Marketing relationship

Making Relationship Marketing Operational
Evert Gummesson
Stockholm University, School of Business, Stockholm, Sweden
Introduction The philosophy of relationship marketing (RM) is being advocated more and more strongly by marketers. However, its operational contents are unclear: Which are the relationships of RM? How do we manage them? Which are the benefits? In this article, an attempt ismade to specify – in a broader sense than usual – the relationships that constitute RM. It deals with direct market relationships between suppliers and customers, but also with supporting relationships above and below the market proper. The philosophy of the marketing mix theory, which is the currently most prevalant approach to marketing, is condensed in a few operational concepts through the 4Ps:product, price, promotion and place. In addition, supporting approaches and activities such as market segmentation and marketing research techniques, have been developed. In a similar vein and in order to improve the applicability of RM, the philosophy of RM is transformed into 30 relationships, the 30Rs. The article opens with a comparison between the marketing mix theory and RM. It proceeds toexplain the link between RM and a new organizational design, here referred to as the imaginary corporation. The core of the text consists of the listing and definition of the 30Rs, and a discussion of their properties and implications for marketing. It is concluded that RM constitutes a paradigm shift in marketing. The article ends with a note on research strategy and methodology. Marketing MixTheory versus RM: From 4Ps to 30 Rs The following definition will be used: “Relationship marketing (RM) is marketing seen as relationships, networks and interaction.” Relationships require at least two parties – basically a supplier and a customer – who enter into interaction with each other. More complex relationships grow into networks. The 4Ps are straightforward and operational. The operationalityhas been less obvious with RM. However, relationships have been in the centre of business activity since time immemorial, although they have not been offered any prominent place in general marketing theory. Consider the following examples: IKEA has 100 huge furniture stores, operates in 25 countries and engages 1,500 suppliers of 12,000 products. This is a complex network of relations toMaking RM Operational

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Received January 1994 Revised August 1994

International Journal of Service Industry Management, Vol. 5 No. 5, 1994, pp. 5-20. © MCB University Press, 0956-4233

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develop and maintain. The marketing relationship between IKEA and the customers is at its strongest when customers visit the stores. But relationships are also maintained through an annualdistribution of 60 million copies of its catalogue and IKEA Family, a club which in 1994 had two million customers as members, entitling the members to a series of benefits. The customers are not just buyers, they are members of a family. The US Xerox Corporation has allied with Rank in the UK to cover the markets in Western and Eastern Europe, the former Soviet Union states, China and Africa. InAsia, Xerox operates in alliances with Japanese Fuji and Indian Modi. Through this network of alliances, Xerox has been able to penetrate the global market. Alliances are part of a new organizational format and are not only for large corporations. One-man firms can become resourceful through alliances; one such example is network or multilevel marketing, MLM, which is built on a friends andfriends-of-friends expansion of a business network (Hawkins, 1991). Affiliation to electronic networks is a necessity for airlines and other players in the travel arena; it is the foundation for their marketing. In Europe, the dominating airline computer reservation systems are Galileo and Amadeus, owned by major carriers. American Airlines’ Sabre has developed into an international booking system...