There is truly a rising dissatisfaction with current marketing thought. And the reason for this dissatisfaction is simple - the marketing mix theory (also known as the '4Ps' - product, price, promotion and placement) is limited in its application and is a narrow, one-sided view of the discipline.
Since it is the prevailing theory however, not many will dare to question it except for the brave few such as respected academic Raymond Kent, who sarcastically referred to it as "the holy quadruple of the marketing faith, written in tablets of stone." But is this disdain really justifiable?
If one looks at the origins of the marketing mix theory, one will soon realise that this approach was developed for Fast Moving Consumer Goods (FMCG)-type companies. More so, look a little bit deeper and one will discover that there were originally 12 parameters proposed for marketers to mix, but they were soon condensed to the ubiquitous 4Ps - primarily because it was easier to understand and to teach.
However as the years passed, many practitioners began to report a shortfall in the marketing mix. To address these shortcomings, additional elements such as 'people', 'process' and 'physical evidence' were put forward as possible additions to the mix. One academic even developed a list of 15Ps for the marketer to manage!
While a plethora of academics and practitioners searched the thesaurus for more words beginning with the letter P, others began to search for a new theory to solve the dilemma. And a possible solution that is growing in popularity is the theory of Relationship Marketing.
The relationship marketing concept emerged many years ago but only started to gain popularity in the 1990s with the introduction of Customer Relationship Marketing (CRM), which many believed was synonymous with the theory of relationship marketing. This belief however is only a partial truth, as many CRM programmes are self-focused and are missing some of the fundamental principles of relationship marketing. They can therefore best be described as one of the many applications of relationship marketing. So then what is relationship marketing, one may ask?
Many elaborate and complicated definitions of relationship marketing have been put forward. The simple explanation however, is that it's about building long-term relationships with those parties that impact or influence the business, based on trust, commitment, information sharing and collaboration, so that value is created for all the parties involved.
Clearly, this approach to marketing can be adopted and implemented in any industry, company type or company size. What's more, relationship marketing can offer several diverse benefits to its practitioners, such as a sustainable competitive advantage, more effective marketing spend, lower staff turnover and even supply chain improvements. The truth is, relationship marketing is a practice that can positively influence an entire business in practically every area - if implemented and managed properly.
Relationship Marketing also challenges a number of traditional views on business.
The first is that, with relationship marketing, a company's biggest competitor might very well be its best friend too. The paradox of relationship marketing is that being an effective competitor also means being an effective co-operator.
While this may sound strange, the logic is very simple. If a customer desires some product or value which you are unable to deliver on your own, then why not collaborate with a competitor who can help you create this value? This actually happens more often that one may think. For example, if an insurance company didn't want to carry the full risk of insuring a very expensive building, they will only insure a percentage of it while a competitor company will insure the outstanding value.
Secondly, relationship marketing challenges the idea that a company needs to do everything itself. A business only needs to have a single or few core capabilities that are unique and can create value.
For all the rest, it can build strong relationships with suppliers and other outside parties to the extent where their expertise can be used by the business as if they were its own. One of the many benefits of this approach is that an organisation can grow and shrink quickly to respond to fluctuations in demand, and turn traditional fixed costs to variable costs.
Many are predicting that the end of the traditional marketing mix is near. Is relationship marketing the new, all-encompassing theory of the future? Many would like to think so. But more importantly, if marketers want their discipline to be regarded as a strategic force again, and once and for all prove to the finicky accountants that marketing spend does in fact generate a net revenue, then they need to approach the profession differently. If you agree, then let's get together and brainstorm it over a nice, lavish lunch.
