P1, Describe the reasons for the development of Relationship Marketing (why it is valuable), giving

Re: Relationship Marketing P1

Introduction to Relationship Marketing

RM is the actual relationship between the company & customers. The marketing approach towards customers has been developed a lot in the past 20/30 years. Today could be seen many marketing techniques aiming to maintain profit and create long term loyal relationship, which leads to keep up secure profit but also aiming to grow.

The concept of the marketing is to study customer’s behaviour and needs in order to adapt their products/services to that they want. Including what customers buy, why they buy it, when they buy it, where they buy it, how often they buy it, how often they use it, how they evaluate it after the purchase, the impact of such evaluations on future purchases and how they dispose of it. (Chapter One, Customer Behaviour) Relationship Marketing is growing but it is quite new area within the marketing world and today is most popular in retail, online sales and some other service oriented companies such as web design businesses. The whole concept of the RM is to create field for membership, which will be offered to people who are willing to use the product/ services of the business in return they will receive benefits that other business might not offer.

Relationship marketing can be seen everywhere today and in order to give examples of how does it work I will be stating relevant examples related to real business and they are RM activities. We are all coffee and tea lovers, but we have so many choices that are offering great quality and taste of coffee. Now the competition match is almost reaching its limits, there is nothing to compete but some extra care to the customer. Muffin Break is business that operates in different parts of the UK including several areas around London. However the business cannot be found as often as Costa or Nero. Muffin Break is offering cards which can collect points on every purchase of coffee by giving every fifth coffee for FREE. On the top of it the card will be personalised which means it will know your name and DOB, which will give them the ability when scanning the card to find out the clients month of birth. This is when they will offer one coffee for free and also free muffin coming to it. This is encouraging the client to use the card and goes there regurly. Now I will talk about a few points starting with the technique which is aiming to give the customers feeling of being treated specially also enjoying free products from their favourite. Secondly the whole idea with DOB treat is outlining the above by making the bond even stronger and make customers feel even better. When customer is feeling good they are more likely to recommend the business and buy even more. Third fact is the card itself is not made of paper but of plastic quality material, which can lost for longer and will be encourage customers to keep it in their wallet, next to their important cards such as ID & bank cards. Always, when they open their wallet they will be remained of Muffin Break which is another PLUS in a way. The great benefit for each business it will be to keep regular customers spending more until they get something FREE or on half price, giving the business the ability to keep regular profit.

Sainsbury’s and EBay are using similar concept by offering Nectar cards which will give the customers’ ability again to collect points but this time they will use the points to get discount on their next shopping. This concept is aiming increase sales by encouraging customers to buy in order to save. Saving is not really big as it seems to be, but if customers buy from one place and use discounts they definitely will enjoy the whole experience of it. There are businesses such as McDonalds and Boots in where they use similar technique but with different approach. After every purchase does not matter if the customer has Booths membership or not, all customers still receive a leaflet giving them certain percentage of discount to their next product. This is aiming to encourage further sales but the whole theory of it is that customer will say ‘’I have these so better to used them and get something for less rather than going elsewhere and spend even more’’. This will make the customer thing of saving and when it comes to food or cosmetics, especially quality cosmetic is quite expensive and an average woman wouldn’t go with one lipstick and foundation, which means they will spend a fortune in order to keep up their ‘’makeup wardrobe’’ full. Relaying on the above facts, can logically answer why boots would offer such way of Relationship Marketing. Online business is something that slowly kills every business by providing everything someone can think of. Amazon, the web platform that use warehouses and sale their products online but online purchase comes with delivery fees, which are usually free for the customer but that works only for certain products. Most of the products comes with shipping fees which increase the final price of the product we have researched and thought that we found the best price. Well, we all do not like when such thing happen, it will be better is the price of the product still the same and we can enjoy free delivery. Amazon offers PAID membership that gives several benefits and one of which is FREE delivery. There are few options including Student Premium which is on low cost membership fee. The idea here is those customers who prefer Amazon will prefer to stay with them and why not go for that monthly membership which can allow customers buy as many products as they like and use free shipping also 24 hours delivery. To give you better understanding why is that I will link my personal experience as customer. Online shopping is quite risky because the human senses can’t work and all we can do is look at the product picture and read the product description. But sometimes the picture cannot give you the quality of the e.g. plastic or metal or lather as touch sense can do!!! In case of dislike the product or not expect the criteria organisations are obligated by law to refund or renew or return. However customers have the need to trust the company, for example I prefer eBay as I had mine bad experience which were always overcome leaving me with satisfaction. I believe there are customers that have trust in Amazon and have the preference to stay with them, the premium memberships offered can only create better experience for the customers of Amazon and leave them with level of satisfaction expected. Internet enables all business including Amazon and eBay to track what potential customers have been looking at/researching and after a day or two the business start sending emails suggesting same products or reminding of this products to those customers. This is actual encouragement to buy what they were looking for previously. The automatic emails can offer different prices which can again encourage sales.

