Handbook of Relationship Marketing

Handbooks

Edited by: Jagdish N. Sheth & Atul Parvatiyar

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  • Chapters
  • Front Matter
  • Back Matter
  • Subject Index
  • Part I: Domain, Evolution, and Growth of Relationship Marketing: Alternative Perspectives

    Part II: Conceptual and Theoretical Foundations of Relationship Marketing

    Part III: Partnering for Relationship Marketing

    Part IV: Enablers of Relationship Marketing

    Part V: Teaching and Research Implications of Relationship Marketing

  • Copyright

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    Dedication

    To our wives, Madhu Sheth and Divya Parvatiyar

    Preface

    The idea for this book originated as a result of a special session that we organized at the Academy of Marketing Science conference in 1994. In a very lively session, participants debated the idea of preparing a compendium of scholarly articles on the emerging topic of relationship marketing. Dave Cravens, a speaker at the session and editor of the Journal of the Academy of Marketing Science (JAMS), took the initiative and invited the special session presenters to write position papers on different areas of relationship marketing. Thus a special issue of JAMS on this topic was published in fall 1995 and has had a significant impact on fostering research and scholarly work in relationship marketing. However, we soon realized that this subject needed a more comprehensive examination that goes beyond the articles published in JAMS and that is not bound by the page limitations of a standard academic journal.

    Although in recent years there has been explosive growth in business practices and academic curiosity with respect to relationship marketing, no textbook is available that presents conceptual ideas on the subject in an organized fashion for use by students and faculty. For people already teaching relationship marketing courses or course modules, it is a challenge to develop relevant course material from many disparate sources. The purpose of this book is to fill this gap and provide a foundation for developing textbooks. It can be used by academic scholars and PhD students as a source of references and extant knowledge on the topic of relationship marketing. It can also serve as a textbook for courses on relationship marketing at the MBA level.

    In many ways the development of this book and the subject area of relationship marketing mirrors the early stages of the development and growth of other subdisciplines of marketing, such as consumer behavior, channel management, product management, and marketing theory. All of these areas witnessed considerable academic interest and scholarship before they grew to become part of standard marketing course offerings at business schools. In fact, books written or edited by leading scholars facilitated the acceptance of certain topics as standard marketing courses and legitimate streams of doctoral research. For example, Stern and El-Ansary's (1977) book on channels and Engel, Kollat, and Blackwell's (1968) book may not have been written around existing course offerings in the marketing curriculum, but they eventually became textbooks as new courses were created on these topics in graduate and undergraduate programs at most institutions. Similarly, the early editions of marketing theory books such as that edited by Sheth and Garrett (1986), comprising articles by leading scholars, and that authored by Hunt (1983) provided useful teaching material on this subject in PhD programs. They also led to the development of other books by these scholars on the topic of marketing theory (Hunt, 1991; Sheth, Gardener, & Garrett, 1988).

    Thus our intent here is to provide a comprehensive scholarly book to students and faculty interested in the area of relationship marketing. We have taken an inclusive rather than exclusive approach to this subject, including a broad coverage of topics, diverse perspectives, theoretical and conceptual paradigms, and scholarly representation. Instead of adopting a single view as to what constitutes relationship marketing or limiting ourselves to the North American viewpoint, we have included the viewpoints of scholars from other parts of the world, particularly Europe, where relationship marketing issues have been of interest to many scholars for several years now. We have attempted to include contributions of some of the best-known scholars on this subject by inviting them to write chapters specifically for this book.

