E Marketing Week12

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MKTG2032 / MKTG7037 E-Marketing The Internet. Neither a truck nor a series of tubes MKTG7037 / MKTG2032 E-marketing Week 12

description

Relationship marketingWeek 12 of 13 of the 2007 Internet Marketing Course. Content is based in part on Dann, S and Dann S 2004 Strategic Internet Marketing 2.0, Milton: Wiley. Diagrams taken from the Dann and Dann text are copyright to their respective copyright holders.

Transcript of E Marketing Week12

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MKTG2032 / MKTG7037 E-Marketing

The Internet. Neither a truck nor a series of tubes

MKTG7037 / MKTG2032

E-marketingWeek 12

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Course StructureWeek No Week beginning Topic(s)/Task(s)

1 19 February Chapter 3 Unique features of internet-based marketing

2 26 February Chapter 4 Consumer behaviour

3 5 March Chapter 5 Creating cybercommunities

4 12 March Chapter 6 Applications for business and non-business

5 19 March* Chapter 7 The internet in marketing strategy

6 26 March Chapter 8 The role of product in internet marketing

7 2 April Chapter 9 Promotion: the internet in the promotional mix

8 23 April Chapter 10 Promotion 2: the internet as a promotional medium

9 30 April Chapter 11 Pricing strategies

10 7 May Chapter 12 Distribution

11 14 May Chapter 13 Services marketing online

13 28 May Chapter 14 Relationship marketing

12 21 May Chapter 15 International marketing

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Assessment Due Dates

Task Weighting Due• Final Examination 30 June• Online Forum 20

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News on the intertube front

• http://www.trendwatching.com/trends/2007top5.htm– Status lifestyles– TRANSPARENCY TYRANNY!– Web n+1– Trysumers– The Global Brain

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MKTG2032 / MKTG7037 E-Marketing

The Internet. Neither a truck nor a series of tubes

News offline

The definition of marketing is (possibly) about to change

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AMA (2007) (pending the final vote)

• the activity, conducted by organizations and individuals, that operates through a set of institutions and processes for creating, communicating, delivering, and exchanging market offerings that have value for customers, clients, marketers, and society at large

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The Changes

• “Marketing is an organization function” – seen to be too strongly associating marketing

with a departmental “company silo.”

• “Marketing is the activity, conducted by organizations and individuals,”– recognizes that marketing is an “action word.” – marketing is something that organizations and

individuals do.

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The Changes

• “a set of processes,” – ambiguous as to who is engaged in the processes.

• “a set of institutions and processes,” – acknowledges that institutions such as

manufacturers, wholesalers, retailers, and marketing research firms are an important part of marketing.

– implies that marketing systems such as channels of distribution are a part of marketing as are social processes (e.g., regulations and norms).

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The changes

• “creating, communicating, and delivering,” but not “exchanging.” – Exchange was a central construct of the 1985 definition. – 2007 definition thus captures this historical focus of

marketing. – acknowledges that exchange continues to be an

important part of marketing, it does not make it the central focus

• 2004 definition included “value” – left the concept ambiguous. – 2007 focus on market offerings (i.e. “ideas, goods, and

services,” as the 1985 definition put it) that have value

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A reversal of position

• 2004 definition indicated that organizations create “value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.”

– marketing creates market offerings that have value to those who are not “customers.”

– “managing customer relationships” inappropriately elevates the strategy of “customer relationship management” to such prominence that this one, particular, strategic thrust becomes a part of the very definition of marketing

– Relationship marketing is shot down.

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The biggest change

• The 2007 definition maintains that market offerings have value for “customers, clients, marketers, and society at large.”– “clients” acknowledges nonprofit institutions– “marketers” acknowledges that those organizations and

individuals that do the marketing benefit from the created, communicated, delivered, and exchanged market offerings.

– “society at large” incorporates the 2004 definition’s concept of “stakeholders,”

• acknowledges the aggregated nature of marketing across competing organizations that impels innovations, improvements, and price competition.

• Creating market offerings that have value benefits society, as do communications about, and the delivery of, marketing offerings.

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MKTG2032 / MKTG7037 E-Marketing

The Internet. Neither a truck nor a series of tubes

The bold claim

In short, the practice and activity of marketing benefits

society.

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1985 2004 20071 organizational function activity conducted by

organizations and individuals

2 process of planning and executing

a set of processes operates through a set of institutions and processes

3 conception, pricing, promotion, and distribution

creating, communicating and delivering

creating, communicating, delivering, and exchanging

4 of ideas, goods, and services value market offerings that have value

5 to create exchanges and exchanging market offerings

6 for managing customer relationships in ways

7 that satisfy individual objectives value to customers have value for customershave value for clients

8 that satisfy organizational objectives

benefit the organization have value for marketers

9 benefit the stakeholders have value for society at large

The three way comparison

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MKTG2032 / MKTG7037 E-Marketing

The Internet. Neither a truck nor a series of tubes

Marketing definitions and internet marketing

AMA (2007) downgrades the role of relationship marketing from

core theory to part of the strategic tool kit

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MKTG2032 / MKTG7037 E-Marketing

The Internet. Neither a truck nor a series of tubes

Relationship Marketing

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Defining relationship marketing

• RM is to – identify, – establish, – maintain, – enhance and, – when necessary, also terminate relationships – with customers and other stakeholders, at a

profit, so that objectives of all parties are met, and so that this is done by a mutual exchange and fulfilment of promises.

