter the era of the knowledge economy. Indeed, the move for many organisations during the late s was to introduce IT based CRM technologies as a means to effectively organise and integrate fragmented organisational systems and databases which is a reflection the need to know more about customers and how they contribute to organisational profitability.

However, many of these organisations collected large amounts of customer data in order to derive trends and patterns in behaviour without particular consideration of how this fits into the overall strategy of the organisation and how this data could help manage customers.

One of the areas that struck me most during the consultancy programme was the presumption by advocates of these technologies that organisations needed to have these often expensive and elaborate CRM systems, and they had the resources available to invest in them.

In reality this may not be the case. The number of small businesses surviving on limited investment and cash flow implies that expensive CRM technologies are out of reach for many of them. The importance of collecting and using contemporary CRM technology to collect customer data is not in dispute.

Relationships have strong historical antecedents from the pre-industrial era Sheth and Parvatiyar a.

Sellers knew each of their buyers individually and suggested appropriate, customized product offerings. This situation changed during the industrial era, in which marketers shifted their concerns towards sales and promotions of goods instead of relationship enhancement and when individualized practices were replaced by mass marketing.

Hanken Professor Christian Grönroos - Principles of Service Management 4 - Profitable long-term..

From the post-industrial era on, however, marketers started realizing the limitations of their transaction-oriented strategies under pressure of eroding repeat purchases and intensified competitive pressures in increasingly saturated markets Sheth and Parvatiyar a.

For instance, EganRao and Perry and Shrivastava and Kale note that a content analysis of different sources done by Harker produced as many as 26 substantial definitions of relationship marketing with seven conceptual categories, proving there is no consensus over it and reflecting the development and evolution of RM over the last three decades. Mainly because of the multidimensional character and the relative newness of relationship marketing, literature has not yet agreed upon a common definition, resulting in quite different conceptualizations of relationship marketing between various scholars.

In a conference paper on service marketing, Berry first introduced the term relationship marketing, and a few years after, Jackson used it in a business-to-business context. Berry defined relationship marketing as attracting, maintaining, and enhancing customer relationships.

Some narrow functional perspectives emphasize database marketing, interactive marketing, customer retention and one-to-one marketing Buttle Trying to shed some light on the nature of relationship marketing, Aijo questions if it is a fad, a new area of marketing, a new marketing strategy, a new marketing concept, a new emerging school of marketing, or a new marketing paradigm.

Surprisingly, relationship marketing was not waiting in the wings hoping to be discovered. The main idea was that the process of establishing business relationships could not be characterized as a process of actions and reactions, but interactions, which happened in multiple levels in the organization. This approach was not management or consumer-oriented, but interorganisationally-oriented and descriptive of marketing processes Moller and Halinenfocusing relationships how they are, and not how they should be Mattsson Instead of focusing solely in relationships between the marketer and the individual customer, assumed to exist in a large number and to be substitutable, this approach deals with exchanges between suppliers and buyers of various types, and even between several actors at a time, in a small number and difficult to switch.

gronroos 2000 relationship marketing orientation

Inspired in concepts from the social exchange theory, the IMP Group looks at inter-organizational relationships as strongly interdependent and reciprocal, based in cooperation, trust and commitment Axelsson and Eastonvariables that moderate the impact of potential struggles for power. The Interaction Approach takes the relationship as its unit of analysis rather than the individual transaction. Each episode is affected by and affects the overall relationship. The relationship between companies is the 3 receptacle for the combined experience of the participants.

Furthermore, relationships evolve over time and can be considered to traverse a series of stages, characterized by increasing mutual adaptation, reduced distance and increasing commitment Turnbull, Ford and Cunningham Industrial networks can be regarded as complex aggregations of relationships, hard to plan, predict or manage.

This process of aggregation is unlikely to be simple or additive. Business markets are seen as arenas within which buying and selling companies interact with each other, and where previous experiences in that relationship and in others are important influences on attitude and behavior.

This view contrasts with previous traditional studies which tended to see markets as atomistic and consisting of a large number of more or less anonymous customers with which marketers dealt at a distance Ford The Nordic School Approach to Services Relationships Based on entirely different empirical data, service research found the same phenomena — relationships, networks and interaction — to be in the core of both consumer and business services marketing Gummesson At the time, the majority of marketing definitions were associated with sales, promotions and mass consumer markets, related with the marketing-mix theory introduced by Borden The Nordic school was one of the first to purpose a paradigm shift in orientation from transaction to relationship, when it realized that the introduction of services marketing concepts and models in business relationships could become a major breakthrough.

By combining the traditional marketing management vision with the interaction and network approaches developed in the business-to-business context, the Nordic school researchers have broadened their range of vision to more general concepts of marketing-oriented management and to relationship marketing Gummesson Marketers now had both the willingness and ability to engage in relational marketing Sheth and Parvatiyar b.

However, this approach is perhaps best characterized as a practice, with limited conceptual efforts to tackle the dynamism of relationships.

Although relationship marketing RM possesses much intuitive appeal, the basic assumptions that underpin this domain extension have not yet been tested or challenged in any meaningful way.

Despite more than ten years of academic and practitioner interest in this area, knowledge has advanced little. Whereas some scholars are convinced of the existence of one overall relationship marketing theory, others argue that relationship marketing is context-specific.

As Palmer refers, much of the published work in the field of relationship marketing is normative and descriptive, and only a limited amount of empirical work has been conducted. A second feature of this divide appears to be between the non-American Nordic and Anglo-Australian approaches and American researchers, which appear to be leading the move to a narrower form more than their European and southern hemisphere colleagues, who defend a holistic, multi- relationship definition of RM Sheth and Parvatiyar Research Framework The main purpose of this study is to develop an interaction conceptual model for relationships in consumer market context in which the activities of both parties are taken into consideration.

SAGE Reference - Relationship Marketing: The Nordic School Perspective

RM is mainly concerned with the behavior of consumers or of firms, but not of both simultaneously. Several authors emphasize the importance of integrating both sides of the relationship.

According to Ganesanif the firm has a long-term orientation, it needs to actively plan relationship efforts. Relationship efforts can be classified into communication with customers, customization of products according to its characteristics, differentiation between customers, personalization degree and schemes of loyalty rewarding.

To develop this kind of strategy and to put 5 these efforts into practice, firms rely on both tangible and intangible resources like available technology, brand name, market knowledge and information, etc. The buyer is not necessarily a willing participant in relationship strategies set up by the seller Fournier, Dobscha and Mick and not all are equally receptive Bendapudi and Berry The product category and its nature is also important, since enhancing relationships is generally easier in high involvement contexts as opposed to low involvement ones.

Product nature is represented in this model as a contextual and instrumental factor that intermediates the buyer-seller relationship.

For instance, consumer products or services tend to involve low levels of purchase risk, technical complexity and service requirement. These differences may have consequences on the type of buyer-seller relationships that exist in these markets.

This is the research crucial aspect, e. Are they mere interactions? Can we find some patterns or a model to describe relationships in consumer markets?

gronroos 2000 relationship marketing orientation

And what factors are relevant to understand its nature? Research framework These four analytical constructs have been integrated in order to develop a research arena for relationship studies in consumer settings.

Relationship marketing practices are not considered to be effective in every situation or context. Not every exchange has the potential to grow into a relationship.