Contemporary marketing practice: theoretical propositions and practical implications Adam Lindgreen Eindhoven University of Technology, Eindhoven, The Netherlands Roger Palmer Cranfield School of Management, Cranfield University, Cranfield, Bedford, UK Joe ¨lle Vanhamme Department of Marketing, Rotterdam School of Management, Erasmus University Rotterdam, Rotterdam, The Netherlands Keywords Marketing, Relationship marketing, Database marketing, Electronic commerce, Marketing strategy, Development Abstract Marketing has changed significantly since it first emerged as a distinct business and management phenomenon. We identify some of the major factors causing the observed change in marketing practice. We then describe a classification scheme that is based on transaction marketing and relationship marketing, each of which is characterised using five marketing exchange dimensions and four managerial dimensions. The two general marketing perspectives encompass five distinct types of marketing: transaction marketing, database marketing, e-marketing, interaction marketing, and network marketing. We consider real-life (mainly European) companies that have implemented these different marketing approaches. Finally, we deal with the pedagogical contributions including an examination of how it is possible for business schools to teach the subject of marketing from a relationship marketing perspective in such a way that the relevance and quality of teaching and research in relationship marketing is useful to students, faculty, and the business community. 1. Introduction Marketing has changed significantly since it first emerged as a distinct business and management phenomenon between the First and Second World War. One of the major changes has been that marketing – from having focused initially on gaining new customers – is now more preoccupied with retaining existing customers. Our goals for this paper are as follows. In the first part, we discuss the many transformations in the practice of marketing that have taken place over the last 80 years or so and, in doing so, the concepts of “transaction marketing” and “relationship marketing” are introduced. In the second part, we consider a pedagogical framework that has been developed as a mean to understand contemporary marketing practice. This framework, which is based upon nine marketing exchange and managerial dimensions, covers five marketing approaches: transaction marketing on the one hand and database marketing, e-marketing, interaction marketing, and network marketing on the other. The four latter marketing approaches are all examples of relationship marketing. In the third part, we consider how (mainly) European companies have implemented the The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at www.emeraldinsight.com/researchregister www.emeraldinsight.com/0263-4503.htm The authors contributed equally. Contemporary marketing practice 673 Marketing Intelligence & Planning Vol. 22 No. 6, 2004 pp. 673-692 q Emerald Group Publishing Limited 0263-4503 DOI 10.1108/02634500410559051
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Eindhoven University of Technology, Eindhoven, The Netherlands
Roger PalmerCranfield School of Management, Cranfield University, Cranfield, Bedford, UK
Joelle VanhammeDepartment of Marketing, Rotterdam School of Management,Erasmus University Rotterdam, Rotterdam, The Netherlands
Keywords Marketing, Relationship marketing, Database marketing, Electronic commerce,Marketing strategy, Development
Abstract Marketing has changed significantly since it first emerged as a distinct business andmanagement phenomenon. We identify some of the major factors causing the observed change inmarketing practice. We then describe a classification scheme that is based on transactionmarketing and relationship marketing, each of which is characterised using five marketingexchange dimensions and four managerial dimensions. The two general marketing perspectivesencompass five distinct types of marketing: transaction marketing, database marketing,e-marketing, interaction marketing, and network marketing. We consider real-life (mainlyEuropean) companies that have implemented these different marketing approaches. Finally, wedeal with the pedagogical contributions including an examination of how it is possible for businessschools to teach the subject of marketing from a relationship marketing perspective in such a waythat the relevance and quality of teaching and research in relationship marketing is useful tostudents, faculty, and the business community.
1. IntroductionMarketing has changed significantly since it first emerged as a distinct business andmanagement phenomenon between the First and Second World War. One of the majorchanges has been that marketing – from having focused initially on gaining newcustomers – is now more preoccupied with retaining existing customers. Our goals forthis paper are as follows. In the first part, we discuss the many transformations in thepractice of marketing that have taken place over the last 80 years or so and, in doing so,the concepts of “transaction marketing” and “relationship marketing” are introduced.In the second part, we consider a pedagogical framework that has been developed as amean to understand contemporary marketing practice. This framework, which isbased upon nine marketing exchange and managerial dimensions, covers fivemarketing approaches: transaction marketing on the one hand and databasemarketing, e-marketing, interaction marketing, and network marketing on the other.The four latter marketing approaches are all examples of relationship marketing. In thethird part, we consider how (mainly) European companies have implemented the
The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
different types of marketing; we examine companies that have been successful at doingso, and companies that have been less successful. In the fourth and final part of thepaper, we look at the pedagogical contributions, mostly in terms of how it is possible toteach the subject of marketing from a relationship marketing perspective in such a waythat the relevance and quality of teaching and research in relationship marketing isuseful to students, faculty, and the business community.
