MP3 -> Relationship Marketing

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29 Terms

1
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Relationship Marketing

identifying, developing, maintaining, and terminating relational exchanges to improve performance and build relationship equity

2
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In which types of markets does relational exchange happen

Both B2B and B2C, the more intangible the product, the more important relationship

3
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CRM

A managerially relevant, firm-wide, IT-enabled, customer-focused application of RM used to achieve performance objectives.

4
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Social Exchange Theory

relationships are maintained based on the perceived balance of rewards and costs.

<p>relationships are maintained based on the <strong>perceived balance of rewards and costs</strong>.</p>
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Breadth’ mean in RM?

The number of relational ties/contacts with a partner. More ties = more info & less risk when a contact is lost.

6
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Quality in RM

The trust, commitment, and gratitude between contacts. Higher quality = higher value

<p>The <strong>trust, commitment, and gratitude</strong> between contacts. Higher quality = higher value</p>
7
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What does ‘Composition’ refer to in network theory?

The diversity of ties. Higher diversity = more broad and meaningful impact.

8
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Network Theory

value comes from how interconnected and redundant network ties are

<p>value comes from how <strong>interconnected</strong> and <strong>redundant</strong> network ties are</p>
9
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Name the four mechanisms through which RM leads to sustainable advantage

  • Relational Loyalty

  • Referrals/Word of Mouth (WOM)

  • Empathetic Behaviours

  • Cooperative Behaviours

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How does RM influence Relational Loyalty

Customers trust the seller more, when perceive less risk dealing with trusted partners, feel belonging, and minimize costs by buying from valued sellers.

o Loyalty = determinant of firm success in competitive marketplaces

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What drives Referrals and WOM?

Trust, gratitude, and relational bonds. Only loyal customers risk their reputation to advocate.

12
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Empathetic Behaviours

Customers understand seller’s difficulties, may forgive service failures, and don’t pressure for price cuts.

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Cooperative Behaviours

Mutual actions to achieve goals. Encourages adaptiveness, flexibility, and reciprocity even if delayed

14
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United Airlines cited its contractual policies when it refused to spend $1200 to repair a passenger’s guitar that its baggage handlers had carelessly broken. The passenger received word that he was ineligible for compensation because he failed to make the claim within United’s stipulated 24-hour timeframe. The passenger vented his frustration by creating a song entitled “United Breaks Guitars” and uploaded it on YouTube. As of 2019, it garnered almost 20 million views. The song has been estimated to have cost United Airlines $180 million. In this case, losses loom larger than gains as the loss of just repairing the guitar for $1200 translates to a loss of up to $180 million.

Why are companies trying to omit such situations?

Prospect Theory: losses loom larger than gains

When you exceed customer expectation, it leads to a lower increase in value compared to a bigger loss when customer expectations are not fulfilled.

15
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Toxic Poisons

Actions that create perceptions of unfairness, especially in loyalty or reward programs

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antidote to RM unfairness

Use pre-emptive approaches and make benefits invisible to bystanders.

17
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3 elements RM strategies must balance

  • Reward Elements

  • RM Delivery

  • Customer Portfolio (targets vs bystanders)

<ul><li><p class=""><strong>Reward Elements</strong></p></li><li><p class=""><strong>RM Delivery</strong></p></li><li><p class=""><strong>Customer Portfolio</strong> (targets vs bystanders)</p></li></ul><p></p>
18
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RM strategies can hurt firm performance

When bystanders feel unfairness, leading to negative perceptions and harming overall outcomes

19
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the “highest impact” RM strategy

Preventing customer perceptions of unfairness. It's more effective than promoting positive experiences

20
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true effectiveness multidimensional view

Reward element perspective

Reward delivery perspective

Portfolio perspective (targets and bystanders)

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4 lifecycle stages of customer relationships

  • Exploratory/Early

  • Growth/Developing

  • Maturity/Maintaining

  • Decline/Recovery

<ul><li><p class=""><strong>Exploratory/Early</strong></p></li><li><p class=""><strong>Growth/Developing</strong></p></li><li><p class=""><strong>Maturity/Maintaining</strong></p></li><li><p class=""><strong>Decline/Recovery</strong></p></li></ul><p></p>
22
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Building relationship equity

  1. Develop a strong foundation that supports relationship building and maintenance: Invest in customer-facing employees, create effective communication, and avoid service failures from unfairness and unresolved conflict

  2. Implement relationship marketing and loyalty programs targeted at specific customer groups

23
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3 types of RM programs

  1. Social RM (e.g., free tickets)

  2. Structural RM (e.g., customized packaging)

  3. Financial RM (e.g., discounts – but easily copied)

24
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Multivariate Regression Analysis key purposes

  • To determine whether a marketing intervention has a statistically significant effect on a marketing outcome.

  • To understand the sign (positive/negative)

  • To compare the relative strength of multiple interventions

  • To control for confounding variables and isolate the true effect of each intervention

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When to use which method of analysis

just read

<p>just read</p>
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Discrete Choice Model

Predicts if a relationship continues (1) or ends (0) based on Social, Structural, and Financial RM inputs

27
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probability of ContinueRelationship = 1

P(ContinueRelationship=1)=e^z/(1+e^z​)

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Why is the effect size not immediately clear in a Discrete Choice Model

Because the model is non-linear, the coefficients (βs) affect the log-odds, not the probability directly

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log-odds z

z = log of (prob continue relationship/prob not continuing)