Session Strategic Relationships. Session Outline Emergence Traditional v/s Relationship Trends...
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Transcript of Session Strategic Relationships. Session Outline Emergence Traditional v/s Relationship Trends...
Session
Strategic Relationships
Session Outline
Emergence Traditional v/s Relationship Trends Strategic Relationships Competitive Advantage
This Session Weekly Activity: Industry Trade Missions Identify the industry you seek a trade mission in:
Tourism Education Industry of interest
Find a trade event calendar website for your selected industry, ie: www.tradeevents.australia.com (Tourism)
Visit the website and determine there are any trade missions going to your country of interest
Comment on the value of such trade missions Word Count: 200 - 300
www.worldbusiness culture.com
www.doingbusiness.org
www.everyculture.com
www.kwintessential.co.uk
Communication Styles
Doing Business
Business Behaviour
Culture
Intercultural Communication
Intercultural Communication
What would be the intercultural communication implications for doing business in South Korea, China and India?
What appropriate intercultural communication styles could you adopt for each country?Word Count: 700 - 1000
Emergence
A new way for marketing management to operate and is based on a managerial perspective that is part of a quest to make marketing effort more effective. (Christopher 1992)
Relationships need to be strategic so that interactive marketing becomes a question of strategy - its origins, development and its continuation is a strategic focus for the firm. (Gronroos 1994)
Relationships are a part of the drive for a more efficient supply chain with the emphasis being on developing closer relationships between channel partners. (Donaldson 2002)
CRM Definitions
"Relationship marketing refers to all marketing activities directed toward establishing, developing, and maintaining successful relational exchanges" (Morgan and Hunt, 1994).
Relationship marketing is how a company finds you; gets to know you; keeps in touch with you; tries to ensure you get what you want from them, not just in the product but in every aspect of their dealings with you; checks that you are getting what they promised you - all subject, of course, to it being mutually worthwhile to both parties (Stone and Woodcock, 1995).
Relationship Value Value added in a relationship or by a relationship is
central when considering strategic relationships. A close relationship with a customer, supplier, and even
competitor can represent an asset. Relationships allow the gains available from joint value
creation to be exploited. Relationship value can be linked into intangible
emotions and preferences developed over time from the actions of a firm, and is measured by loyalty and retention concepts.
Value is also tangible and represented in actions taken in a relationship or as outcomes such as an information technology link, in supplier training, or share-holding in a partner’s organisation.
Topic Example Video
The following video explains how to understand the concept of customer lifetime (or long term) value.
Take note of the key points. http://www.youtube.com/watch?
v=FxpritNCYDA
Relationship Solutions
Implementing relationship-based solutions within an organisation involves:
Re-configuring the organisation in terms of philosophy, organisation and management;
Developing and maintaining partnerships with a range of stakeholders;
Finding ways to secure competitive advantage and deliver superior added value.
Relationships are not only a tactical weapon, but represent a different approach to buyer-seller exchange that is strategic.
Six Dimensions of RM
seeks to create new value for customers and share itrecognises the key role that customers have both as purchasers and in defining the value they wish to achieve.businesses are seen to design and align processes, communication, technology and people customer value.represents continuous cooperative effort between buyers and sellers.recognises the value of customer’s purchasing lifetimes (i.e. lifetime value)seeks to build a chain of relationships within the organisation (to create customer value) and between the organisation and its main stakeholders including suppliers, distribution channels, intermediaries and shareholders.
Trends driving Relationships
Globalisation (markets & organisations)
Falling world growth rates Mergers and acquisitions Strategic supply chain management Organisational complexity Information technology impact Rapid development of electronic
commerce Management implications
Strategic Alliances Strategic Alliances among
independent organisations are common (eg. airlines and telecommunications).
Alliances often evolve as a response to uncertainty and instability in the global business environment.
Sharing resources across organisations rather than through independent expansion is the optimum method for coping within changing environments.
Topic Example Video
The following video explains about the importance of strategic alliances in business.
Take note of the key points. http://www.youtube.com/watch?
v=rACNp6VumDs
Activity: Airline Industry In recent times airline alliance partners have
shifted between alliances. The challenge has been to create alliances
which provide real benefits not only to customers but also to the various alliance partners.
What has been the emerging trend with the alliances and for what possible reasons?
What are the benefits being attained? How has resource sharing improved
efficiencies and strengthened relationships?
Transactions v/s Relationships
Customer relationship types classified by importance as a position along a spectrum between one-off sales and valuable long-term relationships.
Position on spectrum is dependent upon: basis of switching costs volume of business relationship suitability.
