Relationship Marketing and its Application: The Case of Zara | ToughNickel
Dec 17, This article explores various definitions of relationships marketing, its Customer Relationship Management in Banking Sector and A Model. Relationship marketing was first defined as a form of marketing developed from direct response . of the marketing mix. Pricing, product management, promotion , and placement. . Many relationship marketers use a team-based approach. The application of relationship marketing in customer management of travel agency is helpful to solve the problems caused by weak tourism marketing.
Hence, to successfully execute relationship marketing, a company should recognize traits of successful relational exchanges such as trust, commitment, collaboration, keeping words and common values. Trust is key in building lasting relationships Furthermore, other goals of relationship marketing are to retain customers and to make them loyal to the company. The study findings demonstrate significant impacts of some customer relationship marketing dimensions trust, commitment, interaction, empathy, social ties and keeping promises on customer satisfaction which in turn leads to greater customer retention and profitability.
Employing the correlational research method based on survey data of customers of Ghavamin Bank in Iran, Nauroozi and Moghadam also confirmed a positive and significant relationship between the relationship marketing dimensions and customer loyalty, demonstrating by positive correlations between retention rates and relational marketing. International Challenges of Relationship Marketing In this era, business relationships have become increasingly internationalized. Within this context, companies are faced with increased competition with trade barriers being as low as ever.
With the playing field being leveled, more and more suppliers and buyers enter the game, vying for the same consumer base and scarce resources. Hence, to gain a competitive edge over their competitors, many companies turn to relationship marketing as a way to differentiate their brands. Globalisation poses challenges to relationship marketing Within the globalized context, country factors can have an enormous influence on the practice of relationship marketing, which needs to adapt depending on the country.
First, culture differences will require businesses to modify their marketing strategy and expectations. Unlike in Western culture, business behaviors in China are dictated by Confucianism and personal relationships; i. On the other end of the spectrum, Western businesses are more rational and profit-oriented. Hence, when doing business together, Chinese and Western entrepreneurs might encounter misunderstanding, trust issues and behavioral differences Casrnir, Besides, language barriers can also constitute an obstacle where relationship marketing is concerned.
Furthermore, technological advances are also predicted to greatly influence the use of relationship marketing. With the rise of integrated systems as well as new tools such as big data, data mining, digital customer base, etc. In addition, with an ever-expanding base of customers, adopters of relationship marketing can also benefit from economies of scale. There are four factors of economies of scale that marketers can take advantage of: The company was established inand it is the main brand of the Inditex group, one of the world's largest clothing merchants.
Its total sales were 13, million euro. Zara store on Broadway, NY In the world of fashion retailing, internationalization and market saturation have made the market become more fiercely competitive, requiring firms to change its strategies to focus instead on retaining their current customers, especially in low-growth markets.
Zara is a successful story of using customer relationship marketing to enhance its brand and keep updated with its customers. In its relationship marketing strategy, Zara adopts both standardization and adaptation of its marketing mix to achieve the most effective outcomes. For example, on one hand, Zara always tries to deliver one consistent message that in its business strategy, customer is the focal point, i.
In fact, the company has a policy of spending a minimal amount on advertising, discounts and gimmicks, and diverting its budget in buying storefronts and managing its customer base Thompson, In choosing their distribution location, in all countries across the globe, Zara unfailingly has flagship stores at some of the most expensive real estates and locations such as Fifth Avenue in New York, Calle Serrano in Madrid, Oxford Street in London, Shibuya and Ginza in Tokyo, etc.
TRF Zara Limited collection On the other hand, Zara also adapts its strategy to serve different customer target segments differently.
Since the ultimate goal of all business activities is to maximize profit, relationship marketing is likely to remain selective and target certain groups of customers or types of businesses Sheth, Not all customers bring in profit for the company, and in fact, some customers prove to be even more costly to keep.
Hence, there is no one-size-fit-all approach of relationship marketing that guarantees success for all practitioners. Zara has created long lasting and mutually beneficial relationships with its customers.
Zara also makes its clothing in limited quantities with many limited editions and seasonal specials to give the products an exclusive appearance. This technique actually makes customers become more loyal and visit the stores more often. These customers are also very effective in spreading the good words and vibes about the company by posting on their social network sites, which in effect advertises for the company.
Thus, the company gains favorable word-of-mouth, trust, and popularity among their fans. Do you think Zara successfully applying relationship marketing?
Yes See results 6. Conclusion Relational marketing tactics have a statistically significant impact on customer satisfaction and customer trust. Hence, in order to compete in the highly competitive market of retailing, strong customer relationship is the key to success, and companies like Zara should set improving customer satisfaction and customer loyalty as their priority to convert first-time and normal customers into loyal customers.
In this sense, Zara has achieved some success as evidenced by its strong sales and positive brand reputation. Global Journal of Management and Business Studies, Advertising and economies of scale: Critical comments on the evidence. Journal of Industrial Economics, International Journal of Science and Research, Emerging Perspectives in Services Marketing, This approach tries to transcend the post purchase-exchange process with a customer to make richer contact by providing a more personalised purchase, and uses the experience to create stronger ties.
Relationship marketing is different from other marketing techniques as it mainly focuses on long term relationship with customers. Relationship marketing first appeared in the s and was proposed by American marketing scholars Berry and Jackson Berry argued in a conference on the field of service marketing that relationship marketing is a marketing activity for enterprises to obtain, maintain and promote effective relationships with customers.
At the same time, after a long term follow-up study on the marketing process of the service industry, it is concluded that the ultimate goal of enterprise marketing should not only develop new customers, but also pay attention to the maintenance of existing customers, and improve the long term interests of both parties through good cooperative relations.
