Contemporary issues in marketing Essay Example | Topics and Well Written Essays - 1250 words

Contemporary issues in marketing - Essay ExampleThe definition of RM as stated by Gronroos (1994, p.22) is Relationship Marketing is to establish, maintain, and leaven relationships with customers and other partners, at a profit, so that the objectives of the parties involved be met. This is achieved by a mutual turn and fulfilment of promises.Further more than Harker (1999) was able to use the results of his research to build a new definition of RM. accord to Harker (1999, p.16) RM is when an organisation is engaged in proactively creating, developing and maintaining committed, interactive and profitable exchanges with selected customers over quantify.Gronroos (1994) further added to the RM debate when he recognized that marketing mix management was beginning to lose its position as the dominant marketing paradigm. He noted that relationship building and management, or relationship marketing, was one leading new admittance to marketing which was becoming increasingly popular a mongst marketing literature (Gronroos, 1994). ... The Benefits of Relationship MarketingReichheld and Kenny (1991) conducted their research and looked at the benefits derived by firms from retaining long-term loyal customers. They noted that contemporary strategies for improving profitability involved cost lessening and price increases. They found these strategies, while successful in the short-term actually undermined long-term profits (Reichheld & Kenny 1991). By comparing the performance between banks participating in the study (Reichheld & Kenny 1990-1991) found that those who focused on retaining put forward customers outperformed their competitors. Reichheld and Kenny (1991) attributed the increase in growth to the shifting of competition from the open market where the banks had little control, to inside their branches, where they could exercise great control. Reichheld and Kenny (1991, p.20) identified five key areas that affected long-term performance and increased profit s. 1) Balances grow over time 2) The expense of acquiring new customers is incurred only in the first year, therefore the longer the relationship the dishonor the amortised cost 3) The cost of maintaining customers is somewhat fixed, therefore maintenance expenses decline as the relationship lengthens 4) Long-term customers are more likely to expand their relationship to other products or services and 5) Long-term customers are more likely to refer their friends and relatives to the bank. Reichheld and Kenny (1991) concluded by noting that the banks that successfully manage retention will establish themselves as growth and profit leaders within the retail banking industry.After recognising that RM literature focused predominantly on the benefits of customer loyalty from the perspective of the firm, Gwinner, Gremler, and Bitner (1998)