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Volume 3(1): 159–166 Copyright © 2003 SAGE www.sagepublications.com
articles
Relationship marketing: looking back, looking forward David Ballantyne Monash University, Australia
Martin Christopher Cranfield University, UK
Adrian Payne Cranfield University, UK
Abstract. Relationship marketing has taken off over the past 10 years with a burst of vigour. Were relationships staring marketers in the face and were we too preoccupied to see them? We begin with a short historical perspective on the origins of relationship marketing. A discussion on future directions and theory development based around the concept of value exchange follows. A ‘view from the edge’ of chaos is then offered. We conclude that marketing as a discipline is forever changed. Key Words chaos knowledge generating pathways networks relationship and complexity marketing theory development value exchange
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Looking back The term relationship marketing was first contributed by Berry (1983) as a new rubric for services marketing. Of course, the emphasis on relationships, played out in various ways, is as old as trade itself. Early scholarly insights in the 1980s were the identification of service risk points in the customer relationship life cycle (Grönroos, 1983), and an emphasis on developing long-term interactive relationships between suppliers and customers, integrating both services and B2B per1470-5931[200303]3:1;159–166;033078
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spectives (Gummesson, 1987). Also, the foundations for later development of relationship perspectives were set in place by the recognition of the importance of buyer-supplier interaction, service quality, and the extension of the 4Ps to a 7Ps managerial approach in services marketing. In B2B marketing, Jackson (1985) made important distinctions between relationship marketing and what she called transaction marketing. Yet during the 1980s, relationship-based perspectives achieved only a modest impact on mainstream marketing theory and practice (Grönroos, 1994). Transactionally focused marketing and the 4Ps held firm, thus marginalizing relationship considerations in the competitive quest for new customers. In the 1990s, scholarly and practitioner interest in relationship marketing took off to the extent that it became the key marketing issue of the decade. Emory University (USA) established a biannual international conference. Monash University (Australia) initiated the International Colloquia in relationship marketing, since held annually at a different host university and now in its 10th year. Centres for learning in relationship marketing were established at Cranfield University (UK), Hanken Swedish School of Economics and Tampere University (both in Finland), and Emory University (USA). Also, the first relationship marketing books appeared (Christopher et al., 1991; McKenna, 1991). In addition, the Industrial Marketing and Purchasing Group (IMP), a body of academic researchers located mainly in Europe, had been researching business relationships, interactions and networks since the mid 1970s and have achieved important results (see, for example, Håkansson and Ostberg, 1975; Håkansson, 1982; Axelsson and Easton, 1992; Håkansson and Snehota, 1995; Ford, 1997). More recently, there has been a broadening of marketing interest in the phenomena of networks (Möller and Wilson, 1995; Iacobucci, 1996). On a separate but related front, there have been major developments in channel management, notably in North America, based around the rethinking of exchange relationships (see, for example, early contributions from Anderson and Narus, 1990; Dwyer et al., 1987; Heide and John, 1992). Under discussion has been the underpinning role of relationships between channel partners in improving benefits exchanged and reducing transaction costs. Other departures from mainstream marketing thinking have been direct marketing, which emphasizes continuity of direct contact with existing customers, one-to-one (see, for example, Peppers and Rogers, 1993), and database marketing, supported by the improvement and general availability of relational database technology (Sheth and Parvatiyar, 1995). More recently, customer relationship management (CRM) has become popular with suppliers of new technologies, although not always to the satisfaction of customers. Also, loyalty programmes have become commonplace in retail marketing, as have in-bound and out-bound technologically enhanced call centres. A necessary caveat, often ignored by practitioners, is that relationship-building demands mutual trust as a corollary to ongoing commitment (Morgan and Hunt, 1994). Why the growing interest in relationship marketing, in all its forms? First, in global and deregulated open markets, there are no certain prescriptions
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for marketing success that can be based on our past experience in relatively stable market systems. Open market conditions create higher levels of change and complexity within and between organizational boundaries. Establishing more open relationships with key customers, suppliers and other stakeholders can be seen as strategies for recreating stability, thus opening up value-creating opportunities in new ways. Second, new information technologies have enabled better and faster exchange links between firms and data collection about customer behaviour on an unprecedented scale. We believe that a ‘transactional’ marketing mindset is not adequate to work with these changes and challenges. With increasing uncertainty in financial markets since September 11 and more recent dismay at unethical short-cut approaches to creating shareholder value, academic and practitioner interest in the creation and distribution of value among a firm’s stakeholders seems likely to increase. One problematic issue is how value is to be measured and shared over the life of a relationship (Wilson and Jantrania, 1994). The idea of actually sharing value over the life of a relationship begs the question as to who is to ‘do’ the managing and who is to ‘be’ managed. Relationship marketing has tended to highlight the ambiguities in notions of value and it now seems on the edge of taking its next steps, into uncharted territory.
