Relationship marketing theory its roots and direction

Kristian Moller - Google Scholar -sitaatit

relationship marketing theory its roots and direction

Design management is a field of inquiry that uses project management, design, strategy, and The discipline of design management overlaps with marketing management, operations management, and strategic management. .. His thoughts on system theory and project management led to a framework on how to deal. Analyze Relationship marketing concept in dynamics, forecasting its future develop- .. Relationship marketing theory: Its roots and direction. Segui. Kristian Moller. Professor of Marketing, Aalto University School of Business Relationship marketing theory: its roots and direction. K Möller, A Halinen.

Development[ edit ] Relationship marketing refers to an arrangement where both the buyer and seller have an interest in providing a more satisfying exchange. This approach tries to transcend the post purchase-exchange process with a customer to make richer contact by providing a more personalised purchase, and uses the experience to create stronger ties. Relationship marketing is different from other marketing techniques as it mainly focuses on long term relationship with customers.

From a social anthropological perspective, relationship marketing theory and practice can be interpreted as commodity exchange that instrumentalise features of gift exchange. This perspective on marketing opens up fertile ground for future research, where marketing theory and practice can benefit from in-depth research of the principles governing gift exchange.

According to Liam Alvey, [5] relationship marketing can be applied when there are competitive product alternatives for customers to choose from; and when there is an ongoing desire for the product or service.


Relationship marketing revolves around the concept of gaining loyal customers. Research conducted to developing relationship marketing suggests that firms can best do this through having one of the three value strategies; best price, best product, or best service.

Firms can relay their relationship marketing message through value statements. For example, an automobile manufacturer maintaining a database of when and how repeat customers buy their products, the options they choose, the way they finance the purchase etc. In web applications, the consumer shopping profile can be built as the person shops on the website.

This information is then used to compute what can be his or her likely preferences in other categories. These predicted offerings can then be shown to the customer through cross-sell, email recommendation and other channels.

Relationship marketing has also migrated back into direct mail, allowing marketers to take advantage of the technological capabilities of digital, toner-based printing presses to produce unique, personalized pieces for each recipient through a technique called " variable data printing ". Marketers can personalize documents by any information contained in their databases, including name, address, demographics, purchase history, and dozens or even hundreds of other variables.

relationship marketing theory its roots and direction

The result is a printed piece that ideally reflects the individual needs and preferences of each recipient, increasing the relevance of the piece and increasing the response rate.

Scope[ edit ] Relationship marketing has also been strongly influenced by reengineering. According to process reengineering theory, organizations should be structured according to complete tasks and processes rather than functions.

That is, cross-functional teams should be responsible for a whole process, from beginning to end, rather than having the work go from one functional department to another.

relationship marketing theory its roots and direction

Traditional marketing is said to use the functional or 'silo' department approach. The legacy of this can still be seen in the traditional four P's of the marketing mix.

relationship marketing theory its roots and direction

Pricingproduct managementpromotionand placement. According to Gordonthe marketing mix approach is too limited to provide a usable framework for assessing and developing customer relationships in many industries and should be replaced by the relationship marketing alternative model where the focus is on customers, relationships and interaction over time, rather than markets and products. In contrast, relationship marketing is cross-functional marketing.

It is organized around processes that involve all aspects of the organization. In fact, some commentators prefer to call relationship marketing "relationship management" in recognition of the fact that it involves much more than that which is normally included in marketing.

Because of its broad scope, relationship marketing can be effective in many contexts. As well as being relevant to 'for profit' businesses, research indicates that relationship marketing can be useful for organizations in the voluntary sector [7] and also in the public sector.

Satisfaction[ edit ] Relationship marketing relies upon the communication and acquisition of consumer requirements solely from existing customers in a mutually beneficial exchange usually involving permission for contact by the customer through an " opt-in " system.

Although groups targeted through relationship marketing may be large, accuracy of communication and overall relevancy to the customer remains higher than that of direct marketing, but has less potential for generating new leads than direct marketing and is limited to Viral marketing for the acquisition of further customers. Research by John Fleming and Jim Asplund indicates that engaged customers generate 1.

According to Buchanan and Gilles, [18] the increased profitability associated with customer retention efforts occurs because of several factors that occur once a relationship has been established with a customer.

Relationship Marketing

The cost of acquisition occurs only at the beginning of a relationship, so the longer the relationship, the lower the amortized cost. Account maintenance costs decline as a percentage of total costs or as a percentage of revenue.

Long-term customers tend to be less inclined to switch, and also tend to be less price sensitive. This can result in stable unit sales volume and increases in dollar-sales volume. Long-term customers may initiate free word of mouth promotions and referrals. Long-term customers are more likely to purchase ancillary products and high margin supplemental products.

Customers that stay with you tend to be satisfied with the relationship and are less likely to switch to competitors, making it difficult for competitors to enter the market or gain market share. Regular customers tend to be less expensive to service because they are familiar with the process, require less "education", and are consistent in their order placement.

