Relationship marketing: the wheel reinvented?

Business Horizons, Nov-Dec, 1997 by John V. Petrof

Instead of a brand new philosophy in the marketing field, this may be just a recent spin on an old concept.

Since the early 1980s, a new phrase has entered the marketing literature: "relationship marketing." Most sources credit Leonard Berry (1983) with originating it. Many marketing specialists, especially those in the academic field, immediately appropriated this "new" concept and spoke and wrote about it to the point of saturation. Some journals have dedicated special editions to the subject; others have announced their intention to do so. In the "Introduction to the Special Issue" on relationship marketing, the editor of the Journal of the Academy of Marketing Science (Cravens 1995) praised it as a paradigm that places the customer at the center of all enterprise actions. Because of the importance of this "new" idea, several business schools with "vision" have established Centers of Relationship Marketing.

This time, the ever-questioning minds of the academic community failed to question the origin and implications of this new terminology. With very few exceptions, marketing specialists and, in particular, academicians accepted relationship marketing as the latest gospel and began spreading it faithfully as loyal disciples.

Definition

Relationship marketing is typically described as being oriented toward a long time horizon in contrast to the short-term orientation that existed in marketing before 1983. Berry and Parasuraman (1992) hold that relationship marketing consists of attracting, developing, and retaining customers. Morgan and Hudt (1994) refer to it as all activities directed toward establishing, developing, and maintaining successful relational exchanges. According to Gronroos (1995), the objective of relationship marketing is not only to acquire customers but to keep them as well. Moreover, in this "new philosophy," customer satisfaction becomes the responsibility of everyone in the organization. People in other departments must share the responsibility of dealing with customers. Hence, the concept becomes instrumental in coordinating the activities of all departments, with the marketing function playing a pivotal role in the success of the firm.

Even though paying attention to relationships with clients has long been a way of doing business, much of the current literature assumes it to be a new phenomenon, especially in consumer markets. Advocates go so far as to maintain that buyer-seller relationships have become an integral part of business-to-business operating strategies only over the past ten years. Some authors, such as O'Neal (1989), contrast relationship marketing to transactional marketing, which is defined as stressing the individual sale (and hence short-term gains), and in which dealing with customers is viewed solely as the responsibility of the marketing department.

Relationship marketing not only has become a popular expression both in the academic and the business press, but has also been characterized as a major directional change in marketing theory and a fundamental reshaping of the field. At this point it may be appropriate to revisit the "old" marketing concept, as well as pause and examine the contribution, if any, relationship marketing makes to marketing theory.

The Evolution of "Marketing"

Although the function of marketing has always existed, historians agree that the term "marketing" was first used as a noun, in contrast to its earlier use as a verb, between the years 1906 and 1911. Arch W. Shaw and Ralph Starr Butler are often considered the godparents of the new discipline, which until then had been referred to as "trade," "distribution," or "commerce."

Most marketing historians associate the birth of modern marketing with the beginning of the twentieth century. Bartels (1962) has divided its evolution into roughly six periods:

1. Discovery (1900-1910). This is when the conception of the subject took place, and was identified with a name.

2. Conceptualization (1910-1920). This stage is associated with the development, classification and definition of many marketing terms.

3. Integration (1920-1930). The emergence and subsequent harmonization of marketing principles took place during this decade.

4. Development (1930-1940). Specialized areas developed and several theories were verified and quantified.

5. Reappraisal (1940-1950). During this decade attempts were made to analyze and explain traditional marketing practices through the use of scientific methods. However, the prevailing practices were not conducive to good customer relationships. Misled by short-sighted profit objectives and exaggerated promotional claims, consumers were dissatisfied with their purchases. By the end of the 1950s, it was clear that businesses needed a new marketing philosophy to guide their strategies and tactics.

6. Reconception (1950-1960). Growing external pressures for educating managers in areas broader than technical business and economic skills were given voice in the landmark Ford Foundation report (Gordon and Howell) and Carnegie Foundation report (Pierson et al.) on business education, both published in 1959. In marketing, attention turned from traditional concepts to more modern ones. A new philosophy, the marketing concept, was articulated and began to shape competitive thinking. Such ideas as consumer satisfaction and social responsibility came to be viewed as important factors enabling managers to attain their profit objectives. The marketing function, wrote Lazo and Corbin (1961), evolved into a basic attitude and understanding that must pervade the entire business by interpreting the concept of client relationships to all functional areas.