Relationship Networks – Customer and Supplier Networks

Selling and Marketing is no longer the same what it used to be few decades ago. Traditional methods of sales and promotions have long been relegated to history. Technology, Internet as well as globalization have redefined every aspect of Marketing and Sales. Organizations have realised the importance of being in tune with the markets and customers. They are also embarking on investing on relationship with the customers for the Relationship Management aspect is becoming very important for the success of the business. Companies are tuning in to identify and get to know the customer better and anticipate his needs for tomorrow. Customer feedback as well as needs are being seen as vital information to product innovation as well as for customer retention. Especially in the recent times where social networking is gaining ground, customer contact and relationship management is becoming more visible and instantaneous. Organizations have realised that Relationship Marketing is not related to the marketing function alone. This concept is to be embraced at the Corporate level and implemented through all departments covering both internal as well as external customers, suppliers and other agencies that the Organization engages with.

As far as the Marketing and Sales is concerned, an Organization can be involved in multiple formats including B to B and B to C. Sales and Marketing is always a network of multi layered and multi level partners, intermediaries, vendors and agents etc. Relationship marketing aspect assumes high importance for the success of every transaction through the myriad networks. The Organization’s relationships can make or break its ultimate positioning in the market as well as affect the quality of the transaction with the end customer.

If an Organization is engaged in selling products or services to on B–C model, the dynamics of Relationship Management will be different from a B–B mode. Let us take the case of a Multi National Company engaged in manufacturing of Computers. The company would be sourcing or manufacturing at various geographical locations across the globe for supplies to different markets. It can be manufacturing at Company owned factories in different countries or using contract manufacturing partners to manufacture on their behalf. The products are transported through service providers using multi modal transportation networks and a host of agents handling the cargo movement from end to end. The products finally are sold to a whole seller or stockist or sold by the Company to the institutional buyers. There can also be cases where the company maintains its own third party warehouses and sells to the retailers. In such complex networked supply chain the Organization has got to ensure that the products are supplied timely, as per customer requirement.

The Organizations success in being able to reach its products to the customer organization timely and successfully over a long period depends upon the seamless working of the entire network. This is possible when the Organization is able to build a relationship with every stake holder in the network and make that difference. In such complex networks, the process alone will not be able to sustain the transactions and the relationship or the emotional connect with the people involved is what makes things happen. Organizations will necessarily have to invest in building strong partnerships with principle service providers and partners so that they are able to get the partners to deliver a happy experience to the end customer too.

When the customer is an institutional customer or a business, the complexities of transactions pose a challenge to the Organizations. In all such businesses the Organizations set up dedicated Key Account Relationship Managers and teams at various levels to ensure that they reach out to the customer and build relationship at multiple levels where it matters. Therefore there can be multiple levels of relationship building that one needs to engage with including at the actual user level to the procurement, technical as well as management level at the customer end. The Organizations would have to accordingly formulate a relationship management strategy and process as well as create a team to build and grow the relationship in such cases. In the end the dedicated focus and investment made into such relationships pays well in terms of future business opportunities.

Relationship Marketing – Company and Marketing Perspective

We are living in the high tech times. Technology and changing economy have changed the rules the way a business is done. Business organizations have to tune in to various markets and know the customers well. The successful companies are those who have been able to anticipate the customer need and innovate future products leveraging on technology. In a global as well as local scenario, customer holds the key to the growth of business and organizations. No wonder that when you open your mail box or your email, you are always flooded with marketing communication from all possible companies trying to build a relationship with you. Take a look at the cards in your wallet and you must be holding quite a few membership cards that make you feel privileged and keeping bringing rewards and prompting you to extend your relationship with them. Relationship Marketing has never been more important for the Organizations as it has been now. In the field where competition is intense and life cycle of products and services is very small, customer relationship has emerged to be one of the key drivers to contribute a large chunk of sales revenue. When we talk of relationship marketing, we are not referring to customer service. Customer service refers to the quality of service on a transactional mode. By Relationship Marketing, we are referring to the level of Relationship that exists between the customer and the company.