Not all customers are worth investing heavily in relationship building.
BilateralBilateral RecurrentRecurrent
DiscreteDiscreteHierarchicalHierarchical
HighHigh LowLowAction ComponentAction Component
HighHigh
LowLow
Be
lief
Co
mp
on
en
tB
elie
f C
om
po
ne
nt
Relationship Matrix
Bilateral Relationships
This is where parties co-operate for their mutual benefit and actions are taken on the basis of the consideration of joint goals and outcomes.
The relationship strength is based on its social and economic elements,
belief in (social) and action taken in (economic) a relationship.
Discrete Relationships
Discrete relationships have low relationship strength with minimal levels of belief and action components.
Opportunism dominates because there are few, if any, ties between the partners. Organisations are assumed to make rational economic decisions.
Exchanges offer only a limited need or ability to build relationships.
Building relationships is not central to the exchange and it would not be prudent to invest in the relationship.
Discrete relationships are only 'relationships' to the extent that parties can come together to do business.
Recurrent Relationships
Recurrent relationships are a hybrid form between discrete and bilateral.
Through exchange reciprocity a level of trust is built between the parties but committed actions are low.
Recurrent relationships are special partnerships with well developed social structures.
The focus is more on operational issues than strategic ones.
Both parties share matching sentiments.
Hierarchical Relationships
Dominant or hierarchical relationships are a common form of power and occurs where a dominant partner specifies the nature of the interaction between the partners.
Hierarchical relationships revolve around the decision about who controls the exchange which is reflected in the authority and power-dependency balance in these relationships.
The weaker partner faces a combination of low belief in the desired results but demands a lot in terms of action (ie. specific investments by a supplier on behalf of their customer).
Relationship Contribution
Classification based on three factors: relationship value, net price, and cost to serve.
The relationship value is the value of the relationship to the organisation. (Importance)
Net price refers to the level of utility afforded in the exchange. (Financial value)
Cost to serve is a reflection of the opportunity costs foregone on other exchanges. (Loyalty cost savings)
Topic Example Video
The following video explains what is customer lifetime value.
Take note of the key points. http://www.youtube.com/watch?v=BHDblh9Y1-
o
Relationship Ladder
Commitment
Expansion
Exploration
Awareness
Partners
Clients
Customers
Prospects
Members
Advocates
Partners
Clients
Repeat Cust
Prospects
Members
Advocates
1st Time Cust
Suspects
Tra
dit
ional
Mark
eti
ng
Rela
tionsh
ipM
ark
eti
ng
(Dissolution)
Dwyer et al 1987 Payne et al 1995 Kotler 1997
Value Focus(Part/Mem)
Value Focus(Part/Mem)
Product Focus(Advocate)
Product Focus(Advocate)
Price Focus(Customer)
Price Focus(Customer)
Need Focus(Client)
Need Focus(Client)
HighHigh LowLowDialogueDialogue
HighHigh
LowLow
Dis
cov
ery
Dis
cov
ery
Relationship Space Styles
Customer Discovery
Explanation! The degree to which customers are
prepared to share information, knowledge and other resources in order to participate or influence the creation and development of an organisation’s range of product/service offerings.
For consumers, this often relates to the level of involvement required for decision making relative to their formation of attitudes and behaviours.
Customer Discovery
Discovery Profile! Characteristics
Who are they? Preferences
What do they want and expect? Value potential
What is their value worth?
Customer Dialogue
Explanation It is the distinguishing patterns of
interaction and communication as well as the frequency and level to which these occur that differentiates one customer from another.
Customer Dialogue Dialogue Pattern? Relationship
What kind is desirable? Interaction
How can exchange be fostered? Communication
How can control be shared? Reflection: Relationship based
organisations identify ways how their customers can generate value and then structure their CRM strategies accordingly.
Relationship Value Categories
The frequency with which customer dialogue episodes occur is a useful indicator of value potential. There are four basic categories:
Financial Customer
Operational and Process Advocate
Knowledge and Learning Client
Strategic Partner/member
Transactional vs Relationship
TRANSACTIONAL MKTG vs RELATIONSHIP MKTGOrientation to single salesDiscontinuous customer contactFocus on product featuresShort time scaleLittle emphasis on customer serviceLimited commitment to
meeting customer expectationsQuality as the concern of production staff
Orientation to customer retentionContinuous customer
contactFocus on customer valueLong time scaleHigh emphasis on customer serviceHigh commitment to
meeting customer expectationsQuality as the concern of all staff
Approaches Comparison
Traditional Transaction focus Competition Firm-induced Value to firm Buyer passive Firm as control focus Firm as boundary Short-term focus Independent
Strategic relationship Partnership focus Collaboration Co-operation Value in partnership Buyer active participant Firm as part of process Boundary-less Long-term focus Dependent & network led
Customer Profile
Describe the profile of the customer by each market segment.