    This volume is organized into five parts. The first, consisting of five chapters, deals with the domain, evolution, and growth of relationship marketing. In Chapter 1, we define relationship marketing and discuss the antecedents to its emergence as a subdiscipline of marketing. We also present a relationship marketing process model to highlight the domains of current and potential academic inquiry into the subject matter. In Chapter 2, Adrian Payne provides an overview of the development of relationship marketing from the U.K. perspective. He presents a six-markets model as a framework for understanding relationship marketing practice and research domains. In Chapter 3, Håkan Håkansson and Ivan J. Snehota outline the history of the IMP (Industrial Marketing and Purchasing) Group perspective. They review its conceptual cornerstones and suggest future directions for research in business relationships. In Chapter 4, Christian Grönroos describes the Nordic school perspective on relationship marketing. He identifies the core processes of relationship marketing and discusses their application to the management and marketing of services. Finally, in Chapter 5, we trace the evolution of relationship marketing by comparing business practices during the preindustrial, industrial, and postindustrial eras. We also trace the development of marketing thought from the early 1900s to clarify the shifting paradigms that have led to the recent emergence of a relationship marketing viewpoint.

    Part II addresses the conceptual and theoretical foundations of relationship marketing and primarily comprises the position papers that were published in the 1995 special issue of JAMS mentioned above. In Chapter 6, Leonard L. Berry discusses the imperative of relationship marketing in the services sector and its emerging perspectives. He presents his ideas on how relationships can be developed and promoted by service marketers and its consequent research implications. In Chapter 7, we discuss the antecedents and consequences of relationship marketing in consumer markets. We draw upon consumer behavior literature to understand why consumers reduce choice and thereby engage in relationships with marketers. Barton A. Weitz and Sandy D. Jap discuss the conceptual developments relating to distribution channel relationships and partnering behavior in Chapter 8. They provide an overview of the application of various theoretical perspectives, such as transaction cost, power dependence, and relational norms, in the study of distribution channel relationships. In Chapter 9, David T. Wilson provides an integrated model of buyer-seller relationships. He identifies current research on relationship marketing in the business-to-business context at the concept, model, and process levels and suggests directions for future research based on the integrated model of buyer-seller relationships. In Chapter 10, P. Rajan Varadarajan and Margaret H. Cunningham provide a synthesis of conceptual foundations of strategic alliances. Based on resource allocation theories, they recommend directions for future studies on strategic alliances. And in Chapter 11, we develop a typology of alliances by drawing upon the underlying themes of interorganization literature. Based on this typology and implied charaeteristics of different types of alliances, we develop theoretical propositions on business alliance formation.

    Part III comprises chapters on partnering for relationship marketing. Several aspects of partnering that facilitates the development and implementation of customer relationships are addressed in this section. In Chapter 12, C. B. Bhattacharya and Ruth N. Bolton discuss relationship marketing in mass markets where there are potentially large numbers of customers. They address questions related to (a) the conditions under which relationship marketing will be effective in mass markets and (b) the marketing strategies most appropriate for influencing relationship processes and outcomes under these different conditions. In Chapter 13, Thomas W. Gruen proposes a model that provides a comprehensive set of constructs related to membership organizations and their relationship marketing practices. He outlines several avenues of additional research with respect to membership customers and relationship marketing. Vanitha Swaminathan and Srinivas K. Reddy provide a framework of affinity partnering relationships in Chapter 14. They develop a typology and present a conceptual model of affinity partnering strategies. Key account management (KAM) programs, as a means for engaging in relationship marketing with business customers, are Joseph P. Cannon and Narakesari Narayandas's focus in Chapter 15. They contrast traditional sales approaches with KAM and review the relevant issues as presented in the extant literature to point out opportunities for future research in key account management. In Chapter 16, David W. Cravens and Karen S. Cravens consider the context of horizontal alliance relationships and develop a process model for it. They also examine major constructs comprising the process model and explore emerging issues concerning the conceptualization of and research on horizontal alliances. And in Chapter 17, John T. Mentzer examines the potential of positional advantage involving value-added services through supplier partnering. He identifies 11 dimensions of supplier partnering and presents the apparent impetus for each dimension, along with the extant research and managerial thinking related to it.

