VISTO Y CONSIDERANDO:

Chapter overview

This chapter concludes Part B by introducing and examining relatively recent ideas associated with marketing management. The relationship marketing approach is offered as a counter to the prevailing wisdom of the 4Ps approach to marketing before issues concerning relationships with a wider array of stakeholders, especially others upstream in the supply chain, are introduced.

The deliberate development of collaborative and mutually rewarding relationships between suppliers and customers is considered to be fundamentally more appealing and an intuitively correct interpretation of business-to-business marketing. This view also sees the development of partnerships and alliances with other organisations as more appropriate than former adver-sarial ideas based on competition and where the sole focus is on customers.

Organisations are shown to have a portfolio of relationships with a range of stakeholders, most notably suppliers, employees, customers and shareholders. Primarily, this chapter considers the nature, development and characteristics of interorganisational relationships and, in addi-tion, examines the potential of information systems for enhancing relationships with those customers and suppliers who choose to reciprocate and develop trust and commitment.

Chapter aims

The aims of this chapter are to consider the scope and nature of interorganisational relationships and to explore how this impacts on the contemporary view of business-to-business marketing.

Objectives

The objectives of this chapter are to:

1 Explore the development and evolution of relationship marketing.

2 Examine the conceptual underpinning associated with relationship marketing practices.

3 Introduce ideas concerning customer relationship life cycle.

4 Examine the nature and characteristics of partnerships and alliances with suppliers and other stakeholders.

5 Consider trust and commitment as key elements of business relationships.

6 Understand ways in which IST can influence interorganisational relationships.

7 Consider the nature of CRM and associated systems issues.

Introduction

In the mid-1990s, relationship marketing was proclaimed as a new marketing paradigm (Gronroos, 1994). A decade later, it is still regarded as somewhat novel, cer-tainly different, and persistently challenges past interpretations of interorganisational marketing activity. While these may be sound observations and comments, relation-ship marketing does represent a totally new perspective. Marketing is, and always has been, about customers. The principles of looking after customers have not changed, although they might have been overlooked at times in the past. There has always been a relationship between buyers and sellers, even if the depth of understanding about the significance and character of different types is emergent. Ideas concerning the development of relationship marketing have evolved from extensive research based initially on exchange transactions and, in particular, buyer–seller interaction.

One of the broad characteristics of consumer marketing is that interaction and exchanges generally take place between anonymous individuals. By contrast, accord-ing to Easton and Araujo (1993), exchanges in interorganisational marketaccord-ing contexts occur between individuals who are, in general, known to each other. The more fre-quent and intense these exchanges become, so the strength of the relationships between buyers and sellers improves. It is this that provided the infrastructure for a new perspective of marketing, one based on relationships between organisations (Spekman, 1988; Rowe and Barnes, 1998), rather than the objects of a transaction, namely products and services. It should be noted that the development of electronic trading formats may reduce the level and frequency of interpersonal contact for some types of transaction.

At the end of Chapter 1, following an introduction to value chain principles, refer-ence was made to a range of different types of exchanges in which organisations engage. The continuum of value-orientated exchanges (Figure 1.4) expressed visually the diversity of exchanges with which organisations are involved; from one-off, short-term exchanges to those that are based upon collaboration and partnership.

Founding ideas about industrial marketing were based on market exchanges between organisations, where there was no prior history of exchange and no future exchanges expected. These paired organisations were considered to enter into transac-tions where products were the main focus and price was the key mechanism to exchange completion. Organisations were perceived to be adversarial and competi-tion was paramount. These undertakings are referred to as market (or discrete) exchanges and often termed transactional marketing.

In contrast, relationship marketing is based on the principles that there is a history of exchanges and an expectation that there will be exchanges in the future.

Furthermore, the perspective is on the long term, envisioning a form of loyalty or continued attachment by the buyer to the seller. Price as the key controlling mecha-nism is replaced by customer service and quality of interaction between the two organisations. The exchange is termed relational because the focus is on both organi-sations seeking to achieve their goals in a mutually rewarding way and not at the expense of one another (see Table 6.1 for a more comprehensive list of fundamental differences between transactional and relational exchange-based marketing).

