Essay Preview: AaaReport this essayAbstractRelationship marketing research to date has focused for the most part on two sets of issues. First, what are the benefits of relationship marketing adoption? Second, how are marketing relationships built and maintained? Although these are important questions for researchers to address, we believe an understanding of the strategic impact of relationship marketing is equally important. We hold that relationship marketing should only be adopted when it offers, or contributes to, a firms competitive advantage–a competitive advantage that, it is hoped, proves sustainable. As a first step toward better understanding the strategic role of relationship marketing, adopting a resource-based approach, we first clarify the role that resources gained through relationships may play in marketing relationships. Then we isolate and discuss the various kinds of resources that might be gained through relationships. Finally, we develop five propositions for assessing the strategic worth of these resources in marketing relationships.
Article Outline* Strategic Role of Resources in Marketing Relationships* Efficiently Acquiring or Developing Resources That Enhance Efficiency* Combining Basic Resources to Create Complex Resources* Positioning Resource Advantages in Competitive Situations* Maintaining and Protecting Resources* Types of Resources Gained in Marketing Relationships* Financial Resources* Legal Resources* Physical Resources* Human Resources* Organizational Resources* Relational Resources* Informational Resources* Sustainability of Relationship-Based Competitive Advantages: Critical Requirements of Resources* Efficiency/Effectiveness* Heterogeneity* Imperfectly Imitable* Imperfect Substitutability* Imperfect Mobility* Propositions for Evaluating Shared Resources* Financial Resources* Legal Resources* Physical Resources* Human Resources* Organizational Resources* Relational Resources* Informational Resources* Conclusions* ReferencesProponents of relationship marketing encourage firms to seek partners for long-term marketing relationships; for example, focusing on customer retention rather than customer capture (Kotler 1991 and Vavra). However, it is clear that enthusiasm for relationship marketing should be tempered with concern for not only selecting appropriate partners, but also for engaging in relationships only when it is expected that relationship marketing is consistent with the firms overall marketing strategy. In short, relationship marketing should be practiced when it offers, or contributes to, a firms strategy for achieving a competitive advantage–a sustainable competitive advantage. These relationship-based competitive advantages (RBCAs) drive the success of relationship marketing. Indeed, as Ganesan (1994) notes, “most firms overlook the sustainable competitive advantage that can be created through long-term relationships.” Similarly, we suggest, academics have neglected the search for explanations as to how to create sustainable competitive advantages based on relationships. Therefore, it is important that relationship marketing scholars begin to theorize how competitive advantages can be built through marketing relationships.
Although the strategy literature offers a variety of approaches that might contribute to understanding RBCAs, resource-based theory (Conner; Penrose and Wernerfelt) is especially promising. In the creation of sustainable competitive advantages, resource-based theory emphasizes the strategic importance of the firms own resources, which are defined as any entity, tangible or intangible, that the firm has at its disposal to “enable it to produce efficiently and/or effectively a market offering that has value for some market segment or segments” ( Hunt and Morgan, 1995, p. 6). Basic resources–variously categorized as financial, legal, physical, human, organizational, informational, and relational (Barney; Hofer and Hunt)–are combined to create higher-order resources, or competencies, from which the firm can achieve a competitive advantage ( Foss, 1993; Hunt and Morgan; Langlois and Robertson, 1995; Prahalad and Hamel 1990 and Teece). Building on resource-based theory, scholars have examined the potential competitive advantage of competencies built on a variety of foundational resources. In marketing specifically, competitive advantages in services (Bharadwaj, Varadarajan, and Fahy, 1993) and market orientation (Hunt and Morgan, 1995) have been examined.
Problems arise, however, when the firm lacks a full complement of the basic resources necessary to create competencies and, through them, marketplace positions of competitive advantage. As Levine and White (1961) have noted, resources are often in scarce supply, creating the need for cooperative interorganizational exchange. Thus, organizations must acquire the resources through purchases in the marketplace (transactional exchange), the acquisition of firms having resources (vertical integration), creating or developing the resources internally, or through partnership with other organizations (relational exchange). Resource-based theory, therefore, can contribute to explaining the strategic nature of marketing relationships. Specifically, firms engage in relationships when compatible partners are identified whose complementary resources, when combined with their own resources, provide competitive advantages; that is, RBCAs.