Looking forward Looking to the future, we see the idea of value exchange as the foundation stone of relationship marketing. This view is based on three different assumptions of value exchange potentialities (Christopher et al., 2002). These value perspectives suggest that: • Value is created as an offering and delivered through recurrent transactions within a supplier-managed relationship. • Value is created through mutually interactive processes and shared through negotiated agreement within the life of a relationship. • Value is created and shared in interactions that emerge from within networks of relationships. In other words, depending upon how you view the nature of value, so follows your bounded view on the nature of marketing relationships. Some overlap between these three perspectives is likely in practice.1 The first value perspective is close to the marketing management tradition, but is more enlightened, in the sense that it involves meeting customer requirements and longer-term management goals. The second perspective is based on interaction, seen as a social process with economic outcomes, where value is created and shared collaboratively by agreement between the parties involved. The third perspective applies when the firm is seen to be embedded in a network – a supra organization – that is real in the sense that the firm has a position within it, and that position determines what value emerges and for whom. In this perspective,
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the firm creates value jointly with customers and other stakeholders, transcending normal organizational boundaries. These value perspectives, in order, might be called: • Managed value; • Interactive value; • Emergent value. Ballantyne (2003) has described three knowledge-generating pathways found within firms and our three value perspectives align well with these. These knowledge pathways are: • Hierarchical knowledge; • Inter-functional knowledge; • Network knowledge. In the first case, expert knowledge is exchanged and legitimized through formal hierarchical channels. In the second, knowledge is generated and exchanged between internal customers and internal suppliers, along the value chain, end to end. In the third case, knowledge is generated within internal networks – that is, self-managing communities of employees, collaborating in firm-based project teams or in diagnostic problem-solving groups. No single knowledge-generating pathway can be successful on its own, but if any one pathway is inoperative, that will limit the effectiveness of the value perspective to which it is it most closely aligned. Much of what we accept as marketing theory begins with seeing things differently and recognizing a new pattern of ideas. So combining these value perspectives with their dominant knowledge-generating pathways (1 to 1, 2 to 2, and 3 to 3), we offer the following propositions: • Given hierarchical knowledge, value can be created as an offering and delivered through recurrent transactions within a supplier-managed relationship. • Given inter-functional knowledge, value can be created through mutually interactive processes and shared through negotiated agreement within the life of a relationship. • Given network knowledge, value can be created and shared through interactions that emerge from within networks of relationships Are the three value perspectives commensurate? That would require a relationship marketing approach that recognizes the need for firm-based planning and organizing but more in the nature of recurrent phases of reflection, learning and action, within the context of a growing network of interdependencies. The firm-level hierarchical function would not disappear, but rigid managerial control would be recognized as less effective in getting things done than through leadership and the willing commitment of employees to organizational goals that improve resource allocation and extend the lifetime value of the customer. Some academics and practitioners might say this is marketing as it should be, or as it used to be, in which case relationship marketing is getting back to some Arcadian ideal. This
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Internal markets
Supplier/ alliance markets
Recruitment markets
Referral markets
CUSTOMER MARKETS
Influence markets
Source: Christopher et al. (2002)
Figure 1 The six markets framework
seems unlikely – although it really depends upon the starting point chosen to build an historical perspective.2 It is a sobering thought that there are at least 26 definitions of relationship marketing in the academic literature (Harker, 1999). Our preference is to emphasize exchanges of mutual value within a six markets network of relationships (Christopher et al., 2002). Using the ‘six markets’ framework for strategy making (see Figure 1), any action in one domain, say the customer market, is seen to impact on the supplier market and the internal (employee) market, with perhaps wider environmental impacts that require critical issues management and planning. Thus the six markets model brings a systemic perspective to strategy making. This is a way of thinking about working within relationships, seeing the valuecreating possibilities, and delivering value. Somewhat challenging for the future of relationship marketing is the idea that businesses are embedded in these loose-knit stakeholder networks of great subtlety, where marketing activity can be described as ‘interaction within networks of relationships’ (Gummesson, 1999). This is not only a shift in language but also a shift in ideas about how value is created and an acknowledgment of new relationship forms. Relationship marketing is a defence against mental straitjackets and marketing myopia. Whenever traditional boundaries act as constraints to the creation and circulation of value, marketing relationships can act as conduits across those boundaries. This emphasis on relationships and networks, associated with a broadened view of value exchanges, seems likely to continue to redefine the
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marketing domain in the next decade. But there is also a view from the edge, and we will finish with that.
