Morgan and hunt model of relationship marketing companies

morgan and hunt model of relationship marketing companies

Relationship marketing was first defined as a form of marketing developed from direct response From a social anthropological perspective, relationship marketing theory and practice can be interpreted Research conducted to developing relationship marketing suggests that firms can best do this through having one of. strategic business units (Morgan and Hunt, ). Should all the partnerships in Figure 1 be construed as forms of relationship marketing, or should only. This paper discuss empirical model of business relationship in Indonesia . Morgan and Hunt () argue key concept of relationship marketing rely on trust .

For our research, we will retain the three most frequently cited concepts in the literature due, in one hand, to their importance in relationship marketing models and in other hand, also their determining effect relationship value see the following development. In B to B context, this ratio is quite complex because it takes into account many aspects for both benefits and sacrifices.

morgan and hunt model of relationship marketing companies

Indeed, companies are, in one hand, searching for benefits, to do this they intervene on services related to purchasing orders or on these orders management. On other hand, these same companies are also seeking to reduce the sacrifices by either reducing the price or internal costs. The marketing literature has proposed several ways to decompose the relationship value dimensions in B to B context. Anderson and al admit two dimensions: The first dimension is divided into four components: For cons, the dimension of sacrifice refers only to the price paid to the supplier.

Furthermore, Walter and Ritter state that business relationships are related to direct or indirect economic objectives realization Anderson and al, ; Walter and al, These authors decompose relationship value in two dimensions, one refers to direct functions immediate value creation and the other to indirect functions future or secondary Matri Ben Jemaa, Walter and Ritter highlighted the difference between these two dimensions named by function as follows: The above development has allowed a better understanding of relationship value in B to B context.

We propose thus, to approach the relationship value construct as a cognitive one that refers to performance evaluation as performed by customers evaluating a relationship with a supplier. To do this, we will adopt Walter and Ritter and Liu and al approach, while distinguishing direct and indirect functions of relationship value concept as their research field is close to ours B to B relationships.

Relationship Marketing key Concepts and Relationship Value In order to understand the association between relationship marketing and relationship value, this research suggests to explore the interactions between relationship marketing key concepts mentioned above satisfaction, trust and commitment: Trust and Relationship Value Authors are not unanimous regarding the relationship between trust and relationship value.

Indeed, some of them suggest that relationship value determines trust Ulaga and Eggert, Others, by cons, assume that trust determines relationship value Walter and al, According to this approach that we are adopting because we seek to determine the effect of trust on relationship value trust in the trading partner integrity, increases the perceived relationship value Morgan and Hunt, To better understand the link between trust and direct and indirect relationship value, a more detailed analysis is necessary.

  • Browse by Subject
  • Commitment
  • Browse by Content Type

According to Walter and al and Walter and Rittertrust increases the relationship value by increasing in one hand, the direct value and in other hand the indirect relationship value. Indeed, first, trust between a supplier and a customer leads to a higher business volume, because this mutual trust permits to these partners to understand each other, and to reduce transaction costs Doney and Cannon, control costs for example that refers to volume and profit value creation function as explained by Walter and Ritter Mutual trust between a client and a supplier endorses more cooperation Morgan and Hunt,strengthen the association among these two parts and reduce the dependence on other suppliers safeguard functionhence the positive effect of trust on direct relationship value Walter and al, ; Walter and Ritter, These elements permit to present the following hypothesis: Satisfaction and Relationship Value Numerous researches support the positive effect of satisfaction on relationship value Walter and al, According to this approach, a satisfied customer tends to reduce complaint behaviour, to reduce alternative supplier searching Walter and al, Customer satisfaction increases the difference between what is received and what is given in a relationship as it allows, at least, control costs reduction.

Industrial customer satisfaction increases motivation to implement specific relationship decisions Achrol, suggesting greater willingness to engage in the relationship, and thus more business volume Singh and Sirdeshmukh, Thus, the positive association between satisfaction and value creation volume function set by Walter and Ritter Satisfaction has respectively a positive effect on profit and safeguard functions referring to the direct profits for the products or services, as well as guaranteed a volume of business through contractual arrangements between exchange parties.

