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TABLE OF CONTENTS
Introduction ……………………………………………………………………………….Pg 3
Supply chain management ………………………………………………………………...Pg 3
Objectives …………………………………………………………………………………Pg 3
Plant location ……………………………………………………………………………...Pg 4
Transportation ……………………………………………………………………………..Pg 5
Inventory management ……………………………………………………………………Pg 6
Resources ………………………………………………………………………………….Pg 6
Demand management ……………………………………………………………………..Pg 7
Return management ……………………………………………………………………….Pg 7
Supplier relationship management ………………………………………………………..Pg 7
Warehousing management ………………………………………………………………..Pg 8
Conclusion ………………………………………………………………………………...Pg 8
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Question 1: Critically discuss how relationship marketing has evolved? You can support
your answer with examples.
Introduction:
Relationship Marketing is a modern approach to marketing which focuses on strengthening the
customer relationship and developing customer loyalty rather than increasing the sales volume
and profit of the company. Keeping the customers engaged and providing them with the highest
possible value from their purchase is essential. It took thirty years for relationship marketing
to become a mainstream discipline. Today, its principles and practices serve as the basis for a
modern marketing paradigm that focusses on consumer needs first. Understanding human
emotions is very important and lead to a healthy and long-term relationship.
The term relationship marketing quietly slipped into the business lexicon just over three
decades ago. At that time marketers were struggling with the early stages of consumer
demassification, finding it much more difficult to reach a wide audience. However, the
introduction of marketing automation systems had made addressable media a more affordable
option for targeting niche segments. As a result, marketers began to explore a wide variety of
media options in order to create more direct relationships with identified customers.
Literature review:
In contrast with the past, direct marketing has evolved immensely. Organizations often, to
achieve economies of scale restore to standardization and mass customization. The products
were sold on the basis of interpersonal relationships. In the last couple of decades, with the
increase in competition the focus has moved to differentiation. In order to achieve this
differentiation, it is important to understand consumer needs and requirements and adapt
products as per their demands. Thus, marketing moved from mass appeal to customer focused
marketing.
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Direct and database marketing involves collecting customer data like names, addresses, emails,
phone numbers, transaction histories, customer support tickets, and so on. This information is
then analysed to understand the customers purchase patterns and is used to create a
personalized experience for each customer. For instance, Courts Company were selling its
products in a traditional way but with the evolution of relationship marketing, the company has
changed its way and focussing more on customer needs and satisfaction. The real success of a
business lies in retaining its existing customers and maintaining loyalty. As such, the company
would use its business portfolio to build a strong connection with its existing customers. The
company tends to send SMS to its privilege customers offering discounts, sending birthday
wishes along with a gift voucher and discount packages etc... At the same time the company is
promoting its products and encouraging customers for multiple purchases. This allows the
company to form a long-term relationship.
Review of research:
The progression of database marketing from those early days to today’s world of multi-channel
real time engagement has been very noticeable. Technology has been the main catalyst for
change over those three decades, from the rapid growth of home computers in the ‘80s to the
invention of the web browser in the ‘90s to the mass adoption of the smartphone in the past ten
years. There are at least three distinct evolutionary periods in the history of relationship
marketing, each marked by a technology-related tipping point.
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The Era of Direct and Database Marketing (1989-1999)
“The future of advertising is radically different from its past. The struggle for control of
attention, creativity measurements and platforms will reshape the advertising value chain and
shift the balance of power. And, as in previous disruptive cycles, the future cannot be
extrapolated from the past.”
Most companies were still using traditional marketing approaches that they might have been
using since the middle of the 20th century.