    The chapters in Part IV of this book concern the enablers of relationship marketing posture by firms. In Chapter 18, Robert M. Morgan discusses the evolution of relationship marketing strategy within an organization. He presents an expanded conceptualization of commitment-trust theory of relationships, develops an understanding of how firms combine and manage resources to achieve relationship-based competitive advantages, and introduces the concept of cooperative value nets to represent the highest level of sophistication of relationship marketing strategy. In Chapter 19, Ian Gordon provides a framework for organizational redesign so that an organization can better undertake the relationship marketing function. He reviews how relationship marketing can affect the enterprise and how a company could respond through new approaches to organizational design and meet those challenges. Rajendra S. Sisodia and David B. Wolfe, in Chapter 20, describe the role of information technology (IT) in building, maintaining, and enhancing customer relationships. They present a model that shows the symbiosis between IT and relationship marketing and discuss the characteristics and impact of technology-enabled relationship marketing. In Chapter 21, Kaj Storbacka presents a methodology for customer profitability analysis within the relationship marketing context. He also examines the issue of designing appropriate customer relationships based on current and potential profitability of customers and customer bases.

    Finally, the chapters in Part V explore the research and educational implications of relationship marketing. In Chapter 22, Joseph P. Cannon and Jagdish N. Sheth provide a framework for developing curricula to enhance the teaching of relationship marketing. They describe the innovative curriculum and supporting structure developed at Emory Business School, which creates a three-way partnership among students, faculty, and the business community, in order to place a greater emphasis on relationship marketing. In Chapter 23, Sheth discusses the future of relationship marketing research and its potential for influencing a paradigm shift in marketing approach and theory.

    We hope that this book will be of value to students, scholars, and practitioners interested in the conceptual foundations of relationship marketing. We wish to thank all of the authors who have contributed chapters; without their valuable contributions, we would not have been able to prepare this volume. We offer our special thanks to Naresh Malhotra, president of the Academy of Marketing Science, who suggested that we prepare this book on relationship marketing. We also wish to thank Sage Publications for agreeing to publish the book and to make it available to the academic and practitioner communities. In particular, we would like to thank Harry Briggs at Sage Publications, for his support and help in the production of this volume. Finally, we thank our research assistants, Ron Bruno and Chitturi Suresh Rayudu, for helping us in assembling the manuscripts.

    Jagdish N.ShethAtulParvatiyar
    References
    Engel, J. F., Kollat, D. T., & Blackwell, R. D. (1968). Consumer behavior. New York: Holt, Rinehart & Winston.
    Hunt, S. D. (1983). Marketing theory: The philosophy of marketing science. Homewood, IL: Richard D. Irwin.
    Hunt, S. D. (1991). Modern marketing theory: Critical issues in the philosophy of marketing science. Cincinnati, OH: Southwestern.
    Sheth, J. N., Gardner, D. M., & Garrett, D. E. (1988). Marketing theory: Evolution and evaluation. New York: John Wiley.
    Sheth, J. N., & Garrett, D. E. (Eds.). (1986). Marketing theory: Classic and contemporary readings. Cincinnati, OH: Southwestern.
    Stern, L. W., & El-Ansary, A. (1977). Marketing channels. Englewood Cliffs, NJ: Prentice Hall.
  • About the Contributors

    Leonard L. Berry (PhD, Arizona State University) holds the J. C. Penney Chair of Retailing Studies, is Distinguished Professor of Marketing, and is Director of the Center for Retailing Studies at Texas A&M University. He is a former national president of the American Marketing Association. His research interests are in the areas of services marketing, service quality, and retailing strategy. He has published numerous journal articles and books, including Discovering the Soul of Service: The Nine Drivers of Sustainable Business Success (1999), On Great Service: A Framework for Action (1995), and Marketing Services: Competing Through Quality (1991).

    C. B. Bhattacharya is Associate Professor of Marketing at the School of Management at Boston University. He received his PhD in marketing from the Wharton School of the University of Pennsylvania in 1993 and his MBA from the Indiana Institute of Management. He is currently working on measuring brand loyalty and brand health using scanner data, determinants of customer retention, and the roles of corporate social responsibility and organizational identification and disidentification in the design of marketing strategy. He has published in a number of scholarly journals, including the Journal of Marketing, International Journal of Research in Marketing, Journal of the Academy of Marketing Science, Marketing Letters, and the Journal of Retailing and Consumer Services.

