Relationship Marketing in delivering added value

Essay by 427214420University, Bachelor'sA-, December 2008

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1. IntroductionThe purpose of this report is to critically review, analyze and discuss the relevant theories and concepts of Relationship Marketing, and the application of the value creation concepts for added value delivery in the service industry. In the service industry, "regular customers" have always been recognized as important to generate significant value for companies. In less than a decade, Relationship Marketing has escalated into major importance for the service branding to deliver added value to the customers, as the concept of relationship marketing looks at key customers as a business asset that should be nurtured. (Bowie and Buttle, 2004). Also, the ability of a company to provide superior value to its customers is regarded as one of the most successful competitive strategies as customer value is considered to be an important component of relationship marketing (Ravald and Gronroos, 1996). Hence, most of the companies would like to achieve this competitive advantage by growing more effective and profitable relationships.

The remainder of this report is divided into five sections: the definition of the value and added value for customers; the suitability of Relationship Marketing for delivering added value in service industry; how relationship marketing helps to deliver added value; the further explanation on the concept of loyalty program by the support of the real life examples; and finally the conclusion.

2. Discussion2.1 Customer ValueMonroe (1991) defines customer-perceived value as the ratio between perceived benefits and perceived sacrifice: customer-perceived benefits are combination of physical attributes, service attributes and technical support available in relation to the particular use of the product, as well as the purchase price and other indicators of perceived quality; customer perceived sacrifice is all the costs the consumers face when making a purchase such as purchase price, repair and maintenance, risk of failure or poor performance. Those...