Comparison of traditional & relationship marketing

Introduction

Marketing has been an essential part of any business since ages; it was and is still one of the vital functions of any organization. Marketing aims to achieve the two main objectives of any business; viz. to attract/ acquire new customers and to increase customer loyalty/ retention. It delivers what the company, brand or product stands for and what it promises to deliver to its customers. It does not include only the selling of the company’s products and/or services, but it is used as a tool to communicate with the customers, it helps in building a communication link/channel with its customers.

Previously, one-way communication channels used to be in place; however this trend has been changing and as companies realized the importance of customer feedback, participation and satisfaction their focus has shifted on building a two-way communication link with its customers Over time, marketing has evolved and developed to a different form; the traditional marketing approaches, techniques and mindsets now have been affected by the more direct, focused and relationship marketing approaches where the customer is dealt on a one-to-one basis. This change is mainly due to the advent of new and advance technology which now make it possible to extensively collect, integrate, store, filter and analyze customer data to the best of business’ advantage.

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Traditional marketing

Traditional marketing holds a very important place in the marketing strategy of any firm. It still has its roots embedded in the marketing activities of any business and almost no business goes without making use of the traditional marketing approaches and techniques. The traditional marketing activities encompass the conventional methods and mediums a business adopt to form a communication channel with its customers.

The traditional marketing includes the following marketing techniques to communicate with its customers:

Advertising

It is one of the most common and widely used techniques which a company uses to communicate with its customers, build its brand awareness, attract customers & potential customers and make the sale of its products/services. Advertising is done through various channels and a variety of mediums ranging from pamphlets, billboards, brochures, advertisements to print ads, advertisements on buses and a number of other examples as well. It has a wide p and has proved to be one of the most powerful tools to attract customers. Advertising should not be confused, associated or limited with only the use of certain  shapes, jingle, spokespersons, symbol, color, taglines etc.; all these are only elements of advertising or tactics through which a company strives to appeal its customers and entice them to choose their brand over others in the highly competitive global markets of today.

The importance and need of advertising led to the existence of advertising agencies, whose main focus is to conduct the advertising activities for their clients, they specialize in building successful communication channels with the customers and enabling the company to establish formidable ties and relationship with its customers. The advertising agencies work on their client’s behalf to make the customers understand and aware of the promises the company and/or its brand/s make and what it aims to deliver. The companies hire advertising agencies and give them a brief of the intentions of the company, what it wants it customers to expect from them, what it strives to deliver and the reason for their existence. It is then the job of the advertising agency which may make use of different advertising campaigns to achieve specific goals and objectives or simply to deliver the message to the customers.

There are a number of mediums through which advertising is carried out, the most common being Television, Print media (newspapers, magazines etc.), Radio and a relatively newer medium, the Internet.

Public Relations

It is not a very common tool used by companies but is one of the most powerful tools which have deep impact on the customers. These are basically the second or third-party endorsements a company or its brand receives. Word-of-mouth advertising also falls under this category and it is considered to be one of the most effective and economical ways in which a business may market itself. It evolved from the idea that people generally may not believe what a company itself claims about its standing rather they believe if they hear it from sources other than the company itself (may include peers, spokespersons, celebrities etc.). A good PR and/or publicity may also be achieved by displaying social responsiveness and responsibility.

Event Marketing & Corporate Sponsorships

This type of marketing technique is based on the sponsorship or endorsement of an event by a company. It may range from sponsoring sporting events, social events to recreational events such as concerts, game shows, TV programs etc. This approach may benefit a company very much if it understands where the bulk of its customers are and which event will be the best source to reach out for its customers. Once the company discovers the best event or source of communicating with its customers it can initiate, sponsor, endorse or leverage that event to obtain huge benefits in terms of increased awareness and customer attention.

Sales & Trade Promotions

This is related to the provision of sales or trade promotions to customers or partners (suppliers etc.) respectively. These promotions serve as catalysts in the purchasing process i.e. they accelerate the purchase decision and help the customers in choosing or preferring a product/service over others. Similarly, in the case of business or trade partners, the goal is same, to gain their attention and interest and provide them an incentive to prefer the company’s brand over that of its competitors. In such cases, trade promotions may range from trade discounts to the involvement of partners/suppliers in the marketing activities of the firm or in the formulation of its marketing or promotion strategy. With the increased awareness about integrating the partners together to form and manage as a chain (the concept of Supply Chain Management), businesses have started focusing more on building strong relationships with its suppliers so as to manage the channel effectively and economically.

Internet

With the advent of Internet there has been a new wave of advertising, and this medium is gaining increasing attention of the customers and businesses as well. It provides and economical way to reach out to masses without any limitation of geographical or physical boundaries. The Internet has also given rise to the use of direct marketing, i.e. one-to-one or personal marketing. With the increased flow of traffic over the Internet, advertising done on the Internet has achieved significant importance, advertisements on sites (banner ads, pop-up ads etc.) has become common-play and businesses are striving to obtain the maximum benefit from this less expensive and more powerful tool.