    Ruth N. Bolton is Thomas Henry Carroll Ford Foundation Visiting Associate Professor at the Harvard Business School. She is visiting the Harvard Business School from the Robert H. Smith School of Business at the University of Maryland, where she is Associate Professor of Marketing and Harvey Sanders Professor of Retailing and Services Marketing. Her current research is concerned with high-technology services sold to business-to-business customers. She is a frequent speaker on services, marketing, customer satisfaction, customer retention, and quality management topics. She currently serves on the editorial boards of the Journal of Retailing, Journal of Marketing, Marketing Science, Marketing Letters, Journal of Marketing Research, and Journal of Service Research.

    Joseph P. Cannon is Assistant Professor of Marketing at Colorado State University. He received his PhD from the University of North Carolina. His primary research interests involve the issues related to the effective management of business-to-business buyer-seller relationships in domestic and international markets. His research has appeared in the Journal of Marketing, Journal of the Academy of Marketing Science, Academy of Management Review, and other academic journals.

    David W. Cravens, PhD, holds the Eunice and James L. West Chair of American Enterprise Studies at Texas Christian University. He is internationally recognized for his research on marketing strategy and sales management, and he has contributed more than 100 articles, monographs, books, and proceedings papers. His textbook Strategic Marketing (1997) is widely used in strategy and management courses.

    Karen S. Cravens is an Arthur Anderson Faculty Fellow and Associate Professor of Accounting at the University of Tulsa. She is a licensed certified public accountant and holds a PhD from Texas A&M University. Her work has been published in Business Horizons, International Business Review, International Journal of Accounting, Journal of Financial and Strategic Decisions, Journal of Strategic Marketing, Managerial Auditing Journal, Managerial Finance, Oil & Gas Tax Quarterly, and Research in Accounting Regulation.

    Margaret H. Cunningham (PhD, Texas A&M University, College Station) is Associate Professor of Marketing at Queen's University in Kingston, Ontario. Her major research interests are in the areas of marketing alliances, social partnerships, and marketing ethics. Her research has been published in the Journal of the Academy of Marketing Science, Social Marketing and Fundraising, Journal of International Marketing, Festival Management & Event Tourism Journal, and the Philanthropist, as well as in a number of marketing textbooks.

    Ian Gordon is President of Convergence Management Consultants, Toronto, a firm providing strategic marketing services to executive management. His interest is in helping companies bond with chosen customers and ensuring that they do so better than their competitors. He has authored books on relationship marketing and competitive intelligence and strategy, as well as more than 50 articles. He lectured in undergraduate and graduate business programs at York University, Toronto, for 15 years.

    Christian Grönroos, Dr. Econ., is Professor of Service and Relationship Marketing and Chairman of the Board of the Research and Knowledge Center, CERS Center for Relationship Marketing and Service Management, at Hanken Swedish School of Economics, Finland. His research interests include service management, services marketing, service quality, and relationship marketing in both consumer and business-to-business environments. His book Service Management and Marketing (first edition 1990) has been published in eight languages. His work has been published in the Journal of the Academy of Marketing Science, Journal of Business Research, Journal of Marketing Management, International Journal of Service Industry Management, European Journal of Marketing, Journal of Business and Industrial Marketing, Journal of Services Marketing, Integrated Marketing Communication Research Journal, and Asia-Australia Marketing Journal.

    Thomas W. Gruen (PhD, Indiana University) is Assistant Professor of Marketing at the Goizueta Business School at Emory University. His research interests cover three areas of relationship marketing: memberships, team selling, and category management. His work has been published in the Journal of Business Research, Business Horizons, and International Business Review.