British Airways, and their memberships allowing their customers to join benefits on high class of standard. Their relationship marketing with customers is starting with digital membership account from where every purchase of flight will regard points and as the points from the membership will be growing to the Gold, Platinum cards which will be now send in quality plastic to their loyal customers. All the benefits will be growing as the points and membership grow. This will encourage customers to use their services, those customers will be professionals or travel lovers. Now looking to low quality company as Wizzair will be also providing different technique which is working in similar way. This technique or offer is called Discount Club, offering the customers to use discount on every purchase for them and their partner plus discounts on check in baggage plus products on board. Both ways for both companies are offering to their loyal customers to use benefits but the aim is to keep the customers feel obligated to use their business in order to get more and more points. This will be secure profit and both companies can know the number of their loyal customers, allowing them to keep track of their business growth and help them smartly predict future business plans for growth/expanding. All the above examples are long term as they aim to provide points in a way and give special benefits and promotions to their customers. The only exception is Boots and McDonald’s which are offering tickets offering discounts to their next purchase in the shop. This is called short term as the discount/promotion can be used only once. Businesses are willing to invest in winning loyal customers because it is less expensive, they will receive secure profit which can go up and down but it will save its average amount. This will enable the business to create better understanding of what customers like to receive as reward and how they can offer it in order to win more customers and increase their satisfaction. Note: Investigation shows that acquiring new customers will cost 14 times more to the business rather than holding on to the customers who are loyal and happy with the business. This is adopting from many countries these days and more and more organisations are looking after their customer service, policies in terms of return and refunds. Companies are also adopting new techniques of Relationship Marketing in order to welcome and keep up to the new customers. It is very important point to state that the average loyalty/relationship between business and customer is 25/30 years. (Pari Joban, 02/02/2017) The old believe of that statistic were 5/10 years but it is really depending on the efforts of the business to satisfy its customers’ needs and requirements. Every year businesses are innovating something within their business including promotions that are part of the marketing. This is aiming to create demand, demand could be raised naturally from customer needs or synthetically by making something popular and giving the chance to customers to have it. Personalisation is another technique that today boost up a lot of businesses, out there are options to personalise cups, t-shirts, chocolate products or even food ware. Walking into NIKE shop, they have software that offers to all customers to choose model but use chosen by them colours to create unique product that will be answering their needs, their expectation, their emotions. Talking about colours, it is well known that colours can raise different feeling within the human being. This is why business like this are using to commercialise the use of it. It looks like by this activity Nike builds up their company around the customer’s needs, the literally centric the business activities by involving the customers to be actively working in production of the products.

Investigation by Pari Joban says that 90% vs 99% effort from the company to work with their customers can give big difference in 20 years time. A business that puts 90% effort in RM will come up with 12% out of 100% in twenty years but a business putting effort 99% in the same thing will come up with 82% out of 100$ in twenty years time. Every business must consider their future success and think about ion now! Thinking it now will ensure secure success that will be factor for expansion plans and setting up targets and goals.