2. Change in marketing practiceLet us consider the emergence of marketing as a business and managementphenomenon. It is possible to propose that marketing as a business function follows alife cycle (Shaw, 2000), conceptually shown in Figure 1.
Marketing emerged as a distinct business function in the period between the Firstand Second World War. This was when the classic consumer goods companies such asUnilever and Procter & Gamble started to develop the concepts of product and brandmanagement (Shaw, 2000). Later, through the 1950s and 1960s, there was a hugegrowth and interest in the subject of marketing, as the frameworks and concepts oftransaction marketing were developed (Borden, 1964).
The rise in consumer demand and disposable income, together with new means ofmass communication, notably television, stimulated growth. Rapid technologicaldevelopment and innovation, often a by-product of military efforts, produced acontinuing stream of new and innovative products. The challenge for businesses,during this period can now largely be seen as putting in place the means of productionto satisfy growing demand and, at the same time, using marketing techniques tocapture consumers entering the market. It was said this time that the Americanmanufacturing industry could not get it wrong even if it tried (Heskett, 1994). Thefocus was on gaining these new consumers against a background of unfulfilled
Figure 1.The lifecycle of marketingas a business function
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demand. Overall, the concept of capturing consumers and satisfying growing demandby using, respectively, marketing techniques and production means was largely aNorth American one exported to other developed and developing economies.
The series of oil crises of the 1970s brought about significant change, however. Thecontinual rise in consumer demand was halted due to the economic problemsexperienced, and high inflation that followed acted to alter consumers’ perceptions.The growth of interest in consumer and wider environmental issues has often beensymbolically ascribed to the publication of Rachel Carson’s (1962) book Silent Springthat was published more than 40 years ago, in 1962. Consumers increasinglyappreciated the power that they have to influence manufacturers. The decline ofmanufacturing industries saw a rise in service industries, and increased emphasis wasnow placed on the development of service and the way in which this can beincorporated into products (Gummesson et al., 1997).
Conventional marketing – otherwise known as 4Ps[1] classic, or transactionmarketing is now seen as deficient in the current business environment (Brady andDavis, 1993; Doyle, 1995). Manufacturers of products, today, find themselvescompeting in a very different environment from that of the 1950s and 1960s, asmarkets are saturated: the automotive industry is often taken as a bellwether formanufacturing, and in Western Europe, currently one third of manufacturing capacityis not utilised. Some of the factors, which have resulted in markets becoming saturated,are shown in Table I.
Maturity can be understood from a number of perspectives including, for example,product and industry. Using the well-established principle of dependent demandinherent within industrial markets (Hutt and Speh, 2001), the size of the industry willbe largely determined by the size of the market, which, in turn, can be adjusted for therate of substitution of products satisfying similar needs, but offering differentfunctionality based on different technologies such as, for example, the substitution ofthermionic valves by transistors (Harrigan, 1980). The maturity and decline of both theindustry and firm are, therefore, derived from the lack of organic growth in the market.Decline represents a further evolution in which absolute demand declines in volumeterms (Harrigan, 1980). Maturity and decline are representations of the samephenomenon, differing in degree. The unifying characteristic of both of theseconditions is the lack of organic growth in the market, at which point, sales andmarketing actions become critical to the future success of the firm. This is because,future revenue and unit volume growth depends on competing directly with otherfirms for customers and hence market share.
With the nature and degree of change indicated by Table I the question thereforearises for manufacturers and service providers as to whether conventional marketingconcepts, which were developed in the very different environment of the 1950s and1960s, are still relevant and appropriate. That is, the conventional marketing conceptswere developed with particular application to consumer markets some way removedfrom the highly competitive, saturated markets that we now experience in the newmillennium. As one of the features of maturity is the increasing lack of differentiationbetween products (Table I), managers are seeking more and better ways to increase theattractiveness of their products and to add value. Relationships, networks andinteractions present this opportunity.
