Relationship Marketing and Virtual Communities Means Value Added


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In progressive organizations, leaders are beginning or have already realized that scientific management in not the only management practices to improve market share, revenues, and profits. Such organizations have embarked upon a corporate cultural transformation to embrace market oriented behaviors. In doing so, customer relationship marketing (RM) has become an organizational platform for operational success. Customer RM stems from competitive strategies to optimize quality and operational performance (Beaton & Beaton, 1995). Competitive strategies are grounded in time-based competition, total quality management; just-in-time management; early supplier involvement; addressing cost pressures; globalization of markets and international marketing; increased technical co-operation; downsizing of the business as necessary, changes in production and operating structures; and the need for organizational flexibility (Beaton & Beaton).

Consequently, I believe that directly and indirectly, the aforementioned competitive strategies have forced many organizations to overhaul their corporate culture; from the top of the firm to the very bottom where consumer facing takes place. Although, cultural transformation may be challenging and time consuming, the benefits are appropriate for contemporary markets and effective RM initiatives and activities. Hence, in a service industry, as asserted by Gronroos (1994), “It is a perspective the gives firms that face service competition, i.e. that have to understand and manage service elements in their customer relationships in order to achieve a sustainable competitive advantage…” (p. 5). In a service industry, the cultural shift requires the organization to move from a production oriented business to a customer centric operation. The firm must transition accordingly; from short-term quarterly performance to establishing longevity in their customer relationships; from an internal focus on service quality to a platform where the customer’s perceived value and quality is the essence of doing business; and from technical production processes to an orientation where y = f(x) (y is the customer and x is the variable(s) that drive maximum quality according to the customer’s preference (Gronroos).

In a product industry, RM has become very prominent relative to the manufacturer’s and customer’s interaction. Additionally, positive customer relationships and relationship marketing minimize the consequences of inadequate products (Lagrosen, 2005). Producers that incorporate the thoughts and ideas of their customers and consumers are considered to have established a relationship management program (Lagrosen). However, when product industries leverage relationship marketing, they, in essence, have pushed the relationship envelop to a level that makes the relationship a source of market knowledge. Thus, such producers have developed an environment where both suppliers and consumer are part of the interactive manufacturing procedure (Lagrosen). Since consumers may harbor different meanings, ideas, and perceptions about specific products than do producers, interactive involvement can only enhance the relationship (Lagrosen). Moreover, with the application of virtual communities replacing cumbersome and costly focus groups, company-consumer relationships are skyrocketing while consumer information is real-time, accurate, and value added –without third party intervention.

Dr. Johnny D. Magwood
Northeast Utilities Service Company
V.P. Customer Experience & Chief Customer Officer; Northeast Utilities Service Company. J. D. Power Smart Grid Advisory Council; Chairman- Housing Authority Baltimore City; Next Generation Utilities Advisory Board; Utility Knowledge Customer Service Council; CS Advisory Council; Magistrate Judge Seletion Committee. Marketing Executive Council; Mechanical Engineer - The Johns Hopkins University; MBA - Loyola University of Maryland; DBA - University of Phoenix; Doctoral dissertation; Mergers and Acquisition: The Role of Corporate Executives' Relationships with Stakeholders


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