Over the years, the concept of marketing have developed new points of evolution, which are targeting long term of development. Before 20 years ago, marketing people were saying ‘’Make only what you can sell instead of trying to sell what you make.’’ (The Chapter-Consumer Behaviour, 10 PART 1 INTRODUCTION). Today the use of technology enables customers to customize what business make, which enables company to promote and create demand for their products. Before companies were trying to understand the purchase behaviour process and the influences on consumer behaviour but today different businesses are aiming to understand consumer behaviour towards their own product. This is changing the whole concept, which means brand development and preferences. ‘’Research consumer needs and characteristics.’’ Which is enabling companies to track the demand for certain products and sale but today companies prefer to plan their sales and profile in advance. ‘’ Research the levels of profit associated with various consumer needs and characteristics.’’ This is referring to need, product and price. Considering these three points, a company can increase their profit and set up targets. ‘’ Encourage customers to stay with the company and buy more.’’ Or ‘’Make it unattractive to stay with competitors.’’ Same concept looked from different side. However this is important as new customer will cost 14 times more than keeping existing customers. Once the business settled a certain number of existing customers, it comes the time to create customer centric organisation. Considering customers’ needs and keeping up effective communication with them, it will help the organisation satisfy their needs and go beyond that by keeping them for longer. Shopping online is easier but it could be even easier if customers do not need to enter their details all the time when ordering. Platforms like Amazon have innovated a ‘’one click’’ method, allowing customers to buy products by only one click. This might be a reason for becoming an Amazon customer as time today is luxury for all of us.

eBay and Amazon as working in different way but their marketing strategies are almost the same. When customers are researching for different products or listing them in collections, both companies will send emails with suggestions. Personalisation! – eBay is offering suggestions based on previous product reviews by placing them on the front page of the website into the multimedia section. It is such a smart move to be remain customers every time they get into their profile. Both businesses are great in offering online suggestions that can encourage customers to buy. Retention is fluent technique, used by Amazon & eBay as they both are offering ‘’relationship sales’’ by offering additional products that can go together and most of the time are essential. For example shopping a camera could be supported with suggestions of lenses, bags, memory cards, different filters, stabilizers, tripods and so on…. When it comes to expensive equipment as mentioned above, the customer will need to trust the organisation. Outcome- Independent sellers on eBay are sticking up with Sales laws and eBay policies, however if something goes wrong eBay will handle it and will ensure the 100% satisfaction for its customers. Customers will come back for many reasons but trust is huge percentage that will play a part of customer’s decision. As mentioned above customer service is something very important for both eBay and Amazon because they are distance selling platforms and it is very important to keep better communication with their customers. When it comes to different issues created by seller’s mistake the businesses will communicate with its customers until they clear up the problem and create infinite satisfaction. Amazon is offering an option in where customers can write their phone number and will be shortly contacted by representative who will be more than happy to help. Outcome- free phone call is additional care from business to customer. It is one proof that relationship marketing developed over the years. Ultra-convenience is the actual reason, customers of eBay and Amazon will chose them. Comparing to other shops on the high street, online platforms offer one click search, which will give customers what they need or at least closer alternative to what they need. From the other side, that will allow the business to track the searches from customers and lead their own demand research.-(The clue)

The standard marketing procedure is trying to sale, repeat sale and make customers stay with them. However this is not enough for the new generation of marketing experts and this is why they are targeting even higher. As we all know business have survival strategies for the future and one of this strategies is marketing, which is playing part within the long term strategies. Today companies are aiming to create their own advocates* which can increase the customers by recommending trusted brands. When customers are purchasing expensive products, usually they are researching the product that will be most suitable for them. When it comes to personal advice and other customers are recommending certain brand that will increase demand for product of this brand. Therefore the business will grow new customers over the years and in 20 years of time, the customers of e.g. 100 will become 333 million. (of course this is not exact figure but just a prediction aiming to give a clear picture of the Advocates Effect)

Advocates*are previous customers that are willing to recommend the brand to other people, who will try the brand.

Once customer made the first step (buying from business) then it is up to the business to create further sales with the customer. B2C relationship is using the new technologies and developing new techniques and strategies that will create further benefits.

The whole concept of modern RM is not only to create long rem relations with customers but to create new customers without spending a fortune on advertising. It is proven fact that advocates* are recruiting more customers willing to stay for long term, than advertising. Building trust will repeat sales, which will lead to repeating sales and creating advocates which will bring new customers and the cycle will begin again.

Bibliography --------------------------------------------------------------------------------------------------------------------------------- CHAPTER 1 AN INTRODUCTION TO THE STUDY OF CONSUMER BEHAVIOUR Pages 8-10 http://catalogue.pearsoned.co.uk/educator/product/Consumer-Behaviour-A-European-Outlook/9780273736950.pagen Adapted from Joseph Wisenblit, ‘Beyond the Marketing Concept: From “Make Only What You Can Sell” to “Let Customers Customize What You Make”’, The Stillman School of Business, Seton Hall University, South Orange, NJ