Role of relationship marketing in maintaining a competitive advantage
Relationship marketing is one of the crucial strategies used by the businesses designed to strengthen the relationship with the patrons and increase the loyalty. This research report is solely aimed at analysing and assessing the role of relationship marketing in gaining the competitive advantage. The organisation selected for this purpose is Woolworths.This Australian supermarket has the largest market share in Australia. It sells groceries, household products, magazines, health and beauty products, and many more.The report will provide an overview of the organisation and will further highlight the project objectives and scope. The literature review from the assessment 1 will be summarised and the hypothesis and research gap will be justified. Furthermore, the research questions will also be formulated here. The research methodology will also be elaborated, wherein the qualitative and quantitative research methods will be discussed. Before concluding the report, the research limitation and time schedule will also be provided.
2. Project Objectives
- To study the relationship between the organisation and the customers in order to determine the benefits that both parties gain from the interaction.
- To study the effect on the organisation after marketing evolution from transaction-oriented marketing to relationship marketing.
- To determine the steps that are essential for the development of relationships between customer and organisation.
- To provide recommendations for Woolworths to increase the loyal customers' base.
3. Project Scope
The idea behind carrying out this research project is to study the role of relationship marketing approaches followed by Woolworths in increasing the competitive advantage. In addition to this, the research project will also elaborate on how relationship marketing increases the loyal customer base of the Woolworths. The research will study the concept of marketing, marketing strategies, and ways to apply them. In addition to this, the project will also cover the marketing analysis tools and how they are related to relationship marketing. The project will also make use of different data collection methodologies. Both the research methods, namely quantitative and qualitative will be used in order to collect primary and secondary data. The qualitative method would make use of interviews and questionnaires. Once this would be done, the data analysis would be done and based on the findings, the hypothesis would be tested.
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4. Literature Review
Maina, (2016) have described the transactional marketing as the trend in the marketing field that focuses on the exchange of goods or services and money among people. The main characteristics of this type of marketing are that it does not aim at keeping the customers for a longer duration (Maina, 2016). They aimed at keeping a large number of customers and carry out transactions with them. The relationship marketing as the marketing approach that focuses on gaining the significant trust of the customers by understanding their opinion and tries to include them in developing the company's activities. According to Schilke (2014), it is only the aim of customer retention that separates the transactional marketing and relationship marketing. The former is more inclined towards improving the revenue of the company, whereas the latter is more concerned about enhancing the loyalty of patrons (Schilke, 2014). Not only it focuses on retaining the old customer, but also it emphasises on gaining the new ones. Cohen, T., (2014) in the paper goes on explaining the strategies that can be used in order to gain the customer base. This can be done by enhancing the market strategies, personalising the marketing messages, and improving the bond between the consumers and the company (Cohen, 2014). Sheth,, (2017) highlighted certain principles of relationship marketing that are used in obtaining the data related to customer and analyse it. Moreover, the paper also suggested ways to implement the marketing strategies. For that purpose, one needs to define the vision, mission, and culture of the organisation. Based on these aspects, one should design the relationship marketing strategies. The paper further goes on explaining that the bond between the organisation and the customer must be two-way and consumer-oriented. This would help in overcoming the reluctance of the customers and supporting the top management. However, the paper didn't talk about how to develop a two-way relationship between the two parties (Sheth, 2017).
This section talks about why relationship marketing importance, wherein the perception of different writers have been noted down. In his work, Li and Liu, (2014)said that for the supermarkets, customer-oriented approaches have proved to be very beneficial. Maintaining the relationship with people can help those organisations to increase their sales and revenue simultaneously (Li and Liu, 2014). Retaining the customers costs ten times lesser than gaining one. Supermarkets, such as Woolworths, Coles, etc., can make use of technological drivers like relationship management systems. Anthony and Susan (2017) recommended the use of such systems as one can collect and analyse the data associated with the customers. In addition to this, the data can also be used in organisational improvements, altering the purchasing behaviour of customers, and other factors leading to the organisational success. This way supermarkets can alter their marketing message in order to target the specific customers and gain a competitive advantage in the market. One thing that was important to note here is that a lot many kinds of literature have mentioned the use of the growth matrix, wherein the marketing strategies can be developed. However, their usage in the real world has not been tested in many studies.
Benouakrim and Kandoussi (2013) mentioned certain variables of relationship marketing, namely trust, commitment, and satisfaction. These variables play a significant role in governing the bond between the stakeholders and the organisation. Each variable has its own importance and company can also make use of their combination in an attempt to increase the customer base. For instance, most of the services a company make use of trust as the most effective tools for marketing, whereas commitment is the crucial aspect to achieve valuable outcomes. The authors in the literature study were found to be confused between the relational approach of components and ramifications of relationship marketing. Sometimes the authors have used satisfaction and cooperation as the component of relationship marketing, and in a few instances, these have been shown as the consequences. In addition to this, the paper failed to evidencing the use of this variable in relationship marketing.
Another literature by Beck, et.al (2013) talked about loyalty and its classification. He said loyalty is characterised by the customer's commitment to making a repurchase of a product or service. The customers are said to be loyal when they find that their needs are being fulfilled by the company (Beck, et.al, 2013). The author explained the concept of loyalty by linking it with behavior and attitude. However, the researcher failed in the right application of the categories of loyalty in formulating and implementing the right strategy. In addition to this, the author did not talk about the ways or any relevant model to measure the loyalty.
