Ch. 11: Relationship Marketing & Customer Relationship Management (CRM)

question

transaction-based marketing
answer

buyer & seller exchanges characterized by limited communication and little or no ongoing relationship btw the parties
question

relationship marketing
answer

development, growth, & maintenance of long-term, cost-effective relationships w/ individual customers, suppliers, employees, & other partners for mutual benefit – views customers as equal partners in transactions – encourages long-term relationships, repeat purchases, & multiple brand purchases from the firm – emphasizes retaining customers over making a sale – ranks customer service as a high priority – fosters customer commitment w/ the firm – bases customer interactions on cooperation & trust
question

***4 ways that firms build long-term relationships
answer

***1. Gather info about their customers 2. Analyze the data & use it to modify the marketing mix 3. Monitor interactions w/ customers 4. Use customers’ preferences & knowledge
question

external customers
answer

people or organizations that buy or use a firm’s goods or services
question

internal customers
answer

employees or departments within the organization whose success depends on the work of other employees or departments
question

3 levels of relationship marketing
answer

1. focus on price (financial) 2. social interactions (social) 3. interdependent partnership (structural)
question

1st level of relationship marketing: focus on price
answer

– most superficial level, least likely to lead to long-term relationships – marketers rely on pricing to motivate customers – competitors can easily duplicate pricing benefits
question

2nd level of relationship marketing: social interactions
answer

– customer service & communication are key factors – ex: a wine shop holding a wine-tasting reception
question

3rd level of relationship marketing: interdependent partnerships
answer

– relationship transformed into structural changes that ensure partnership & interdependence btw buyer & seller
question

customer churn
answer

customer turnover
question

frequency marketing
answer

frequent-buyer or frequent-user marketing programs that reward customers
question

affinity marketing
answer

solicits responses from individuals who share common interests & activities
question

customer relationship management (CRM)
answer

– combination of strategies & tools that drive customer relationship programs – leverages technology to manage customer relationships – integrates all stakeholders into a company’s product design & development
question

benefits of CRM
answer

– software systems can make sense of huge amounts of data – simplifies complex business processes – CRM can be used at 2 different levels: on-demand & on-premises
question

problems with CRM
answer

– requires companywide commitment & knowledge to use the CRM system – failure to effectively reorganize firm’s people & processes to take advantage of benefits a CRM system offers
question

customer win-back
answer

process of rejuvenating lost relationships with customers
question

business-to-business marketing
answer

organizational sales & purchases of goods & services to support production of other products
question

partnership
answer

affiliation of 2 or more companies that help each other achieve common goals
question

types of partnerships
answer

1. buyer partnership 2. seller partnership 3. internal partnership 4. lateral partnership
question

buyer partnership
answer

firm purchases goods & services from one or more providers
question

seller partnership
answer

long-term exchanges of goods & services in return for cash or other consideration
question

internal partnership
answer

relationship involving customers within an organization
question

lateral partnership
answer

strategic relationship that extends to external entities but involves no direct buyer-seller interactions
question

cobranding
answer

cooperative arrangement in which 2 or more businesses team up to closely link their names on a single product
question

comarketing
answer

cooperative arrangement in which 2 businesses jointly market each other’s products
question

national account selling
answer

promotional effort in which a dedicated sales team is assigned to a firm’s major customers
question

supply chain
answer

sequence of suppliers that contribute to the creation & delivery of a product
question

strategic alliance
answer

partnership formed to create a competitive advantage – improve supply chain relationships & enhance operating flexibility

Get instant access to
all materials

Become a Member