Indeed, a satisfied customer from its relationship with his supplier tends to benefit the maximum Gabarino and Johnson, Therefore, he is more likely to increase his profits, his business volume with his supplier and ensure business volumes through contractual arrangements Walter and Ritter,hence the positive association between satisfaction and direct relationship value.

Customer satisfaction also fosters a closer relationship with his supplier which will encourage the latter to introduce the customer to a third party operating on the market technology provider, service company Liu and al, A satisfied customer will also be more likely to adapt his production and innovation processes Doney and Cannon, It is therefore, possible to think about the positive effect of satisfaction on relationship value indirect dimension Walter and al, ; Matri Ben Jemaa, Hence the following hypothesis: Commitment and Relationship Value Authors have placed great emphasis on the role of commitment on relationship value increase in B to B context Shamdasani and Sheth, Indeed, commitment generates perceived risk reduction and thus, favourably affects performance and relationship value between exchange parties Moore, Commitment is, indeed, a central element partnership value, as relationship committed customers tend to reduce claims, and to limit alternative suppliers to avoid unsatisfactory products and services Sharma and al, Commitment increases the direct relationship value, as it promotes increased business volumes and revenues through contractual arrangements with suppliers Walter and Ritter,Ritter and Walter, ; Mohr and Spekman, Commitment increases also indirect relationship value as it encourages cooperation and investment referring to product or process innovation innovative function.

morgan and hunt model of relationship marketing companies

Commitment allows also gaining new customers or suppliers market function and market development scout function Moller and Torronen, Marketing Relationship key Concepts Interaction The Link Between Trust and Satisfaction The new research trend articulates the importance of trust and satisfaction association in showing a positive relationship between these two concepts Nefzi, In B to B context, Mohr and Spekman prove the positive impact of trust on satisfaction, as well as on business volume increase.

Thus, more a customer is satisfied more he tends to assume that his supplier is honest a trust dimension and thus have confidence on him Chouk and Perrien, ; Sharma, ; Eddaimi, In this research, we assume that trust is an important source of satisfaction because many researches in B to B context have validated this assumption Mohr and Spekman, Hence our fourth hypothesis: Customer trust in a supplier is positively linked to the fisrt satisfaction.

The Link between Satisfaction and Commitment The literature does not converge regarding the link between satisfaction and commitment. For some authors, the satisfaction influences directly and positively commitment in a relationship Ganesan, ; Mohr and Spekman, and is one of its most important determinants. In this regard, Dwyer and al state that a satisfied customer search less an alternative supplier and will therefore be more committed.

In this same vein, Abbad and al point out that a satisfied customer regarding his supplier has more confidence on him in the future and will be committed in the relationship.

The Commitment-Trust Theory of Relationship Marketing |

Other theory stipulates that there is at least no direct relationship between satisfaction and commitment Walter and al, Indeed, according to this theory supporter, satisfaction effect on commitment can pass through trust Walter and al, ; Rao, For our research, we will align to Ganesan and submit the following hypothesis: The Link between Trust and Commitment Trust reduces transaction costs Doney and Cannon,perceived risk Benamour, and allows cooperation Morgan and Hunt, Trust ensures lower control procedures and encourages exchange parties agreements Gode- Sanchez, Thus, the nature of the relationship between exchange parties changes thanks to mutual trust feeling and become more tight and stable Walter and al, Trust leads, therefore, to relationship commitment Ganesan, Trust can also be seen as an indispensable commitment determinant Abbad and al, Hence our sixth hypothesis: The trust of a customer has a positif impact on his commitment in a relationship with his supplier.

Conceptual Model Above development, allows bellow conceptual model development Figure 1.


The model highlights the contribution of relationship marketing key elements in value creation in B to B context. Increased customer retention and loyalty makes the employees' jobs easier and more satisfying.

In turn, happy employees feed back into better customer satisfaction in a virtuous circle. Relationship marketers speak of the "relationship ladder of customer loyalty ". It groups types of customers according to their level of loyalty.

Relationship marketing

The ladder's first rung consists of "prospects", that is, people that have not purchased yet but are likely to in the future. This is followed by the successive rungs of "customer", "client", "supporter", "advocate", and "partner".