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Author Factors
Aijo (1996) Transition from post-industrial/service economy toinformation economyMaturing industries and lower growth ratesDeregulationIncreased competitionImportance of customer retentionTechnological innovationDevelopments in computers andtelecommunicationsIncreased rate of changeIncreased affluence
Denison and McDonald (1995) InternationalisationDeregulationIncreasing customer sophisticationShift in channel powerMarket maturityIncreasing importance of processesIncreasing importance of time-basedcompetition
Doyle (1995) Changing business environmentTechnological changeInternational competition on priceand quality
Gronroos (1994) GlobalisationImportance of customer relationsRole of market economics
Hunt and Morgan (1994) Collapse of socialismTriumph of market economy and capitalismTechnologyCommunicationsKnowledge and skills as competitiveadvantage
Sheth and Parvatiyar (1995) Technological change, especially ITAdoption of total quality programmesGrowth of the service economyEmpowerment of individuals and teamsIncrease in competitive intensityImportance of customer retention
Tapscott and Caston (1993) Higher staff productivityHigher quality expectationsCustomers demand better, quicker responseGlobalisationOutsourcingAlliances and partnershipsEmployee empowermentHigher awareness of social and environmentalresponsibility
Turnbull et al. (1996) Market concentrationCustomers perception of risk and needto reduce itSwitching costsLoyalty to supplier
Table I.Factors importantin maturity
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As features of individual products become less distinctive – is there really a functionaldifference between one brand of television or microwave, for example, and anotherbrand? – intangible factors then gain importance. Hence the management of reputation,delivery of service, technical support, advice, and the management not just of the sale,but also of the purchase and owning experience are ways in which firms can differentiatethemselves (Gronroos, 2000). Toyota has established an enviable reputation forreliability and satisfaction with their cars (Kotler, 2003) whereas in the area ofservice-based products First Direct – a telephone banking service in the UK – is widelyacknowledged as one of the best of its type in the world (Christopher et al., 2002).
Many authors have expressed these ideas by suggesting that marketing has passedthrough a series of stages or eras (Brady and Davis, 1993; Dickson, 1992; Webster,1992). Underlying, this is a change in emphasis from transaction marketing torelationship marketing (Gummesson, 1999; Jackson, 1985; Payne, 1995; Sheth andParvatiyar, 2000). The observed change has led to a discussion, however, as to whetheror not the magnitude of change is such as to justify it being described as a paradigmshift (Gronroos, 1994; Gummesson, 1996; Kotler, 1991). Alternatively, thetransactional-based view of marketing may simply have to be supplemented withmore Ps in addition to the conventional four 4Ps. This represents what is known as themarketing mix plus perspective whereby progress is understood as incremental ratherthan step-wise. Various supplements to the conventional marketing mix have beenproposed, for example customer service, the role of staff, new ways of measuring andmanaging customer relationships, and service delivery (Brookes, 1988; Gordon, 1998;Judd, 1987). Whilst there are opponents for and against these views, there iswidespread agreement that relationship marketing is a new phenomenon.
In the context of maturity that brought about the phenomenon of relationshipmarketing, few or no new customers are emerging and, indeed, mergers andacquisitions actually reduce customer numbers and increase the commercialsignificance of those who remain. The transaction marketing paradigm is, therefore,likely to be less effective since transaction marketing focus is to gain new customers.In contrast, and as will be seen shortly, relationship marketing early on emphasised thevalue of retained customers and advocated that firms must be successful in retainingtheir customers if they are to grow profits and sales (Reichheld, 1996; Reichheld andSasser, 1990; for a review, see Storbacka, 2000). In summary, then, this brief discussionpositions relationship marketing as a contextual response to a changing, largelyadverse, mature business environment.
