Relationship Marketing: Local Implementation of A Universal Concept
Relationship Marketing: Local Implementation of A Universal Concept
471-481, 1995
Copyright © 1995 Elsevier Science Ltd
Pergamon 0969-5931(95)00027-5 Printed in Great Britain. All fights reserved
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Local
Relationship Marketing: Local Implementation
of a Universal
Implementation of a Universal Concept
Concept
Adrian J. Palmer
De Montfort University, Leicester Business School, The Gateway,
Leicester LE1 9BH, UK
Abstract -- Relationship marketing has been described as a new paradigm for the study of
exchange. However, current interest in developing relationship marketing programs overlooks
the existence of relational exchange as the dominant form of exchange in many of the world's
economies. This paper discusses the nature of relational exchange and governance within a
cross-cultural context and advises caution in the implementation of western style tactical
relationship marketing activity in markets where relationships represent core cultural values.
Introduction
Relationship marketing has recently excited the minds of marketing
academics and practitioners alike. However, this excitement must be seen in
perspective, for it has mostly originated from western countries, overlooking
the fact that relational exchange is the norm in many other cultures and indeed
has been the norm in previous eras in western economies (Sheth and
Parvatiyar, 1993).
Formulations of relationship marketing based on contemporary western
interpretations may fail if transplanted to overseas countries where the cultural
and economic environments differ significantly from the country for which a
relationship marketing policy was originally formulated. There is now an
extensive literature to guide companies in the development of a marketing
mix strategy in overseas markets in a manner that meets the needs of those
markets (e.g. Keegan, 1989; Levitt, 1976). However, less attention has been
given to the sensitive adaptation of exchange mechanisms to meet the needs
of overseas markets. Given the growing trend towards globalization of
markets (Porter and Fuller, 1986), and the increasing deployment of
organizations' employees overseas (Smith, 1992), it is important that
employees, organizational structures and processes are sympathetic to the
exchange needs of a market.
This paper seeks initially to identify the multiple dimensions of relationship
marketing, drawing on contemporary literature. It will be argued that
relationship marketing is not a universal paradigm capable of uniform global
application. Western prescriptions of relationship marketing must consider the
state of economic and social development of a country as factors influencing
471
472
International the pattern of exchange between buyers and sellers. Cycles of social and
Business e c o n o m i c d e v e l o p m e n t can be i d e n t i f i e d w h i c h can affect the local
Review implementation of relationship marketing strategies.
4,4
Defining Relationship Marketing
It is now widely accepted that a transactional exchange framework is
inappropriate for studying a wide range of buyer-seller transactions (Levy and
Zaltman, 1975; Morgan and Hunt, 1994). A considerable body of literature
has been developed to explain the antecedents and consequences of relational
exchange between buyers and sellers. This has been subsumed under the title
of 'relationship marketing', although this term has now been so widely used
that it means quite different things to different people (Fisk et al., 1993).
At a tactical level, relationship marketing has focused on loyalty programs
which are often very short-term in nature and perform a similar role to sales
promotion activity. It has been pointed out that such programs do not
guarantee long-term loyalty from customers (O'Brien and Jones, 1995). At the
tactical level, relationship marketing has been stimulated by the falling costs
and increasing user-friendliness of databases through which a company can
gain a better understanding of its customers to enhance future exchange
possibilities (Copulsky and Wolf, 1990).
At a more strategic level, relationship marketing has been seen as a process
of 'tying in' customers through the creation of legal, economic, technological,
geographical and time bonds (Liljander and Strandvik, 1995; Perrien et al.,
1992). It has, however been suggested that it may be more appropriate to talk
about such bonds leading to involuntary customer detention rather than
willing retention (Dick and Basu, 1994).
Finally, relationship marketing has been conceptualized as a core business
p h i l o s o p h y which is fundamentally about adding value to a relationship
through mutually rewarding co-operation (Han et al., 1993), to the point
where relational exchange is characterised by stable, friendly relationships
based on reciprocated trust and commitment involving both cognitive and
emotional components (Gupta, 1983; Rusbult and Buunk, 1993). Recent
conceptualizations of marketing as being the integration of customer
orientation, competitor orientation and inter-functional co-ordination (Narver
and Slater, 1990) stress the key features of a relationship marketing
philosophy; using all employees of an organization to profitably meet the
changing lifetime needs of targeted customers better than competitors.
