Relationship Marketing Taxonomy
Running head: RELATIONSHIP MARKETING TAXONOMY
Relationship Marketing Taxonomy
Ed Jennings
University of Phoenix
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Relationship Marketing Taxonomy
Relationship Marketing Taxonomy
Marketing theory and author
The Innovation Diffusion
Model by Bass
Timeframe
Description of the
theory
The innovation The innovation
diffusion model diffusion model
was first
was created as a
proposed by
mathematical
Bass in 1969
model to forecast
and modified
the adoption rate
again in 2004.
of a new product
Since then,
or service.
suggestions
Essentially, the
have been made diffusion is a
for modification process of
based on a
communicating
change rate
the new product
which changes
or service to
the behavior of members of a
the adoption
similar social
rate (Kapur,
system. There are
Singh, Anand,
four main
and Yadavalli,
elements to the
2007).
diffusion model
which consist of:
time; innovation:
communication;
and the social
environment itself
(Kapur, Singh,
Anand, and
Yadavalli, 2007).
Five forces of Competition
The first
Framework by Michael Porter reference to
Michael
Porter’s five
forces of
competition
framework was
mentioned in
Current use or
influences
The innovation
diffusion model
is primarily used
as a forecasting
tool. Global
product managers
want to know
how fast a new
product can be
adopted in their
home country as
well as other
countries. In the
early 1990’s
Direct TV used
the innovation
diffusion model
to forecast a five
year projection of
subscriptions
which proved to
be accurate. At
US WEST /
QWEST the
innovation
diffusion model
was used to
forecast the
number of
Internet yellow
page searches
when the Internet
was in the
infancy stage.
The work done by Siaw and Yu
Porter strategized (2004), wrote an
five determinants article on the
for long-term
impact of the
profitability. The Internet within
first determinant
the banking
is the rivalry
industry. The
among
Internet provides
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Relationship Marketing Taxonomy
1979. However,
the first
publication
outlining
techniques for
analyzing
industries and
competitors was
published in
1980 (Goett,
1999).
Market-Oriented Ethnography Arnould and
by Arnould and Wallendorf
Wallendorf
used the phrase
market-oriented
ethnography in
1994
competitors
within an
industry. This can
range from
subdued to
vicious. The
second
determinant is the
threat of new
competition. The
ability of a new
competitor to
enter the market
is partially based
on the barriers to
entry. Substitute
products are the
next
consideration. If
the customer has
many choices,
there is more
competition. The
final two forces
deal with the
bargaining power
of buyers and
suppliers. Based
on their ability to
negotiate the
prices, services
provided, or extra
services such as
storing inventory.
This will have an
effect on the five
forces
competitive
framework
(Goett, 1999).
The phrase
market-oriented
ethnography is
used to describe
the behavior of
people in the
both benefits and
threats. The
barrier of entry is
reduced because
Internet banking
does not require
brick and mortar
buildings. The
Internet has
forced banks to
look for
additional
segmentation
opportunities and
customer
relationships.
Market-oriented
ethnography is
used to observe
people dealing
with products and
service in the
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Relationship Marketing Taxonomy
market for a
product or service
and the
conversations
they have with
strangers, taking
into account the
surroundings, in
the context of the
conversation.
There are three
main stages of
analysis. The first
stage is to
examine the
extensive field
notes and massive
amount of data.
The second stage
is to identify
themes and
categories which
were behavioral
in nature and took
place between
strangers. The
third phase was to
develop the links
between the
concepts,
indicators and
context of the
comments
between strangers
regarding
products or
services.
context of
strangers who do
not represent a
threat to the
anonymity of
conversation.
Additionally,
positive and
negative
comments can be
placed in the
context of what
was happening at
the moment. Also
context specific
stimuli can be
observed. A
report was
conducted on rail
travel. An
example of
context based
stimuli was a
passenger asking
a stranger to
wake them up
when they
arrived at a
certain stop.