The view from the edge of chaos Is relationship marketing a new paradigm for marketing? Though the ‘paradigm’ word is often overused, perhaps the ‘paradigm shift’ comes when we recognize that the new scientific world-view of chaos and complexity might inform our thinking about the nature of marketing networks and the patterns of relationships within this context. This would mean understanding marketing activity as systemic, holistic, and, above all, as dynamically complex. Increasingly, business situations can be recognized as being constructed of dynamic complexity rather than the everyday detailed complexity. The circulation of information on the Internet is one of the more striking examples. Senge (1990) has popularized the idea that conventional forecasting, planning and analytical methods will not be agile enough to capture dynamic complexity, except in the very short term. In other words, business actions and reactions are no longer linear, mono-causal or exactly traceable back to their cause. Indeed, they never really were. This world-view connects with the new science of complexity in which the effects of any interaction can approach a near chaotic state (Stacey, 1996). In other words, feedback from any interaction can lead to more than one possible response, there will be a variety of unintended consequences, and the effects of these may be amplified over time. Likewise, it might be argued, the effects of small changes to any marketing plan might be amplified, and fed back into dialogue and change, so that the consequences of any action become less certain. Any one interaction can affect any other market interaction, so any relationship between a firm and the customer – even a single customer – will ‘interfere’ with other relationships. Surely this is a challenge to traditional marketing thought, as we know it?
Notes 1 By way of comparison, Brodie et al. (1997) have suggested that four types of marketing activity are found in contemporary marketing practice (CMP). Their studies are ongoing but their classification scheme includes transaction marketing, interaction marketing, network marketing and database marketing. We see the last of these, database marketing, more as an enabling technology that may support any kind of practice perspective. 2 In a recent analysis of relationship marketing’s theoretical roots and direction, Möller and Halinen (2000) conclude that different exchange characteristics and exchange contexts require different types of relationship marketing and the ability to use different theories and tools in an integrated manner. Paradoxically, they also caution against mixing different types of theory (p 45), which suggests to us that a new ‘commensurability debate’ on theory mixing is just beginning.
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References Anderson, James C. and Narus, James A. (1990) ‘A Model of Distributor Firm and Manufacturer Firm Working Partnerships’, Journal of Marketing 54(January): 42–58. Axelsson, B. and Easton, G. (eds) (1992) Industrial Networks: A New View of Reality. London: Routledge. Ballantyne, David (2003) ‘A Relationship Mediated Theory of Internal Marketing’, European Journal of Marketing 37(9): (forthcoming). Berry, L.L. (1983) ‘Relationship Marketing’, in L.L. Berry, G.L. Shostack and G.D. Upah (eds) Emerging Perspectives of Services Marketing, pp. 25–8. Chicago, IL: American Marketing Association. Brodie, R.J., Coviello, N.E., Brookes, R.W. and Little, V. (1997) ‘Towards a Paradigm Shift in Marketing: An Examination of Current Marketing Practices’, Journal of Marketing Management 13(5): 383–406. Christopher, M., Payne, A. and Ballantyne, D. (1991) Relationship Marketing: Bringing Quality, Customer Service and Marketing Together. Oxford: Butterworth Heinemann. Christopher, M., Payne, A. and Ballantyne, D. (2002) Relationship Marketing: Creating Stakeholder Value, 2nd edn. Oxford: Butterworth Heinemann. Dwyer, F.R., Schurr, P.H. and Oh, S. (1987) ‘Developing Buyer-Seller Relationships’, Journal of Marketing 51(April): 11–27. Ford, David (ed.) (1997) Understanding Business Markets, 2nd edn. London: Dryden. Grönroos, Christian (1983) Strategic Management and Marketing in the Service Sector. Cambridge, MA: Marketing Science Institute. Grönroos, C. (1994) ‘From Marketing Mix to Relationship Marketing: Towards a Paradigm Shift in Marketing’, Asia-Australia Marketing Journal 2(1): 9–29, and