The study of relational exchange initially focused on the behavior of
industrial buyers in relation to the suppliers of industrial goods (Hakansson
and Ostberg, 1975; Campbell, 1985; Cunningham and Turnbull, 1982), and
has since been applied to c o n s u m e r m a r k e t s (Crosby et al., 1990);
transactions between parties at the same level of a supply chain (Nueno and
Oosterveld, 1988; Bucklin and Sengupta, 1993); relationships between
government bodies and private sector organizations (Waddock, 1989; Comer
et al., 1980) and between a firm and its employees (Berry and Parasuraman,
1991).
473
International to their structure, processes and core values. There has been much recent
Business interest in the development of extended network-type organizations (Achrol,
Review 1991; Q u i n n , 1992) and the i m p l i c a t i o n s of such structures for the
4,4 development of 'seamless' inter-organizational collaboration (Gummesson,
1994). It has been pointed out that relationships may fail to develop where the
differing cultural backgrounds of organizations prevents the development of
agreed social norms (Rainey, 1983; Ring and Perry, 1985). Organizations
differ in the extent to which they are able, or willing, to calculate the lifetime
value of a customer (Reichheld, 1993; Reichheld and Sasser, 1990).
i i l !il
J I
I
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!
!
I
I
Figure 1. "time
475
the basis of a trusted relationship with a supplier, instead seek reassurance . Local
through other means. The brand emerged as a means of providing reassurance Implementation
of consistent quality to spatially dispersed customers who, because of the use of a Universal
of intermediaries, had no direct relationship with the manufacturers of their Concept
products. Branding creates a product which has unique physical, functional
and psychological values and can help to transform commodities into unique
products (Jones and Ward, 1989). In relatively simple societies, the functional
attributes of a brand predominate. These refer to the purity, reliability and
durability of a product, whereas the emotional attributes of a brand refer to the
image that a product creates in relation to the needs, values and lifestyles of
customers (Sirgy, 1982, Venkatraman, 1988).
As societies develop, it has been argued that consumers have become
increasingly critical of both the functional and emotional dimensions of
brands. Research has suggested that consumers are becoming increasingly
critical of the messages of brand building advertising, especially those aimed
at creating abstract emotional brand personalities (Biel, 1990). It is also
claimed that consumers are becoming more confident, ready to experiment
and to trust their own judgement and less tolerant of products that do not
contribute to their own values (King, 1991). It has been suggested that
consumers increasingly evaluate products on the basis of the quality of
relationship with the supplier (Christopher et al., 1991). It is no longer
sufficient to offer better merchandise, or even better levels of service. When
markets become saturated, better quality of relationships can give competitive
advantage (for example, the marketing of cars in the more developed
economies has moved from an emphasis on better design characteristics and
brand image, to better service facilities, and subsequently to superior
relationships which provide complete finance, maintenance and replacement
facilities. In developing economies with less mature markets, the emphasis
remains on better physical design and brand image).
The apparent decline in brands in many western countries has been
associated with the growth in retailers' private label products (Richardson et
al., 1994; Simmons and Meredith, 1984). By being closer to their customers,
retailers have been better able to develop relationship marketing policies, at a
tactical level (e.g. the use of Electronic Point Of Sales systems linked to
loyalty schemes); at a strategic level (developing added value programs for
'club' members); and at a philosophical level (e.g. knowing and satisfying the
needs of their customers so well that customers come to trust them more than
owners of manufacturers' brands).
It is interesting to note that branding achieved prominence in the wake of
the industrial revolution of the nineteenth century. During that era, technology
did not allow large scale manufacturers to keep in touch with their final
consumers, hence the resort to brand building and the use of intermediaries.
Today, industrialization of goods manufacturing and service industries allows
large scale production to be combined with one-to-one relationships between
producers and consumers, through the medium of direct marketing (Vavra,
1992).