Then the content of relationship marketing is given. It also argues that the cost of maintaining an old customer is far lower than the cost of developing a new customer, and that the marketing concept of maintaining the relationship with old consumers is more economical than the marketing concept of developing new customers.
This research conclusion has been generally recognized later, but the research scope is only limited to the relationship with old customers, which is easy to ignore the dynamic development of customers, because the formation of customer loyalty customers are from the development of new customers, so we should pay attention to the development of new customers. If the enterprise is limited to the maintenance of existing customers, then it is impossible for the enterprise to achieve any progress and cannot cope with the current market competition.
From a social anthropological perspective, relationship marketing theory and practice can be interpreted as commodity exchange that instrumentalise features of gift exchange. This perspective on marketing opens up fertile ground for future research, where marketing theory and practice can benefit from in-depth research of the principles governing gift exchange.
According to Liam Alvey,  relationship marketing can be applied when there are competitive product alternatives for customers to choose from; and when there is an ongoing desire for the product or service.
5 Reasons Why Relationship Marketing is Important in Business
Relationship marketing revolves around the concept of gaining loyal customers. Research conducted to developing relationship marketing suggests that firms can best do this through having one of the three value strategies; best price, best product, or best service.
Firms can relay their relationship marketing message through value statements. For example, an automobile manufacturer maintaining a database of when and how repeat customers buy their products, the options they choose, the way they finance the purchase etc.
- 5 Reasons Why Relationship Marketing is Important in Business
- Relationship Marketing and its Application: The Case of Zara
In web applications, the consumer shopping profile can be built as the person shops on the website. This information is then used to compute what can be his or her likely preferences in other categories.
These predicted offerings can then be shown to the customer through cross-sell, email recommendation and other channels. Relationship marketing has also migrated back into direct mail, allowing marketers to take advantage of the technological capabilities of digital, toner-based printing presses to produce unique, personalized pieces for each recipient through a technique called " variable data printing ".
Marketers can personalize documents by any information contained in their databases, including name, address, demographics, purchase history, and dozens or even hundreds of other variables. The result is a printed piece that ideally reflects the individual needs and preferences of each recipient, increasing the relevance of the piece and increasing the response rate. Scope[ edit ] Relationship marketing has also been strongly influenced by reengineering. According to process reengineering theory, organizations should be structured according to complete tasks and processes rather than functions.
That is, cross-functional teams should be responsible for a whole process, from beginning to end, rather than having the work go from one functional department to another.
Traditional marketing is said to use the functional or 'silo' department approach. The legacy of this can still be seen in the traditional four P's of the marketing mix. Pricingproduct managementpromotionand placement. According to Gordonthe marketing mix approach is too limited to provide a usable framework for assessing and developing customer relationships in many industries and should be replaced by the relationship marketing alternative model where the focus is on customers, relationships and interaction over time, rather than markets and products.
In contrast, relationship marketing is cross-functional marketing. It is organized around processes that involve all aspects of the organization. In fact, some commentators prefer to call relationship marketing "relationship management" in recognition of the fact that it involves much more than that which is normally included in marketing.
Because of its broad scope, relationship marketing can be effective in many contexts. As well as being relevant to 'for profit' businesses, research indicates that relationship marketing can be useful for organizations in the voluntary sector  and also in the public sector.
Satisfaction[ edit ] Relationship marketing relies upon the communication and acquisition of consumer requirements solely from existing customers in a mutually beneficial exchange usually involving permission for contact by the customer through an " opt-in " system.
Although groups targeted through relationship marketing may be large, accuracy of communication and overall relevancy to the customer remains higher than that of direct marketing, but has less potential for generating new leads than direct marketing and is limited to Viral marketing for the acquisition of further customers.
Research by John Fleming and Jim Asplund indicates that engaged customers generate 1. According to Buchanan and Gilles,  the increased profitability associated with customer retention efforts occurs because of several factors that occur once a relationship has been established with a customer. The cost of acquisition occurs only at the beginning of a relationship, so the longer the relationship, the lower the amortized cost. Account maintenance costs decline as a percentage of total costs or as a percentage of revenue.
Long-term customers tend to be less inclined to switch, and also tend to be less price sensitive.
This can result in stable unit sales volume and increases in dollar-sales volume. Long-term customers may initiate free word of mouth promotions and referrals. Long-term customers are more likely to purchase ancillary products and high margin supplemental products. Customers that stay with you tend to be satisfied with the relationship and are less likely to switch to competitors, making it difficult for competitors to enter the market or gain market share.
Regular customers tend to be less expensive to service because they are familiar with the process, require less "education", and are consistent in their order placement.
Increased customer retention and loyalty makes the employees' jobs easier and more satisfying. In turn, happy employees feed back into better customer satisfaction in a virtuous circle. Relationship marketers speak of the "relationship ladder of customer loyalty ". It groups types of customers according to their level of loyalty.
The ladder's first rung consists of "prospects", that is, people that have not purchased yet but are likely to in the future. This is followed by the successive rungs of "customer", "client", "supporter", "advocate", and "partner". The relationship marketer's objective is to "help" customers get as high up the ladder as possible.
This usually involves providing more personalized service and providing service quality that exceeds expectations at each step. Customer retention efforts involve considerations such as the following: Customer valuation — Gordon describes how to value customers and categorize them according to their financial and strategic value so that companies can decide where to invest for deeper relationships and which relationships need to be served differently or even terminated.
Customer retention measurement — Dawkins and Reichheld calculated a company's "customer retention rate".