Unit Number and Title Unit 11: Relationship Marketing

Qualification Pearson BTEC Level 3 Extended Diploma in Business

Start Date 1st June 2015

Deadline 29th June 2015
Assessor Amritesh Pratap Singh

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Assignment Title Understanding the importance of relationship marketing
Purpose of this Assignment

This unit aims to give learners an understanding of what relationship marketing is and why it is used by organisations.
The unit also links relationship marketing with customer service and quality management.

Scenario

Relationship marketing is about forming long-term relationships with customers. Rather than trying to encourage a one-
time sale, relationship marketing tries to foster customer loyalty by providing exemplary products and services. This is
different than most normal advertising practices that focus on a single transaction; watch ad A and buy product B.
Relationship marketing, by contrast, is usually not linked to a single product or offer. It involves a company refining the
way they do business in order to maximize the value of that relationship for the customer. (See also B2P Marketing)
Relationship Marketing Best Practices:-
 Conduct regular polls and surveys to solicit feedback from customers.
 Respect that feedback and incorporate it into the company's business practices.
 Use any and all social media outlets to connect with customers.
 Have effective customer monitoring technologies in place.
 Use clear policies to dictate how all company employees should interact with customers in both positive and
negative situations.
 Leverage the value of warm leads – customers who have already expressed an interest in the company.
 Have a comprehensive customer relationship management strategy.
 Conduct regular training sessions for all members of staff.
 Stay on the cutting edge of product offerings.
 Do not sacrifice quality for innovativeness.
 Maintain a high customer satisfaction rate in all areas of the company.
 Make an effort to inform customers how much they are appreciated.
 Relationship marketing mainly involves the improvement of internal operations. Many customers leave a
company not because they didn't like the product, but because they were frustrated with the customer service. If
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 a business streamlines its internal operations to satisfy all service needs of their customers, customers will be
happier even in the face of product problems.
Technology also plays an important role in relationship marketing. The Internet has made it easier for companies to
track, store, analyze and then utilize vast amounts of information about customers. Customers are offered personalized
ads, special deals, and expedited service as a token of appreciation for their loyalty.
Social media sites allow business to engage their customers in an informal and ongoing way. In the past, it would have
been impossible to keep useful records about every single client, but technology makes it easy for companies to
automate their marketing efforts.
Branding is the final component of relationship marketing. A company can form a long-term relationship with a client if
that client feels like the brand they purchase reflects who they are or who they want to be. Customers are less inclined
to switch to a different brand if they think that switch makes a statement about their identity.
Who Employs Relationship Marketing?
Many types of companies have something to gain from developing long-term relationships with their customers. Smaller
businesses often serve a steady stream of regulars, and make little effort to draw in new customers. Imagine a small
restaurant that sees a steady stream of business from the morning commute. Their daily presence is a large part of the
business that restaurant does every day.
Larger companies typically invest the most in carrying out sophisticated relationship marketing campaigns. In some
major companies, relationship marketing is a strategy that affects every department with a client facing purpose (sales,
customer service, shipping etc.). Industry leaders constantly face competition from new companies who claim to provide
similar goods with a higher-quality level of service. Holding onto their existing customers is the only way they can
maintain their position at the top of their industry. This is true for businesses in all industries, from cell phones to baby
food.

Examples of Relationship Marketing

Ikea – The Swedish furniture maker has a worldwide base of intensely loyal customers. When the company changed
the font in their ubiquitous catalog, Ikea lovers took to the Internet to air their complaints. Rather than alienate their
customers for a trivial reason, Ikea changed the font back in the next catalog.
Direct Recruitment – The direct mail marketing firm sends out handwritten birthday cards to clients and associates
every year. This simple, personal touch helps clients feel like Direct Recruitment cares about them as people rather
than simply consumers.
American Airlines – The airline maintains a comprehensive frequent flyer program that rewards customer loyalty with
the promise of free flights, upgrades, and discounts.