republished in Management Decision (1997) 35(4): 322–39. Gummesson, Evert (1987) ‘The New Marketing: Developing Long Term Interactive Relationships’, Long Range Planning 20(4): 10–20. Gummesson, Evert (1999) ‘Total Relationship Marketing: Experimenting with a Synthesis of Research Frontiers’, Australasian Marketing Journal 7(1): 72–85. Håkansson, H. (ed.) (1982) International Marketing and Purchasing of Industrial Goods: An Interaction Approach. Chichester: Wiley. Håkansson, H. and Ostberg, C. (1975) ‘Industrial Marketing – An Organizational Problem?’, Industrial Marketing Management 4: 113–23. Håkansson, H. and Snehota, I. (eds) (1995) Developing Relationships in Business Networks. London: Routledge. Harker, M.J. (1999) ‘Relationship Marketing Defined: An Examination of Current Relationship Marketing Definitions’, Marketing Intelligence and Planning 17(1): 13–20. Heide, J.B. and John, G. (1992) ‘Do Norms Matter in Marketing Relationships?’, Journal of Marketing 56(April): 32–44. Iacobucci, Dawn (ed.) (1996) Networks in Marketing. Thousand Oaks, CA: Sage. Jackson, Barbara Bund (1985) Winning and Keeping Industrial Customers. Lexington, MA: Lexington Books. McKenna, Regis (1991) Relationship Marketing. Reading, MA: Addison-Wesley. Möller, Kristian and Halinen, Aino (2000) ‘Relationship Marketing Theory: Its Roots and Direction’, Journal of Marketing Management 16: 29–54. Möller, Kristian and Wilson, David (1995) Business Marketing: An Interaction and Network Perspective. Boston, MA: Kluwer.
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Morgan, R.M. and Hunt, S.D. (1994) ‘The Commitment-Trust Theory of Relationship Marketing’, Journal of Marketing 58(July): 20–38. Peppers, Don and Rogers, Martha (1993) The One to One Future. New York: Currency/ Doubleday. Senge, Peter (1990) The Fifth Discipline. New York: Doubleday. Sheth, Jagdish N. and Parvatiyar, Atul (1995) ‘Relationship Marketing in Consumer Markets: Antecedents and Consequences’, Journal of the Academy of Marketing Science 23(4): 255–271. Stacey, Ralph D. (1996) Complexity and Creativity in Organizations. San Francisco, CA: Berrett-Koehler. Wilson, David T. and Jantrania, Swati (1994) ‘Understanding the Value of a Relationship’, Asia-Australia Marketing Journal 2(1): 55–66.
David Ballantyne is senior lecturer in relationship marketing and service management at Monash University, Australia. He is co-author with Martin Christopher and Adrian Payne of Relationship Marketing: Bringing Quality, Customer Service and Marketing Together (1991), now in second edition as Relationship Marketing: Creating Stakeholder Value (2002). David is also the founder of the International Colloquia in Relationship Marketing, a conference series held annually at a different university setting. The Colloquia is now a major international event and in its 10th year. Address: Department of Marketing, Monash University, Caulfield Campus, PO Box 197, Caulfield East, Victoria, Australia. [email:
[email protected]] Martin Christopher is professor of marketing and logistics systems at Cranfield University, School of Management, UK, where he is chairman of the centre for logistics and transportation. His work on logistics and supply chain management is internationally recognized and he has published widely on these subjects. He is also the lead author of Relationship Marketing: Bringing Quality, Customer Service and Marketing Together (1991). This was the first international text published on this evolving marketing philosophy and is now in second edition as Relationship Marketing: Creating Stakeholder Value (2002). Address: Cranfield University School of Management, Bedford, MK43OAL, UK. [email:
[email protected]] Adrian Payne is professor of services and relationship marketing, and director of the centre for CRM at Cranfield University, School of Management, UK. Adrian is coauthor with Martin Christopher and David Ballantyne of Relationship Marketing: Bringing Quality, Customer Service and Marketing Together (1991), now in second edition as Relationship Marketing: Creating Stakeholder Value (2002). He is the author of ten books on relationship marketing, CRM, and marketing strategy. His research interests are relationship marketing, value creation and customer retention strategy. Address: Cranfield University School of Management, Bedford, MK43OAL, UK. [email:
[email protected]]
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