The history of relationship marketing

The history of relationship marketing

1

The Production Orientation Era: Enter the industrial age. Since goods were scarce, businesses focused mainly in manufacturing. As long as someone was producing, someone else would want to buy it. This orientation rose to popularity due to shortages in the market, hence creating the foundation of Jean-Baptiste Say’s famous remark: “Supply creates its own demand.” (http://morethanbranding.com/2012/04/30/the-evolution-of-marketing/)

The Sales Orientation Era: After the Industrial Revolution, competition grew and focus turned to selling. Communications, advertising and branding started to become more important as companies needed to sell the increasing outputs of production in an increasingly crowded market. Companies began to get more aggressive in their search for a competitive edge. Sales campaigns were devised to persuade customers or the advantages of the specific product over others. The customer’s wants and needs became important and distribution networks were developed.

The Marketing Orientation Era: From the second half of the 20th century onward, the saturation of markets (the size of the market remains the same) led companies to be stow upon marketers the opportunity to perform on a more strategic level. Marketers are involved at a strategic level within the organisation and therefore inform an organisation about what should be produced, where it should be sold, how much should be charged for it and how it should be communicated to consumers. Modern marketers research markets and consumers. They attempt to understand consumer needs (and potential needs) and allocate organisational resources appropriately to meet these needs. Modern marketers are particularly interested in brands. They are also increasingly interested in ensuring that employees understand marketing, i.e. that everyone within the organisation involves themselves with marketing activities. (Defining Marketing – Bournemouth university website)

The Relationship Marketing Era: The focus of companies shifts towards building customer loyalty  and developing relationships with clients. Authors such as Don Peppers, Martha Rogers and Philip Kotler were instigators of the importance of creating bonds, considering that “the cost of attracting a new customer is estimated to be five times the cost of keeping a current customer happy.” (Kotler, 1997). Starting in the 1990s, a new stage of marketing emerged called relationship marketing. The focus of relationship marketing is on a long-term relationship that benefits both the company and the customer.[13] The relationship is based on trust and commitment, and both companies tend to shift their operating activities to be able to work more efficiently together.[14] One of the most prominent reasons for relationship marketing comes from Kotler’s idea that it costs about five times more to obtain a new customer than to maintain the relationship with an existing customer.[15]

Sales in relationship marketing should encompass the following: open communication, employee empowerment, customers and the planning process, and teamwork.[14] First, communication is essential in figuring out what the customers need and determining how the firm can satisfy those needs. With open communication, both sides can express what they are trying to do and can work out a way to make it work together. Second, employee empowerment is important so that the employees are able to satisfy customer needs. Without empowerment, they may be limited in their solutions and cannot creatively satisfy needs. Third, customers must be involved in the planning process. Customer input is invaluable, as the customer is the one who will be using the product. If the customer is not satisfied from the beginning, there is no way to gain approval after the product is incorporated. Lastly, relationship marketing must emphasize teamwork. Several people who can help solve customer problems should work together and use their talents to best serve the customers.[14]

While relationship marketing is largely held as the most recent stage of marketing, there is speculation that we are now entering into a new era of marketing called the social/mobile marketing era where companies are connected to customers 24/7 (https://en.wikipedia.org/wiki/History_of_marketing)

Purpose and issue

This study aims to examine the role of Relationship Marketing for producers in the current market, and to discuss the implications of Relationship Marketing in regards to the producers remoteness to the end consumer in Vietnam, and by doing so develop the understanding of how producers can improve their relationships with the end consumer.

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