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Core concepts of RM

• The lifetime value of the customer– The total value of the customer to the

organisation; as the customer stays with the organisation this value increases

• Customer loyalty– The cornerstone of relationship marketing; the

theory assumes that the development of trust, commitment and responsiveness will result in the customer reciprocating loyalty to the organisation

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Theory of loyalty

• Loyal customers exhibit behavioural and psychological commitments – Behavioural commitment includes:

• Repeat purchases• Increased transactions• Providing constructive feedback

– Psychological commitment includes:• Wouldn’t consider terminating the relationship• Engages in positive word-of-mouth referral• Holds a positive attitude towards the firm

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Suitability for RM

• There is an ongoing periodic desire for the service on the part of the customer

• The service customer controls the selection of the service supplier

• There exists an alternative choice• Brand switching is common• Word-of-mouth is key • Ability to cross-sell products

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Philosophical principles in RM

• Trust: – willingness to rely on the exchange partner in

whom one has confidence and reliance to perform

• Commitment: – need to maintain the relationship because of the

value of staying or cost associated with leaving

• Reciprocity: – notion of equality, – mutual obligation and – exchange theory

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Trust in business relationships

• Five processes by which trust can be formed in business relationships:– Calculative process– Prediction of future intent on past behaviour – Credibility– Motive assessment– Transference process

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Commitment

• Commitment is almost the end-game in RM

• Commitment is the operationalisation of contractual obligations; it depends on:– Service and product quality– Satisfaction

• Commitment has been defined as:– An affective event – A calculative approach

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Commitment’s impact

• Commitment has an impact on the following areas:– Intention to stay in the relationship– Desire to stay in the relationship– Performance of the relationship– Willingness to invest in the relationship– Development of alternatives– Opportunistic behaviour

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Reciprocity

• Reciprocity can move beyond simple financial functions to include:– Increasing stability by reducing risk and

uncertainty– Establishing legitimacy – Increasing effective and efficient resource

usage– Accessing resources not currently available to

the organisation

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Three levels of RM

• Tactics: incentive schemes designed to get the user from pre-purchase to purchase

• Strategic direction: developed for the medium to long term to foster mutually dependent relationships

• Relationship marketing philosophy: aimed at a long-term relationship rather than one-off transactions

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Approaches to long-term retention of customers

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Approaches to long-term retention of customers (contd)

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Approaches to long-term retention of customers (contd)

Source: Gilbert, D. C., Powell-Perry, J. & Widijoso, S. 1999, ‘Approaches by hotels to the use of the Internet as a relationship marketing tool’, Journal of Marketing Practice: Applied Marketing

Science, vol. 5, no. 1, pp.21–38.

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Creating relationships online

• Six strategic steps for RM using the Internet:– Treat the Internet as new medium

• exploit its unique properties

– Start with customers • define them

– Build relationships by getting to know customers– Build a service and not a web site

• Web2.0?

– Leverage by building on assets (brands)– Think radically to achieve best results

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Other tasks that help in creating relationships online

• Learn more about the customer through database analysis.

• Improve the product or service and make it more attractive.

• Inform to build the customer’s knowledge of the company.

• Tempt customers to purchase more regularly.

• Retain the customer using different forms of loyalty schemes.

• Web2.0 / Social media

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Trust: where does it need to occur?

• Common areas where trust is a heightened issue in online exchanges:– Sending/seller/merchant trading partner to a

receiving/buyer/customer trading partner– Customer and bank where trust is derived– A bank and a merchant – A merchant and a customer– A trusted third party such as eBay

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Barriers to trust

• Specific barriers include the lack of:– Co-presence in time and space– The entire human bandwidth (sight, hearing,

smell, touch and taste)– Capacity for interruption, feedback and

learning– Prior familiarity with one another

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Trust and e-servicescape

Source: Papadopoulou, P., Andreou, A., Kanellis, P. & Martakos, D. 2001, ‘Trust andrelationship building in electronic commerce’, Internet Research: Electronic

Networking Applications and Policy, vol. 11, no. 4, pp. 322–32.

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Trust and e-servicescape

• A six-step approach:– Offers goods and services (a promise)– Customer decides to buy (trusting intention)– Web site is secure (enable the promise)– Credit card details entered (trusting behaviour)– Goods shipped (keep the promise)– Customer is satisfied – this increases trust

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Discussion Questions for the Board

• In your owns words – give a 50 word summary of your assignment topic. Group members may not post “What they said” or equivalent to avoid answering the question.

• If the AMA (2007) is adopted, and what impact will that have on the value of relationship marketing in internet marketing?

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