《BMA258 week 4 Relationship Marketing》.ppt

* Preparation for tutorial four Outline and discuss the different relationship marketing strategies that may be used by the firm. Discuss whether the organisation should attempt to build ongoing relationships with its entire customer base. What type of customer would be of the most value? Desperately Seeking Loyalty I start the lecture with the observation that both parties in the market exchange process - customers and the firm - value loyalty and want to build ongoing relationships. Wheel of Loyalty: Graphical representation of the links we have already discussed. * Desperately Seeking Loyalty. For firms, customer loyalty can have a big impact on profitability. Reducing customer churn by 5% can increase long term profitability by 25-85%. However, loyal customers are not always more profitable: Sometimes no/little upfront costs, but higher ongoing costs. Loyal customers may not spend more than individual transaction customers. Loyal customers may expect a price discount. * Loyalty for the Customer. Customers also seek to develop relationships with service organisations. The intangibility, heterogeneity, inseparability of service delivery, coupled with perceptions of risk means that customers seek relationships with service providers. Impacts of increased consumer scepticism on loyalty (GFC effects)? * Problem! Failure of the marketing approach to engender loyalty and to stimulate customer retention: Focuses on attracting new customers. Views customers as relatively undifferentiated (mass marketing). Focuses on discrete transactions. Transactional marketing - a transactional exchange involving a single, short exchange with a distinct beginning and ending. Instead, service firms need to adopt a new approach where customer retention is a key strategic goal. Solution – Relationship Marketing. * Relationship Marketing. Attributed to Berry (1983) and now widely adopted by producers of goods and services. Focuses on life-time value of the customer and developing a last