Relationship Marketing: Easy to Understand, Hard to Do

Intense competition in today’s fast-paced global markets has prompted many successful U.S. firms to focus on “customer value.” Gaining loyal customers by providing unique value is the essence of successful marketing. What is new is a more careful attempt at understanding how a firm’s customers perceive value and then actually creating and delivering that value to them.20  Customer value  is the unique combination of benefits received by targeted buyers that includes quality, convenience, on-time delivery, and both before-sale and after-sale service at a specific price. Firms now actually try to place a dollar value on the purchases of loyal, satisfied customers during their lifetimes. For example, loyal Kleenex customers average 6.7 boxes a year, about $994 over 60 years in today’s dollars (see question 2, Figure 1–1).21

Target, Starbucks, and U.S. Bank provide customer value using three very different approaches. For their strategies, see the text.

Page 12

Research suggests that firms cannot succeed by being all things to all people. Instead, firms seek to build long-term relationships with customers by providing unique value to them. Many successful firms deliver outstanding customer value with one of three value strategies: best price, best product, or best service.22

With the intense competition among U.S. businesses, being seen as “best” is admittedly difficult. Still, the three firms shown in the ads on the previous page have achieved great success as reflected in the mission, vision, and values statements they stress and live by:23

•Best price: Target. It uses the Target brand promise of “Expect More, Pay Less®” to “make Target the preferred shopping destination for our guests by delivering outstanding value.”

•Best product: Starbucks. Starbucks seeks “to inspire and nurture the human spirit—one person, one cup and one neighborhood at a time,” stressing quality coffee and ethics in the process.

•Best service: U.S. Bank. The brand-line in the U.S. Bank ad—“All of US serving you®”—reinforces its commitment to best-in-class customer service, while providing a complete array of financial products and services.

Remaining among the “best” is a continuing challenge for today’s businesses.

A firm achieves meaningful customer relationships by creating connections with its customers through careful coordination of the product, its price, the way it’s promoted, and how it’s placed.

The hallmark of developing and maintaining effective customer relationships is today called  relationship marketing , which links the organization to its individual customers, employees, suppliers, and other partners for their mutual long-term benefit. Relationship marketing involves a personal, ongoing relationship between the organization and its individual customers that begins before and continues after the sale.24

Apple uses relationship marketing concepts with its iMac—tailoring the product to the taste of an individual customer and delivering it quickly.

Huge manufacturers find this rigorous standard of relationship marketing difficult to achieve. Today’s information technology, along with cutting-edge manufacturing and marketing processes, has led to tailoring products or services to the tastes of individual customers in high volumes at a relatively low cost. So you can place an Internet order for an Apple iMac and have it delivered in four or five days—in a configuration tailored to your unique wants. But with today’s Internet purchases, you will probably have difficulty achieving the same personal, tender-loving-care connection that you once had with your neighborhood computer store, bookstore, or other local retailer.25

The Marketing Program and Market Segments

Effective relationship marketing strategies help marketing managers discover what prospective customers need and convert these ideas into marketable products (see Figure 1–3). These concepts must then be converted into a tangible  marketing program —a plan that integrates the marketing mix to provide a good, service, or idea to prospective buyers. Ideally, they can be formed into  market segments , which are relatively homogeneous groups of prospective buyers that (1) have common needs and (2) will respond similarly to a marketing action. This action might be a product feature, a promotion, or a price. As shown in Figure 1–3, in an effective organization this process is continuous: Consumer needs trigger product concepts that are translated into actual products that stimulate further discovery of consumer needs.