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Evert Gummesson. Click here if your Evert Gummesson. New examples Edition pdf · Read Online Total Relationship Marketing, Second Edition pdf. Evert Gummesson: Stockholm University, Email: [email protected] AUSTRALASIAN MARKETING concept has become total relationship marketing defined as. Key Words: Relationship Marketing, Marketing, Total Quality Management, Total Gummesson ; Aijo ; Grönroos ; Magrath ; Khalil and Harcar Another writer describes it as “how to do things differently, more they want (JIT), a perfect delivery each and every time with desired levels of service that is.

I fully agree with the thesis of the book, several of the topics described are interesting and to top it off, Philip Kotler is one of those endorsing the book. Despite mainly being targeted at mass marketing of standardized consumer goods the quartet of Product, Price, Promotion and Place dominates the teachings of marketing all over the world.

When it comes to marketing of services, of B2B-products, less standardized products or even online sales, the Marketing Mix is not as applicable. Instead the real world focus of the marketing effort shifts to relationships, networks, co-operation etc. At the very end of the book the author states that he aims to right this faulty premise by initiating the development of a new general theory of marketing.

One after one Gummesson lists a number of relations that affect the company. He then discusses a number of more or less loosely related topics to this relationship tying in various aspects of interactions and collaborations and moves on to the next relation.

This makes a very odd book since many of the relationships listed are very far off from what is normally thought of as marketing.

Total Relationship Marketing by Evert Gummesson (ebook)

Some more exotic examples can be the legal relationship, the criminal relationship, the relationship to knowledge and governmental agreements in international organizations like WTO. Agreed, business is dominated and built on interactions between people, but does this mean that all relations that in some way affect business is marketing? My answer would be no. People have girlfriends and boyfriends, go steady, marry, have an affair, divorce.

Many have used matrimony as a metaphor for commercial relationships: You can invite somebody to dance with you. Peters6 makes it even more dramatic: The effective firm is much more like carnival in Rio than a pyramid along the Nile.

Craftsmen exchange services with other craftsmen whom they know and trust. The first thing I heard about business was that you need 5 6 Wilkinson and Young People who knew each other did business and then the seller wined and dined the buyer. As individuals, we voluntarily enter formal relationships through associations. Rotary, for example, brings people together from different trades and professions. The Rotarians get to know each other and business relationships are facilitated by the long-term friendship that develops among them.

Marketing and business are subsets or properties of society. In practice, relationships, networks and interaction have been at the core of business since time immemorial.

Relationships have certainly not gone unnoticed by business people. The sad story is that relationships have too long gone unnoticed in research and education.

Does the current interest in RM and CRM imply that marketing theorists are getting closer to marketing reality? Are we beginning to discern the marketing content of Japanese keiretsus, Chinese guanxies, global ethnic networks, the British school tie, trade between friends, loyalty to the local pub, and so on? Marketing theory has not invented these phenomena, practice has.

Some practitioners have lived them, others have not. A book can draw your attention to relationships by adding them to the map, making them visible. Relationships between customers and suppliers are the ground for all marketing. Within the current marketing management mode of thinking, much of marketing is reduced to impersonal exchange through mass promotion and mass distribution.

The manufacturer offers products and services via an intermediary and the consumer offers money. The manufacturer and even the retailer are no more than trademarks, they may even be totally anonymous to the consumer, who in turn is just a statistic. This approach to marketing does not comply with the reality of society. But focus is also on groups of like-minded people, affinity groups. The group members share a common interest, they want a relationship with the supplier, its products and services, and even with each other.

Golfers, environmentalists, computer freaks and HarleyDavidson owners belong here. The roots of RM During the industrial era, mass manufacturing of standardized goods gave birth to mass marketing and mass distribution. During this brief period of our history, marketing theory and education evolved around consumer goods marketing. Services marketing and B-to-B — where 7 One of the early academic proponents for a network view of the market was Thorelli Rethinking marketing 11 relationships were also central during the industrial era — were blank spots in research and education.

Research and practice in marketing during the past thirty years points particularly to the significance of relationships, networks and interaction. With certain exceptions, the literature is narrow, characterized by treating single issues in RM such as consumer loyalty, databases for smarter direct marketing, call centres, customer clubs or CRM software systems. These are all valuable bits and pieces, but they lack a coherent framework, an overriding theory.

A first effort to merge these two schools was made by Gummesson in Relationships, networks and interaction play a certain but subdued role in traditional marketing management, popularly referred to as marketing mix or the 4Ps product, price, promotion, place.

It has hegemony over marketing education throughout the world, but refers first and foremost to the mass marketing of standardized consumer goods. Despite its limitations it is erroneously presented as a general marketing theory. These three approaches, services marketing, B-to-B as networks and traditional marketing management, are central in the RM root system, but the roots have been extended during the past decades.