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Dell – Dell computers created a special online store for high volume corporate customers. By tailoring the ordering
process to the specific customer's needs, Dell was able to expedite many of the hassles corporate technology buyers
face. Providing a higher level of service leads to increased loyalty.
Vyvanse – The makers of the popular ADHD drug created an extensive online portal that included videos, forums,
expert articles, and mobile apps to help those who suffer from ADHD. Rather than relying on the strength of the product
alone, the drug makers created a place for users to gather and interact that was linked back to the company.

Why Do People “Like” Things

Social media is one of the most important components of relationship marketing. Sites like Facebook and Twitter make
it fast and easy for companies to communicate information to their customers. But in order to make this a long term
relationship, the company has to get their customers to become regular followers of their social media profiles. The
chart below, based on data from MarketingProfs, illustrates the reasons that customers choose to “like” a company’s
Facebook page. As the chart shows, most customers do not elect to follow a company out of mere curiosity. Companies
can increase their social media followers if they offer incentives like coupons or insider information.

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The above mentioned picture shows you the connection between Relationship Marketing and business Aims
and Objectives.

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You have to conduct an independent research in the industry of your choice on the topic of relationship marketing. The
initial step of the research includes certain aspects of the relationship marketing to be assessed and derive consensus
out of it to come up with best relationship marketing practices.

Task 1 (P1, P2, P3, P5, M1, M2, D1):

P1
Pick a company of your choice dealing in product or a service and describe the development of relationship marketing
covering following aspects:

 Difficulty of attracting new customers.

 Cost of lost customers.
 Life time value of customers.
 Growth of service sector.
 Growing sophistication of direct marketing.
 Role of information and communication technologies.

P2
Keeping the same organization from above under consideration explain how relationship marketing can be applied to
selected business covering following concepts:

 Definition of relationship marketing

 7Ps of marketing
 The ladder of customer loyalty
 The augmented product
 The total product concept

M1
Considering above mentioned organization analyze the ways in which relationship marketing activities can be used to
support achievement of the strategic aims and objectives of the selected organisation.

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D1
In continuation to your article Evaluate the contribution of relationship marketing activities to the effectiveness of the
marketing function in a selected organisation. The effectiveness shall be measured through following points:

 Some real time information or data supporting relationship marketing effectiveness in your selected
organization.
 Distinguish between reliable and unreliable data collected during your research.
 Draw conclusion based on an evidence available for effectiveness of relationship marketing in the selected
organization.

P3
In the article also Describe the different methods used to attract and retain customers for a service or product in the
selected organization. Scope of following methods should be described in respect to selected organization:

 Customer service
 Loyalty schemes
 Customer databases
 Personalized recommendations

P5
In addition to above, describe how a customer relationship management system is used in the selected organisation.

M2
In the article also analyze the effectiveness of methods used to retain customers in a selected organisation.

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Scenario

The GAP Model

The Service Quality Model, also known as the GAP Model, was developed in 1985. It highlights the main requirements for
delivering a high level of service quality by identifying five ‘gaps' that can lead to unsuccessful delivery of service.

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Customers generally have a tendency to compare the service they 'experience' with the service they 'expect' to receive;
thus, when the experience does not match the expectation, a gap arises.

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GAP 1:
Gap between consumer expectation and management perception: This gap arises when the management or service
provider does not correctly perceive what the customer wants or needs. For instance – hotel administrators may think guests
want better food or in-house restaurant facilities, but guests may be more concerned with the responsiveness of the staff
or the cleanliness of their rooms.

Hotel administrators may think guests want better food or in-house restaurant facilities, but guests may be more concerned
with the responsiveness of the staff.

Factors that affect the size of the knowledge gap include:

Market research:
Before introducing a new product or service into the market, a company must conduct market research to understand
whether there would be any demand for the product, and what features should be incorporated. The better this process is
conducted, the smaller the knowledge gap will be.
There are methods of ensuring that customer desires are taken on board. These include: comprehensive studies, gauging
satisfaction after individual transactions (surveys immediately after a purchase is made), customer panels and interviews,
and through customer complaints.

