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Relationship Marketing

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Ol her marketing partners—in order to cam and retain (heir business^- Relationship marketing builds strong economic, technical, and social ties among the parties.

relationship marketing involves cultivating (he right kind of relationships with the right const iuient groups. Marketing must flot only do customer relationship manage ruent (CRM), but also partner relationship management (PRM) as well. I:uur key constituents tor marketing are customers, employees, marketing partners (channels, suppliers, distributors, dealers, agencies), and members oft lie financial community (share! Hilders, investors, analysis).

Tie ultimate outcome of relationship marketing is the building of a unique com party asset called a marketing network. A marketing network consists of the company and its supporting stakeholders (customers, enipluvees, Suppliers, distributors, retailers, ad agencies, university scientists, and others) with whom it has built Mutually profitable business relationships. Increasingly, competition is not between companies but between marketing networks, with the prize going to the company that has built the better network, the operating principle is simple: I lui 1(3 an effective network of relationships with key stakeholders, and profits will follow.^

The development of strong relationships lequiit-s ¡m iindcrManding ni ihr capabilities a od resources of di lièrent groups, as tvcll as their needs, goals, and desires. A growing ¡1 titulier of today's companies are now shaping separate olfers. services, and messages to individual customers. These eompanies collect information on each customer's past transactions. demographics, psych« ¡graphic*. and media anil distribution preferences. They hope to achieve profitable growth through capturing a larger share of each customer's expenditures by building high customer lovaltvaud focusing on customer lifetime value.

The ability Of a Company to deal 1 Villi customers one al a time lias become practical as a result of advances in factory customization, computers, the Internet, and database marketing software. BMW's technology now allows buyers jo design their own models from -î.'îD varia* lions, ,rj[)<} options, 90 exterior colors, and 170 trims. The company claims that 90 percent of the cars bought by Individuals in Europe and up to percent of those in the United States are built to older British supermarket giant Tesco is outpacing ii* rival skuiî, Sainsbury by using ils (ilubcard data to personal i/.e offers according to individual customer attributes.-1

Yet I lie practice of one-m-one marketing is nut for every company: The required investment in information collection, hardware, and software may exceed the payout, h works hirst for companies that normally collect a great deal of individual customer in formai ion, carry a lilt of products that can he cross-sold, carry products that need periodic replacement til' upgrading, and sell products of high vaIMellich, rrtultifaceted relationships With key constituents create llic foundation for a mutually beneficial arrangement for both parties- l or example, tired of having its big rigs return empty after making <1 delivery as often as 15 percent of the time. General Mills entered a program with t ort lames Eindadown other companies to combine one-way shipping routes into a cross-country loop via a tag-tcain of contracted trucks. As a result, General Mills reduced its empty truck time loupera-ut, saving? percent on shipping costs in the process.20

DEFINING MARKETING FOR 2hST CEMTURV CHAPTER 1 Hi

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