The Impact Of Relationship Marketing On Consumer Marketing Essay

TATA MOTORS LIMITED formerly known as TELCO (TATA Engineering and Locomotive Company) is a multinational company and is a part of the TATA Group with its headquarters located in Mumbai, India. It was set up in 1945 and is India’s largest automobile company; also, it is a leader in Commercial Vehicles and the second largest in passenger vehicles. It is the world’s second largest heavy bus manufacturer and fifth largest medium and heavy truck manufacturer. It is also, the designer and manufacturer of the iconic TATA Nano car, which is the world’s cheapest car, costing around INR 1, 00,000 or USD 2250.

Tata Motors was the first company to be listed in the New York Stock Exchange (September 2004) from India’s Engineering Sector. It has plans to become a global company by means of acquisitions, mergers, alliances, and a rigorous Research and Development to meet the demands of the international market. The company operates in the UK, South Korea, Thailand, and Spain through its subsidiary and associate companies. In 2008, the company acquired the British Jaguar Land Rover (JLR) business, which also includes Daimler, Lanchester and Rover brand names. In 2004, it had acquired, South Korea’s Daewoo Commercial Vehicle Company. Also, it had acquired Hispano Carrocera, a reputed Spanish bus and Coach Manufacturer in 2009.

It is continuously facing competition from global companies such as Toyota and other Indian brands such as Maruti Suzuki, Mahindra, etc. to operate in India and overseas. In order to cope up with the continuous competition Tata is gradually coming up with revised models of its previous cars such as Indica, Indigo Vista, Xenon, Tata World Truck, etc. Also, it is bringing up new models of cars on lines of economy, power, and designs to be a market leader.

(www.tatamotors.com)

BACKGROUND OF RESEARCH

Relationship Marketing refers to the concept of using methods and tactics to develop long term relationship by providing the customers maximum possible satisfaction in order to retain them. It is different from the traditional Transactional Marketing that involves the organisation focussing on one off sales to customers.

The needs and wants of customers change overtime, so it’s the responsibility of the organisation to meet the customer’s requirements. In order to do that the organisation must monitor the changes in the customer environment. Some useful methods to monitor customer satisfaction can be:

Focus groups

Personal interviews

Mystery shoppers

Customer Complaints

Suggestion Boxes

Online Surveys

General Comments

Courtesy Calls

The organisation must keep itself up to date with the customer needs overtime as the needs never remain static and change overtime. In order to build a long-term relationship with the customer, the organisation needs to adapt and change simultaneously according to needs of customers; which would gradually benefit the organisation in terms of profit, market share, and brand loyalty.

(www.learnmarketing.net)

REASONS FOR THE STUDY

The review of Relationship Marketing in regards to consumer behavior suggests that there is an intense competition among organizations in order to retain their customers. So, in order to remain competitive and capture a greater market share the organization must observe the changes in customer needs from time to time and must adapt itself accordingly.

EXTENT OF RELEVANCE OF RESEARCH

The research shows several implications for the design of the relationship marketing strategies for the organizations. This would in exact forms, would reveal the ways and means which could benefit the organization in maintaining long-term relationships with its customers. In today’s competitive world, an organization cannot afford to lose its customers if it wants to survive in the market. From an academic perspective, this research seeks to add to the existing knowledge and serve as a guiding document for organizations to review their Relationship Marketing strategies. It would also, form a basis for further study.

RESEARCH QUESTIONS

Drawing upon the above, the research seeks to answer the following questions:

To what extent does Relationship Marketing affect Consumer Buying Behaviour?

Is there any link between Relationship Marketing and Consumer Buying Behaviour?

How can Tata Motors build up better relationships with their customer base?

LITERATURE REVIEW

Relationship Marketing is considered to be a significant change in the traditional marketing concepts and different aspects of it are needed to be considered in order to avoid an illusion of its concepts as various aspects seem to overlap over each other.

According to Gronross (1984), ‘Relationship Marketing is a process by which the objectives of the parties involved are met through fulfillment of commitments and bilateral exchange. Whereas, Stone and Woodcock (1996) focus on the techniques of marketing, customer service techniques and maintaining relationship. According to them, ‘Relationship Marketing includes the utilization of marketing and customer service techniques by a company to generate customers and maintain relationship with them, so that it benefits both the parties’.