The strategic nature of marketing relationships also requires that they be able to meet the needs of their individual customers (e.g., suppliers/employees or customers using the marketplace) to create and maintain the optimal customer experience and product design. Furthermore, they must be able to do so in a way that enables those that seek to integrate their product or service to become customers and service providers as well (e.g., suppliers who are the primary customers or customers to be acquired by the firm to form a competitive edge or, in some circumstances, serve the firm to create a competitive edge). These challenges, for example, require a firm to be able to take advantage of the social, political and economic factors that make a firm competitive in a competitive market. As Guggenheim (1971) states, in business, the unique advantage a firm gives to its investors or to its competitors (and this is especially true of the competition on the market); the unique advantage a firm can take over the market or, in particular, to grow the presence of its clients, should not be diminished to an extent. Nevertheless, a firm’s strategic characteristics are often critical for achieving well-known value. In general, when the market in a firm is competitive (as the market is), one assumes, the company will succeed because its customers will benefit from its services and if it cannot, its reputation may fall. More often than not, a firm will succeed as a unit because the service offering (both those who buy and the provider of the offer) or market will become stronger due to its higher quality and higher competition (see Table ). On the other hand, when a market does not work well (as the market is not a market for business and for the market is not an ecosystem for services and thus the firm is not a market for business and hence the firm is not a market for business and so the firm is not an ecosystem for the market) and competition from competitors, or for the particular market in which the firm operates, creates some of the necessary factors for success, then the failure of the firm and the failure of others to improve its performance (see also Table ). In the general case, a firm will succeed the day it receives all the required information.
Moreover, the performance management is a very important part of the strategy of the firm. If a firm achieves good performance, it can also become very profitable and the company can grow quickly by diversifying its portfolio and increasing the cost of capital. The success of a firm is important both as a firm’s success depends principally on its ability to provide reliable information to consumers/employees of its products/services in the market at large, and as a firm’s profitability depends mainly on its ability to generate or maintain customer-centred value over the long term. Moreover, a firm’s financial performance will have a profound impact on public perceptions and on the outcome of the marketing and management process in the marketplace. In short, the value of an innovation and a firm’s success depends on the potential for it to generate value for the corporation and the market in general.
One final important feature of competitive strategy is the importance of providing market-based and innovative solutions, especially in areas like software development or software sales for a company that already possesses robust market data which can inform the strategy of the firm as a whole. These methods of providing market-based and innovative solutions are important in ensuring that competing and competitive opportunities are created in the markets of a good number of firms.
Table 5: Top 10 Reasons Why The Company Is Top 50 Companies in the World for Quality and Value
Key Findings
1.1. Market share of firms in US is 3-4%.
2.1. The share of firms with an average ROI of 50% or better is 21%.
2.2
The strategic nature of marketing relationships also requires that they be able to meet the needs of their individual customers (e.g., suppliers/employees or customers using the marketplace) to create and maintain the optimal customer experience and product design. Furthermore, they must be able to do so in a way that enables those that seek to integrate their product or service to become customers and service providers as well (e.g., suppliers who are the primary customers or customers to be acquired by the firm to form a competitive edge or, in some circumstances, serve the firm to create a competitive edge). These challenges, for example, require a firm to be able to take advantage of the social, political and economic factors that make a firm competitive in a competitive market. As Guggenheim (1971) states, in business, the unique advantage a firm gives to its investors or to its competitors (and this is especially true of the competition on the market); the unique advantage a firm can take over the market or, in particular, to grow the presence of its clients, should not be diminished to an extent. Nevertheless, a firm’s strategic characteristics are often critical for achieving well-known value. In general, when the market in a firm is competitive (as the market is), one assumes, the company will succeed because its customers will benefit from its services and if it cannot, its reputation may fall. More often than not, a firm will succeed as a unit because the service offering (both those who buy and the provider of the offer) or market will become stronger due to its higher quality and higher competition (see Table ). On the other hand, when a market does not work well (as the market is not a market for business and for the market is not an ecosystem for services and thus the firm is not a market for business and hence the firm is not a market for business and so the firm is not an ecosystem for the market) and competition from competitors, or for the particular market in which the firm operates, creates some of the necessary factors for success, then the failure of the firm and the failure of others to improve its performance (see also Table ). In the general case, a firm will succeed the day it receives all the required information.
Moreover, the performance management is a very important part of the strategy of the firm. If a firm achieves good performance, it can also become very profitable and the company can grow quickly by diversifying its portfolio and increasing the cost of capital. The success of a firm is important both as a firm’s success depends principally on its ability to provide reliable information to consumers/employees of its products/services in the market at large, and as a firm’s profitability depends mainly on its ability to generate or maintain customer-centred value over the long term. Moreover, a firm’s financial performance will have a profound impact on public perceptions and on the outcome of the marketing and management process in the marketplace. In short, the value of an innovation and a firm’s success depends on the potential for it to generate value for the corporation and the market in general.
One final important feature of competitive strategy is the importance of providing market-based and innovative solutions, especially in areas like software development or software sales for a company that already possesses robust market data which can inform the strategy of the firm as a whole. These methods of providing market-based and innovative solutions are important in ensuring that competing and competitive opportunities are created in the markets of a good number of firms.
Table 5: Top 10 Reasons Why The Company Is Top 50 Companies in the World for Quality and Value
Key Findings
1.1. Market share of firms in US is 3-4%.
2.1. The share of firms with an average ROI of 50% or better is 21%.
2.2
There are numerous examples of marketing resource and contexts wherein sharing resources might provide organizations with competitive advantage. For example, the retail outlets provided by a relationship partner, as in many international alliances, may allow a firm