3. Theoretical propositions: contemporary marketing practiceOwing to dramatic changes in the context of marketing – such as physical distance,time, economy, deregulation, globalisation, customer expectations, and new informationtechnology – the way in which marketing is practised is changing (Brookes et al., 2002;Doyle, 2000; Hunt, 2000; Sheth and Sisodia, 1999; Sheth et al., 2000). Although Table I hasalready listed many of the factors that are causing changes in marketing practice, thefollowing represent some of the major examples (Brodie et al., 2000):
. the increasing emphasis on services and service aspects of products;
. the focus on financial accountability, loyalty, and value management;
. the transformation of organizations;
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. the shifts in power and control within marketing systems; and
. the increased role of information technology-based interactivity.
The “contemporary marketing practice” (CMP) research group is one among severalresearch groups that have sought to understand the nature of these changes in thecontext and practice of marketing (Coviello et al., 2002).
One finding has been that organizations really increasingly are focusing onattracting, developing, and retaining business, as relationship marketing has called for(Berry, 1983; Jackson, 1985; Morgan and Hunt, 1994; Wyner, 1999). This is in contrastto transaction marketing that emphasises attracting business, but less so retainingbusiness (Buttle, 1996; Gummesson, 1999). The rationale is that it can be up to tentimes more expensive to win a new business than to retain business, and that the costof bringing a new customer to the same level of profitability as a lost customer can beup to sixteen times more (Peppers and Rogers, 1993; Rosenberg and Czepiel, 1984).In mature markets, retained customers thus, have a different and more importantstrategic value to the firm. The emphasis is at least as much on retaining currentcustomers and, therefore, depriving competitors of the benefit of having them, as it ison attracting new customers with all the costs of acquisition that are entailed (Buttle,1996).
Another finding is that managers are placing a greater emphasis on managing theirmarketing relationships, networks, and interactions, both internally with employeesand externally with suppliers, customers, and other important markets (Brodie et al.,1997; Christopher et al., 1991; Egan 2001; Gummesson 1999; Hunt 2000). Marketingmust recognise the diversity of these markets, and develop effective market plans thatprovide value.
Yet, a third finding has been that in many organizations there is a pluralisticapproach to marketing and how it is being practised – with relationship marketingbeing carried out in conjunction with transaction marketing (Brodie et al., 1997; Egan,2001; Lindgreen et al., 2000; Moller and Halinen, 2000). For example, Lindgreen (2001)and Beverland (2002) found that New Zealand wineries tend not to approach theirdifferent customers in a similar marketing manner. Some focus on producing largevolumes of wine at a low cost and frequently have to fight for customers, whereasothers engage in long-term relationships with their customers. Moreover, theyobserved that the same winery could deal transactionally with some of its customersand yet, relationally with others. This has been called a “pluralistic approach” tomarketing (Brodie et al., 1997).
In an effort to clarify and reconcile the various views of marketing, Coviello and hercolleagues (Brodie et al., 1997; Coviello et al., 1997, 2001) developed a classificationscheme that builds upon content analysis of how European and North Americanresearch centres have defined marketing in the literature. The scheme is based upontwo themes: transaction marketing and relationship marketing, and these two themesare characterised using five marketing exchange dimensions, Table II, and fourmanagerial dimensions, Table III.
The two general marketing perspectives of transaction marketing and relationshipmarketing encompass five distinct types of marketing: transaction marketing,database marketing, e-marketing, interaction marketing, and network marketing. Ofimportance is that the scheme does not place distinct boundaries between the five types
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Tra
nsa
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gT
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pe:
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Pu
rpos
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exch
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eE
con
omic
tran
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Info
rmat
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and
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Info
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dia
log
ue
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any
iden
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ips
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wee
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and
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ips
bet
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Nat
ure
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mm
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Ty
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Imp
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Du
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Con
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Table II.Types of marketing
classified by marketingexchange dimensions
Contemporarymarketing
practice
679
Tra
nsa
ctio
nal
per
spec
tiv
eR
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alp
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Ty
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mar
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Ty
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dat
abas
em
ark
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gT
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mar
ket
ing
Ty
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inte
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mar
ket
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Ty
pe:
net
wor
km
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etin
g
Man
ager
ial
inte
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Cu
stom
erat
trac
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(to
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sfy
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ata
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Cu
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tion
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crea
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mu
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firm
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net
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les
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men
tm
anag
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ecia
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ket
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stom
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loy
alty
man
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)
Mar
ket
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iali
sts
(wit
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sts,
sen
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man
ager
s
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plo
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(200
1,p
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Table III.Types of marketingclassified by managerialdimensions
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680
of marketing, and that the different types of marketing are not necessarily independentand mutually exclusive.