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Communication channels:
The fewer the layers between management and customer contact personnel, the more likely that customer preferences will
be incorporated into higher-level decision making on the product.
GAP 2 :
Gap between management perception and service quality specification: This is when the management or service provider
might correctly perceive what the customer wants, but may not set a performance standard. An example here would be that
hospital administrators may tell the nurse to respond to a request ‘fast', but may not specify ‘how fast'.

GAP 3:
Gap between service quality specification and service delivery: This gap may arise in situations pertaining to the service
personnel. It could happen due to poor training, incapability or unwillingness to meet the set service standard. An example
would be when a doctor's office has very specific standards of hygiene communicated but the hired staff may have been
poorly trained on the need to follow these strict protocols.

GAP 4 :
Gap between service delivery and external communication: Consumer expectations are highly influenced by statements
made by company representatives and advertisements. The gap arises when these assumed expectations are not fulfilled
at the time of delivery of the service. For example – a hospital printed on its brochure may have clean and furnished rooms
but in reality, it may be poorly maintained – in this case the patient's expectations are not met.

GAP 5:
Gap between expected service and experienced service: This gap arises when the consumer misinterprets the service
quality. The physician may keep visiting the patient to show and ensure care, but the patient may interpret this as an
indication that something is really wrong.

Ways of Improving Quality through different Methods:-

Quality Circles:-

== A Quality Circle is: volunteer group composed of members who meet to talk about workplace and service improvements
and make presentations to their management with their ideas.
== Quality circle is nothing but a small group of employees who come together to discuss with the management issues
related to either quality control or improvement in production methods form a Quality Control Circle (QCC).
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Benchmarking:-

1- To improve the quality of products and services as well as productivity.

2- To improve the competence, as one of all organizations goals.
3- To reduce cost and redundant efforts in the long run, reduce the cost of products or services by waste reduction,
safety, effective utilization of resources, avoiding unnecessary errors and defects.
4- To identify and solve work-related problems and interfere with production as a team.
5- With improved efficiency, the lead time on convene of information and its subassemblies is reduced, resulting in an
improvement in meeting customers due dates.
6- Customer satisfaction is the fundamental goal of any library. It will ultimately be achieved by Benchmarking and will
also help to be competitive for a long time.

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There are many different methods which can be used for improving the service or product quality gap though as a trainee
you need to conduct a research in a company of your choice to find out the quality gaps lying in the company.

Task 1 (P4, M3, D2):

For P4 learners must use techniques to identify perceived quality gaps for a selected product or service. Techniques include
gap analysis, quality circles, benchmarking, value chain, alignment of value chains and fishbone (Ishikawa) analysis. It is
sufficient for learners to use four of these techniques. For M3, learners need to use their analysis to develop and explain
the options for closing the perceived quality gap. Three options would be sufficient evidence. For D2 this is developed
further into justified recommendations for improving the selected organisation’s relationship with a group of customers. To
achieve at this level learners should demonstrate the ability to look at the situation from different points of view. For P5,
learners need to describe how a customer relationship management system is used in a selected organisation.

P4
Pick an organization of your choice and use the techniques to identify perceived quality gaps in product or service of the
selected organization. Any one of the techniques from following can be used to identify perceived quality gaps:

 Gap analysis
 Quality circles
 Benchmarking
 Value chain
 Ishikawa analysis

M3
Use the information available from above criteria and analyze to develop and explain the options for closing the perceived
quality gap. The analysis and explanation should suggest al the least 3 options.

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D2
Provide justified recommendations for improving the selected organization’s relationship with a group of customers. Flourish
some information about the profile of current customers of the organization and look at it from a different point of view while
making recommendations.

Evidence Checklist Type of Evidence required Evidence Presented

Scenario 1 Article
Scenario 2 word file/ power point presentation

Result/ Grade Tasks 1 Date

Result/ Grade Tasks 2 Date

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Note:
The learners can find the feedback for their assignments in the ‘Achievement Feedback Summary’. The elaborated
comments shall be provided in the feedback form attached with the assessment.
The grades issued to the learners are subjected to change as per the final verification report of the external verifier
appointed by the awarding body Pearson (Edexcel). The dates of external verification are decided by the awarding body
in accordance with the institute, all learners are expected to make their presence count upon the visit of external verifier.

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