Increased customer retention and loyalty makes the employees' jobs easier and more satisfying. In turn, happy employees feed back into better customer satisfaction in a virtuous circle.

Relationship marketers speak of the "relationship ladder of customer loyalty ". It groups types of customers according to their level of loyalty. The ladder's first rung consists of "prospects", that is, people that have not purchased yet but are likely to in the future.

Main issues and debates in design management included the topics of design leadership, design thinking, and corporate identity; plus the involvement of design management at the operational, tactical, and strategic levels.

In Robert Blaich, the senior managing director of design at Philipsintroduced a design management system that regards design, production, and marketing as a single unit. At Philips DesignStefano Marzano became CEO and Chief Creative Director incontinuing the work of Robert Blaich to align design processes with business processes and furthering design strategy as an important asset of the overall business strategy. The intent was to reprise IBM's brand image with customer experience-driven quality, approachability and contemporary product innovation.

The highly successful IBM ThinkPad was the first product to emerge from this strategy in and, together with other innovative, award-winning products that followed, served to position design as a strategic asset for IBM's brand turnaround efforts initiated in by newly appointed CEO Louis V.

Design management has been recognized and subsidized throughout the European Union as a function for corporate advantage of both companies and nations. Design management was influenced by the following design trends: It was also influenced by the later management trends of open innovation and design thinking.

This series includes a pre-publication [12] of the first chapter of the book Design Management by Michael Farr, [42] which is considered as the first comprehensive literature on design management. His thoughts on system theory and project management led to a framework on how to deal with design as a business function at the corporate management level by providing the language and methodology to effectively manage it.

Christopher Alexander's work played an important role in the development of the design methodology, where he devoted his attention to the problems of form and context; and focused on disassembling complex design challenges into constituent parts to approach a solution.

His intention was to bring more rationalism and structure into the solving of design problems. Design Policy up to s [ edit ] The British Design Council was founded in to promote design in the British industry.

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Design policies have a history reaching back to the end of the 19th century, when design programs with roots in the crafts sector were implemented in Sweden and Finland The success of the Deutscher Werkbund inspired a group of British designers, industrialists and business people after they had seen the Werkbund Exhibition in Cologne into found the Design and Industries Association and campaign for a greater involvement of government in the promotion of good design.

The British Design Council was founded by Hugh Dalton, president of the Board of Trade in the British wartime government, as the Council of Industrial Design with the objective "to promote by all practicable means the improvement of design in the products of British industry".

Germany also realized the national importance of design during World War II. Heinrich Himmler coordinated several design activities for Hitler, including: Since the s the practice of design promotion evolved, and governments have used policy management and design management to promote design as part of their efforts of fostering technology, manufacturing and innovation.

In the first conference topic, "Design as a function of management", was chosen to ensure the participation of the business community. After several years, business leaders stopped attending because the increased participation of designers changed the dialogue, focusing not on the need for collaboration between business and design, but rather on the business community's failure to understand the value of design. These were to recognize outstanding examples of design policy in organizations that maintained a consistently high standard in all aspects of design management, throughout all industries and disciplines.

With these awards the RSA introduced the term design management.

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The medal selection committee included representatives of the RSA council and the faculty of Royal Designers for Industry. Since the mids the DMI has been an international non-profit organization that seeks to heighten the awareness of design as an essential part of business strategyand become the leading resource and international authority on design management. One year later the first conference was organized. The DMI increased its international presence and established the "European International Conference on Design Management" inand a professional development program for design management.

The aim was to encourage companies — especially small and medium enterprises SMEs — to introduce design management procedures to; improve their competitiveness, stimulate innovation, establish a European knowledge-sharing platform, organize the Design Management Europe Awardand to identify and test new activities to promote Design Management.

Relationship Marketing : John Egan :

Gorb had previously embedded design management in the Burton Retail Group before joining LBS where he later founded the Design Management Unit in in collaboration with Charles Handy which he led for over 20 years. In his talk at the RSA entitled Design and its Use by Managers [53] provided a background introduction to the wide scope of design within industry and commerce, an appreciation of the power of design as a management resource, and advocated the teaching of design to managers.

Papers from the London Business School [56] Gorb is also remembered as introducing the concept of Silent Design, [57] design undertaken by non-designers, in an influential paper with Angela Dumas In the University of Art and Design Helsinki founded the Institute of Design Leadership and Management and established an international training program.

relationship marketing theory its roots and direction

The publication is solely focusing on design management and has become the flagship publication of the discipline. In its first generation design focused on the object, in the second on the process, and in the third on the user. For design management this has been illustrated by Brigitte Borja de Mozota, [62] using Findeli's Bremen Model as a framework.