Buttle (1996) provides better outlook on the subject as according to him ‘Relationship Management is symbolized by the concern of the company in meeting customer’s anticipations by providing high standards of service and develop values of trust and commitment to customers, thereby, maintaining the relationship’.

Relationship marketing is a major development and a suggested new paradigm in the field of marketing, from the prior approach to traditional marketing which is now referred to as ‘Transactional Marketing’. It is all about numbers and nothing else. They are more precisely transactional relationships and just focus on pushing sales or services through its distribution channels. The core of every action and decision is ‘Money’ or to be more precise a one -off exchange of money and commodity.

Whereas ‘Relationship Marketing’ or ‘One-to-One Marketing’ is a completely different approach to marketing focusing on customer’s wants, needs and expectations. In this case, the priority for every decision and action is to maintain a long and a fruitful relationship with the customer which would generate profits for the company. (Schneider. M, 2003).

Lancaster (1993) also supports the above fact that, and gives the idea, that relationship marketing accentuates on a relatively extending term and a unique set of relationships between the marketing organization and its customers but, financial considerations and absolute gratification of both involved parties is still important and should benefit both the parties through bilateral willingness.

(Lancaster et al, 2002)

In order to maintain a satisfying and long-term relationship, the marketer must analyze the buying behaviour of existing and potential customers. This can be achieved by understanding the factors related consumer buying behaviour that gives an insight of what makes them buy a product or what makes them reject a product.

CONCEPTUAL CLARIFICATION

The automobile industry has an increasingly complex and combative environment where the challenges are in regards to lower profit margins and after sales services among the big players in the automobile industry. New technologies allow one automobile company to gain competitive advantages over the others. But, this should be considered as an important fact that, developing a new technology alone cannot develop the trust of the customer in its vehicles. Trust is the outcome of sense of security and confidence, a customer has in a company. This can be achieved by a company by maintaining effective relationships with the customers. Today’s automotive customers are quite well-informed about the market changes.

(www.gtm.sap.com)

According to Liam Alvey (1983), the ultimate application of relationship marketing shows immediate effects when there are rivaling product options or customers have the opportunity to choose from many options; and also, there is a continuous and increasing passion for the particular product or service. (B. Leonard, 1983)

The role of relationship marketing in the automobile industry is increasing at an immense rate. Thus, they follow a common strategy of ‘Developing new customers and retaining the old customers’. The companies are focusing on the various techniques to meet the customer needs mainly through increasing brand loyalty, reducing costs, gaining competitive advantage by technological advancements and effective marketing and customer service strategies. Inability to meet the criteria of understanding customer needs may lead to higher costs, and lowering brand image.

Nowadays, there are various tools to study the buying behaviour of customers that enables an automotive company to understand the customer preferences. Also, there are various software available in the market which enable a company to analyze every customer’s preferences, tastes, likes and dislikes, etc. by means of maintaining a database of products purchased, and type of options for finance and upgrades taken up by the customer. This helps the company in developing sales strategies for a market.

(www.gtm.sap.com)

Advantages of Relationship Marketing

In the global competitive times, the aim of the company is to maintain life-time customers that can provide long-term benefits to the company. Some of the positive implications of Relationship Marketing can be-

Relationship marketing enables a two-way communication between the company and its customers.

Relationship Marketing enables a company to respond and better understand the customer’s changing requirements with time and make effective strategies.

It also enables a company to maintain customer loyalty, which is one of the main concerns of the company.

Loyal customers may bring in more business by word of mouth.

A higher percentage of retention would imply that fewer customers need be attracted further and the cost for attracting them would be a substantial cost, i.e. more cheaper.

Existing and Loyal customers would be willing to pay more because of inculcated trust in them for the company’s services if there are any benefits given to them for their loyalty.

Finally, the resulting benefit out of relationship marketing would be an increase in sales, profits and market share; also, there would be lesser chances for the company’s market share to be invaded or overtaken by others.

Disadvantages of Relationship Marketing

Introduction of relationship marketing involves an investment by the company, but its return cannot be guaranteed. As, it depends on the choice of the customer to accept the company or not.