    Håkan Håkansson (PhD, Uppsala University) is Professor of Industrial Marketing at Uppsala University in Sweden. Aside from industrial marketing, his two complementary research interests are technical development and purchasing. He is the author or coauthor of a number of books and has published articles in the Journal of Marketing, Journal of Marketing Research, Journal of Business-to-Business Marketing, International Journal of Research in Marketing, European Journal of Management, and Industrial Marketing Management

    Sandy D. Jap is Assistant Professor of Marketing at the Sloan School of Management at the Massachusetts Institute of Technology. Her research interest is in collaboration in the distribution channel and supply chain. Her work has been published or is forthcoming in the Journal of Marketing Research, Journal of the Academy of Marketing Science, Journal of Business Research, and Sloan Management Review.

    John T. Mentzer is the Harry J. and Vivienne R. Bruce Excellence Chair of Business Policy in the Department of Marketing, Logistics and Transportation at the University of Tennessee. He has published more than 120 articles and papers in the Journal of the Academy of Marketing Science, Journal of Marketing, Journal of Business Logistics, Journal of Business Research, International Journal of Physical Distribution and Logistics Management, Transportation and Logistics Review, Transportation Journal, Columbia Journal of World Business, Industrial Marketing Management, Research in Marketing, Business Horizons, and other journals.

    Robert M. Morgan is Associate Professor of Marketing and Reese Phifer Faculty Fellow of Marketing at the University of Alabama. His research focuses on marketing strategy and relationship marketing, particularly on understanding how strategies centering on relationship building develop and their impacts on the firm, its constituencies, and its partners. His research has been published in the Journal of Marketing, Academy of Management Journal, Marketing Management, and Journal of Advertising.

    Narakesari Narayandas is Assistant Professor of Business Administration at the Harvard Business School. He received his PhD in marketing from the Krannert Graduate School of Management, Purdue University. His research interests are in the area of customer management. His work has previously been published in the Journal of Marketing, Journal of Service Research, and Journal of Business-to-Business Marketing.

    Atul Parvatiyar is Assistant Professor of Marketing at Goizueta Business School, Emory University. He received his MBA and PhD from Banaras Hindu University, India. He has authored a number of articles in the areas of international marketing, business alliances, and environmental marketing. His previous research has been published in the Journal of the Academy of Marketing Science, International Business Review, Research in Marketing, and Journal of Business Research. He is coeditor of Research in Marketing and serves on the editorial review board of International Marketing Review and the International Journal of Customer Relationship Management.

    Adrian Payne is Professor of Services and Relationship Marketing and Director of the Center for Relationship Marketing at the Cranfield School of Management, Cranfield University. His research interests include customer retention and relationship marketing. His books include Relationship Marketing: Strategy and Implementation (1999), Advances in Relationship Marketing (1995), Relationship Marketing for Competitive Advantage (1995), and Relationship Marketing (1991).

    Srinivas K. Reddy (PhD, Columbia University) is Professor of Marketing and Sanford Research Fellow at the Terry College of Business, University of Georgia. His research interests are in marketing strategy, particularly in the areas of brand management and pricing. His research has been published in the Journal of Marketing Research, Journal of Marketing, Management Science, Journal of the Academy of Marketing Science, Journal of Business Research, Journal of Advertising Research, and Multivariate Behavioral Research.

    Jagdish N. Sheth is the Charles H. Kelistadt Professor of Marketing at Emory University. He has published more than 200 books and research papers in different areas of marketing. His book The Theory of Buyer Behavior (1969), with John A. Howard, is a classic in the field. He has recently published two scholarly books: Marketing Theory: Evolution and Evaluation, with D. M. Gardner and D. E. Garrett (1988); and Consumption Values and Market Choices, with B. I. Newman and B. L. Gross (1991). He is on the editorial boards of at least a dozen scholarly journals in marketing, international business, and quantitative methods; he is also series editor of Research in Marketing. In 1989, he received the Outstanding Educator Award from the Academy of Marketing Science, and in 1992 he received the P. D. Converse Award from the American Marketing Association. He is also a Fellow of the American Psychological Association and Past President of the Association for Consumer Research.