As said, the five marketing exchange dimensions and four managerial dimensionscharacterise each marketing approach. For each of these and other related dimensionsTable IV (Coviello et al., 2001) provides a pattern-matching with themes from theliterature.
For example, transaction marketing is intended mainly to attract customers,whereas the aim of relationship marketing is primarily to retain customers. Tables IIand III also show that relational-oriented organizations focus less on conventionalmarketing tools such as the 4Ps and more on internal marketing assets (employee andinformation technology-based interactivity) and external marketing assets (developingrelationships and networks with other organizations). This has importance for thecommunication pattern that tends to be from the organization to the mass market intransaction marketing, but between the organization and individual customers inrelational marketing approaches. In the latter case, the type of contacts also naturallymore personalised and interactive. As can be seen, the framework distinguishesbetween four main approaches to relationship marketing depending on how theorganization employs the marketing exchange and managerial dimensions in order toestablish relationships, networks, and interactions.
4. Practical implications: experiences of European companiesWe now provide real-life examples of how companies have sought to implement eachof the different five marketing approaches. We will also examine how, in some cases, acompany is employing a so-called pluralistic approach to marketing.
4.1 Transaction marketingThe manufacturing of glass is a capital intensive and continuous manufacturingbusiness. The major European manufacturers, Pilkington in the UK and St Gobain inFrance, are both global companies. With such high and fixed costs, profitability issignificantly dependent upon capacity utilisation and control of production efficiency.The market for glass consists of, and is relatively evenly divided between, theautomotive and building/architectural sectors. Whilst relationships are sustained inthe glass industry, where there are few manufacturers and relatively few but largecustomers, there is a very considerable focus to price. As capacity is so expensive,glass manufacturers will attempt to manage the balance between supply and demand.These trade-offs inevitably result in price being used either to fill marginal capacity, orin times of stronger demand to increase margins. Hence the balance of power, the levelof investment, and the managerial intent strongly influence the style of marketing inthis highly competitive industry. In summary, the overall result is that economictransactions become the purpose of the company’s marketing exchanges, and withcustomer attraction as a key objective, the company’s sales force naturally plays apivotal role. The glass manufacturer focuses on the product and brand, and the contactbetween the company and the customers is mostly impersonal and formal.
4.2 Database marketingA large food supply company with interests in France found that it was losing marketshare due to its outdated product range and sharply increased levels of competition.
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practice
681
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In order to improve its market position, the company developed a new range ofready-to-serve menus and initiated a database marketing system. The company usedexternal marketing agencies to develop new communication material, which was thenmailed to prospective customers. Although this represented a substantial investmentin marketing, it was still cheaper and more flexible than using the traditional field salesforce. Even though this approach lacked personal contact, it did enable the company toidentify potentially interested new customers who could then form the focus of moreintense sales force activity to effectively sell the benefits of its new product range. Thiswas a carefully designed and managed campaign, which successfully generatedgenuinely new business from a segment of the market that was previously notaddressed. As a result, the company increased its sales volume by ten per cent, with amargin improvement of approximately five per cent. The company changed itstraditional focus to the market based on a clearer understanding of their intentions andthe decisions necessary to achieve the objectives. Consequently, they were prepared tomake the necessary investment in the communication programme. We, thus, see thatwhen its market share started to dwindle, the company changed its marketingexchanges to information and economic transactions. The company focused itscommunication on targeted segments in order to deliver more personalised customersolutions.
4.3 e-MarketingThe low-cost airlines typified by EasyJet and Ryanair have demonstrated how thebusiness model can be developed based on operational efficiency and a low-cost routeto market. Sophisticated software allows these airlines to offer low cost flights that canbe booked over the Internet. The software allows for the price of the flight to bemanaged against the capacity of the plane. Hence an early booking, when planes arerelatively empty, or travelling at an inconvenient time usually means that a very lowprice is offered. As capacity fills and the fixed and variable costs of the flight are offsetthen the price starts to raise and can match, or even exceed, the prices offered bynational flag carriers.
