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11.3

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11.3

TABLE 1 COMPARISON OF TRANRACTIONAL, RELATIONSHIP AND NETWORK MARKETING

TRANSACTIONS MARKETING RELATIONSHIP MARKETING

NETWORK MARKETING

Focus Players

Communications pattern

Communications style Duration

Formality Power

Profitable transactions

Buyers and sellers in an open market

Firm to market

Arm's length Discrete

Formal Active seller

Profitable relationships Buyers and sellers in a relationship

Individual to individual

Interpersonal Lifecycle

Managed Seller manages

Links between organizations Seller, buyer and other organizations

Organization with organization at many levels Multipersonal Continuous but of varying intensity

Interactive Reciprocal relationships compete with Boeing's 777 and smaller 747 with its Airbus A340-600, but for it to do so die owners of Airbus have to agree. That means obtaining the agreement of Britain's BAe, Franee's Aerospatiale, Germany's Daimler-Benz and Spain's Casa, as well as the governments that will have to pay one-third of the development costs. Because ot' the L'K government's reluctance to provide $120 million, BAe is talking to manufacturers in Italy, China, Taiwan, Malaysia and North America, in the hope that their governments will be more generous. As a result of this confusion, European politicians have called for a swift restructuring of Airbus, Some network! No wonder the Eurofighter is struggling to stay in the air!

Sources: Andrew Edgecliff®ohnson, 'TI and French Aerospace link up'. Financial Timen (11 December 1996), jr. 23-, Roderick J BriiiM Miedle E. Govídlo, Richard W. Brohner and Victoria Little, 'Towards a paradigm shiit in marketing? An examination oi current marketing practices'. Journal of Marketing Management, 13, 5 (1997), pp. 383406; Lars-Gunnar Mattson, 'Relationship marketing' and 'The markets-as-networks approach - a comparative analysis oí two evolving streams of research', Journal of Marketing Management, 13, 5 (1997), pp. 447-61; Michael Shspirho, 'Go-ahead expected with new airbus'. Financial Timen (6-7 December 1997), p. 2; 'Farewell to arms', The Economist (22 "November 1997), Wefc pages; Adam Jones, 'i\erospiice industry consolidation cleared for rake-off in Europe'. The Times (10 December 1997), p. 29.

Customers may be nameless to the institution; clients cannot be nameless. Customers are served as part of the mass or as part of larger segments; clients are served on an individual basis. ... Customers are served by anyone who happens to be available; clients are served ... by the professional ,.. assigned to them.L6

The third approach to building strong customer relationships is to add structural ties as well as financial and social benefits. For example, a business marketer might supply customers with special equipment or computer linkages that help them manage their orders, payroll or inventory. Investment bankers J.P. Morgan provides its RiskMctrics financial risk measurement system free of charge to its customers. It has two reasons for doing so. First, says the company, it will promote greater transparency to risk and so help identify problems. Second, J.P. Morgan must also be hoping that the association of its name with a widely accepted benchmarking system will yield long-term commercial advantages, partly through strengthening ties with existing customers. There arc clear customer needs here. In the twelve months prior to RiskMetries' release, estimated derivatives losses, by firms ineludJng Metallgcsellsehaft and Kashima Oil, approached DM10 billion.17

The main steps in establishing a relationship-marketing programme in a mmpany are:

• Identify the key customers meriting relationship management. Choose the largest or best customers and designate them for relationship management. Other customers can be added that show exceptional growth or pioneer new industry developments.

• Assign a skilled relationship manager to each key customer. The salesperson currently servicing the customer should receive training in relationship management or be replaced by someone more skilled in relationship management. The relationship manager should have characteristics that match or appeal to the customer.

• Develop a clear job descriptionfor relationship managers. Describe their reporting relationships, objectives, responsibilities and evaluation criteria.

Make the relationship manager the focal point for all dealings with and about the client. Give each relationship manager only one or a few relationships to manage.

• Have each relationship manager develop annual and long-range eustotnM relationship plans. These plans should state objectives, strategies, specific actions and required resources.

• Appoint an overall manager to supervise the relationship managers. Th« person will develop job descriptions, evaluation criteria and resource support to increase relationship manager effectiveness.

When it has properly implemented relationship management, the organic atiori begins to focus on managing its customers as well as its products. At r,.. same time, although many companies are moving strongly towards relationship marketing, it is not effective in all situations:

When it comes to relationship marketing ... you don't want a relationship with every customer. ... In fact, there are some bad customers. [The objective is to] figure out which customers are worth cultivating becausel you can meet their needs more effectively than anyone else.1"

In the end, companies must judge which segments and which specific customers will be profitable.

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