Talking about the research paper by Tan and Sousa, (2015), the study highlighted the relationship between competitive advantage and relationship marketing. Relationship marketing is the sub-part of the Competitive Marketing Strategy (CMS). RM can assist in guiding the moments of truths, building a partnership, addressing customer demands, etc. The competitive advantage is crucial for the organisation, especially the service sectors. It assists in increasing their profits, customer base, and annual sales (Tan and Sousa, 2015). However, the rapidly changing demands of the customers pose a major challenge for all the organisation. An organisation can make use of emerging technology in order to gain a competitive position in the market. Apart from technology, an organisation can also make use of strategies, such as product offering, distribution network, customer support, and cost structure in order to gain a competitive edge. Even if this paper highlighted the significance of relationship marketing and strategies for gaining a competitive position in the market, it does not give any evidence to support the usefulness of these strategies.
The overall finding from the literature review highlighted a lot many things that other researchers have not considered or missed in their studies. The first one is the relationship marketing variables and their roles in gaining the competitive analysis. The second is that researchers have not provided evidence to support the use of tools in real-world scenarios. The third one is the determinants of the outcomes of relationship marketing.
5. Research Questions
- What can be done in relationship marketing in the case of Woolworths to increase the loyal customer base and gain a competitive advantage?
- What are the relationship marketing variables and how they can help in gaining the competitive advantage?
- What strategies fall under the relationship marketing and how they are applied in the real world?
- What could be the determinants of the outcomes of relationship marketing?
6. Research Design and Methodology
The entire research study has been bifurcated into two sub-sections: The theoretical and empirical part. The research will be documented in the form of a report, wherein there will be different chapters. A brief of which is shown in the figure below:
The research will opt the deductive approach, wherein first, the theoretical aspects will be covered and theory will be developed based on the literature review. Later on, the observations would be noted. For the data collection, both qualitative and quantitative methods would be employed here. For the non-numeric data, the qualitative approach will be used. Here, the interviews of customers, employees, employers, and other stakeholders will be taken. Nearly 8-10 samples of each stakeholder would be recorded in order to develop a deep understanding in here. Apart from this, some sort of content analysis would also be done in which the annual report of Woolworths and other related documents will be analysed.
For the quantitative data, surveys and other secondary data will be used. These data will be presented in the form of tables, graphs, and diagrams. In addition to this, various statistical methods and tools will be used, such as the regression method, co-relation method, etc. Apart from this, the use of statistical analysis software like R-commander, MS Excel, etc., will also be carried out, if needed.
7. Research Limitation
It is very crucial to mention the limitation of this deductive research work. The first and foremost limitation of this research is that it mainly focuses on sales and marketing concept and relates the relationship marketing to these topics only. The research avoids mentioning the use of computer and software or any other tools like Customer Relationship Management (CRM) tools. Another limitation is that the research is covering only a small part of relationship marketing due to time constraint. Therefore, the research could cover up to the marketing model only. The last limitation is that the research solely focuses on Woolworths which is a supermarket company. Therefore, the findings and suggestions of this research will only be applicable to similar organisations.
This research report analysed and assessed the role of relationship marketing in gaining the competitive advantage in the context of Woolworths. It is an Australian supermarket with the largest market share in Australia. It sells groceries, household products, magazines, health and beauty products, and many more.The report gave an overview of the organisation and further highlighted the project objectives and scope. The literature review from the assessment 1 was summarised and the hypothesis and research gap were justified. Furthermore, the research questions were also formulated here based on the literature review. The research methodology was also elaborated, wherein the qualitative and quantitative research methods were discussed. Before concluding the report, the research limitation and time schedule was provided.
9. Reference List
- Anthony, K. and Susan, N., 2017. Effect of Product Differentiation of Substitutes on Competitive Strategy in Deposit Taking Saccos in Kericho County, Kenya. Imperial Journal of Interdisciplinary Research, 3(7).
- Beck, J.T., Chapman, K. and Palmatier, R.W., 2015. Understanding relationship marketing and loyalty program effectiveness in global markets. Journal of International Marketing, 23(3), pp.1-21.
- Bilgihan, A. and Bujisic, M., 2015. The effect of website features in online relationship marketing: A case of online hotel booking. Electronic Commerce Research and Applications, 14(4), pp.222-232.
- Cohen, T., 2014. Relationship Marketing. Touro Accounting & Business Journal,
- Li, D.Y. and Liu, J., 2014. Dynamic capabilities, environmental dynamism, and competitive advantage: Evidence from China. Journal of Business Research, 67(1), pp.2793-2799.
- Maina, V.N., 2016. Relationship marketing and sustainable competitive advantage in large pre-hospital service companies in Kenya.
- Montgomery, R. (2017). Is woolies trading at a discount?. [ONLINE] com Available at:https://rogermontgomery.com/is-woolies-trading-at-a-discount/ Accessed on: [5 October 2018]
- Murphy, D. (2018). Relationship Marketing - Connecting You with Your Customers. [online] Masterful Marketing. Available at: https://masterful-marketing.com/relationship-marketing-connecting-you-with-your-customers/ [Accessed 6 Oct. 2018].
- Pythagoras, (2012). Teachers' professional development needs in data handling and probability. [ONLINE] org.za Available at:https://pythagoras.org.za/index.php/pythagoras/article/view/10/15Accessed on: [5 October 2018]
- Schilke, O., 2014. On the contingent value of dynamic capabilities for competitive advantage: The nonlinear moderating effect of environmental dynamism. Strategic management journal, 35(2), pp.179-203.
- Sheth, J., 2017. Revitalizing relationship marketing. Journal of Services Marketing, 31(1), pp.6-10.