It would also require investment into new technologies to maintain databases of customer preferences, etc.

The companies which used to focus on traditional methods of business would have to bring about a change in their culture before taking a newer outlook towards relationship marketing.

(www.goliath.ecnext.com)

Inspite of all the above listed disadvantages, the research still supports relationship marketing due to the reason that, relationship marketing is the demand of time. The company which changes with time flourishes, while the others perish.

CONCEPTUAL MODEL FOR RESEARCH ON RELATIONSHIP MARKETING

THE SIX MARKETS MODEL- This model of relationship marketing was given by Christopher et al in 1991 and analyzes stakeholders in the market as six markets operating near the central core of relationship marketing followed by the organisation.

(Adopted from – www.auhy69.dsl.pipex.com)

The success of a relationship marketing programme in a company or organisation depends on how best a company manages the above shown six markets, which are all inter-related with each other. If these key markets operating around the core of the organisation are managed properly, it can maintain its value proposition in the market along with decreasing the risks of being attacked by a competitor company.

The key factors that need to be analysed about Tata Motors in the research by the application of this model are shown below by means of a table-

Market Type

Critical Issues related to the Market

Customer Markets

What approach can be adopted by Tata Motors to adopt to develop new customer base and as well retain the old ones?

Internal Markets

Are the internal employees capable and willing to impart quality services to the customers which are in accordance to the approach taken by the company?

Recruitment Markets

Has the company carefully selected, motivated and trained the employees to deliver quality service in regards to the approach for gaining and retaining customers?

Supplier Markets

How can the relationships of the company with its suppliers and distributors be effectively maintained so that quality service can be maintained?

Influence Markets

Does the company possess a reputed brand name? What kind of strategy are followed to maintain effective relations with the Media, analysts, etc. that promotes word of mouth publicity?

Referral Markets

Is the company having good communication links with professionals in public who make recommendations on purchasing decisions of customers? How can the company enhance the customer’s loyalty towards it s products?

(www.openlearn.open.ac.uk)

FACTORS INFLUENCING CONSUMER BUYING BEHAVIOUR

Cultural aspects followed by a customer

Social characteristics of customers by which they form a group related to education, occupation, interests, etc.

Influences by family and friends

Situational influences which promotes or demotes company sales depending upon customer’s situation. This also includes his economic situation.

Influence of marketing efforts to purchase the company brands.

Influence of Psychological factors that include the customer’s perception, motivation, attitude, etc. towards a company’s brand.

Influence of demographic variables which divide individuals according to age, sex, monthly income, qualifications, occupation, etc.

(Parsons. E and Maclaran. P, 2009)

RESEARCH METHODOLOGY AND DESIGN

In the exploratory research, Positivism will be adopted as a research methodology. It has been assumed that relationship marketing influences the consumer buying behavior. The case study research strategy would be followed in the research that will provide the insights of the impact of relationship marketing on the automobile industry.

Tata motors had been focussing on Six Sigma marketing strategy previously, but it failed due to some reasons. Presently, they are focussing on Siebel CRM techniques to maintain their relationships with the customers and bring in more customers but the competition by Multi-national automobile giants such as Toyota, General motors, etc. is very intense. Previously, the company was far behind other car manufacturers because its cars were based on 3rd and 4th generation models, but now after the take-over of land-rover and jaguar brands, it has entered the luxury segment of automobiles. To gain the market-share, Tata would now have to develop a more competitive strategy which would gear up the attraction of customers towards Tata. As, it now possesses cars to meet the needs of customers from all segments and financial backgrounds; Thus, a differential relationship marketing strategy needs to be developed to capture potential customers from all segments which would prove to be fruitful to the company.

RESEARCH APPROACH

The methodology employed to understand the relationship marketing’s impact on consumer behavior would be the Case-Study Research which is an empirical inquiry that investigates a existent occurrence in the condition of its natural state; and in the case, where the outlines of the occurrence and its conditions are not clearly distinct; and in such a case, several sources of indicators for evidence are employed. (Yin, 1984).

Thus, this research would include a detailed contextual analysis of the previous researches and carrying on an in-depth analysis of the factors which affect as well as promote the relation between a customer and a service-provider, through interviews, questionnaires, informal discussions with consumers and management of Tata Motors, India.