One of the new branches is total quality management TQM. The core of the TQM concept is customer perceived quality and customer satisfaction — which is also the core of the marketing concept. TQM has inspired the concept of relationship quality, that is, the efforts to improve quality of relationships, and not just the quality of goods and services. Relationship quality emerged in the large quality programme of Ericsson in the early s.

The purpose was to make explicit the fact that relationships are part of customer perceived quality. The fuzziness stands out better in Figure 1. RM is not happening in a vacuum, it is mirroring other events in business and society. When organization is discussed in the following chapters, it is treated as a network of relationships and referred to as the network organization. Gummesson b, ; Holmlund See also Davidow and Malone ; and Hedberg et al.

Investors, stock market analysts, top management and controllers have, however, gradually begun to question the role of traditional accounting: Do we really measure what matters? Modern accounting goes beyond the mere financial numbers. Accountants who are by training historians acknowledge the impact of customers, employees, services, knowledge, IT readiness, environmental effects and innovation as antecedents to future profit. Both concepts help to give a framework to the measurement of return on relationships ROR.

Chapter 6 is dedicated to these issues. IT is the latest branch of the RM root system. I have felt uneasy about how IT, primarily the Internet, the Web and the growing mobility, should be integrated with RM. It is easy to get enthralled by the media hype and the trendy praise for all the blessings of technology. Dotcoms and quick startups with young people, their ability to use the media as image builders to create celebrity status, the naivety of reporters, and the stock markets approaching the outer space of wealth, turned dotcom shares into sweepstakes and casinos.

The roller-coaster ride of the stock markets gave birth to enchanted winners and queasy losers, the latter group in the majority after What in this daily hullabaloo will exert sustainable influence and what is just a short-lived, albeit colourful, butterfly.

We begin to discern some answers, to see IT in a context, as part of marketing theory. IT has a lot in common with RM. The Internet, email and mobile telephony form new networks within which we can interact.

The IT influence is covered specifically in R12, the e-relationship, but is also an integral part of the whole book. Contributions to RM also come from other directions, both from theory and practice. As theory and scientific literature only cover fragments of reality, it is crucial to add knowledge from the reflective practitioner.

Business leaders, marketers, consultants and others disseminate their experience in action by running corporations as well as through lectures, interviews, articles, handbooks and memoirs. Sometimes professors of business schools have practical experience of business or government.

Furthermore, we shall not forget our lifelong and daily experience of being buyers and consumers, perhaps reflective customers. All this knowledge can be integrated in research and contribute to more dynamic and rich progress beneficial to both education and practice. Knowledge, experience, compassion and reflection — the pre-understanding of the individual — are grounds for enhancing the understanding of marketing.

There is, however, a growing tendency to take better care of tacit knowledge or knowledge by acquaintance. This Rethinking marketing 13 kind of knowledge has not found a language and a theory, but is used by the insightful both in practice and research. The most complete theory that has a link to marketing is the neoclassical microeconomic theory, also called price theory. To reach the self-imposed desire for rigour and theoretical completeness, a series of limiting assumptions have to be made, such as all customers being the same, all suppliers being the same and all products being the same.

It disregards differentiated offerings and brands, services, quality and relationships. Thus, microeconomic theory distances itself from the variety and complexity of real life, and the validity of the theory becomes weak, even non-existent. To design theory, researchers interview and observe marketers and customers. Activities and decsisions in companies form empirical evidence for theory. Thus there is no a priori conflict between theory and practice; they are two sides of the same coin.

There often is, however, animosity between representatives of theory and practice who claim that their side of the coin shines brighter. Such pseudo-conflicts do not contribute to knowledge development and are left aside here. If international research in marketing was less obsessed with techniques and less committed to received theory, we would have more reflective researchers who contribute more valid knowledge and therefore make more good.

The gap can be caused by lack of implementation skills and stamina, but also by difficulties in grasping the essentials. Hunt and Morgan None of these and their interdependence can be predicted with accuracy. The gap is also caused by marketers who have not internalized marketing values. Drucker was an early proponent of the marketing concept. In his classic management book fromhe says: If a company offers goods and services that satisfy needs and create value for the customer, customer satisfaction and the right customer perceived quality, the company stands the best chance of success.

This marketing-oriented and customer-centric approach is in opposition to production orientation, according to which the customer is obliged to buy what is available or not buy at all. Production orientation is typical of markets with a shortage of goods and services, and markets of centrally planned economies, but also of complacent industries in wealthy market economies such as in Europe and the USA.

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The marketing concept is popularly expressed as customer in focus. This has become a widespread slogan, understood and implemented only by a few of those who express it. They may just perceive it as a fad which it is timely to confess to, or yet another smart trick to trap the consumer.

