Tracing the 'Sui-Generis' (origin) of Relationship Marketing
“Every living practitioner is a prisoner of the ideas of a dead theorist”. This saying is proved by the fact that marketing management has remained unchanged since it was introduced in the 1960s. Things are changing now, thanks to increasing globalisation and importance of ‘customer retention’ and ‘market economics’. Relationship marketing is one such approach that has been established in most developed countries where a paradigm shift in marketing fundamentals has taken place.
Relationship Marketing: The Definition
It is a process of establishing, maintaining and enhancing long-term, trusting, win–win relationships with customers, distributors, dealers and suppliers at a profit, so that objectives of all parties involved are met.
The Birth of Relationship Marketing
Many years ago in China, Ming Hua, a young rice merchant sat long hours waiting for customers who never came. When he finally got around to wondering why he was so unsuccessful, he decided to maintain a record of his potential customers’ eating habits. He collected the following information:
· The members in a family.
· The amount of rice consumed per day.
Then he offered every customer the following:
· To replenish the rice jar of a household at regular intervals
· Free home delivery.
For example, in a household of four persons, on an average, a person would consume two bowls of rice per day and therefore, the household would need eight bowls of rice. He observed that the rice jar of that particular household would last for 15 days. Consequently, he offered to deliver a bag of rice every 15 days to that household. By establishing these records and developing new services, Ming Hua managed to create deeper relationships with his old customers, and then with potential customers through the old ones.
Ming Hua unknowingly discovered a concept, which we now call relationship marketing. He changed his role from being just a transaction-oriented businessman to a value-enhancing relationship manager.
His strategy included three typical elements of a relationship marketing:
· Seeking direct contacts with customers and other stakeholders.
· Building a database covering necessary information about customers and others.
· Developing a customer-oriented service system.
Today, Customer Relationship Management has become the key to long-term growth and success. Relationship marketing is the biggest change marketing theory and practice has witnessed during the last fifty years, all thanks to Ming Hua and the rice bowls!
Further Reading:
1. Relationship Marketing - A Theory and Practice Christian R. Gronroos European Journal of Marketing.
2. Marketing Channels Lou Pelton, James Lumpkin
