Akash C.Mathapati

Relationship Marketing in Services

Akash C.Mathapati

Akash C.Mathapati

Relationship marketing terminology in the services literature 1983

Recognition of the need to market formally to existing customers appeared earlier

Prof.Levitt emphasized the need for firms to

engage in constant reselling efforts

Akash C.Mathapati

Relationship Marketing in Services What accounts for the accelerated interest in

relationship marketing in services ? Four convergent influences have propelled the

current focus on relationship marketing a. Maturing of services marketing b. increased recognition of potential benefits for

the firm and customers c. technological advances

Akash C.Mathapati

Implication of marketing a performance rather than an object are well understood today

Reality of many services being rendered on an ongoing or periodic basis coupled with the reality of customers forming relationship with people rather than goods paves the way for relationship marketing

Repeated contact between customers and service providers

Services often requires reselling efforts

Akash C.Mathapati

Benefits to the firm Service industries competition has been fierce

since 1990’s Banks, Airlines Marketing to protect customer base has become

imperative Reduce customer defection, duration of the

relationship doubles

Akash C.Mathapati

Benefits to the customers High involvement services also hold

relationship appeal for customers Services illustrate some or all of the

significant characters – importance, complexity, involvement etc

Causes many customer to desire continuity with same service providers

Risk reduction benefit of having a relationship with a supplier, customer can reap social benefits

Akash C.Mathapati

Technological Advances Marketers are likely interested in relationship

marketing if its affordable and practical United services automobile asso (USAA)

1994 2.6 million members & associate member Walgreen fills more than 7% of all

prescriptions in USA Intercom satellite based computer system

Akash C.Mathapati

Targeting Profitable Customers Some customers are loyalty prone and some are

deal – prone Identify customer who are most likely to be loyal Targeting profitable customers for relationship

marketing involves study and analysis of loyalty and defection

Which types of customer defectors they are not relationship customers – dual strategies

Akash C.Mathapati

Multiple Levels of Relationship Marketing Level – 1

Relationship marketing relies primarily on pricing incentives to secure customer loyalty

Level – 2 Relationship marketing relies on social bonds, RM

attempts to capitalize on the reality that many service encounters are also social encounter

Personal bonding involves personalization and customization of the relationship

Akash C.Mathapati

Level – 3 Relationship marketing relies on structured

solutions to customer problems Solutions to customer problems is designed into

the service delivery system rather than being dependent upon the relationship building skills of individual service providers

E.G., FedEx Powership Program

Akash C.Mathapati

Trust as a marketing tool Black Box

Opening lines of communication Guaranteeing the service A higher standard of conduct