The market for low-cost airlines continues to develop with Buzz, a subsidiary of theDutch airline KLM, recently being taken over, whilst new low-cost airlines continue tobe established such as Air Berlin in Germany. These businesses dramaticallydemonstrate how entrepreneurs have been able to change the focus of the business andthe way that customers understand airlines, and to utilise the low-cost opportunity toreach the market that is offered by the Internet. This has enabled such companies toreach a much wider range of customers, and communicate with them in a very differentway. Although the type of contact is very impersonal with minimal levels of service,this has changed the balance of power within the airline industry. This example showsa company engaging in an information-generating dialogue with its customers. Thecompany uses technology to communicate with its customers, and relationships areenabled through IT. Such relationships are different from transactional ones becausethey are interactive and no longer impersonal at arm’s-length.
4.4 Interaction marketingGigantic retailers Wal-Mart in the US and Carrefour in France use everyday lowpricing (Kotler, 2001). This means that whilst there are few or no temporary price
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discounts, everyday prices are low. Consumers often prefer this way of pricing goods,as they have little time for looking out for deals. The retailers interact closely with theirsuppliers who contribute with unique know-how and production processes.
Together, for example, Procter & Gamble and Wal-Mart have improved theirsupply chain and thus saved the two companies $30 billion, boosting mutual profitmargins by more than 10 per cent. Indeed, a strategic account team from Procter &Gamble is working with Wal-Mart at their headquarters. When employees andmanagers from across functions and levels in the two companies thus interact, itbecomes increasingly difficult to distinguish the companies from each other. Throughelectronic data interchange, it is now possible for a retailer like Carrefour to bettermanage their inventories effectively: on a real-time basis Carrefour’s suppliers receiveelectronic notification of the items that have been sold in the different retailer outletsand they can, therefore, quickly respond to the retailer’s need for additional goods.In this way the system has moved from a push to pull.
In summary, this is a case of two companies where the purpose of marketingexchanges is the creation of interpersonal relationships: together, and throughcontinuous and mutually adaptive relationships, the companies position themselvessuccessfully in the business landscape. In this case, Procter & Gamble and Wal-Martsaved billions of dollars because of the improvements in their business operations; inother cases the outcome of such relationships could be improved products or newproducts.
An European example of interaction marketing is the partnership between the twoairlines Sabena and Swissair. In contrast to Procter & Gamble and Wal-Mart, thepartnership between Sabena and Swissair failed because Sabena was undercapitalisedand uncompetitive, and its expansion strategy was seriously flawed. Although Sabenawas one of Europe’s oldest national carriers, it eventually collapsed in the late 2001.Evidence has now come forward that its board of directors throughout most of theperiod had been passive and politicised, and that terrible blunders had been made(Gumbel, 2002). That the Sabena- Swissair partnership failed is also interestingbecause other partnerships in the airline industry have succeeded. In this case, therelationships between important stakeholders, obviously, were far from interpersonaland close as they should have been, and they also were not based upon commitment,trust, and co-operation.
4.5 Network marketingWhen faced with the challenge of not being able to work with all 50,000 suppliercompanies, Toyota decided to work closely with only a small number of so-calledsystem suppliers each of which is responsible for the design and the production of aparticular part of a particular Toyota car (Ford, 2002). These system suppliers aresupplied from a restricted number of suppliers, so-called second tier suppliers thathave standardized, non-adapted components delivered from third-tier suppliers.
One advantage of such a “spider” supplier network is that it enables a company todeal with literally thousands of suppliers even though it only has direct relationshipswith very few suppliers (Figure 2). It is the key, of course, that management focus is onseeking an effective coordination between all the suppliers, which took Toyota severaldecades. Another advantage of supplier networks is that through all of theserelationships, many suppliers are able to achieve their strategies, because they have
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thereby gained an understanding and appreciation of the problems that their businesspartners have to deal with. Yet, a third advantage is the systematic co-development ofcompanies meaning that although different resources are embedded in one particularcompany’s operations, they are still developed according to the partner company’srequirements.
Distribution networks such as IBM supplying to software houses, joint venturepartners, value-added distributors, and dedicated partners are another examples ofnetwork marketing. Alliances such as Star Alliance and One World in which severalairlines compete together against others is yet, a third example of network marketing;in this particular network, the airlines’ business operations are linked together so thatit becomes difficult for a customer to tell whether he is flying Scandinavian AirlinesSystems or, in fact, Air New Zealand. Through the examples, we see how it is possiblefor connected companies to compete successfully: such companies focus on developingtheir position within a network. In the Star Alliance and the One World alliances, theairlines seek mutual benefit, resource exchange, and market access – and boundariesbetween the individual airlines are increasingly being erased.