In terms of Relationship, there can be several ways of defining or measuring the quality of relationship with the Customer. Understanding of the depth of relationship and qualifying can help the Company in improving its reach to the markets as well as work towards increasing the depth of the relationship with the customer. In the first instance, we have a happy customer who has bought the product or a service and found it satisfactory.

When the Company reaches out to communicate with him and anticipate his future needs, he can be converted to a faithful customer. A faithful customer may be a repeat customer who does continues to buy the product from the company on repeat basis without making an effort to look at alternatives. However, at this stage the customer can be influenced and be vulnerable to competition as well as price sensitivity. Relationship marketing by the Company can help convert this customer from a faithful customer to a loyal customer. A loyal customer is one who has made an informed decision to go with the particular Company, is happy with the product, is loyal to the brand and is likely to advocate the same brand to friends and family because he believes in the Product as well as the Company and values the relationship. Apart from customer service, there are several marketing programmes and loyalty programmes besides brand advertising that the Companies carry out to build the relationship with the customer.

Relationship marketing gets translated and implemented through the marketing strategies, promotional programs as well as through marketing communication programs. When implemented as a part of marketing strategy, the relationship is normally focussed on leveraging the brands and products of the Company with the customer. Besides the marketing activities, the Companies implement internal and external corporate communications too keeping in view the Customers.

Marketing strategies are required to define the relationship marketing strategies for each of the product or service category taking into account the geographies, the customer profile as well as the overall RM objective of the Company. The RM strategy in case of a product company would be different from that of a service company and the element of communication design strategy would need to be different for a product from that of a service. In case of a product, the Customer is likely to respond in terms of brand, tangible and quantifiable performance of the product and the satisfaction derived from post sales service. In case of service, however, there is no tangible product and the customer’s expectations are different when it comes to service that is mainly concentrated around his perceptions and experience.

Therefore understanding the concept of Relationship marketing, the difference between RM and Customer Service as well as the ways and means of implementing or achieving RM objectives through effective marketing strategies is important for all the marketing managers and students who are going to be the drivers to defining, planning, detailing and implementing marketing strategies. An effective Marketing Manager should be able to effectively design marketing policies and strategies that are aligned with the Company’s RM objective and help build the relationship between the Company and Customer, Partners as well as the intermediaries who are critical to one’s business.

Organizations and Relationship Marketing

Traditionally with Organizations the customers belonged to and were the responsibility of the Marketing Department alone. Organizations probably had too many constraints on meeting the demands and were saddled with limited product range that did not require them to look out and reach out to the Customer. However with evolution of technology, mass production processes as well as expanding geographical markets, the Organizations began to realize the need to reorient their understanding of the business and the way to manage the business. To a large extent we can very well say that the Customer Relationship Marketing did not originate only in the marketing department. It developed as an Organizational approach and management thought. Management experts and Organizations have come a long way in terms of their outlook to the internal and external environment. Today Organizations have begun to understand and recognize the relationship that exists between the Stockholders, the Employees and the Customers who provide the reason as well as the resources for the Organization to exist and grow.

There exists a mutually inclusive relationship between all the three factors. Organizations need to manage the relationship dynamics on all the three fronts. This understanding has further brought about the Management thought and approach to orient and imbibe Relationship Marketing as an Organizational Philosophy.

An Organization does not recognize the customer in the market to be the only stake holder in its relationships. The Company has ongoing relationships both internally as well as externally at many levels and tiers. The Company strives to build excellent and long term relationships with its strategic suppliers as well as the intermediaries important for its business. Sales and Distribution partners including whole sales, channel partners as well as point of sale retailers form a part of the chain which needs to be handled via the relationship platform.

The number of relationships that the Organization is required to manage are spread over several areas. Ongoing Relationship Management with Current Employees as well as prospective employees becomes very important for the Organization as the Human resource is a key resource for its business. Besides the employees, suppliers, as well as the Customers and intermediaries, the Organization has a relationship that needs to be managed with the public, Government as well as media too.