Another example
of marketoriented
ethnography was
a woman who
purchased a cup
of coffee but the
lid was not
placed properly
on the top of the
cup resulting in
frustration that
the coffee could
have spilled on
her. The woman
commented to a
stranger this was
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Relationship Marketing Taxonomy
Conjoint Analysis by Luce,
Tukey, Green, Rao, Johnson,
Westwood, Lunn, and
Beazely.
Conjoint
analysis has had
several
significant
contributors.
Most of the
credit for
conjoint
analysis is
given to Green.
The origins
began in 1964
in mathematical
Psychology
where Luce and
Tukey
published a
paper about
collecting data
based on rank
score
measurement.
Green began
running many
experiments in
the late 1960’s.
Ultimately,
Green and Rap
published their
findings in 1969
which appeared
in a marketing
journal in 1971.
Later, Johnson,
Westwood,
Lunn, and
Beazley
published
articles on
trade-off
models using
Conjoint analysis
is a methodology
for exploring how
consumer’s tradeoff attributes
when making
purchasing
decisions from
competing
suppliers.
her biggest
frustration with
purchasing coffee
at the particular
coffee shop.
The benefit of
conjoint analysis
is to infer the
buyers’ attributes
and worth when
making a
purchasing
decision. An
application of
conjoint analysis
was Courtyard by
Marriott. Marriott
wanted to create
a new hotel
chain. They
evaluated 160
attributes of
staying at a hotel.
Users were asked
to make
tradeoffs. The
project was a
success and by
1990, Marriott
had 300
Courtyard hotels
(Green, Krieger,
and Wind (2001).
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Relationship Marketing Taxonomy
Affinity Marketing by
Macchiette and Roy
Prospect Theory by
Kahneman and Tversky
two attributes
(Green, Krieger,
and Wind
(2001).
Macchiette
andRoy
published a
seminal paper
around the
concept of
affinity
marketing
programs in
1992. Further
research in this
area is
recognized by
Swaminathan
and Reddy in
2000 (Woo,
Fock, and Hui
2006).
The concept of
prospect theory
was first
introduced in
1979. This
concept deals
with
There are three
concepts which
constitute the idea
of affinity
marketing. First,
there is the nature
of the affinity
group whom
would be
interested in the
specific affinity
program. There
can be different
levels of affinity
and interaction.
The second aspect
is some element
membership
requirement. This
reflects a higher
degree of
affiliation. The
third aspect refers
to the
interrelationships
between the
institution and
members. If a
member is part of
the affinity group
they receive a
benefit from the
institution (Woo,
Fock, and Hui
2006).
The basic
assumption is
consumers are not
very good with
statistics or math.
People tend to use
rules of thumb to
In the 1990’s
Mastercard
hosted a sports
team affinity card
worldwide
consistingof
15,000 members.
The card had a
picture of the
customers’
favorite team on
the card. The
typical attrition
rates for other
cards were 31%
compared with
only 5% for the
MasterCard
affinity card
during the testing
period (Woo,
Fock, and Hui
2006).
British Airways
offered a lower
price to fly into
an airport which
was much further
away from
London. British
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Relationship Marketing Taxonomy
incorporating
consumer
psychology into
pricing
decisions
(Shoemaker,
2005).
Word of Mouth Marketing by
Arndt and Ditcher
answer such
questions. So,
when deciding to
purchase a
product or
service, the
consumer
determines from a
neutral point
whether the
purchase will
create a positive
or negative
change of wellbeing in their
lives. Kahneman
and Tversky
furthered their
research in 1981
by outlining the
consumer frame
of reference is
based on two
basic
considerations:
how they
formulate the
problem; and the
norms, habits, and
typical
characteristics of
the consumer
(Shoemaker,
2005).
Arndt and
Arndt and Ditcher
Ditcher first
created the first
developed the
list of factors as
concept of word to why people
of mouth
engage in word of
marketing in the mouth
1966-1967
advertising. First,
timeframe
is to reduce
(Cheung,
confusion.
