Customer Royalty and Relationship Marketings

Customer Royalty and Relationship Marketings





  • Customer Royalty and Relationship Marketings

  • 1.0 Introduction

  • Customer loyalties as well as relationship marketing are two very critical pillars for the success of company in this competitive world. Traditional approaches of marketing where one way communication was prime method of branding is old idea. Currently every corporate is focusing on the two way communication where customers are the most important part of communication process. Companies have started developing relationship with the customers

  • through relationship marketing approaches (Williamson, 2010). They are making customers as loyal customers through loyalty programs and thus increase the number of retained customers. It has been observed that retained customers are more beneficial than acquiring new customers.

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  • 1.1 Background Information

  • The company which is used for this report is fictitious company known as “Retek” which is one of the largest retail chains in middle-east head quartered in Dubai. This company has grown from single store in Dubai to many retail stores in several countries in middle-east. As the numbers of the stores were increasing the numbers of customers were also increasing. But the major problem being faced by this retail chain is lack of loyal customers and its incompetency to compete with giant global retail chains and their loyalty programs.

  • 1.2 Aims

  • The major objective of this report is to analyze the characteristics of loyalty programs as well as relationship marketing approaches through scholarly articles, journals and books written in past. a primary research will also be conducted to know the awareness of loyalty programs among a group of persons. After the analysis of the loyalty programs as well as relationship marketing, recommendations will be provided to CEO of Retek determining the benefits of the loyalty programs as well as strategies which can be implemented in Retek to increase the number of loyal customers.

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  • 1.3 Scope

  • This report deals with only the analyses as well as recommendation approaches of loyalty program as well as relationship marketing for the company “Retek”. Detailed analyses and recommendation will be provided. Implementation plan as well as budget and schedule of implementation is considered to be out of scope.

  • 2.0 Customer Loyalty and Relationship Marketing

  • A customer tends to switch products of different brands depending upon several factors like price, performance and quality of service. Thus companies lose thousands of dollars every year because of these hopping customers. Hence companies have introduced new form of concept of relationship marketing where customers are not only believed just as customers but the companies establish relationship with these customers (Jones, Mothersbaugh & Beatty, 2010). They implement several loyalty programs to instigate brand or corporate loyalty among the customers. Several scholarly articles have also been published on the topic of customer loyalties as well as relationship



  • Customer Royalty and Relationship Marketings



  • marketing which provides useful information to the marketers as well as top management.

  • 2.1 Literature review

  • In present world, marketing is the core business function of any product or service based company. Earlier the marketing was based on the one way communication and every company was focused to provide the awareness and information of their products to the potential customers. This one way communication was effective when there was monopoly or the competition was very less (Sharma & Patterson, 2008). Thus there was less number of service providers or good providers hence less effort was put to acquire new customers as well as retain customers. Then few years back, numbers of service providers are increasing exponentially and these service providers indulge in different types of corporate wars aiming to increase the client base. Increasing the client base was sole objective as it is assumed that greater the number of customers will increase the revenue of the company (Sheehan & Hoy, 2008).

  • Presently the marketing world is cluttered with different branding tools as well as marketing strategies. These strategies are aimed at increasing the brand image as well as brand equity among the target segment which includes customers as well as potential customers. Now lately it has also been identified that acquiring a new customer is not a cost-effective strategy as compared to the retaining old customers. According to the Pareto’s 80-20 rule, 20% of the total customers i.e. retained customers are the customers who are believed to bring 80% of the total revenue of the company (Levesque & McDougall, 2005).

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  • 2.1.1 Managing Value through Loyalty Programs

  • In the recent era, marketing is a two- way communication process in which the communication is sent to the customers as well as feedback is received from them. Because of the prime motive of increasing of client base as well as retained customers, companies are struggling to adopt innovative marketing strategies to tap the untapped market potential. Thus the best strategy introduced is loyalty program which help in generating loyalty among the customers. These loyalty programs initiated by different companies help in increasing the retention of the loyal customers (Sirdeshmukh, Singh & Sabol, 2002). Retention of loyal customers adds to the revenue as well as profit of the company.

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  • Companies have different number of customers like some companies might be having hundreds of clients whereas other companies might be thousands to lakh of customers. But today, every customer wants to be treated in special way and pampered by the service or goods providers. Thu in order to fulfill the expectations of the customers, companies is getting involved into implementations of loyalty or relationship marketing strategies. Relationship marketing helps a company to build long term relationship with the customers and make them loyal customers of that particular brand (Sweeney & Soutar, 2007). Customer values is calculated through benefits which are reaped by the customers and the cost incurred by those persons while reaping the benefits. Through relationship marketing and loyalty programs, companies tend to send promotional offers as well as information about the products or services directly to the customers. Thus cost of gathering information is reduced heavily in loyalty programs and thus in the end these loyalty programs adds value to the customer as well as generates huge revenue for the company (Szymanski & Henard, 2009).

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