Therefore it should be very clearly understood that Relationship Marketing is a business philosophy and not a marketing strategy. Of course Marketing strategy and plans are built around this Organizational philosophy and value of Relationship Marketing.

Managements have successfully adapted to the concept of internal and external Relationship Marketing and have benefited immensely from it. Internally the concept of internal customer has yielded tremendous advantageous and brought about efficiencies in operations. TQM, JIT, Six Sigma philosophies have been successfully implemented thanks to the fundamental concept of internal customers and customer satisfaction.

Apart from marketing and sales functions which are exposed to the Customers and markets and hence need to be sensitized and oriented towards relationship management, the Organizations have realized the need to sensitize the other departments including Finance, HR, Technical Service, Customer Service as well as the Product Development and legal departments towards relationship Management with he customers. This orientation has benefited the Organizations immensely besides changing the service dynamics for the customers.

Importance of Relationship Marketing

The recent trend seen in the Organizations across the world is that they are faced with changing times and the changing economies and business is forcing them to change themselves too. Organizations today have no option but to change and evolve. The change has to do with every aspect of business and not limited to any one aspect of its business. Those who are not able to see the trends and change themselves are perishing. Technology has been the single most important change agent. Technology has redefined all aspects of business. What we see today is the definitive shift of power from the Organization into the hands of the Customer. Customers today know their position and the power they wield. Especially the medium of internet has brought the customers closer to the Organisation as well as to the other Customers. Information, discussions, feedbacks and opinions are now visible and available to one and all almost instantaneously. Social networking is a medium that the Organizations cannot afford to ignore. This is both a boon as well as a bane to the Organizations. Marketing Managers are learning to use this to manage their relationship with the customers at large. Customer redressal too is another important phenomenon that has contributed to the Customer becoming powerful in the market place.

The fact that the information and interaction happens on live basis and the customer reactions can be instantaneous puts a lot of pressure on the Organizations to be on their guard all the time. Any adverse opinion shared or feedback from a dis-satisfied customer can spearhead a word of mouth campaign that can harm the Organisation. Therefore the internet and social network is a double edged sword as far as the Organizations are concerned. When used effectively this medium can help the Organization build a relationship with the customer and strengthen that relationship. This medium helps the Organization to reach out individually to the customer which may not be possible otherwise.

The marketing departments are able to not only communicate and address the customer individually, with the help of technology and data mining techniques, they are able to understand the customer’s needs and customize solutions as per the specific individual needs of the customer. CRM packages and technology become the enablers to make this happen. Banks, Airlines, Insurance as well as Services like Pizza hut, Macdonald’s are some of the businesses that have developed effective means to recognize and communicate with individual customers and thereby build an emotional connect with the customers.

Product Companies have begun to use social networking sites effectively as a platform to engage with customer on technical and product related discussions and build a community around its products and services. Building relationships in such situations is easier and more effective.

The dynamics in the market is changing, thanks to internet. Marketing Managers can no longer afford to use the traditional methods of engaging and selling to the customers. Marketing today demands a customer centric approach. Customer is no longer an entity without a face. Today’s customer is an informed and intelligent customer who can be reached, who is visible and can be heard and a relationship with him matters the most to the Organization.

Relationship Management holds the centre stage to designing Marketing as well as communication strategies of the organization. It is essential for every student to understand the dynamics of Relationship Marketing in the present context for this subject will be the key differentiator for the Organizations in the market place.

Evolution of Relationship Marketing

Marketing Management has evolved to become a multi faceted and all embracing science over a period of time. Studies in Marketing do not involve the 4Ps anymore. The markets, geographies, the consumer segments have changed leading to multi tier and complex networks and relationships. Marketing Managers of today are no longer following the same rules of game that they followed two decades ago. Technology has changed the rules of the game and competition has become more intense. Instead of concentrating on selling the product, the marketing effort is now directed to expanding the customer base and relationship. By widening the customer base as well as expanding the depth of the customer base using relationship marketing, they see the possibility to lengthen the revenue lines. Therefore Marketing professionals to be will benefit greatly by understanding more about Relationship Marketing as well as direct marketing, service marketing and CRM etc.