Anitsal, and
Second, is being
Anitsal, 2007).
involved with the
product itself.
Airways then
raised the price
for flights into
Heathrow. People
paid the higher
price and British
Airways made
money in a year
when several
other carriers lost
money
(Shoemaker,
2005).
Fashion
designers starting
out such as Zac
Posen often use
word of mouth to
launch their
businesses.
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Relationship Marketing Taxonomy
Customer reacquisition by
Stauss and Friege
In 1999, Stauss
and Friege
define customer
reacquisition as
losing a
customer then
rebuilding the
relationship
with the
customer
(Tokman,
Davis, and
Lemon, 2007).
Third, is selfinvolvement.
Fourth, is to help
others and fifth, is
to enhance
relationships
(Cheung, Anitsal,
and Anitsal,
2007).
Customer
relationship
management has
be a hot topic for
the last 10 years.
The basic premise
is establishing a
relationship with
a customer and
finding the best
ways to make that
customer loyal.
Stauss and Friege
focused on a
customer who has
been lost and
reacquiring them
as a returning
customer
(Tokman, Davis,
and Lemon,
2007).
Comprehensive Product
Evolutionary Cycle (CPEC)
by Tellis and Crawford
Tellis and
Crawford
proposed the
CPEC model in
1981. This
theory was
based on natural
sciences models
which explain
transformation
from simple to
complex. In
CPEC was
closely aligned
with chaos theory
which is designed
to explain the
rapid innovation
and evolution of
markets based on
new technology.
The advancement
of technology can
change the
In 2001,
BellSouth was
losing customers
at a rate of
29,000 lines per
month. By the
first half of 2003,
BellSouth had
won back 26,000
previously lost
lines. Through
high economic
benefit, a
company has a
60%-70%
probability of
winning back a
previously lost
customer. This
compares to a
success rate of
5% to 20%
success rate of
selling a new
buyer.
The Internet has
been a rapid and
chaotic change
for many
businesses.
Whether the topic
is banking,
printing, yellow
pages, or medical
advice, the
Internet has
played a role in
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Relationship Marketing Taxonomy
1991, Achrol
suggested that
technology can
remove
traditional
geographic
boundaries and
evolve
organizations
(Doherty and
Delener, 2001).
Dynamic pricing in Internet
Retail by Shepherd 1997
Dynamic
pricing is a
concept which
has been
discussed by
Shepherd since
1997. As the
Internet offers
more
transparency,
customers are
more informed
(Garbarino and
Lee, 2003).
competitive
landscape very
quickly.
Outcomes of
chaos theory as
applied to CPEC
are innovation,
market niches,
diversity,
alliances,
acquisitions, and
uncertainty in
long-term
forecasting. The
three key
elements of chaos
theory are
Nonlinearity,
system states and
how things are
ordered when
they emerge
(Doherty and
Delener, 2001).
Dynamic pricing
is perceived to be
inherently good
for the business.
More current
research has show
if customers find
a lower price for a
product or service
on the same web
site, they are
frustrated and
disenchanted
(Garbarino and
Lee, 2003).
evolutionary and
chaotic change.
With the increase
in Internet users
and database
sizes, more
companies are
experimenting
with changing
pricing in the
Internet
environment.
Amazon.com
found consumers
to be frustrated
and complain if
they found a
lower price after
they had
purchased
something from
the company
(Garbarino and
Lee, 2003). So,
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Relationship Marketing Taxonomy
10
while the ability
exists to change
the prices quickly
on the Internet,
consumers feel
taken advantage
of if the price is
lower after they
have made their
purchase
(Garbarino and
Lee, 2003).
References:
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Doherty, & Delener. (2001). Chaos theory: Marketing & management implications. Journal of
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Garbarino, & Lee. (2003). Dynamic pricing in Internet retail: Effects on consumer trust.
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Goett. (1999). Michael E Porter: A man with a competitive advantage. The Journal of Business
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Relationship Marketing Taxonomy
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