Most marketer’s wages were still dependent on closing sales. They were set up to sell products,
but not provide relevant and valuable information to customers and prospects. Many
organizations were not measuring their marketing, so they were not even sure about what is
effective and not. Many businesses were reluctant to abandon traditional marketing tactics as
they believed that their well-worn marketing paths were easy to follow and going off into
uncharted territory is intimidating. However, mass advertising was also on the decline as
markets had begun to splinter due to media fragmentation. The stressing part of marketers was
how to make the best use of their media budgets. As per their research, it has been found that
for a more accountable marketing, it is vital to encourage an ongoing relationship with the
customer after the first sale to promote additional purchases or continued loyalty.
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The Era of Customer Relationship Management (2000-2010)
As the new millennium began, a growing chorus of complaint could be heard, led by a group
of digital professionals who ridiculed old school brand persuasion methods. That time many
companies lacked both the right people and the right processes to implement a new kind of
marketing. They placed very little value in marketing versus other aspects of the organization
such as operations, product development. They did not realise that every part of the
organization is actually affected by marketing.
Therefore, the digital professionals developed a more consensual relationship with customers
which is Permission marketing which has been popularized by Seth Godin. This new approach
gives the intended audience the choice of opting in to receive promotional messages. It came
up with more personalized marketing which addressed individual needs and preferences.
Gradually the use of email to connect with customers quickly had become the main mode of
communication. Users can opt in to receive periodic emails with updates and offers based
on the interests they expressed when they registered on a website.
Moreover, electronic customer relationship management was introduced - the concept of
developing strategies through usage of the internet and other digital platform for customer
relationship management. The aim is to attract more and more visitors to the e-commerce
website. But the focus is to attract quality visitors who are likely to make purchases. Companies
should be able to capture maximum consumer information during the purchase action and
promote the development of virtual groups where products and services are discussed. This
group can help in resolving consumer queries and also serve in lead generation.
The Era of Customer Experience Management (2010 – Present)
At the start of this current era most businesses struggled to keep up with the speed of digital
transformation. However, many brand marketers were reluctant to embrace the interactive
marketing as a grown-up discipline. But the change in customer behaviour could not be ignored
anymore. People no longer needed a brand to tell them what product to buy or where to find it.
They just wanted a better experience. All the money spent in advertisement to persuade
consumers was starting to see a diminishing return. Audiences were paying less attention,
distracted by their digital devices. The brand differentiator was now the ease and memorability
of the customer experience. As the lights began to flicker in print publishing and broadcast
media, marketers surged into digital media, hoping to find people willing to engage. Now as
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the decade is drawing to a close, even the most advertisers are scaling back and viewing “oneto-one marketing at scale” as their saviour. The age of the customer had finally arrived.
The Future: Integrated Customer Management (Post 2020)
Over the next few years artificial intelligence will have a dramatic impact on marketing,
helping to alleviate the burden and complexity of managing real-time interactions across
multiple channels and devices. But first marketers must solve the riddle of the times. How do
they encourage an open relationship with customers when the threat of data piracy and privacy
intrusion looms large? For example, let’s consider the recent Facebook data breach when 30
million account profiles were hijacked. And as long as marketers are paid to persuade rather
than to befriend, they can just pay lip service to the concept of relationship marketing. The rate
of change is about to accelerate, putting pressure on all marketers to move to a customer-first
strategy.
Recommendations:
The main points to focus on to be able to create a good relationship marketing are:

Knowing customers

Understanding customers

Trusting customers

Satisfying customers

Committing to customers

Communicating to customers

Reaching customers

Delighting customers
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Conclusion:
Due to technological advances, direct marketing is staging a comeback, leading to a
relationship orientation. Thus, relationship marketing represented a shift from transactional
exchanges to rational ones and from attracting customers to satisfying and maintaining them.
Ideally, a CRM (Customer Relationship Management) system helps a business to improve the
relationship with existing customers, find new customers and win back former customers. It
also enhances customer loyalty, builds up on effective internal communication, facilitates
optimized marketing, drives sales growth and facilitates to discovery of new customers
somehow through the customers’ positive word of mouth.
With the advent of the internet and big data analysis, organizations have been able to use
relationship marketing and database mining as a powerful marketing tool. Some companies
think that the Internet is just another way to market in today’s age. It’s those companies that
are in trouble.
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Question 2: How does relationship marketing work, with whom to keep relationships and
what are the conditions conducive to relationship marketing?
Introduction:
Relationship marketing is the process of identifying, developing, maintaining and terminating
relational exchanges with the purpose of enhancing performance of the business. Relationship
marketing implies direct marketing, relationship marketing and database mining to create
useful customer relationship marketing strategy. Direct marketing serves to deliver product
communication as well as the product themselves to individual consumers. The relationship
marketing theory gives the foundation to customer relationship management. The database
mining serves as the technology platform to store and use consumer related information. This
combination of the internet, technology and relationship marketing is referred to as customer
relationship management. The biggest advantage of the internet from relationship marketing is
the interactivity. Organization through email and online chat can establish customer
relationship and data collected from this interaction serves as base for future product offering
and other personalized services.
Literature review:
Relationship marketing is segregated in three levels, customizing to the customer, rewarding
customer loyalty, and connecting with high value customers on a personal level. The main
focus of relationship marketing is to retain customers and make them frequent buyer. The
existing customers are the main focus of relationship marketing. The reason for targeting
existing customer base is that there is no customer acquisition cost, lesser extent of discount or
vouchers, reduced price sensitivity, increase probability of referral and assured revenue growth.
Now within a defined existing customer base, organizations need to develop strategies to
maximize return on relationship investments. The existing customers are divided into three
broad categories, such as most valued customers, most potential customers and no value
customers.
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Most valued customers
The most valued customers as the name suggest are frequent buyers and their loyalty is highest
towards the company. These clients are considered as valuable assets of the company. So
companies need to develop strategy to retain them such as create a VIP list, give them personal
attention, thank them, listen to their feedback, have regular communication, and provide loyalty
rewards.
Giving customers personal attention makes customers feel they are being assisted whenever
required but at the same time they should not feel suffocated. Businesses should find the right
balance of personal attention without crossing the line into pushiness.
Thanking customers shows the appreciation for being chosen as business partner. This should
be done regularly but with authenticity. A way to thank the customers is by offering something
special such as small gift of card.
Listen to customers’ feedback helps to collect a little bit of information about their likes and
dislikes. This enables to make changes to appeal to their tastes thus increase in sales and make
the customers feel truly valued.
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Regular communication is important to inform customers about new products and services
being launched in the market. Clients should be kept updated about special sale or promotion
to encourage purchases.
As these customers are high profile clients, loyalty rewards to be offered to make them feel
privilege. Loyalty programs help create memorable experiences for customers which keep
them coming back.
Most potential customers
For the most potential customers, companies need to develop strategies under which they
become frequent buyers. Enterprises should keep their promises, deliver memorable service,
always stay presentable, strengthen the brand, and earn the customers’ trust.
“Keep your customers by keeping your promises”. It is important that a company provides its
services as defined. The entire company need to be trained and develop ongoing programs that
will keep the company focused on service, thus deliver memorable service. Also, it is vital to
sustain the enthusiasm for increased customer satisfaction by broadcasting the effects of service
initiatives.
In order to entice customers, it is important that the company displays itself smartly. An
impressive brand logo and attractive physical location impress the clients which make them
stay longer and shop more.
Trust and loyalty are the building blocks of a strong customer base. They are essential for
earning long-term customers and can make all the difference in the company’s success. And
earning customers’ trust does not require any sort of complex strategy, the best step is to offer
excellent customer service and maintain the commitments.
No value customer
These are the least profitable customers as sometimes they themselves are not sure what to buy.
These customers are normally new in industry and most of the times visit suppliers only for
confirming their needs on products. They investigate features of most prominent products in
the market but do not buy any of those or show least interest in buying. To grab such customers,
