The concept of Relationship Marketing began to emerge in the literature in the mid 1980’s
(Rosenburg and Czepiel 1984), and over a relatively short period of time the application of
Relationship Marketing has been so rapid that a change in the orientation of marketing practice has been largely overlooked.
A number of authors (Cravens 1997; McCarthy and Perreault 1993) expose differing descriptions
(semantics) of the evolution of marketing over time, all of which fit into a time continuum spanning from the 1900s to the 1990s. Kotler (1988) conceptualised the changing orientation of marketing over time spanning from Product Orientation to Consumer Orientation. Gronroos (1989a) developed Kotler’s (1988) conceptualisation further by focusing the marketing effort on the relationship between the organisation and the customer, in what could be described as a Relationship Orientation
Figure 1: The Evolution towards a Relationship Orientation
Pre and early 1900 1960 1970 1980 1990 2000 and beyond
Kotler (1988)
ProductOrientation -----Kotler (1988) Consumer Orientation -----
Gronroos (1989) Relationship
Orientation
Previous discussions of marketing orientation (Cravens 1997; Gronroos 1989a; Kotler 1988;
McCarthy and Perreault 1993; Steinman and Deshpande 2000) have focused on the Industrial and Post-industrial eras. Sheth and Parvatiyar (1995) acknowledge the existence of a Relationship Orientation and have taken the concept further by demonstrating that the evolution towards relationships has actually been cyclical when we consider the activities of marketers in the Preindustrial era. Given Sheth and Parvatiyar’s discussion of Relationship Orientation, it would seem that empirical investigation is appropriate.
Defining relationship marketing
A review of current relationship marketing literature reveals a great many attempts by a pantheon of authors to define “relationship marketing” in terms of what they perceive as its key conceptualizations. Needless to say, different authors have differing opinions about what should and shouldn’t be at the core of what constitutes “relationship marketing” (Harker 1999).
Some of the definitions are given below:
Morgan and Hunt (1994) define that relationship marketing is establishing, developing andmaintaining successful relational exchanges. They emphasized that trust and commitment are two mediating variables to continue successful relations.
Bennet (1996) stated that relationship marketing include mutual benefit, lifetime commitment to the customer, the fulfillment of the promises, use of knowledge about customers to help them satisfy their needs, interaction and empathy with customers, and continue dialogs with them.
According to O’Malley et al. (1997), relationship marketing involves the identification,
specification, initiation, maintenance and (where appropriate) dissolution of long-term relationships with key customers and other parties, through mutual exchange, fulfillment of promises and adherence to relationship norms in order to satisfy the objectives and enhance the experience of the parties concerned.
3 Components of the relationship marketing orientation
Based on past related literature, Sin et al. (2002) hypothesized that relationship marketing is a multi-dimensional construct consisting of six components and these dimensions will be explained below:
• Trust
• Bonding
• Communication
• Shared Value
• Empathy
• Reciprocity
3.1 Trust
Trust is viewed as a key construct in relationship marketing studies. When examining the researches that emphasize the importance of trust, it has seen that trust has a lot of definitions.
According to Morgan andHunt (1994), trust is defined as a willingness to rely on an exchange partner in whom one has confidence. In this definition trust consists of beliefs about other party’s honesty and expertise. Callaghan et al. (1995) defined trust as the dimension of a business relationship that determines the level to which each party feels he/she can rely on the integrity of the promises offered by the other party.
Examination of the effects of the relationship marketing orientation on the company performance Anderson and Weitz (1989) also defined trust as one party’s belief that its needs will be fulfilled in the future by actions undertaken by the other party. Trust plays a critical role in the development of long-term relationships because short-term inequities are inevitable in any relationship. Through trust, parties in a relationship develop confidence that, over the
long-term, short-term inequities will be corrected to yield a long-term benefit (Dwyer et al.1986). In order to build trust based relationships between buyers and sellers, parties should have good communications and they should believe each other.
3.2 Bonding
Bonding is one of the basic concepts of relationship marketing and customer relations studies. Callaghan et al. (1995) defined bonding as the dimension of a business relationship that results in two parties (buyer–seller) acting in a unified manner toward a desired goal. Shani and Chalasani (1992) determine that to develop bonds between buyers and sellers, it needs relationship marketing. Bonding creates a sense of belonging to the relationship and indirectly, sense of belonging to the organization. And this enhances the customer loyalty. There are several types of bonds with regard to nature of interactions between groups or individuals. Differences in bonds may also partly be according to differences of shared values. Bonding based relationships, contributes long-term relationships and company performance.
3.3 Communication
There is a general agreement among the majority of marketing authors that communication is one of the basic concepts in relationship marketing.
Sin et al. (2002) defined communication as the formal as well as informal exchanging and sharing of meaningful and timely information between buyers and sellers. This definition has as its focus the efficacy of information exchange rather than the quantity or amount, and the construct inherently taps past communications. That is, an informant who is asked to characterize his or her firm’s communication with a partner firm reflects on recent past experience between the firms. In organizations, communication plays a critical role to improve coordination based attitudes (Hutt and Speh 1995). Communication helps buyers and sellers to understand other party’s intentions and abilities.
3.4 Shared value
Shared value is the extent, to which partners have beliefs in common about what behaviors, goals and policies are important or unimportant, appropriate or inappropriate, and right or wrong (Morgan and Hunt 1994).
Every company has their own values involves information transfer systems, reward and punishment methods, rules, goals, politics that constitute organizational culture.
Organization culture is a system of shared values (that define what is important) and norms that define appropriate attitudes and behaviors for organizational members (O’Reilly and Chatman 1996).
Parties require relationship marketing process to learn their rules, way of thinking, problems.Improving and protecting customer oriented organization culture, provide companies to constitute long-term relations with their customers (Payne and Frow 1999).
3.5 Empathy
Empathy is the dimension of a business relationship that enables the two parties to see the situation from the other person’s perspective. Sin et al. (2002) defined empathy as seeking to understand somebody else’s desires and goals. Ellis and Raymond (1993) emphasize that in order to improve communication and sales force quality, sales manager must empathize with the sales force and show understanding. Empathy involves putting the customer first and understanding his/her needs.
A quality sales force empathizes with the customer and tries to solve his/her problems rather than just takes orders and give a sales presentation. The sales force must listen and show interest in customers and prospects. Each customer must be treated as an individual and the sales force must stay close to the customer to satisfy his/her
needs and wants.
3.6 Reciprocity
Reciprocity is the dimension of a business relationship that causes either party to provide favors or make allowances for the other in return for similar favors or allowances to be received at a later date (Callaghan et al. 1995). Links of reciprocity to relationship marketing have been indicated by many authors. For example, Grönroos (1994) defined relationship marketing as to establish, maintain, and enhance relationships with customers and other partners, at a profit, so that the objectives of the parties involved are met.
This is achieved by a mutual exchange and fulfillment of promises. Shani and Chalasani (1992) defined relationship marketing as an integrated effort to identify, maintain, and built up a network with individual consumers and to continuously strengthen the network for the mutual benefit of both sides, through interactive, individualized and value added contacts over a long period of time. Ellis and Raymond (1993) explain that relationship marketing is characterized by interactions, reciprocities and long-term commitments.