476
Basis of Governance
Exchange occurs within a framework of rules and norms. Governance systems
can be placed on a continuum from being predominantly legally based to
predominantly morally based (Gundlach and Murphy, 1993). Many exporters
fail in overseas markets because they have not understood the basis of buyer-
seller governance and the prerequisites for turning transactional exchange into
relational exchange.
In many societies, shared ethical values form the dominant governance
mechanism for relational exchange. There is, for example, a presumption in
many Far Eastern cultures that exchange partners will be faithful in delivering
their part of a bargain. Before relational exchange takes place, there may be a
lengthy period during which partners gain the social acquaintance and trust of
each other, as a prerequisite for business exchange to occur. There have been
numerous analyses of the stages in the development of trust that buyers pass
through before they trust a seller (Schurr and Ozanne, 1985; Morgan and
Hunt, 1994). Models of trust based in social psychology often conceptualize
trust as the outcome of a process of exploratory interaction between parties
(Swan and Nolan, 1985).
Trust may be an important means of governing e x c h a n g e where the
network of exchange partners is closed and a defaulter to an exchange fears
being shamed by his community. Many western exporters have found it a time
consuming task to enter this network of trusting relationships.
The industrialization of economies leads to the development of extensive
impersonal relationships, and this may account for the gradual replacement of
moral governance with contractual governance. It has been argued that
governance through contract law is most appropriate to societies based on
transactional rather than relational exchange and this is reflected in the
traditional steps of contract formation -- offer, acceptance and performance
(Gundlach and Murphy, 1993). While contract law may be an appropriate
governance system for one-off exchanges, its theoretical inconsistencies for
the development of ongoing relationships have been noted (Macneil, 1980;
Williamson, 1991). It has been suggested that the r e n e w e d interest in
relational exchange calls for a reaffirmation of the moral framework within
which exchange takes place. Relational exchange requires cooperation, resting
on a foundation of shared interests and mutually agreed rules of conduct and
exchange out of which norms of behavior develop (Solomon, 1992; Heide and
John, 1992).
478
International Conclusions
Business Relationship marketing is not the new paradigm that its proponents have often
Review claimed. Companies seeking growth in overseas markets have often failed by
4,4 imposing a marketing mix formula which had worked in the very different
environment of the domestic market. Less attention has been paid to adapting
methods of exchange which are sympathetic to the governance systems and
exchange values of local cultures.
While relational exchange is not new in western economies, its form differs
from that which existed in an era of relatively simple economic development.
While companies seek to exploit information technology to develop
relationships with their customers, the types of relationships now enjoyed are
very different compared with those that existed between customers and small
scale, local producers. Although research evidence suggests that commercial
buyers and sellers develop norms and frameworks for governing their
relationship, the close network of relationships may not be available to
companies dealing with large numbers of private consumers. Information
technology may help companies to keep in touch with their customers, but it
does not allow for a symmetrical evaluation of exchange partners within a
closed network.
In some countries, such as Japan, the philosophy of relationship marketing
is enshrined in current business practice but marketers there may need to
make better use of available technology for developing relationships at a
tactical level. In less developed countries of Asia and Latin America, the
infrastructure and technology may itself present a constraint on the extent to
which relationship marketing can be developed tactically. In some countries,
loyalty programs may be viewed by regulatory authorities with suspicion as a
device for limiting competition. In short, prescriptions for relationship
development must have regard to the social, economic, political and
technological environment of the host country.
This paper has suggested the necessity of researching the exchange values
of overseas markets before seeking to implement a relationship marketing
program, but it must be recognized that technology itself may influence
exchange values. Will less developed countries follow the pattern of western
economies in the transition from relationship based small scale production,
through functional and emotional brands back to a focus on quality of
relationships? Or will Information Technology allow relationship building
during the process of industrialization? More fundamentally, will the
development of information technology influence the exchange values of a
culture?
Relationship marketing has a long history and will feature prominently in
future global marketing activity. Effective relational exchange must evolve in
accordance with the needs of local culture and the availability of technology.
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