From times immemorial including the times when trading used to happen through the silk route, the basis of trading was the relationship that was built on trust, loyalty and previous history of transaction. Traditionally if you analyze the jeweler’s business, you will see that the families have always been going to one jeweler for generations together. The same is the case with banker who would extend loan to a well known individual who was personally known or referred by a known person. Even while renting out a house, the owner prefers to let out to a known person or a person referred by a known party where there exists some kind of relationship. Therefore we can say that relationship has always been the basis of business.

However the growth of Relationship Marketing as a discipline and practice got an impetus post industrial era. Until this period the products and services were always produced in smaller quality where things were in short supply and were marketed in the local area. Industrialization led to mass production as well as standardization of the products and services. The businesses started expanding their geographic boundaries and exploring new markets where in it became necessary for them to evolve new methods of marketing. They understood the importance of having to reach out and build a relationship with a customer and make efforts to retain the customer rather than keep spending on marketing to new customers every time.

At this stage we do see significant changes that happened at an Organizational level. Organizations realized the importance of having to put the Customer ahead of its business. Organizational philosophy seemed to have shifted from profits, products and markets to Customer first. Right from product design to manufacturing as well as selling began to be designed around what the Customer wants, his needs, his comfort and satisfaction. Customer focus and relationship became the Organizational focus and lead to many new trends in manufacturing methods the most significant being the concept of TQM or Total Quality Management.

On the marketing front too, the managers had to come up with new channels for marketing and sales for they had to reach out to bigger markets and new customer segments. As a result we saw the emergence of Direct Mailer or catalogue sales was born in the 1960s. Information technology further enhanced the marketing methods whereby database marketing, direct mailing and customer loyalty programs along with marketing services came into being. With the advent of internet we have see several more marketing methods like e commerce, online selling, one to one selling happening. All these marketing channels have been built around the concept of relationship marketing. We as consumers have now are used to being courted by the companies and given individual attention. Most of our purchases of products and services are based on relationships with companies that make us comfortable and valued.

Introduction to Relationship Marketing

Ask any frequent flyer and a globe trotter, who enjoys flying with and always chooses his favorite airline as to why he insists on using the same airline every time. The answer will be that he is happy with the Customer Service. The airline spares no efforts to ensure that he is comfortable and enjoys his journey. The airline recognizes him as a valuable customer and has built a relationship with him over a period of time. It is this relationship, the comfort of being recognized, looked after and cared for individually that has resulted in loyalty in the relationship. All of us enjoy being members of several loyalty programs and enjoy collecting rewards and redeeming them. In doing so we have enjoyed the relationship with the Supplier or the Company and continue to be loyal customers. In everyday life we are used to going back to the same supermarket, the same garage and bank with the same bank all the time. This happens because we have grown to accept an unspoken relationship that exists with these businesses for various reasons and we feel happy dealing with the same vendors day in and day out.

Every human interaction and transaction is built around relationships. Networks of relationships is the fundamental design of the human society. No wonder that this fundamental fact has been recognized and explored by all the businesses where in they have been building business strategies around the customer and strive to build a relationship with every Customer.

Relationship Marketing therefore has evolved not only as a marketing strategy but has been the foundation on which the Companies build their core values and ethics. Relationship Marketing defines the framework for the Company to reach out as well as and orient themselves to the outside markets, to the end customer as well as to the business partners, the suppliers and vendors too. Relationship marketing is not limited to Customers and Suppliers alone but has been extended in scope to cover he internal employees as well as an effective way of reaching out to attracting best talent too. If you scan any advertisement of a leading Corporate in the Newspaper, you will see that major portion of the advertisement for recruitment is related to the Company’s background, culture and the effort to reach out to the prospective employees. The advertisements are designed to strike a cord amongst the readers that prompts one to apply for the job.

In the high tech age where the marketing concepts and tools have undergone major changes with the introduction of e commerce, online selling, network marketing, direct marketing, B2B and B2C business models, relationship marketing has become the base on which the Business strategies as well as Marketing strategies are built.

