Managing marketing relationships Article Example | Topics and Well Written Essays - 3500 words

Managing marketing relationships - Article Example Finally, revenue does not necessarily increase with time for all types of customers (Reinartz & Kumar, 2000). But relationship marketing still has been adopted with aim to: build grater customer loyalty and relation; develop methods of creating longer term relationships; Lead ultimately to increase sales and profits. To build up customer loyalty, three kinds of marketing tools were designed: economic, psychological (creating links) and structural (partnerships) (Berry and Parasumaran, 1991). In order to increase loyalty relationship marketing has came into existence.Relationship marketing has been defined by Gronroos (1990, 1991, 1994) who has consistently argued for the importance of ensuring that relationships with customers should be continuously developed: "Marketing is to establish, maintain and enhance relationships with customers and other partners, at a profit, so that the objectives of the parties involve are met. This is achieved by a Mutual exchange and fulfillment of prom ises." Gronroos argues that all marketing strategies lie on a continuum ranging from transactional to relational marketing where relationship marketing can be judged in terms of measures of customer retention rather than marketing share. RM requires the effective acquisition and retention of customers for the building of a more efficient operation and ultimately, a stronger competitive position. Now being familiar with a bank doing retail banking in the country, and having 500 branches and over 2 million customers. I will try to discuss the relationship marketing strategies for the particular bank. It is an important aspect of retail banking to... The reasoning behind retaining the customer is simple i.e. if we want to be profitable and increase it, hold on to the good customers. To identify the good customers’ bank has divided the customers in several tiers in terms of profitability and that these tiers often have quite different service expectations and needs. According to Valarie Zeithaml, Roland Rust and Katharine Lemony (2001) it’s critical that organizations must understand the needs of customers. Customers within different profitability tiers and adjust their service level accordingly. Bank has developed customers around various levels of contribution, different needs (including sensitivities to such variables as price, comfort and speed) and identifiable personal profiles such as demographics. Bank has stratified its customers according to their requirements. At the top level, customers, who constitute a very small percentage of a bank’s customer’ base. They are heavy users of services and c ontribute a large share of the profits generated in the bank. Typically this segment is relatively less price sensitive but expects highest service levels in return and is likely to willing to invest in and try new services. The next tier forms a larger percentage of customers than the top one’s and contributes less profit to the bank in comparison to top ones. They tend to be slightly more price sensitive and less committed to the firm. The third level of customers provides the bulk of customer base.