Relationship Marketing: Creating Stakeholder Value

Citation

Paulin, M. (2003), "Relationship Marketing: Creating Stakeholder Value", Journal of Services Marketing, Vol. 17 No. 4, pp. 443-445. https://doi.org/10.1108/jsm.2003.17.4.443.1

We use the words “customer relationship management” and “customer service” freely in service management and marketing. However, do we really understand the processes required to support these aims, or how to integrate a broader range of stakeholder interests in the creation and delivery of value?

Relationship Marketing: Creating Stakeholder Value comes out at a time when academics and business practitioners are starting consider the broader stakeholder picture. The authors argue that this means linking customer value creation concepts to the management of stakeholder relationships and then enabling relationship strategies through making improvements to cross‐functional processes.

This book offers several evolutionary approaches to marketing by shifting from:

• •

  the corporate objective of maximizing market share to a concern for the “quality of share” and long term profitability;

• •

  employing the traditional marketing mix approach of manipulating and exploiting market demand to recognizing that attention to the legitimate requirements of various stakeholders in multiple market domains creates a better climate for a business to win or retain profitable customers;

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  a one way perspective of creating value to a two‐way flow of value, where business can create and sustain mutual beneficial relationships; and

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  using valuable resources (human, ecological or material) to enhancing valuable resources.

A particularly interesting aspect of the book is the integration of three themes:

1. 1.

   (1) value creation through relationships;

2. 2.

   (2) management of stakeholder relationships; and

3. 3.

   (3) enabling relationship strategies.

These three themes make up an overall concept aimed at creating long term profitable relationships with targeted customers and reinforcing the importance of looking at the market from a collaborative approach rather than dictating and forcing the market into a rationale for increased market share at all costs.

Theme 1

Value creation through relationship is divided into two chapters. Chapter 1, “Creating value for the customer”, emphasizes the particular aspects of relationship marketing and their evolution. It provides the reader with sound principles for achieving the transition from a transactional marketing perspective to a relational orientation and for defining marketing activities around processes that involve the whole organization. Chapter 2, “Creating value for the organization”, explores how to create value for and from the customer as opposed to the income derived from the customer. Customer retention is recognized as being critical to the profitability of the organization, however, the framework to achieve this objective is often lacking.

Theme 2

Managing stakeholder relationships emphasizes the importance of value creation by linking the customer and the organization through the building and managing of relationship networks. Chapter 3, “Building marketing relationships”, defines different market domains that must be considered, including business‐to‐business, business‐to‐customer and non‐profit sectors, in order to conduct marketing activities and relationship strategies. Chapter 4, “Managing relationships in networks”, insists on the importance of managing the business network and how different actors need to synchronize their actions and resources in order to build an overall relationship marketing network.

Theme 3

Enabling relationship strategies suggests ways in which firms can create frameworks, structures and cultures that foster relationship networks in order to create value for stakeholders. In particular, Chapter 5, “Integrating quality, customer service and marketing”, demonstrates the importance of close monitoring and continuous innovation where people are agents of the processes. The idea of creating ongoing processes of managing the buyer‐seller relationship interface requires a definite turnaround of the organization where service is the responsibility of all people, departments and functions. To create and deliver value in their activities, people need processes and adequate support service systems. Different alternatives are explored to provide guidance for managers. Finally, Chapter 6, looks at how to develop and implement a relationship marketing strategy based on value creation for stakeholders. Different models are presented and discussed in order to help businesses develop the appropriate relationship marketing strategies for different types of customers. One of the key aspects in this chapter is the integration of the authors well known “six markets concept” within the organizational mindset rather than limiting all market focused responsibilities to a single functional department. Note that the six‐markets concept encourages strategic relationship building within the customer market, of course, but also within the “internal market” of employees, the “market” of suppliers, and market sources of business referral, employee recruitment, and influence. These six markets are not exhaustive of all possibilities for strategic attention, as mentioned by the authors, but rather give an idea of the complexity of today’s economy.

Overall, this book fosters the theory and the practical applications of relationship marketing and how they can create value for stakeholders. However, as mentioned by the authors, dealing with organizational change and culture is critical in implementing a relationship marketing strategy. Everything begins with recognizing that successfully delivering stakeholder value depends on how business sees its primary purpose.

For professors teaching at the MBA level

The models are well presented and the text is easy to understand. The concepts are straightforward and can be applied to practical examples and live cases. Furthermore, in the context of globalization, this book brings together different relationship marketing approaches (Anglo‐Australian, European and North American) and emphasizes the importance of different markets and networks of relationships. Interestingly also, is the importance of building internal marketing relationships in order to bring better balance to the notion of a customer centric organization.

For professionals and practitioners

This book can help professionals and practitioners to better manage business relationships and develop sound strategies. In an era of scarce resources and geo‐political complexity, business people can build a competitive advantage for themselves and for their business by fundamentally reviewing their thinking and courses of action. Understanding the strategic importance of relationship marketing and its impact on stakeholders can definitely make a great difference in how business is developed, managed and nurtured. Furthermore, rather than giving recipes, the authors have elaborated guiding principles that can be used in both profit and not‐for‐profit organizations and have emphasized processes on which people in organizations can concentrate in order to create value for their customers. The importance of looking at internal processes and their links with external processes avoids the concentration on a given “power” function within an organization that can become blind to the notion of creating and enhancing customer value in and beyond the organization.

On a more personal note, I see this book as a refreshing approach with which to conduct seminars and business courses. It allows one to get away from the traditional transactional way of promoting marketing management by presenting a more service‐minded and quality integrated approach for business‐to‐customer, business‐to‐business and business‐to‐community marketing. The book is refreshing since, in opposition to standardized marketing concepts with their overblown focus on competition and their use of conflictual metaphors, it emphasizes the need for more collaboration, alliances and respect of cultural differences. Exactly what the doctor ordered!