Business Organizations today have begun to recognize and consider the human quotient as well as the emotional quotient of business relationships. Relationship Marketing has evolved as a discipline that helps the Businesses to look beyond transactions to long term business associations. Successful Relationship Marketing strategy helps the Organization deepen and strengthen its revenue streams on long term basis.

Relationship Marketing is a considered to be a core Corporate Philosophy on which the Business strategy is built upon. It is reflected in all of the Marketing disciplines including branding, advertisements, promotions, public relations as well as through all sales channels and networks through which the Company reaches out to the Markets and Customers.

Body Language in communication

Did you know that while in India or America a “fantastic” or an “ok” sign is demonstrated by forming a circle with your thumb and forefinger, in Tunisia the same symbol means “I will kill you” and in Japan it means “money”? Kinesics or study of body language must be understood by all. Whether it is an interview or a presentation, one must be aware of how to use body language effectively. Read on to understand more about various non verbal components of communication…   Eye Contact: Always maintain eye contact with your audience. However, a person must ensure that he / she should not fix his gaze at one person for more than 5 seconds. Too much fluttering of eyes could indicate lack of confidence. Staring at a person could be daunting and hence is not such a good idea.

 

2. Hand Shake: While shaking hands especially in a professional environment, the hand shake should be firm and not loose. An iron handshake [very strong handshake] can indicate that a person is trying to dominate. 

    

3. Crossing your Arms: Crossing your arms could imply that a person is not open to new ideas / opinion especially in case of giving a presentation. However, in a one-on-one interview if the interviewer has his / her arms crossed, the candidate could do the same. 

    

4. Sitting Posture: Leaning on a chair is not a good idea. One must sit upright though in a relaxed position. Sitting back in your chair implies lack of interest or rejection. 

    

5. Gesture: Gesture refers to a type of non verbal communication which uses a part of the body with or without verbal communication. Gestures include facial expressions, nods [which is a sign of approval in most cultures], head bobbling / shaking. 

    

6. Facial Expression: The face is a best reflection of what a person feels. More often than not it is easy to recognize if a person is happy, sad, anxious, irritated, or excited. It is very important that in a professional scenario a person must control his / her facial expressions. For e.g. If a presenter gets a feel that his presentation is not going on very well, he / she should not show the sign of losing of hope and instead try for a greater involvement from the participants.

Data Collection in Marketing Research

Data Collection in Marketing Research is a detailed process in which a planned search for all relevant data is made by researcher. Types of Data Primary Data- Primary data is the data which is collected first hand specially for the purpose of study. It is collected for addressing the problem at hand. Thus, primary data is original data collected by researcher first hand. Secondary data- Secondary data is the data that have been already collected by and readily available from other sources. Such data are cheaper and more quickly obtainable than the primary data and also may be available when primary data can not be obtained at all.

Data Collection Methods

1. Qualitative Research- Qualitative Research is generally undertaken to develop an initial understanding of the problem. It is non statistical in nature. It uses an inductive method, that is, data relevant to some topics are collected and grouped into appropriate meaningful categories. The explanations are emerged from the data itself. It is used in exploratory research design and descriptive research also. Qualitative data comes into a variety of forms like interview transcripts; documents, diaries and notes made while observing. There are two main methods for collecting Qualitative data 
   1. Direct Collection Method-When the data is collected directly, it makes use of disguised method. Purpose of data collection is not known. This method makes use of-
      1. Focus Groups
      2. Depth Interview
      3. Case Study
   2. Indirect Collection-Method
      1. Projective Techniques
2. Quantitative Research- Quantitative Research quantifies the data and generalizes the results from the sample to the population. In Quantitative Research, data can be colleted by two methods
   1. Survey Method
   2. Observation Method

Limitations of Marketing Research

limitations of Marketing Research:

