The 21st century customer and importance of relationship marketing

S. K. M. Silva Senior Area Manager Bank of Ceylon

Marketing revolves around anticipation, identification and satisfaction of the customer (consumer) needs. Therefore, if there is an emergence of a new consumer into next millennium, marketing will have to transform to meet the expectation of this new consumer.

How to identify this new consumer, that characteristics will he exhibited? This new consumer will be far more demanding and discerning that the consumer of this century. The consumer of the next millennium will very clearly exhibit the following characteristics.

He:

1 demands greater quality in products and services

2 places greater emphasis upon receiving value for money

3 has a higher level of price awareness and price sensitivity

4 will accept technology as a way of life (less technophobia)

5 show a willingness to accept and also demand more exciting new products and services

6 exhibits lower level of loyalty to brands (brands loyalty) and greater willingness to switch between brands and between markets too.

7) displays greater awareness of the environment and preference towards green products - (environmentally friendly products).

Based on the abovementioned characteristics display by the emerging new consumer, our Marketing Guru, Philip Kotler states that marketing, as discipline, has to play greater emphasis upon -

1. Quality, value and consumer satisfaction

2. Relationship building and customer retention (relationship marketing).

3. Global thinking and marketing planning.

4.Building strategic alliances and networks.

5. Direct and online marketing.

6. Service marketing.

7. Ethical marketing behaviour.

As we approach the new millennium, there are a number of priorities for Marketing Managers to contend with:

1. Differentiation will increasingly be based upon service. Differentiation is a major factor in ensuring competitive advantage.

2. With consumer expectation rising, quality will become one of the basic rulers of competition. This means that, quality will be taken for granted by consumers and will no longer be a contributory factor towards gaining a competitive edge.

3. As markets fragment, customisation will become more necessary. This is termed as the emergence of mass customisation. Mass customisation is different from mass marketing.

Mass marketing was based on generating mass values which is relating with economics of scales to manufacturers. Mass customisation, on the other hand, is the ability for an organisation to tailor-make their offerings to meet the individual needs of customers, without losing the ability to man produce.

4. Information and greater marketing knowledge will provide a powerful basis for competitive advantage. This means that the use of marketing research and marketing intelligence will provide a well developed marketing information system (MKIS).

5. Speed of anticipation and response to marketing opportunities will become evermore important. This is due to the intensity of competition of the external marketing environment.

6. Partnership with suppliers and distributors will become far more strategically significant. This means building effective relationship which would act as a basis of competitive advantage.

These priorities are, by no means, exhaustive. However, they are probably the most important. Marketing managers need to take these priorities on board and demonstrate an appreciation for same by reflecting them in their marketing plans. Due recognition should be given to the changing needs of consumers by organisations.

The cost of gaining a new customer has been determined to be four times the cost of maintaining the existing customer. Therefore, it is logical that every effort be made to retaining the existing customer-base. Relationship marketing has been very very important for the retention of existing customer-base.

Therefore, what is Relationship Marketing? Relationship Marketing is marketing seen as relationship, networks and interaction. Relationship requires, at least, two parties who are in contact with each other. It is a process of strengthening relationship with the customer from transaction to transaction in order to sustain a continuously improving value creating exchange process.

This requires businesses to move away from the traditional idea that marketing and selling is concerned with transactions to being concerned with the marketing of long-term relationship.

(See table at bottom right)

Therefore, to meet the expectation of this new customer of next millennium, Relationship Marketing will give the real answer.

How to introduce a relationship marketing programme in an organisation -

1 Identify your key customers.

2 Study the needs and expectations of both parties (company and consumer).

3. What is required for the organisation to work as closely as possible with the customer.

4. Build the Relationship Marketing process as an integral part of an organisation’s marketing strategy.

5. Building the relationship with the identified customer by first focusing on small winning situations.

6. Recognise that different types of customers having different expectations. This must be reflected in the relationship building process.

Therefore, in order to successfully introduce and sustain a Relationship Marketing programme, an organisation must have a different outlook towards its customers and reflect same in the marketing strategies formulated and implemented.

If Relationship Marketing is to succeed as an effective marketing strategy, there are some important criteria that must be satisfied.

This activity must be fully supported by Senior Management and more importantly driven by a member of the senior management team. As stated earlier, it must be seen and believed in as a long term and strategic activity.

Finally, the importance of developing a relationship with internal customers (employees) should not be neglected because employees could make an external relationship marketing programme successful or not.