HOLLENSEN
Chapter 1
1.1 Introduction
- Transactional marketing: the major focus of the marketing program (4 P’s) is to make
customers buy. Independence among marketing actors (‘arm’s length’) is considered vital
for marketing efficiency.
- Relationship marketing: the process of creating maintaining and enhancing strong long-
term relationships with customers through mutual exchange and trust. RM seeks to build
a chain of relationships between the firm and its main stakeholders.
1.2 The marketing management process (figure 1.1, page 3)
- Marketing plan: a written document that details the necessary actions to achieve the
company’s marketing objectives. It can be for a product or service, a brand or a product
line. Basically, a marketing plan describes the marketing activities of a company in order
to produce sales at the customer level. Marketing plans cover between one and five
years. A marketing plan may be part of an overall business plan.
- The three major levels of strategy in most large, multi-product organizations are:
1. Corporate strategy
2. Business-level strategy
3. Functional strategies, e.g. marketing strategy
- Mission: the purpose of the company. It’s what the company wants to do for its
customers. The mission statement should answer who the customers are and what value
(products and services) should be provided to the customers. (table 1.1, page 4)
- Objective: a desired result at some future point in time. Objectives should be SMART.
- Diversification: the market and product development strategy that involves expansion to
a relatively large number of markets and products.
- Line extension: using a successful brand name to introduce additional items in a given
product category under the same brand name, such as new flavors, colors, added
ingredients or package sizes.
- Return on investment (ROI): a common measure of managerial effectiveness – the ratio
of net profit to investment.
- MIS: a system in which marketing information is formally gathered, stored, analyzed and
distributed to managers in accord with their informational needs on a regular planned
basis.
- Marketing audit: an analysis and evaluation of the internal and external marketing
environment of the company.
1.3 The traditional (transactional) marketing (TM) concept versus the relationship
marketing (RM) concept
- Traditional marketing concept: the conception, pricing, promotion and distribution (4 P’s)
of ideas, goods and services. Moreover, the definition implies a list of activities for the
marketer to undertake: the planning and execution of these 4 elements of competition so
that individual and organizational objectives are satisfied.
- Relationship marketing concept: not only attempts to involve and integrate suppliers
and customers. Besides a need for focusing on customer retention, Payne (1995)
emphasizes that RM indicates a shift towards the organization of marketing activities
around cross-functional activities. (figure 1.2, page 10)
- RM’s six-markets model:
1. Suppliers markets (collaboration with key suppliers)
2. Recruitment markets (human resources/skilled people)
3. Influence markets (industry-related influencers: associations, government
departments (universities)
4. Referral markets (creation of advocates (besides customers): intermediaries,
agencies)
5. Internal markets (internal marketing: every employee is an internal customer or an
internal supplier)
6. (In the middle of figure 1.2) Customer markets (customer retention, customer lifetime
value)
Transactional and relationship marketing (figure 1.3, page 11, table 1.2, page 12)
1.5 How the RM concept influences the traditional marketing concept
Chapter 1
1.1 Introduction
- Transactional marketing: the major focus of the marketing program (4 P’s) is to make
customers buy. Independence among marketing actors (‘arm’s length’) is considered vital
for marketing efficiency.
- Relationship marketing: the process of creating maintaining and enhancing strong long-
term relationships with customers through mutual exchange and trust. RM seeks to build
a chain of relationships between the firm and its main stakeholders.
1.2 The marketing management process (figure 1.1, page 3)
- Marketing plan: a written document that details the necessary actions to achieve the
company’s marketing objectives. It can be for a product or service, a brand or a product
line. Basically, a marketing plan describes the marketing activities of a company in order
to produce sales at the customer level. Marketing plans cover between one and five
years. A marketing plan may be part of an overall business plan.
- The three major levels of strategy in most large, multi-product organizations are:
1. Corporate strategy
2. Business-level strategy
3. Functional strategies, e.g. marketing strategy
- Mission: the purpose of the company. It’s what the company wants to do for its
customers. The mission statement should answer who the customers are and what value
(products and services) should be provided to the customers. (table 1.1, page 4)
- Objective: a desired result at some future point in time. Objectives should be SMART.
- Diversification: the market and product development strategy that involves expansion to
a relatively large number of markets and products.
- Line extension: using a successful brand name to introduce additional items in a given
product category under the same brand name, such as new flavors, colors, added
ingredients or package sizes.
- Return on investment (ROI): a common measure of managerial effectiveness – the ratio
of net profit to investment.
- MIS: a system in which marketing information is formally gathered, stored, analyzed and
distributed to managers in accord with their informational needs on a regular planned
basis.
- Marketing audit: an analysis and evaluation of the internal and external marketing
environment of the company.
1.3 The traditional (transactional) marketing (TM) concept versus the relationship
marketing (RM) concept
- Traditional marketing concept: the conception, pricing, promotion and distribution (4 P’s)
of ideas, goods and services. Moreover, the definition implies a list of activities for the
marketer to undertake: the planning and execution of these 4 elements of competition so
that individual and organizational objectives are satisfied.
- Relationship marketing concept: not only attempts to involve and integrate suppliers
and customers. Besides a need for focusing on customer retention, Payne (1995)
emphasizes that RM indicates a shift towards the organization of marketing activities
around cross-functional activities. (figure 1.2, page 10)
- RM’s six-markets model:
1. Suppliers markets (collaboration with key suppliers)
2. Recruitment markets (human resources/skilled people)
3. Influence markets (industry-related influencers: associations, government
departments (universities)
4. Referral markets (creation of advocates (besides customers): intermediaries,
agencies)
5. Internal markets (internal marketing: every employee is an internal customer or an
internal supplier)
6. (In the middle of figure 1.2) Customer markets (customer retention, customer lifetime
value)
Transactional and relationship marketing (figure 1.3, page 11, table 1.2, page 12)
1.5 How the RM concept influences the traditional marketing concept
