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									Public Relations and Relationship Marketing:
           Their similarities and differences
                                Chun-ju Flora Hung
                        Hong Kong Baptist University
                                       July 5, 2008
                                     Bled, Slovenia
Introduction
 Berry (1983) and Ferguson (1984) emphasized the
  importance of relationships in marketing and public
  relations.
 The focus on relationships in public relations was not
  fully developed until 1997 (Broom, Casey, & Ritchie,
  1997, 2000).
 In marketing, due to its goal in serving customers to
  achieve profits, research on relationship marketing has
  been one of the major centers of attention.
Contribution of the relational approach in
public relations & marketing
 Marketing: a relationship between customers and
  suppliers or service providers creates additional values
  for both sides (Grönroos, 2000, 2004) and long-term
  customer relationships are the basis for cost-effective
  business (Reichheld & Sasser, 1990; Reichheld, 1993;
  Storbacka, 1994).
 Public Relations: the relationships maintained and
  cultivated by public relations enhance the reputation of
  the organization (J. Grunig & Hung, 2002; Yang & J.
  Grunig, 2005), bottom-lines, and organizational
  effectiveness (L. Grunig, et. al, 2002).
Relationship marketing

 The idea of relationship marketing was originated in
  the 1950s (McGarry, 1950, 1951, 1953, 1958) but was
  first mentioned by Berry in 1983.
 2 schools of thoughts on the importance of relationship
  marketing
    Industrial Marketing and Purchasing (IMP) Group: Networks of
     companies are the main focus where relationships are seen as
     the criteria for developing and managing these networks
     (Håkansson, 1982; Håkansson & Snehota, 1995).
    The Nordic school: Scholars from this school believe “internal
     marketing” and engaging the whole company in relationship
     development with customers account for the effectiveness of
     marketing and service delivery (Grönroos, 1981).
Definition

 Grönroos (2004): “the process of identifying and
  establishing, maintaining, enhancing, and when
  necessary terminating relationships with customers and
  other stakeholders, at a profit, so that the objectives
  of all parties involved are met, where there is done by
  a mutual giving and fulfillment of promises” (p. 101).
 Harker (1999): “relationship marketing occurs when an
  organization engages in proactively creating,
  developing and maintaining committed, interactive and
  profitable exchanges with selected customers or
  partners over time” (p. 16).
Relationship Marketing

 In the contemporary era of hypercompetition, customer
  retention and loyalty became crucial for the marketers
  (Dick & Basu, 1994; Reichheld, 1996). Many marketers
  even believe retaining existing customers is more
  effective and cost-saving than to seek for the new ones
  (Hayes, Wheelwright & Clark, 1988; Spekman, 1988).
  As a result, companies tend to maintain long-term
  relationships with customers than to make one-time
  sales (Cannie & Caplin, 1991; Rosenberg & Czepiel,
  1984).
Transactional marketing vs. relationship
marketing (Stephens, 1992; Baye, 1995; Hung,
et. al. 2008)
                                           Transactional marketing                      Relationship marketing

Core                     Exchange of products                                  Management of interaction process
Duration                 Distinct beginning and end; hit and run; short-term   On going process; long term
Orientation              Bottom-line oriented                                  Knowledge-oriented
Method                   Negotiate deals                                       Collaborate and cooperate
Responsibility           For self                                              mutual
Focus                    Features of products; 4 Ps                            Creation of value; 4Cs
Types of Relationships   Exchange                                              Communal
Reciprocity              Reciprocal                                            Non-reciprocal
Accountability           Non-accountability                                    Accountability
Communication            Isolated; not widely shared                           Shared among staff; on going
Commitment               Limited commitment                                    High commitment
Audience                 Customers                                             Primarily customers, other stakeholders

Customer interaction     Discontinuous customer interaction                    Continuous customer interaction


Quality                  Emphasized by producers /product quality              Emphasized by everyone/service quality,
                                                                               relationship quality, etc.
Stephens (1992) Relationship expectational
continuum
Types of Organization-public
Relationships (Hung, 2002, 2005, 2006)
Relationship cultivation strategies
 J. Grunig & Huang (2000), Hon      Keeping promises
  & J. Grunig (1999), Hung           Being attentive
  (2002, 2006), Hung & Chen          Education
  (2007), Rhee (2004) & H. Kim
  & Rhee (2006)                      Personal relationships
 Openness or disclosure             Organizational credibility
 Positivity                         Adherence to cultural &
                                      relational rules
 Access
                                     Visible leadership
 Assurance of legitimacy
                                     Listening
 Networking
                                     Responsiveness
 Sharing of task
                                     Continued dialogue
 Cooperating
                                     Respect
 Being unconditionally
  constructive                       Face to face communication
 Saying win-win or no deal
Research Questions