The relationship marketer's objective is to "help" customers get as high up the ladder as possible. This usually involves providing more personalized service and providing service quality that exceeds expectations at each step. Customer retention efforts involve considerations such as the following: Customer valuation — Gordon describes how to value customers and categorize them according to their financial and strategic value so that companies can decide where to invest for deeper relationships and which relationships need to be served differently or even terminated.

Customer retention measurement — Dawkins and Reichheld calculated a company's "customer retention rate".

morgan and hunt model of relationship marketing companies

This is simply the percentage of customers at the beginning of the year that are still customers by the end of the year. This ratio can be used to make comparisons between products, between market segments, and over time. Determine reasons for defection — Look for the root causes, not mere symptoms. This involves probing for details when talking to former customers.

IBIMA Publishing Relationship Marketing Key Concepts as Relationship Value Determinant

Other techniques include the analysis of customers' complaints and competitive benchmarking see competitor analysis. Develop and implement a corrective plan — This could involve actions to improve employee practices, using benchmarking to determine best corrective practices, visible endorsement of top management, adjustments to the company's reward and recognition systems, and the use of "recovery teams" to eliminate the causes of defections.

A technique to calculate the value to a firm of a sustained customer relationship has been developed. This calculation is typically called customer lifetime value. Retention strategies may also include building barriers to customer switching. This can be done by product bundling combining several products or services into one "package" and offering them at a single pricecross-selling selling related products to current customerscross promotions giving discounts or other promotional incentives to purchasers of related productsloyalty programs giving incentives for frequent purchasesincreasing switching costs adding termination costs, such as mortgage termination feesand integrating computer systems of multiple organizations primarily in industrial marketing.

Many relationship marketers use a team-based approach. The rationale is that the more points of contact between the organization and customer, the stronger will be the bond, and the more secure the relationship. Application[ edit ] Relationship marketing and traditional or transactional marketing are not mutually exclusive and there is no need for a conflict between them.

In practice, a relationship-oriented marketer still has choices, depending on the situation. Most firms blend the two approaches to match their portfolio of products and services. It is claimed that many of the relationship marketing attributes like collaboration, loyalty and trust determine what "internal customers" say and do. According to this theory, every employee, team, or department in the company is simultaneously a supplier and a customer of services and products.

morgan and hunt model of relationship marketing companies

An employee obtains a service at a point in the value chain and then provides a service to another employee further along the value chain. If internal marketing is effective, every employee will both provide and receive exceptional service from and to other employees. It also helps employees understand the significance of their roles and how their roles relate to others'.

If implemented well, it can also encourage every employee to see the process in terms of the customer's perception of value added, and the organization's strategic mission.

The Commitment-Trust Theory of Relationship Marketing

Further it is claimed that an effective internal marketing program is a prerequisite for effective external marketing efforts. Referral marketing is developing and implementing a marketing plan to stimulate referrals.

Although it may take months before you see the effect of referral marketing, this is often the most effective part of an overall marketing plan and the best use of resources[ citation needed ]. Marketing to suppliers is aimed at ensuring a long-term conflict-free relationship in which all parties understand each other's needs and exceed each other's expectations.

Such a strategy can reduce costs and improve quality. Influence markets involve a wide range of sub-markets including: These activities are typically carried out by the public relations department, but relationship marketers feel that marketing to all six markets is the responsibility of everyone in the organization. Each market may require its own explicit strategies and a separate marketing mix for each. Live-in Marketing[ edit ] Live-in Marketing LIM is a variant of marketing and advertising in which the target consumer is allowed to sample or use a brands product in a relaxed atmosphere over a longer period of time.

Much like product placement in film and television LIM was developed as a means to reach select target demographics in a non-invasive and much less garish manner than traditional advertising. History[ edit ] While LIM represents an entirely untapped avenue of marketing for both big and small brands alike it is not an all that novel an idea.

With the rising popularity of experiential and event marketing [19] in North America and Europe, as well as the relatively high ROI in terms of advertising dollars spent on experiential marketing compared to traditional big media advertising, industry analysts see LIM as a natural progression.

Premise[ edit ] LIM functions around the premise that marketing or advertising agencies go out on behalf of the brand in question and find its target demographic.