- Marketing Principle #3 focuses on building and maintaining barriers, or sustainable competitive advantages (SCA), to competitive attacks, based on the premise that competitors react continually to a firm’s success
- Relationship equity refers to the aggregation of relational assets and liabilities, associated with the firm’s boundary-spanning employees and social networks linked to the offering or experience, that add to or subtract from the value provided by the firm’s offering
- Relationships powerfully affect behavior; relational-based decision making is ingrained in people’s psyches
- Strong affect on performance outcomes (meta-analysis of 20 years of data across 38,000 relationships)
- WOM (r = .61, p < .01)
- Loyalty (r = .52, p < .01)
- Objective performance (r = .35, p < .01)
(Palmatier et al. 2006)
- Shift to service economies
- Increase in use of marketing channels
- Aging population and shift of purchasing power
- Increased global competition, “me too” offerings, and faster “product” commoditization
- Firms look for additional sources of SCA and higher marketing ROI (advertising saturation)
(Fang, Palmatier, and Steenkamp 2007; Palmatier 2008)
- Relationship marketing efforts seek to improve relationship characteristics with an exchange partner and build relationship equity, in the hope of ultimately improved financial performance
- RM activities do not affect financial performance directly
- Instead, they help build relationship equity, which influences customer behaviors, which improves the seller’s financial outcomes
- This chain of effects operates through four mechanisms:
- Cooperative behaviors
- Relational loyalty
- Referrals or word of mouth (WOM)
- Empathetic behaviors
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