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Relationship Marketing: Local Implementation of A Universal Concept

Relationship Marketing has been described as a new paradigm for the study of exchange. However, current interest in developing Relationship Marketing programs overlooks relational exchange. This paper discusses the nature of relational exchange and governance within a cross-cultural context.

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0% found this document useful (0 votes)
106 views11 pages

Relationship Marketing: Local Implementation of A Universal Concept

Relationship Marketing has been described as a new paradigm for the study of exchange. However, current interest in developing Relationship Marketing programs overlooks relational exchange. This paper discusses the nature of relational exchange and governance within a cross-cultural context.

Uploaded by

Dawson Lam
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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International Business Review Vol. 4, No. 4, pp.

471-481, 1995
Copyright © 1995 Elsevier Science Ltd
Pergamon 0969-5931(95)00027-5 Printed in Great Britain. All fights reserved
0969-5931/95 $9,50 + 0.00

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.

Key Words -- Relationship Marketing, Exchange, Globalization.

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

M u c h o f the c u r r e n t interest in r e l a t i o n s h i p m a r k e t i n g in w e s t e r n Local


economies is driven by the emergence of powerful user-friendly databases Implementation
which allow companies to develop a degree of intimacy with their customers of a Universal
(Treacy and Wiersema, 1993). If implemented as a tactical tool, relationship Concept
marketing will fail if it overlooks the fundamental need to deliver a quality
and depth of relationship that customers value (Barnes, 1994). It has been
suggested that in many sectors, for example banking, database led relationship
marketing has been implemented alongside a weakening of the emotional
relationship that customers feel towards an organization (Barnes, 1994). To be
successfully implemented, relationship marketing should reflect the value
system of the population to which it is targeted. A tactically led relationship
marketing program which has succeeded in a home market may fail if
i m p l e m e n t e d in a culture which places greater value on the emotional
elements of a relationship philosophy.

The Universality of Relationship Marketing


Relationship marketing strategies are not appropriate to all buyer-seller
relationships. Sellers of generic commodity products may find relationships
difficult to achieve in a market where customers have no reason to remain
loyal to one supplier and routinely seek out the supplier which is the lowest
cost and/or most accessible.
The extent to which marketing strategy is relationship focused is dependent
upon the characteristics of an organization's products, the characteristics of its
customers, and the characteristics of the organization itself. The nature of the
product i n f l u e n c e s r e l a t i o n s h i p d e v e l o p m e n t t h r o u g h the level of its
complexity which influences buyers' perceived risk. Where products are
complex and involve a high degree of buyer uncertainty, the likelihood of
customers seeking a relationship is increased (Berry, 1983; Lovelock, 1983).
For some products, a relationship may allow preferential treatment or semi-
automatic responses to requests for service (Marshall et al., 1979), thereby
reducing transaction costs. It has been suggested that both suppliers and
customers seek the security of relationships where the market environment is
turbulent (Zeithaml, 1981). What may be seen as a straightforward, relatively
low risk product in one market may be seen as high risk in another (for
example, the purchase of telephone equipment may be perceived as much
more risky in developing economies where there is a poor infrastructure to
facilitate repairs and upgrading).
A stream of research has sought to segment customers according to the
importance individuals attach to the economic as against the social aspects of
an exchange (Jackson, 1985; Fern and Brown, 1984). Customers differ in their
receptiveness to relationship development and in the level of suspicion they
show towards attempts to create relationships. Some groups will shift their
primary focus away from the pure economic aspects of the purchase to
secondary social exchange factors and develop interpersonal relationships
with suppliers (Blau, 1989).
The extent to which organizations are relationship orientated can be related
474

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).

Relationship Marketing and Economic Development


Economies in an early stage of development are characterised by small scale
production processes and relatively local markets (Watts, 1975). In such
systems, relationship development between producer and consumer is
relatively easy to achieve. Buyers are able to learn through personal
experience of the abilities, consistency and reliability of a supplier, while
suppliers are able to adapt simple production methods to the needs of
individual customers who are known personally. Through personal knowledge
and trust, a supplier is likely to be able to judge the credit worthiness of each
customer.
With the development of mass production methods, producers are able to
achieve economies of scale in production and, through price advantage, to
encroach on the traditional markets of smaller, less efficient producers.
Relationship building based on personal knowledge becomes more difficult.
The development of economic systems in terms of the transition from
relational-dominant to transaction-dominant exchange is illustrated in Fig. 1.
In impersonal mass-markets, consumers, who cannot judge a product on

i i l !il
J I
I
!
!
!
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

International Relationship Marketing and Exchange


Business Exchange has been considered by many authors as being at the heart of
Review marketing (Hunt, 1983; Kotler and Levy, 1969). Yet exchange is a multi-
4,4 dimensional concept whose dimensions are not uniform between all buyer-
seller relationships.
A number of authors have sought to identify the principal elements that
parties give to each other in marketing exchange, drawing on frameworks
developed in social psychology and organizational behavior (Kotler and
Zaltman, 1971; Luck, 1974). In the case of transactional exchange, the
elements are relatively easy to identify, as the presumption is made that the
parties involved bring no previous history of exchanges to the current
e x c h a n g e , nor do they expect the o u t c o m e of the current e x c h a n g e to
influence future exchanges. In the case of relational exchange, the last
condition is not met, and any analysis of exchange elements must consider a
wide range of social and economic factors that form part of exchange.
Within the context of industrial buyer-seller relationships, Hakansson
(1982) identified four elements which are exchanged between buyer and
seller: a product; money; information; and sociality. While the first two are
common to most commercial exchanges, information and sociality assume
greater importance where the relationship has a time dimension.
The meaning of the social element of exchange can differ between cultures.
Although social ties have received considerable attention in the context of
industrial buyer-seller relationships, they can also be important in private
buyer-seller relationships (Blau, 1989). In cultures where social aspects of
exchange form a relatively important part of the total exchange benefits
received by a buyer, attempts by other suppliers to attract buyers on the basis
of more tangible economic benefits may fail.
The diverse focal points of exchange can be related to a hierarchy of needs
(Maslow, 1954). In Maslow's model, needs are satisfied in a hierarchical
manner and a particular need only becomes a motivator when it is unmet. The
most basic needs which an individual seeks to satisfy are characterized as
physiological needs, and when these basic needs are satisfied, the individual
moves on to seek satisfaction of higher order social and self-actualizing
needs.
H i e r a r c h i c a l m o d e l s o f needs have b e e n c h a l l e n g e d for failing to
differentiate between different sets of cultural values (Hofstede, 1991). It has
been pointed out, for example, that social, family and spiritual needs may
override m a n y physiological needs, as e v i d e n c e d by rituals of fasting
observed by some cultures. It follows that in some cultures, relationship
marketing programs that emphasize material rewards for repeated purchase
may act as a much weaker motivation than a program which emphasizes the
honour of maintaining long-term relationships with a trusted supplier.
It was noted earlier that relationship marketing can be attributed with a
number of dimensions, from a tactical to philosophical level. Business
strategy in overseas markets with respect to the pattern of exchange will only
be successful where the exchange philosophy is in accordance with the
477

culture and motivations of individuals in that market. Attempts to implement Local


relationship marketing at the tactical level of database marketing alone will Implementation
fail in a culture which seeks uncertainty avoidance through relationships o f a Universal
which are characterised by commitment at a cognitive and emotional level. Concept
Similarly, attempts to develop long-term relationships based on mutual trust
and sociality may fail in a transactional culture which is preoccupied with
obtaining the best deal for each transaction.

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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