Figure 2.Toyota’s extended
supplier network
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4.6 Pluralistic marketingThere is, however, yet another approach to marketing: “pluralistic”. Consider theSunlight Travels company (a major European travel company, the name of which hasbeen disguised), which deals with multiple market segments and approaches each ofthese segments differently. In order to capture new customers, or customers who hadnot thought of leaving for holiday, it regularly displays last-minute deals in its shopwindows (e.g. “Malaga, flight and seven-days accommodation. Two persons. Price onlye150. Departure this Saturday”). Although Sunlight Travels and their operators makevery little money, if any, it is hoped that through offering these travels customers arediscouraged from seeking the company’s competitors, and in the long run, they mayeven become regular customers. Sunlight Travels has established relationships thatare more relational with other market segments. For example, a key account managerhas been assigned each of the large international consulting and constructiondevelopment companies that revenue-wise constitute some of the most importantcustomers. The account manager is the connecting link between the travel companyand the customers. Finally, Sunlight Travels engage in network marketing activities.When booking their travel, some customers want not only the flight andaccommodation, but also the whole package including flight, accommodation,excursions, tickets for opera and musical performances, car rental, and insurance.Because of this, the travel company works professionally with other companies thatcan help fulfilling these customer needs.
This example shows that, because it is prudent to approach each market segmentwith the approach that best delivers what is required, the company ends up employinga set of different marketing activities. It is also entirely possible, of course, that at timesthe company will sell a last-minute trip to Customer A who nevertheless is along-retained customer going on his annual four-week Caribbean Sea cruise with hiswife for the past 15 years, which in turn means that a long-term relationship has beenbuilt between Customer A and Sunlight Travels.
Figure 3 is an attempt to summarise this discussion. As shown in Figure 3, there is astrong positive association between transaction marketing and database marketing, astransaction marketing is often combined with database marketing in one way oranother. In contrast, there is only little positive association between transactionmarketing and network marketing, and the association between transaction marketingon the one hand and e-marketing and interaction marketing on the other hand is strongnegative. It is interesting to note that all four types of relational marketing arepositively associated with each other. They seek to build stronger relationships withimportant stakeholders, and it is, therefore, understandable that the approaches arefrequently combined with each other.
The pluralistic approach is in accordance with recent research. Brodie et al. (1997)investigated current marketing practice in New Zealand using a survey of 134 firmsand four case studies. (At the time of the research, the authors did not includee-marketing, as it had not yet been conceptually developed.) Their results did not findsupport for a complete paradigm shift in marketing to relationship marketing. Rather,their findings supported the notion that transaction marketing is still relevant, and thatmany businesses practice transaction marketing concurrently with various types ofrelational marketing.
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5. Pedagogical contributionsAs we have seen, European companies are realising that relationship marketing has alot to offer. Interestingly, in many business schools and university managementdepartments, the subject of marketing is now taught from a relationship marketingperspective. Recent theoretical and empirical research shows that traditionalmarketing is not enough, and that other aspects of marketing need to be taken intoaccount. However, it appears as if many European management/marketing schoolsand university departments to a large extent still rely on textbooks that do not takethese aspects into consideration and only consider the traditional 4Ps. Even iftextbooks make the distinction between transaction and relationship marketing, theyoften proceed to describe marketing practice as defined under the transactionalmarketing paradigm. Consequently, those responsible for teaching marketing atdegree level continue to specify the traditional textbooks on marketing for their coursessince these give a broad coverage of marketing management.
However, as we have seen, relationship marketing builds strong long-termrelationships with important stakeholders, and this becomes a competitive advantageto the company. Therefore, in the long run, the marketing textbooks that students willread should be written from a relationship marketing perspective, but at the same timegive broad coverage of core marketing principles and models. There is a sign, though,that this has begun to happen, and we, therefore, find ourselves in a situation wheremarketing educators are stressing the relationship marketing orientation of theircourses, while the supporting textbooks mainly follow a traditional marketing content.
