Identification and development of a rationale for a current issue in Marketing:-
The extensive embracing of the marketing concept by organizations is a comparatively new one. Sans one or two exclusions, writing on marketing is just crossing the fifty-year mark. However, during these fifty years the manner in which we think regarding marketing and its practice is undergoing a sea change. Marketing has advanced from a basic focus on 'giving the customers their requirements' to a pan-company orientation in which the particular potential of the business are focused around building and providing customer value to targeted market segments. (Relationship Marketing: Creating Stakeholder Value)
Marketing is analyzing, organizing, planning and controlling of the company's customer invading resources, policies and activities with an objective of fulfilling the needs and wants of selected customer groups at a profit. During the growth markets of the 1960s and 1970s, the challenge confronting the managers was to capture growth in demand at the earliest possible. This resulted in allowing them to concentrate on the volume and market share, or what is known as transactional approach to marketing. With the maturing of the markets in the final decades of the twentieth century, the importance slowly changed from the corporate goal of maximizing market share towards a concern with the 'quality of share' in appreciation of the reality that equal profits cannot be obtained from all customers. This had resulted in the idea that the goal of marketing is to create profitable and lasting relationships with chosen customers.
The main role of marketing in this new perspective is to find out what value propositions to build and who are the chosen customers who will be delivered this value. The market-oriented companies of the present era are really 'market-driven', in a sense that they are structured, organized and managed with the only objective of building and delivering value to the selected markets. Concepts and terminologies like customer intimacy, customer-centric and customer focus sum up the novel concept of the corporation as an entity which is present to provide value to carefully chosen market segments. This is not some philanthropic or idealistic view of the company who delivers customer satisfaction at any cost. But on the other hand it is the hard-edged business model which identifies that long-term profits have increased the scope of maximization through satisfied customers who are loyal to a particular company and spend more money on them. This is the cornerstone of the current issue in Marketing which is known as Relationship Marketing. (Relationship Marketing: Creating Stakeholder Value)
Marketing theory and practice is based till this day to the marketing-mix which is known as the 4Ps i.e. The product, price, promotion and place. These were the mechanisms which if exploited properly, would result in increased demand for the products of the company. Marketing management targeted to formulate strategies, which would optimize expenditure on the marketing mix in order to maximize sales. Nevertheless the basic concept of the marketing mix continues to be applicable in the present era in a manner that companies are required to comprehend and manage the influences on demand. But it is important to bear in mind that these original perspectives for marketing action were formulated in an exclusive setting. They appeared from the U.S. during a period of unparalleled growth and prosperity, and concentrated on the Fast Moving Consumer Goods -- FMCG sector.
Although the apparatus and mechanisms were developed in a particular period, and meant for particular products, the fundamental concepts of 4Ps of marketing were fast extended to the industrial, service and also for the voluntary sector. It was during the last years of 20th century that several of the fundamental doctrines of marketing were beginning to be doubted. The market environment has undergone a transformation since it was in the 1950s. In a lot of situations, consumers as well as customers were increasingly refined and less responsive to the conventional marketing pressures -- specifically advertisement. A more choice was available, to some extent due to globalization of markets and new sources of competition.
Besides, as a lot of markets had matured over the year's incremental growth was low or was absent. Due to this and a lot of pressures on profits, brand loyalty is weaker compared to what it was and plain vanilla marketing relying solely on the 4Ps is not likely to win or keep customers either in the consumer or industrial markets. The effectiveness of traditional marketing has come to be continuously challenged in various writings and conference papers with the headlines 'Is marketing dead'. It is against this pointer that the new genre of marketing thinking has come to be evident, and the concept Relationship Marketing has come to be applied to define the modified framework or paradigm. (Relationship Marketing: Creating Stakeholder Value)
My case for why this choice of issue is relevant for the marketing profession to consider:
Relationship Marketing applies the event-driven strategy of customer retention marketing but considers marketing as a process over a time period instead of separate unconnected events. Through shaping the marketing message and strategies to the Life Cycle of the customer, the Relationship Marketing approach attains a tremendous high customer satisfaction and becomes highly profitable. The Relationship Marketing process is normally defined as sequence of steps, and these are called by a number of names, depending on the marketing viewpoint and the nature of business, for instance operating from the 'relationship' angle from the starting point till the end. (Relationship Marketing)
Through the application of the Relationship Marketing approach, programs have to be tailored for individual consumer groups and the stage or the process they are passing through as against to some type of database marketing in which everybody will get almost the same promotions, with maybe an alteration in the offer. The stage in the customer life cycle determines the marketing approach applied in the case of the customer. A single instance of this would be akin to sending fresh customers a 'Welcome Kit' that might contain an inducement to make a repeat purchase. Incase after passage of 60 days the consumer has not made a repeat purchase, it has to be followed with an Email discount. Hence, at this point of time, Relationship Marketing has to take help of yet another tool of modern marketing warfare i.e. Internet Marketing. And use is being made of the customer behavior over time --the customer Life Cycle to trigger the marketing approach. (Relationship Marketing)
Broadly two categories of Life Time Value -- LTV Assessment are available viz. absolute and relative. Calculation of the first one is difficult, but the second one is very easy and in a number of ways considered to be more powerful compared to the first. The most intricate element in calculating the LTV is arriving at a decision as to what constitutes a lifetime. LTV is the value of the customer over that of the Life Cycle. It is evident that Lifetime Value is non-existent in the absence of a Lifecycle. The concept of LTV has been badly misused and misunderstood since the last many years. It is not necessary to find out an absolute Life Time Value in the case of a customer or wait 'lifetime' to ascertain the value to use the concept in the management of customer value. (Calculating Life Time Value (LTV) or Life Time Customer Value (LCV)
At this point of time it is important to understand the meaning of Customer Life Cycle -- CLC. CLC is just the behavior of a customer with the company over time. It is seen that customer start a relationship with the company, and over a time frame they either take a decision to continue this relationship or put an end to it. During any point of this particular Life Cycle, the customer is either starting to be more or less probable to carry on doing business with the company and exhibits this likelihood through their interactions with the customer. If data is collected from these interactions like purchases made from e-commerce sites, page views this data can be used to predict the position of the customer in their Life Cycle which will show if the customer has more or less chances of doing business with the company. In case the company is able to predict where the customers are positioned in the Life Cycle, Return on Investment -- ROI can be maximized by targeting customer who have the highest possibility to buy the products of the company, attempting to 'save' customers having a waning interest, and not wasting money on customers who are not likely to do business with the company. (CRM and the Customer Life Cycles)
The next sphere to look forward is the High ROI Customer Marketing whose essence happens to be (i) Retaining the best and the most active customers and (ii) Increasing the value of majority of the customers. In case the methods for retaining and increasing the value of customers are money-losers, it will be unviable…