Interorganisational relationships 143

DISCRETE VERSUS RELATIONAL EXCHANGES

Car manufacturers do not normally sell cars direct to individual consumers. This is because consumers are relatively infrequent buyers of new cars and when they do buy from a dealer, it is normally a one-off or discrete exchange.

Car manufacturers normally develop relational exchanges with their fleet customers.

These organisations tend to buy large quantities of cars on a regular basis.

Communications and interaction between the parties tends to be continuous and designed to support the relationship over the longer term.

Car manufacturers sell batches of cars to their appointed dealers at pre-agreed dates.

These exchanges cannot always be regarded as relational, as the goal of the manufacturer is stock turnover and their decisions are not always based on the financial or marketing situation facing each dealer. The element of collaboration and mutual self-help charac-teristic of relational exchanges is often missing within these relationships.

S N A P S H O T 6 . 1

Table 6.1 Characteristics of market and relational exchanges

Attribute Discrete exchange Relational exchange

Chronological aspects ⁿ Defined beginning ⁿ Beginning can be traced back to

of exchange earlier agreements

n Short term ⁿ Long term

n Sudden end ⁿ Reflects a continuous process Expectations of the ⁿ Conflicts of interest/goals ⁿ Conflicts of interest expected

relationship are expected

n Immediate settlement ⁿ Future problems are overcome (‘cash payment’) by trust and joint commitment n No problems expected

in future

Communication ⁿ Minimal personal relations ⁿ Both formal and informal n Ritual-like communication communication used

predominates

Transferability ⁿ Totally transferable ⁿ Limited transferability

n It makes no difference who ⁿ Exchanges are highly dependent performs contractual on the identity of the parties obligations

Cooperation ⁿ No joint efforts ⁿ Joint efforts at both planning and implementation stages

n Modifications endemic over time Division of burden ⁿ Sharp distinction between ⁿ Burden and benefits likely to be

and benefit parties shared

n Each party has its own, ⁿ Division of benefits and burdens strictly defined obligations likely to vary over time

Source: Wagner and Boutellier (2002). Reprinted with permission from Business Horizons, 45, 6 (November–December 2002). Copyright © (2002) by The Trustees at Indiana University, Kelley School of Business.

The suggestion, implied in the terms discrete and relational exchanges, is that the former is devoid of a relationship component. However, although discrete, or market, exchanges focus on products and prices, there is not necessarily a complete absence of a relationship. Indeed, Cousins (2002) refers to the relationship marketing literature in terms of two broad perspectives. One of these is based on a behavioural dimension and the other is based on economic power. The former considers relation-ships as the prime determinant of interorganisational relations, while the latter considers market exchanges based on power and competition as the prevalent mecha-nism. Payne (2000) and Bruhn (2003) make the point that relationship marketing is not a new marketing paradigm, merely an extension of the marketing concept. The approach adopted in this book recognises the importance of both economic and behavioural dimensions and accepts that there is a relational dimension in all exchange activity. Rather, it is the case that the strength of focus varies between the two dimensions according to the contextual conditions facing organisations.

Relationship marketing is therefore not necessarily a new marketing paradigm, but a fresh approach to marketing, one which puts relationships, not products, at the centre of marketing activities.

With this in mind Dwyer et al. (1987) refer to B2B relationship marketing as an approach which encompasses a wide range of relationships, not just with customers, but also those that organisations develop with suppliers, regulators, government, competi-tors, employees and others. From this, relationship marketing might be regarded as all marketing activities associated with the management of successful relational exchanges.

Christopher et al. (2002) refer to a six markets model of relationship marketing, where, in addition to customer markets, relationships should be developed with recruitment, supplier, influence, internal and referral markets, on the grounds that these represent groups that contribute to an organisation’s performance and marketplace contribution.

This chapter explores some of the characteristics associated with discrete and rela-tional exchanges, it considers the development of relationship marketing, explores aspects of network interpretations and the impact on partnerships and alliances, not only with customers but suppliers and key stakeholders. In addition, it examines the role of IST in the management of interorganisational relationships, with particular emphasis on customer relationship management (CRM) systems.