Relationship marketing

This type of marketing has evolved lately than the traditional and conventional forms of marketing and is of great importance to businesses as well as customers. It is one of the key drivers of customer satisfaction and retention. Relationship marketing has also gained attention because of the shift in the mindset of companies who were previously concerned only about making a product which they deem to be beneficial and marketing it to customers, whereas nowadays, they are more concerned about providing what the customers want or what they prefer and valuing customer feedbacks and reviews.. Dealing with the customer on a one-to-one or personal level instills the belief in the customers that the company does value them and also enables them to voice their opinions and suggestions. Customers have been increasing viewed by the company as partners and are also being dealt with accordingly. Companies are increasingly integrating customers in the process of developing new products/services as well as increasing the value derived from current offerings, the customers are reviewed on individual basis and the company strives to deliver each of its customers the value which caters to the individual needs of a customer.

Although the importance of direct or relationship marketing was realized way back, the technological drawbacks and/or the high costs associated with such activities restrained the company from adopting any such practices. However, with the advent of Internet the scenario has dramatically changed and it is still experiencing increasing prevalence in the marketing world. This does not denote that direct or relationship marketing came into existence only with the inception of the Internet, it was carried out even before through personal interviews, Tele-marketing etc. but the reach was limited and the costs associated with such campaigns were very high, sometimes so high that it may offset the whole idea or benefit that can be obtained from relationship marketing.  Relationship marketing provides the company with valuable customer data, which it can manipulate, mould and analyze to exploit it to the best of the mutual advantage of the customers as well as the company. It helps the company in predicting customer behavior, trends, patterns and preferences.

Role of Technology

Technology has played a major role in promoting relationship marketing, enabling the companies to practice direct marketing and providing the necessary tools which helps the company to operate on a one-to-one level with its customers. The Internet is the most visible and dynamic component of technological advancements in this area. The use of e-mails and catalogues which are customized to match the individual needs of the customers are an example of this innovation. There are other advancements as well such as the introduction of databases, data-marts, data-warehouse, analytical tools, business intelligence, On-line Analytical Processing (OLAP), Customer Relationship Management (CRM) tools and software now available and adopted widely by companies to manage one of the key assets of the company, the customers.

E-mail, catalogues and customization

The use of e-mail and Internet is still on the rise even after attracting masses of population from all age groups. E-mail is one of the simplest and least-expensive forms of communication, through which a person can be reached within a few seconds of time irrespective of his/ her location. The analytical and data-processing tools now available to businesses has enabled them to track the movements and preferences of its customers, study their behavior and patterns and then customize or formulate messages or e-mails which best reflects their interests and cater to their needs/wants.

Catalogues are also designed on the basis of specific customer interest and preferences. Most companies now employ such tools which track the movements of its customers to obtain detailed information about them or by directly obtaining information from customers about their preferences and needs. The information obtained is manipulated to produce catalogues which are customized to meet the individual needs of the customers and then mailed to the respective customer. Customization is not only being done in the catalogues but the advancements of technology have enabled the company to provide its users a customized look of their websites. The customers can choose the way they want to view a certain website or page over the Internet and the next time they visit they will get their desired view of that specific website. The catalogues were used even before such technological advancements but the customization to match individual needs was not prevalent through manual tools. Companies at most were able to produce catalogues meeting the requirements or preferences of specific groups of customers or target population.

Relationship marketing does have its cons too and care must be taken to ensure that the customer does not feel violated in any way when trying to build a relationship with him/her. Some customers are simply not interested in building a one-to-one relationship with the company or they prefer to remain anonymous, the company should be aware of this fact and should not adopt any strategy or action which might annoy its customers. Privacy invasion is one of the key issues this type of marketing has to face and the company must either obtain permission from its customers or should adopt practices which does not inflict any damage on the relationship with the customers. It should also take careful measures and should scrutinize its methods of obtaining customer information on a regular basis. Relationship marketing has gained great attention of the company and customers in a short time p and is here to stay.

References

1. Allen, Cliff, Kania, Deborah, and Yaeckel, Beth (1998).
2. Internet World, Guide to One-to-One Web Marketing, Building a relationship marketing strategy one customer at a time. USA: John Wiley & Sons, Inc Davis, Scott M. (2002).
3. Brand Asset Management: Driving Profitable Growth Through your Brands. US: Jossey-Bass Publishers Gordon, Ian (1999).
4. Relationship Marketing: New Strategies, Techniques and Technologies to Win the Customers You Want and Keep Them Forever. John Wiley and Sons Publishers Kotler, Philip, Armstrong, Gary, Saunders, John and Wong, Veronica. (1999).
5. Principles of Marketing 2nd ed. Europe: Prentice Hall Peck H, Payne A, Christopher M & Clark M. (1998).
6. Relationship Marketing. Oxford: Butterworth Heinemann. Blackwell, Jeff (2006, December 1). Overview of Traditional Marketing. Overview of Traditional Marketing  EzineArticles.com. Available from <http://ezinearticles.com/?Overview-of-Traditional-Marketing&id=374128> [9th Nov 2008] Thurston, S. (2008, October 30).
7. Experiential Marketing – Bold, Non-Traditional Marketing Techniques Effectively Increase ROI.  Experiential Marketing – Bold, Non-Traditional Marketing Techniques Effectively Increase ROI. Available from <http://ezinearticles.com/?Experiential-Marketing-Bold,-Non-Traditional-Marketing-Techniques-Effectively-Increase-ROI&id=1634082>[November 9, 2008]
8. Grönroos C. (1994). . Management Decisions. From marketing mix to relationship marketing. Available from <Emerald: http//emeraldinsight.com> [10th Nov 2008]

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