,LEARNING UNIT 1:
THE NATURE OF CUSTOMER RELATIONSHIP MANAGEMENT
Introduction:
The traditional marketing approach entails the application of the marketing mix elements
such as the product, price, place (distribution) and promotion in satisfying customer
needs.
It is necessary to create personal relationships with customers in this competitive digital
age so that they will be able to maintain and sustain their long-term success. Customer
relationship management (CRM) is a business philosophy that encourages customer
centricity in the day-to-day operations of a business.
CRM enables organisations to provide excellent real-time customer service through the
effective use of individual account information. This requires a more complex approach,
since organisations need to investigate customer needs, build relationships with both
existing and potential customers, and satisfy their customers’ needs.
Relationship marketing is the foundation that business-to-consumer (B2C) and business-to-
business (B2B) relationships are built on. The outcome of a relationship marketing
approach is to secure benefits for both the organisation and the customer.
A process that satisfies consumer needs by adding value through the provision of
appropriate products or services, at reasonable prices, through acceptable distribution
channels, using promotional strategies and marketing communication, in an ever-
changing business environment.
MNM3712 February 2022 Page 2
, The Marketing Concept:
A management orientation focussing on researching the customers’ needs and wants
and advocating the manufacturing of a product or service that will satisfy customer
needs.
Marketing concept advocates customer focus. Relationship marketing was initiated and
extended to emphasise the building of relationships with customers and profitably
managing those relationships for the long-term survival of the organisation.
The traditional marketing approach:
Elements of The traditional marketing approach:
• Marketing mix
• Transactional marketing
• Market segmentation
The marketing mix
• Marketing is a process that directs the flow of products and goods from the
manufacturer to the customer with the purpose of achieving a reasonable profit.
• The ingredients of successful marketing require the mixing of the following marketing
elements:
o product/service
o price
o place or distribution
o promotion
• Extended marketing mix - 3 Ps:
o people
o processes
o physical surroundings
Transactional marketing
• Aim: to generate a transaction or a sale.
• Exchange between businesses and customers without regard to retaining future sales
from existing customers.
• Outdated practice - businesses are now adapting to new ways of conducting their
selling operations by implementing relationship marketing.
• Purpose of relationship marketing - generate continuous support from existing groups
of customers (linking of separate transactions)
• Relationship marketing saves money in customer acquisition (acquires the customer
only once).
MNM3712 February 2022 Page 3
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