The customer in focus values have not killed the old values, just pushed them into a corner from which they make recurring and successful efforts to break out. INSIGHT I propose that inadequate basic values and their accompanying procedures — the wrong paradigm — is the biggest obstacle to success in marketing. If marketers and top management do not understand and accept relationship values as a natural vantage point, there will be no positive effect of RM, nor of the installation of computerized CRM systems eCRM.

The most fundamental values of RM are: Since the early s, I have made a distinction between the marketing and sales department and the marketing and sales function in order to emphasize that marketing and sales are more than just the activities of specialized departments.

They are functions that must permeate every corner of an organization, not least the minds and actions of management. This is an old thought which has turned out to be enormously difficult to convey and implement. In companies I successfully use the terms full-time marketers FTMs and part-time marketers 13 Druckerp. For a discussion on the past and future of marketing, see Baker a, b. Rethinking marketing 15 PTMs to stress that everybody, irrespective of task and expertise, influences customer relationships either full-time or part-time.

Marketing management in this sense requires marketing orientation of the whole of the company, that is, marketing-oriented management. The core values of RM are found in its emphasis on collaboration and the creation of mutual value. It includes viewing suppliers, customers and others as partners rather than opposite parties.

RM should be more of win—win than win—lose, more of a plus sum game than a zero sum game. In a plus sum game, the parties increase value for each other; in a zero sum game, what one gains is the loss of another. A constructive attitude is expected by all those involved and all should find the relationship meaningful.

If these conditions are fulfilled, the relationships may become sustaining. For a supplier, it is important to retain existing customers, a fact which is increasingly being stressed. Extending the duration of the relationship becomes a major marketing goal. Too much emphasis has been put on the acquisition of new customers and too little on caring for existing customers. RM and CRM encourage customer retention and discourage customer defection; they encourage retention marketing first and attraction marketing — getting new customers — second.

RM should not be mixed up with traditional selling, which represents the supplier perspective and does not put the customer and an interactive relationship in focus. Contrary to the mythology of marketing, the supplier is not necessarily the active party. In B-to-B, customers initiate innovation and force suppliers to change their products or services. Consumers suggest improvements but have a tough time getting lethargic and complacent suppliers and legislators to listen.

Chat groups on the Internet empower customers to reach out at no cost but time; it makes customer-to-customer interaction C-to-C possible.

Customers can exert pressure on suppliers and it may even go so far that hate sites are created. At the same time, the supplier has more and better information available to act on.

Crosby, Evans and Cowles Bureaucratic—legal values are characterized by: These values historically dominate governments and their agencies. Its representatives have previously disclaimed marketing, but the international wave of privatization, deregulation and demand for competition, as well as the failure of the command economies, has forced a change. Unfortunately, bureaucratic—legal values are also common in private companies. RM requires different values based on relationships and services to the customer.

RM requires more ethical behaviour than traditional marketing. But all business people do not base their activities on RM values as presented here. Competition means winning over somebody, even destroying others, showing who is the biggest, the best and the wealthiest. Short-term greed often overrules long-term survival. For some, this fight has a value in itself. Although collaboration is the core property of RM, my RM concept holds that both competition and collaboration are essential in a functioning market economy.

Traditional marketing is prejudiced in favour of the benefits of competition. It sees collaboration as inhibiting the forces of the market. Rethinking marketing 17 RM versus transaction marketing RM is often presented as the opposite to transaction marketing, the one-shot deal. A customer may repeatedly use the same supplier because of high switching costs, but without feeling committed to the supplier or wanting to enter a closer relationship. In RM, loyalty — especially customer loyalty — is emphasized.

Recurrent customers are clients; those who have come back and a long-term relationship is in the making. In the next stages the client becomes a supporter and finally an advocate for the supplier. Transaction marketing has no ambition to climb the loyalty ladder. Still, it is often a realistic and functional option. A purchase can concern standardized goods at lowest price within a specified delivery time and grade of quality. Such deals are made, for example, on metals exchanges.

A consumer may only buy a home on a single or a few occasions in a lifetime and rarely has surgery on the appendix more than once. But even a one-shot deal can mean deep interactive relationships.

If a company builds a new office, the interaction with the builder and a network of providers may be intense for a year or two. The company may not build another office for the next few decades. If you have surgery and stay in a hospital, the interaction will be intense and painfully intimate, but both parties hope that the relationship will be superfluous as the wound heals. In order to conceptually incorporate transaction marketing in RM, it can be seen as the zero point of the RM scale.

Total Relationship Marketing

The zero relationship of RM has a price component within which the lowest price connects the buyer and the seller. Micro-economic theory advocates that price be the sole determinant of a purchase. This limitation makes the theory a blind guide to marketing management, as it only represents one extreme point on the 18 19 20 21 See Jackson a, bwho treats marketing and RM in the B-to-B context. Christopher, Payne and Ballantynep. Bunnell and Luecke The zero relationship also has a convenience component which implies that the customer often buys where it is simplest and most convenient on a certain occasion.