Design management research organised itself into: Product design management[ edit ] Product design management helps to create a distinctive design. The Saab hockey stick is an automotive design feature. In product-focused companies, design management focuses mainly on product design management, including strong interactions with product design, product marketing, research and development, and new product development.

This perspective of design management is mainly focused on the aesthetic, semiotic, and ergonomic aspects of the product to express the product's qualities and to manage diverse product groups and product design platforms [65] and can be applied together with a user-centered design perspective. Focusing on the brand as the core for design decisions results in a strong focus on the brand experience, customer touch points, reliability, recognition, and trust relations.

The design is driven by the brand vision and strategy. Corporate design management implements, develops, and maintains the corporate identity, or brand.

This type of brand management is strongly anchored in the organization to control and influence corporate design activities. The design program plays the role of a quality program within many fields of the organization to achieve uniform internal branding. It is strongly linked to strategy, corporate culture, product development, marketing, organizational structure, and technological development. Achieving a consistent corporate brand requires the involvement of designers and a widespread design awareness among employees.

relationship marketing theory its roots and direction

A creative culture, knowledge sharing processes, determination, design leadership, and good work relations support the work of corporate brand management. Product design management is linked to research and development, marketing, and brand management, and is present in the fast-moving consumer goods FMCG industry. It is responsible for the visual expressions of the individual product brand, with its diverse customer—brand touch points and the execution of the brand through design.

Service design management deals with the newly emerging field of service design. It is the activity of planning and organizing people, infrastructure, communication, and material components of a service. The aim is to improve the quality of the service, the interaction between the service provider and its customers, and the customer's experience.

The increasing importance and size of the service sector in terms of people employed and economic importance requires that services should be well-designed in order to remain competitive and to continue to attract customers.

Design management traditionally focuses in the design and development of manufactured products; service design managers can apply many of the same theoretical and methodological approaches. Systematic and strategic management of service design helps the business gain competitive advantages and conquer new markets. Companies that proactively identify the interests of their customers and use this information to develop services that create good experiences for the customer will open up new and profitable business opportunities.

Companies in the service sector innovate by addressing the intangibility, heterogeneity, inseparability, and perishability of service the IHIP challenge: Services are heterogenous; unlike tangible products, no two service delivery experiences are alike.

Services are inseparable; the act of supplying a service is inseparable from the customer's act of consuming it. Services are perishable; they can not be inventoried. Service design management differs in several ways from product design management.

Relationship marketing theory its roots and direction

For example, the application of international trading strategies of services is difficult [68] because the evolution of service 'from a craftsmanship attitude to industrialization of services' requires the development of new tools, approaches, and policies.

Whereas goods can be manufactured centrally and delivered around the globe, services have to be performed at the place of consumption, which makes it difficult to achieve global quality consistency [69] and effective cost control. Business design management[ edit ] Main article: Design thinking Business design management is used in the development of business models.

The business model canvas by Alexander Osterwalder. Business design management deals with the newly emerging field of integrating design thinking into management. The designerly way of problem solving is an integrative way of thinking that is characterized by a deep understanding of the user, creative resolution of tensions, collaborative prototyping, and continuous modification and enhancement of ideas and solutions.

This approach to problem solving can be applied to all components of business, and the management of the problem solving process forms the core of business design management activity. It represents the adaptation and application of customary management practices, with the intention of achieving a productive [engineering design process].

Engineering design management is primarily applied in the context of engineering design teams, whereby the activities, outputs and influences of design teams are planned, guided, monitored and controlled. The output of an engineering design process [70] is ultimately a description of a technical system.

Therefore, the domain of engineering design management includes high volume, mass production as well as low-volume, infrastructure.

Urban design management[ edit ] Urban design management contributes to the development of urban districts. The newly built HafenCityHamburgGermany. Urban design management involves mediation among a range of self-interested stakeholders engaged in the production of the built environment.

Such mediation can encourage a joint search for mutually beneficial outcomes or integrative development. Integrative development aims to produce sustainable solutions by increasing stakeholder satisfaction with the process and with the resulting urban development.

The integrative negotiation approach emphasises mutual gains. The approach has been applied in land use planning and environmental management, but has not been used as a coordinated approach to real estate development, city design, and urban planning. Urban design management involves reordering the chain of events in the production of the built environment according to the principles of integrative negotiation. Such negotiation can be used in urban development and planning activities to reach more efficient agreements.

This leads to integrative developments and more sustainable ways to produce the built environment. Real estate development and urban planning often occur at very different decision-making levels. The practitioners involved may have diverse educational and professional backgrounds. They certainly have conflicting interests. Providing prescriptive advice for differing, possibly conflicting, groups requires construction of a framework that accommodates all of their daily activities and responsibilities.

Urban design management provides a common framework to help bring together the conventional practices of urban and regional planning, real estate development, and urban design. The work on Integrative Negotiation Consensus Building [74] and the Mutual Gains Approach [75] provide a helpful theoretical framework for developing the theory of urban design management.