The example of what the Emory Business School in Atlanta is seeking to do isillustrative. Cannon and Sheth (2000) note that in recent years, students and thebusiness community have increasingly criticised business schools and theircurriculum content, (Byrne, 1993; Mason, 1992; Porter and McKibbin, 1988; Sheth,1988; see Cannon and Sheth, 2000 for a thorough discussion) teaching methods and
Figure 3.Sunlight Travels’
pluralistic approach tomarketing
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pedagogy (Hotch (1992)) and the relevance of academic research Behrman and Levin,1984; Byrne, 1993; Stanton, 1988; Walle, 1991; see Cannon and Sheth (2000) for athorough discussion. As we have seen, however, companies are understanding theadvantages of relationship marketing and “are shifting their attention from thesingle-minded acquisition of new customers to a greater focus on the retention ofcurrent customers” (Cannon and Sheth, 2000, p. 590). This is why, the Emory BusinessSchool has now begun to teach the subject of marketing from a relationship marketingperspective in such a way that the relevance and quality of teaching and research inrelationship marketing supports students, faculty, and the business community(Cannon and Sheth, 2000). Table V outlines the curriculum from the Emory BusinessSchool, which has 17 typical marketing courses in a relational marketing managementcurriculum. Each of these covers aspects that are relevant to relational marketingmanagement.
We, thus, notice that relationship marketing is a theme that runs through all themarketing courses. Consider, for example, the course Foundations of RelationshipMarketing that introduces the concepts and principles of relationship marketing suchas the importance of inter-organizational (developed further in the course CustomerBusiness Development) and intra-organizational (developed further in the courseInternal Relationships) relationships. We also see that the curriculum fosters apartnership between students, faculty, and the business community: as part of thecurriculum, a student will do an internship with one of the sponsoring companies, andwill be monitored and supported by a faculty member. All three parties benefit fromthis experience. Students get hands-on experience, and faculty members gain contactsand insight into current marketing practice that they can bring into the classroom.At the same time, the companies have students (but also faculty members to a certainextent) to work on a marketing problem that is relevant to them, and the students’methodological thorough analysis of marketing problems will be useful to guide theirmarketing decisions.
It is possible in the curriculum to provide students with opportunities to build anddevelop their leadership, team-building, and communication skills. For example,different group projects require students to work in teams, and to practice leadershipskills; as well as to communicate with each other, also in writing and presentingthe results of these projects. Again, it is possible to reach these objectives at the
Marketing: a relationship perspectiveCourse Foundations of
relationshipmarketing
Marketing strategy Customerbehaviour
Internationalmarketing
Marketingresearch
Topics Internalrelationships
Marketing planningand implementation
Key accountmanagement
Globalsourcing
Measuringcustomersatisfaction
Customer businessdevelopment
Integratedmarketingcommunications
Integrateddistributionmanagement
Globalalliances
Databasemarketing
Direct marketing
Source: Adapted from Cannon and Sheth (2000)
Table V.Typical marketingcourses in a relationalmarketing curriculum
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same time as relationships are created with the business community, and real-worldissues are tackled. Student groups can thus work on finding a solution to thechallenge(s) a local company is facing, and communicate the findings at the end ofthe process.
6. ConclusionsMany factors are causing profound changes in marketing practice. From havingfocused initially on gaining new customers, marketing is thus, now, more preoccupiedwith retaining existing customers. This paper has discussed the efforts to clarify andreconcile the various views of marketing, as well as the development of a classificationscheme, building on two themes, transaction marketing and relationship marketing,which together cover five distinct marketing approaches. In order to characterise eachof these approaches five marketing exchange dimensions and four managerialdimensions are employed. The marketing classification scheme helps students tounderstand the essential characteristics of transaction marketing, database marketing,e-marketing, interaction marketing, and network marketing. To this end, the paperprovides the reader with examples of how (mainly European) companies haveimplemented a particular marketing approach. The described situation gives rise to aunique opportunity to use the classification scheme, which Coviello and her colleagueshave developed, and to have it sit alongside a traditional marketing textbook and,thereby, underpin the course designers’ claim to have a relationship marketingorientation.
Note
1. 4Ps stand for product, price, place, and promotion.
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