Overview

Relationship marketing is emerging as the core marketing activity for businesses operating in competitive environments. It focuses on maintaining a continuous relationship with customers and building long term bonds. Over a period, a company learns more about the customer's needs and wants and is therefore able toprovide more personalised and relevant one-to one service. Relationship marketing, with its focus on customer relationships as opposed to one-time transactions, has been viewed as a paradigm shift that has reshaped the entire field of marketing. It is beneficial to both company and customers involved in such mutual relationships and consequently marketers' started focussing on building customer relationships.Marketers introduced the concept of trust and commitment towards one's customers to supplement the concept of consumer satisfaction in attempting to explain the dynamics underpinning long-term relationships. On an average, businesses spend six times more to acquire customers than they do to keep them (Gruen, 1997). Therefore, many firms are now paying more attention to their relationships with existing customers to retain them and increase their share of customer's purchases. Most marketers in present scenario focused on attracting customers from its target segments using the tools and techniques developed for mass marketing in the industrial era. This is proving to be highly ineffective in most competitive markets. Decreased growth rates, intensifying competition and technological developments made businesses look for ways to reduce cost and improve their effectiveness.Relationship marketing appears to be an expensive alternative to firms practicing mass marketing due to the relatively high initial investments. Firms would adopt relationship marketing only if it has the potential to benefit them. When customers enter into a relationship with a firm, they are willingly foregoing other options and limiting their choice. Some of the personal motivations to do so result from greater efficiency in decision making, reduction in information processing.

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