On such occasions price is almost immaterial. The fact that this book is about RM and advocates relationships as essential in marketing does not imply a religious belief in relationships as a magic panacea. On the contrary, we know that human relationships can be a source of insurmountable hassle as well as of unlimited joy.

But we cannot live without them. The larger share of world literature and entertainment deal with relationships between adults, parent and child, police and crook, and not least between the players in a business venture. The oil tycoon JR of the classic soap opera Dallas stood out as an international role model for greed-driven manipulation of all types of relationships, be it oil contracts, politics or family matters.

A relationship should not be retained if it works badly. Long-term relationships and customer care are not the same as admitting customers to the geriatric ward of the supplier, attaching them to the bed and keeping them on life support.

Relationships should not necessarily be broken just because there is a conflict, however. They can often be restored and improved or they may be the best option for the parties despite a conflict.

The beginning of a relationship is often romantic and passionate.

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It is when the passion phase fades that the real work of building a relationship starts. Jackson22 succinctly states a common-sense RM strategy: It is a matter of common sense. The issue is how to make it happen. Common sense, sound judgement, instinct, intuition, insights and wisdom are stressed in the handbook-type marketing literature; in the scholarly literature they are often treated with contempt.

Common sense does not mean that good sense which is common. Companies grow and employees cannot overview the meaning of their job. Common sense and sound judgement had to be reinstated. They had got lost in the red tape and standardized mass production of the industrial society. It only means that we must enhance our ability to utilize both systematic analysis and personal experience and insights.

The rules of the marketing game are rewritten through political events and changes in values, consumption patterns and technology. Marketing reality requires living with complexity, paradoxes, uncertainty, ambiguity and instability.

Many markets are perceived as chaotic, but chaos holds opportunities for those who can see them and use them better than the competition. Chaos is not chaotic per se, there is order in chaos,26 but we fail to see the underlying pattern.

It was an uncertain venture when, more than a century ago, European companies took their new products to South America. We may wish to reduce uncertainty, but the market economy is built on dynamic change, which is only partially predictable.

Prigogene and Stengers There is no general marketing theory that makes us see everything at the same time. New categories, concepts, models and theories work as lenses through which we perceive the world. If the lenses are wrongly curved, the world will look blurry. If they are tinted, it may look sunny when in fact it is cloudy. Certain lenses improve our vision at close range, others at a distance.

As marketing is a complex field, a single pair of glasses is not sufficent. There are bifocals that allow two perspectives, but we need more than two. This book offers the relationship eye-glasses. If we look through these glasses we can only see relationships, networks and interaction. RM is about what you see through these glasses. RM offers more common sense in marketing, and it makes important phenomena visible in the confusing world in which marketers search for meaning.

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CRM offers systems to implement RM strategies. My conclusion is that a radically new thinking in marketing — a paradigm shift — is necessary. These properties are presented in the next section. An overview of the thirty specific relationships which I have found applicable in marketing-oriented management follows. General properties of relationships, networks and interaction In studies of relationships, networks and interaction, a series of general properties have emerged.

In the network approach of B-to-B, a distinction is made between three types of connections which together form a relationship between buyers and sellers: RM as a tool for implementation is treated by Gummesson b. Rethinking marketing 21 1 Activity links embrace activities of a technical, administrative and marketing kind.

The interaction can also be approached as a hierarchy where activities lowest level together form episodes which form sequences which form relationships. It is also feasible to list the properties or dimensions which a party may perceive in a relationship. In a study of service consumers, as many as forty-five properties were identified.

In the next four chapters, where thirty relationships, the 30Rs, are presented, applications of these properties will be continuously examined. The following sections will summarize important general properties of commercial relationships.

The properties are somewhat overlapping; they do not readily lend themselves to clear-cut definitions. The collaboration can be linked to a single deal or be continuous.

The degree of collaboration could be combined with the degree of competition. A high degree of collaboration and a low degree of competition provide a base 30 31 32 33 34 Holmlund Ward, Frew and Caldow This section is a synthesis from research within the B-to-B network approach; studies within sociology and psychology see Granovetter,; Boissevein, ; Scott, ; practical business experience; plus some specific references in the text.

According to Wilkinson and Young Relationships can also thrive in a situation of both extensive collaboration and competition. If the collaborative part is insignificant and competition takes over, it becomes imperative to either divest in the relationship or to consciously work for a reinforced relationship. Longevity It has been stressed that the long-term relationship is a pillar of RM. This is in opposition to transaction marketing, which is characterized by single deals and customer promiscuity.