• Marketing Research (MR) is not an exact science though it uses the techniques of science. Thus, the results and conclusions drawn upon by using MR are not very accurate.
• The results of MR are very vague as MR is carried out on consumers, suppliers, intermediaries, etc. who are humans. Humans have a tendency to behave artificially when they know that they are being observed. Thus, the consumers and respondents upon whom the research is carried behave artificially when they are aware that their attitudes, beliefs, views, etc are being observed.
• MR is not a complete solution to any marketing issue as there are many dominant variables between research conclusions and market response.
• MR is not free from bias. The research conclusions cannot be verified. The reproduction of the same project on the same class of respondents give different research results.
• Inappropriate training to researchers can lead to misapprehension of questions to be asked for data collection.
• Many business executives and researchers have ambiguity about the research problem and it’s objectives. They have limited experience of the notion of the decision-making process. This leads to carelessness in research and researchers are not able to do anything real.
• There is less interaction between the MR department and the main research executives. The research department is in segregation. This all makes research ineffective.
• MR faces time constraint. The firms are required to maintain a balance between the requirement for having a broader perspective of customer needs and the need for quick decision making so as to have competitive advantage.
• Huge cost is involved in MR as collection and processing of data can be costly. Many firms do not have the proficiency to carry wide surveys for collecting primary data, and might not also able to hire specialized market experts and research agencies to collect primary data. Thus, in that case, they go for obtaining secondary data that is cheaper to obtain.
• MR is conducted in open marketplace where numerous variables act on research settings.

Meaning and Scope of Marketing Research

According to American Marketing Association, “Marketing Research is the function that links the consumer, customer and public to the marketer through information-information used to identify and define marketing opportunities and problems, generate, refine and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process.”  Marketing Research is systematic problem analysis, model building and fact finding for the purpose of important decision making and control in the marketing of goods and services. Marketing Research is a well-planned, systematic process which implies that it needs planning at all the stages. It uses scientific method. It is an objective process as it attempts to provide accurate authentic information. Marketing Research is sometimes defined as the application of scientific method in the solution of marketing problems.

Marketing Research plays a very significant role in identifying the needs of customers and meeting them in best possible way. The main task of Marketing Research is systematic gathering and analysis of information.

Before we proceed further, it is essential to clarify the relationship and difference between Marketing Research and Marketing Information System (MIS). Whatever information are generated by Marketing Research from internal sources, external sources, marketing intelligence agencies-consist the part of MIS.

MIS is a set of formalized procedures for generating, analyzing, storing and distributing information to marketing decision makers on an ongoing basis.

1. While Marketing Research is done with a specific purpose in mind with information being generated when it is conducted, MIS information is generated continuously.
2. MIS is continuous entity while Marketing Research is a ad-hoc system.
3. While in Marketing Research information is for specific purpose, so it is not rigid; in MIS information is more rigid and structured.

Marketing Research is essential for strategic market planning and decision making. It helps a firm in identifying what are the market opportunities and constraints, in developing and implementing market strategies, and in evaluating the effectiveness of marketing plans.

Marketing Research is a growing and widely used business activity as the sellers need to know more about their final consumers but are generally widely separated from those consumers. Marketing Research is a necessary link between marketing decision makers and the markets in which they operate.

Marketing Research includes various important principles for generating information which is useful to managers. These principles relate to the timeliness and importance of data, the significance of defining objectives cautiously and clearly, and the need to avoid conducting research to support decisions already made.

Marketing Research is of use to the following:-

1. Producers
   1. To know about his product potential in the market vis-à-vis the total product;
   2. New Products;
   3. Various brands;
   4. Pricing;
   5. Market Structures and selection of product strategy, etc.
2. Business and GovernmentMarketing Research helps businesses and government in focusing attention on the complex nature of problems faced by them. For example:
   1. Determination of Gross National Product; Price indices, and per capita income;
   2. Expenditure levels and budgeting;
   3. Agricultural Pricing;
   4. The economic policies of Government; and
   5. Operational and planning problems of business and industry.
3. Market Research AgenciesMarketing Research is being used extensively by professionals to help conducting various studies in Marketing Research. Most prominent agencies being:-
   1. Linta India Ltd;
   2. British Market Research Bureau (BMRB);
   3. Hindustan Thompson Associate Ltd;
   4. eSurveysPro.com;
   5. MARG