What do they buy? Where do they buy it? Why do they buy it?
When do they buy it? Where and how are the products
sold in each market segment?
Customer Profile
Who is the buyer and who is the end user in each market segment?
Who buys what in what market segments?
Will they change their buying habits?
Remember, buyer behaviour is affected by economic, social and political influences.
Activity: Customer Value Profile
Using the four basic value categories as your starting point,
Financial Operational and Process Knowledge and Learning Strategic, identify the benefits and costs to an
organisation for each value category.
Relationship Mode Characteristics
Developing new opportunities via partnerships and strategic alliances;
Out-sourcing of non-core activities; Using product development teams to turn ideas
winning products and services; Open relationships with their employees; Using IT to serve customers better and gain
competitive advantage; Employing customer satisfaction measurement
linked to the company's compensation and reward structure;
A focus on being market-driven and customer-led.
Relationship Approach Criteria
(a) its belief in not only satisfying or even delighting customers but involving customers as the number one priority;
(b) by investing resources to research markets and customers on a one-to-one basis;
(c) by taking a planned and joint approach towards delivering customer satisfaction.
Core Firm & Its Relationships
Classic/Special Relationships
Customer Markets
Buyer Partnerships
Customer P
CORE FIRM
External P
Lateral Partnerships
Referral/Influence Mkt
Meta Relationships
Cla
ssic
/Sp
eci
al
Rela
tionsh
ips
Sup
plie
r M
ark
ets
Sup
plie
r Part
’sh
ips
Su
pp
lier
P
Inte
rnal P
Inte
rnal Part
’sh
ips
Inte
rnal/Em
plo
yee M
kt
Nano R
ela
tion
ship
s
Relational Exchange Categories
Supplier partnerships Goods suppliers Services suppliers.
Lateral partnerships Competitors Non-profit
organisations Government.
Buyer partnerships Ultimate customers Intermediate
customers. Internal
partnerships Functional departments Employees Business units.
Relationship Strategy Questions
Decisions concerning collaboration or competition as a strategy - whether or not to pursue relationships as a strategy. Overall vision and direction for relationships set by top management;
Choices about which relationships to develop - deciding which relationships to develop or new ones to nurture;
Choices about levels of relationship benefits to provide - allocation of resources to relationships. Levels of product/service to each relationship, investment and adaptation patterns;
Choices about how benefits are delivered - organisation structures to relate to each of a firm's relationships.
Selection and Positioning
Strategy is about choice. Choice is a complex problem and is closely related to position.
Positioning in relation to other competitors is important. Relationship networks are as beneficial as they are fluid over time. Therefore, position within the network of relationships is crucial.
Competitive Advantages
Relationship-specific assets - investment and adaptation unique to the relationship;
Knowledge routines - joint learning as a focus for higher order value, for example, ideas from another firm may define a new product;
Combining complementary resources and capability - often lead to the joint creation of new products, services and technology.
Lower transaction costs than competitors - trust creates a atmosphere where costly safeguards and checks are not needed.
Relationship Advantage Criteria
Difficult to identify what generates the advantage (its causes are ambiguous);
Causes can be identified but there is not enough time to copy (time to market can be significant in many sectors, for example, electronics);
Interconnectedness between the parties to the relationship may have created a unique asset;
Partner scarcity - just as relationships with advantage potential are scarce the corollary that partners of this type are also scarce holds;
The relationship is unique in total that is difficult to divide into component parts and is governed by rules and regulations unique to the parties.
Next Session Weekly Activity: IKEA Case Study Click on the link, (http://books.google.com.au/books?
id=YreJ42YFjb0C&pg=PA174&lpg=PA174&dq=case+study+ikea+furniture+retailer+to+the+world&source=bl&ots=ItFx_SKc4k&sig=XNZWBM_v8EoCltODZYFIjK6adOw&hl=en&sa=X&ei=mCgfUbD4Ku_JmAWq8IGICQ&ved=0CFEQ6AEwBg#v=onepage&q=case%20study%20ikea
%20furniture%20retailer%20to%20the%20world&f=false) read the case study and answer the following questions:
What has allowed IKEA to be successful in a competitive environment?
Is IKEA destined to succeed everywhere it cares to establish itself?
Word count: 150 – 200.