they should be properly informed about the various positive features of the products so that
they develop a sense of interest. Another way to retain these customers is to apply exit barriers
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such as penalty fees. For example, an early termination fee is charged by a company when a
customer wants to be released from a contract before it expires. The longer the customers stay
in the company, they will learn about new products and services which might interest them in
the future purchases.
Review of research:
The key to successful relationship marketing is a good customer experience. The easier a
company make it for customers to shop with, the more likely they are to do so. It is important
to note that customers are more likely to recall bad experiences than good ones. Gartner found
“When it comes to making a purchase, 64% of people find customer experience more
important than price.” So, this implies that companies should impress customers at the very
first sale and service in order to foster future sales.
However, relationship marketing is not to be maintained only with customers, but with
employees and other stakeholders as well such as suppliers and manufacturers. A company
will not be successful on the external market if it has not first taken good care of its internal
market which is its employees and stakeholders. Gronroos stated that relationship marketing
is to identify and establish, maintain and enhance relationships with customers, and other
stakeholders, at a profit, so that the objectives of all parties involved are met. This is done by
a mutual exchange and fulfilment of promises.
High customer orientation in relationship marketing is understandable, considering that the
number of purchases and the amounts purchased directly affect the company's bottom line. By
developing close relationships with customers, companies are better able to meet individual
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needs and desires, and are thereby more likely to increase customer loyalty. However, as has
been demonstrated within the interaction and network approach (Ford et al. 1998), different
stakeholder relationships cannot be looked upon as isolated entities. Each relationship may
affect all other relationships, including that with customers. One marketing relationship which
has a direct effect on customers, and which has received too little attention, is the one involving
the company's personnel. The importance of employee relationships has been discussed
extensively within services marketing, because of the specific nature of services. Customers
are believed to form relationships with individuals and organizations, rather than with goods,
and despite the increased use of technology in services, customers are still very much
dependent on personal interactions with employees.
Lately, attention has also been paid to the positive effect of high employee retention on
customer retention. It is to be noted that the success of relationship marketing is to a large
extent dependent on the attitudes, commitment and performance of the employees. If they are
not committed to their role as part-time marketers and are not motivated to perform in a
customer oriented fashion, the strategy fails. Hence success on the external marketplace
requires initial success internally in motivating employees and getting their commitment to the
pursuit of a relationship marketing strategy. Front-line employees depend on the services that
they receive from employees in other departments. Every employee within a company is an
internal customer of someone else, and thus forms internal customer relationships. Internal
service quality affects job satisfaction and, ultimately, customer satisfaction. Therefore,
relationship marketing should not be limited to front-line employees, but should be extended
to all personnel.
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Data Analysis
According to Accenture, businesses lose $1.6 trillion per year when customers churn.
This implies that the key to any happy, healthy, and lasting relationship is providing a human
touch, by using relationship marketing as a driver of the human interactions that delight the
customers. Digitally speaking, it is possible to connect with anyone on the planet. But a
connection is not a relationship. They are two different things. It is this culture that has made
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companies forget that there are people behind these digital profiles. These people have feelings,
emotions, problems, and motivations. It is people that form relationships with, not businesses.
In order to build a genuine, personal relationship with the company, customers need to see that
they are dealing with real people, not robots. People are naturally more attracted to other people
than they are to brands. Proving that there are people behind the brand makes it easier to create
a human-to-human connection. Therefore, investing more time in nurturing existing
relationships is something that will pay off in the long run.
Another important factor to keep the trust of customers is privacy. Companies should not get
over board with regards to consumer information. They should not share the information
without prior consent and knowledge of the consumer.
Conclusion:
How important are long-term customer relationships to your business?
85% of companies confirmed that long-term customer relationships were important to their
business. However the last significant study on the topic was published in 2013 and found that
only 30% of companies are fully committed to relationship marketing.
Today, fewer companies are committed to it and only 24% use relationship marketing in their
current marketing strategy – with 19% saying it is part of their 2021 strategy.
A lack of strategy is preventing companies to invest in relationship marketing. Many businesses
think that they are already promoting relationship marketing by offering discounts, loyalty
programs, personalized services and upselling. But these are tactics, and tactics are a dime a
dozen. To truly develop the relationship, businesses need to bond with their customers, create
friendships and feelings that no price change, marketing campaign or discount can compete
with. Relationships must be constantly maintained, otherwise, they will quickly wither and die.
Companies that invest in relationship marketing achieve a much greater ROI compared to
transactional marketing.
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