    Rajendra S. Sisodia is Trustee Professor of Marketing at Bentley College. Previously, he was Associate Professor of Marketing and Director of Executive Programs at George Mason University and Assistant Professor of Marketing at Boston University. He has a PhD in marketing from Columbia University. He has published approximately 50 articles in journals such as the Harvard Business Review, Journal of the Academy of Marketing Science, Journal of Business Strategy, and Marketing Letters and Marketing Management, as well as several book chapters. He has also authored about two dozen cases, primarily on strategic and marketing issues in the telecommunications industry, as well as a number of telecommunications industry and company analyses.

    Ivan J. Snehota (PhD, Uppsala University) is Associate Professor of Marketing at Stockholm School of Economics. His research interest is in market strategy in business markets. He is coauthor of Developing Relationships in Business Networks (1995) and Managing Business Relationships (1998).

    Kaj Storbacka has worked on strategy formulation as a management consultant to major Scandinavian service companies for 15 years. In 1991 he founded CRM Customer Relationship Management Ltd., a consulting company that specializes in developing customer-oriented strategies. He is also one of the founders of CRM International, a network of consulting companies. He has held various positions (researcher, lecturer, and professor) at the Swedish School of Economics and Business Administration in Helsinki, Finland. Currently he is affiliated with the Center for Relationship Marketing and Service Management at the Swedish School of Economics and Business Administration. He has written a number of research reports on marketing issues, several articles and working papers on relationship marketing and service management, a book on leadership in service organizations, and a book about relationship management, which won a Scandinavian award for best business book 1994–1997.

    Vanitha Swaminathan is Assistant Professor of Marketing in the Isenberg School of Management at the University of Massachusetts at Amherst. Her research interests center on branding strategies such as brand alliances and extensions and on branding issues in the emerging electronic media. She has published in the Journal of Marketing Research and Advances in Consumer Research, and in the proceedings of conferences held by the American Marketing Association, the Academy of Management, and the Center for Relationship Marketing.

    P. Rajan Varadarajan is Professor of Marketing and Jenna and Calvin R. Guest Professor of Business Administration at Texas A&M University. His research interests are in the areas of corporate, business, and marketing strategy; marketing management; and global competitive strategy. His research has been published in the Journal of Marketing, Journal of the Academy of Marketing Science, Academy of Management Journal, Strategic Management Journal, Sloan Management Review, California Management Review, Business Horizons, and other journals. He is coauthor of the textbook Contemporary Perspectives on Strategic Market Planning. He served as an editor of the Journal of Marketing from 1993 to 1996, and he currently serves on the Board of Governors of the Academy of Marketing Science, as chair of the Marketing Strategy Special Interest Group of the American Marketing Association, and on the editorial review boards of the Journal of Marketing, Journal of Strategic Marketing, and Journal of International Marketing.

    Barton A. Weitz is Chairman of the Marketing Department, the J. C. Penney Eminent Scholar Chair, and Executive Director of the Center for Retailing Education and Research at the University of Florida. He is a member of the board of directors of the National Retail Federation and former editor of the Journal of Marketing Research. His research interests focus on the development of long-term relationships between firms in a channel of distribution (retailers and vendors), between firms and their employees, and between salespeople and their customers.

    David T. Wilson (PhD, University of Western Ontario) is Alvin H. Clemens Professor of Entrepreneurial Studies at the Smeal College of Business Administration at the Pennsylvania State University. His research interest is in value creation and measurement in value-creating networks of business-to-business firms. He has published widely in leading national and international journals.

    David B. Wolfe heads Wolfe Resources Group, a consumer behavior consultancy located in Reston, Virginia. His client list includes American Express, Bausch & Lomb, Ford Motor Company, General Motors, MetLife, and Marriott, as well as other major U.S. companies. His work has taken him to Africa, Asia, and Europe. He frequently guest lectures at major universities on a new marketing model called developmental relationship marketing. He has authored more than 20 articles in the past 10 years and is author of a book on marketing to middle-aged and older consumers, Serving the Ageless Market.


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