(Bryman. A and Bell. E, 2007)

RESEARCH METHOD

There are mainly two types of data generated from a research, namely, primary and secondary. Primary research is a form of research which involves collection of data through questionnaires, interviews, focus groups, etc. whereas, Secondary data is the literary data collected from the works done by other researchers previously and involves the data being collected from sources such as, books, journals, articles, newspapers, etc. (Walliman, 2001)

The primary data in the research would be collected by means of questionnaires and telephonic interviews with the employees of Tata Motors in India, by utilizing social networking sites such as Facebook and Orkut to know the tactics applied by the company to promote relationship marketing. And also, in order to know the factors which promote consumer buying behavior through relationship marketing, separate data would be collected by means of questionnaires and telephonic interviews. This would reveal what are the consumer needs and expectations; also, how far is Tata Motors able to deliver them. Apart from this, the secondary data would be collected from sources such as books, journals, articles, blogs, company reviews, etc. which would form the basis of research by means of gaining in-depth knowledge about relationship marketing and its implications in the real world, by studying previously researched knowledge.

SAMPLING THE COLLECTED DATA

Sampling is an statistical process involving the selection of individuals from a selected segment of population and then making general inferences on the subject of research from these selected individuals by studying them (Stuart.A, 1962). In this research the targeted theoretical population for primary research would be from the central part of India (Madhya Pradesh) and Delhi. Samples of twenty-five Tata Motors Marketing employees that includes Middle-level and lower level employees would be studied for getting data related to the company and then, fifty samples of customers would be studied from the targeted regions of India. The samples would be drawn made by the simple random sampling method so that all the elements of relationship marketing get an equal probability of selection. This would minimize bias and also make it easy to analyze the variety of results. For this a sample of selected individuals would be considered that would truly represent the whole population which would give accurate results for the whole population.

DATA ANALYSIS PLAN

In order to support the above stated hypothesis, the data collected through interviews and questionnaires would be studied through descriptive methods of analysis. Also, statistics of the samples would be analyzed by descriptive statistics such as graphs and percentages.

ANTICIPATED ANALYSIS AND FINDINGS

The proposed methodology is supposed to incorporate the review of literature on relationship marketing with the analysis of derived data through secondary research. The data hence obtained from the secondary research would be analyzed on following lines: conceptual models of relationship marketing, services provided by the company to customers, customer service, extent of maintaining relations with the customers for the company, analyzing customers to maintain relationship with, analyzing the behavior of staff with customers and activities involved in retention of dissatisfied customers, etc.

The level of customer satisfaction along with the number of long-time customers achieved by a company would be a measure of relationship marketing in a company. This applies to every company including Tata motors in India. As relationship marketing is assumed to give benefits to a company, so it has to be evaluated where and how will it give desired profits to Tata Motors

CONCLUSION AND RECOMMENDATIONS

Relationship Marketing and Mass Marketing or transactional relationships are completely different that has already been established. But it depends on business to business when and how to adopt an approach to relationship marketing. For example, many small businesses such as newsagent shops do not require any approach of relationship marketing. But it develops over a period of time with regular customers. In case of big businesses in Automobile Industry, Aviation Industry, Telecommunications, etc. relationship marketing plays a very important role and this would supported by the research along with its implications. As per the research findings, judgments would be presented to take up a more strategic approach for administration of customer hopes. From the present literature review it can be suggested that, relationship marketing is influential on customer buying decisions and it can be good source of profits in a common marketing strategy of Multi-National Companies, where ‘they want to retain old customers and gain new customers’. But the approach adopted to manage customer expectations successfully is still not very clear and can ruin a company or can lead to its overall success.

SCHEDULE FOR RESEARCH ACTIVITIES

TIME FRAME

ACTIVITY

Dec 2009 – Jan 2010

Identifying a research topic

Feb 2010

Analyze case study for research and derive steps to be taken for accumulating primary data

Feb 2010 – March 2010

Submission of Research proposal

March 2010

Critical analyzing of related literature

April 2010

Concluding a research methodology

May 2010

Distribution of related questionnaire, compilation of gathered data.

June 2010

Writing the report of the carried-out research

July 2010

Concluding the research and submitting the final report.