 In practices, what are the differences between
  transactional marketing and relationship marketing?
 In practices, what are the similarities and differences
  between relationship management and relationship
  marketing?
Research Design
 Literature review on public relations, transactional
  marketing, relationship marketing, and interpersonal
  communication.
 Qualitative interviews from the marketing perspective
 Each interview lasted from one hour to 90 minutes.
 Interview notes were sent back to participants for their
  confirmation and verification.
 All interviews were conducted in Hong Kong in English in
  June 2008.
 Interview data were compared with Hung’s previous
  studies (Hung, 2002, 2004; Hung & Y. Chen, 2007) on
  cultivation strategies and types of relationships.
Cultivation Strategies in OPR

 Hung (2004), Hung & Y. Chen (2007, 2008)
    Relationship b/w OPR Types &
    Cultivation Strategies
     Hung (2004), Hung & Y. Chen (2007, 2008)
                                              Relationship Cultivation Strategies
                        Networking   Positivity Openness Assurance Sharing of    Being       Access
                                                                              Unconditio-
                                                             of      Task
                                                                                 nally
Types of Relationship                                    Legitimacy           Constructive
Exchange                                +          +           -          +         +
Communal                    +           +          +           +          +         +          +
One-sided Communal          +           +          +           +          +         +          +
Exploitive                  +            -          -          -                     -         -
Covenantal                  +           +          +           +          +         +          +
Manipulative                                                                         -
Symbiotic                   +           +          +           +          +         +          +
Contractual                              -
In relationship marketing

 Most of the cultivation strategies in OPR were applied
  to relationship marketing
 In terms of communication dimensions, relationship
  marketers used more mediated communication,
  compared with public relations managers

    “As in people’s business, without good relationship, (it) makes
     hard to be in the industry.”
    “Relationship is the foundation. It’s always like the pyramid.
     You build up the quality foundation, and they go up one after
     one and step by step…”
Relationship marketing vs. transactional
marketing

 Involvement, participation & loyalty: “[For
  transactional marketing,] if you are not involved, it is a
  buyer-seller relationships, then there is a conflict, then
  they will go.”
 “For our company, transactional marketing is very
  inconsiderable because we look for long-term
  relationship, a good image and recognition…
  relationship marketing would be important for us.”
 “For transactional marketing, it focuses on sales and
  products. It is hard to evaluate how well we’ve done
  to lead to that transaction. If they [clients] focus
  heavily on transactional marketing, they won’t come to
  us.”
Relationship marketing vs. transactional
marketing

 “In the past, marketing focused on mass…, ten or
  twenty years ago because everybody was looking for us
  for buying houses. The investment returns were so high.
  In the past, they were begging us to sell…”
 “Today is different, change. We have to do it
  proactively rather than they do it proactively. Today,
  the total relationship marketing… we build the
  relationship with agents because they hold the
  consumers…”
Findings: Relationship termination

 In relationship marketing practices or current
  marketing practices:
    It is not possible to terminate a relationship with
     customers
    “We never make enemies. As a public company,
     we shouldn’t make enemies… you shouldn’t make
     enemies with the worse opinion parties. You
     should listen to them… In this market or this
     world, you need to have anti-voices… Let the
     people judge by themselves.”
Findings: Types of relationships
 President, Asia, Bates Advertising: “They all exist in the
  relationships… When we enter into relationships, it could be any
  type of them.”
    Manipulative relationships
    Transactional (exchange) relationships
 The marketing director from the property company:
    Win-win
    Exchange relationships: “It’s a give and take approach… if you don’t
     offer, if you don’t invest… you will never gain what you expect to
     receive.”
    Communal relationships
    “Manipulative relationship in a positive way”
    Symbiotic relationships
 The PR director from the public transportation company:
    Communal relationships: with customers (for passengers’ safety)
    Contractual relationships: with travel agencies and advertising
     agencies
Findings: Types of relationships

 Director from a multinational PR firm:
    Exchange relationships: “Giving more is to receive more.”
    Communal relationships
 Marketing director from the airlines:
    Exchange relationships
    Communal relationships
    Contractual relationships
Findings: Types of relationships and
relationship termination

 For companies, it is easier for them to terminate a
  relationship when it is a contractual or exploitive one.
 Profit is still a key indicator for relationship marketers.
    Relationships between companies and agents
    Relationships between companies and employees
 Findings: Types of relationships and relationship
 cultivation in relationship marketing
  Types of Relationships                Cultivation Strategies


Exchange relationships (win- Investment, listening, leadership,
win relationships)           Accommodation, networking, maintaining
                             dialogues, being reliable, communicating
                             with opinion leaders, proactive
                             participation, involvement, providing
                             incentives, positivity, quality support,
                             access, sharing tasks
Communal relationships       Being reliable, maintaining dialogues,
                             patience, understanding, education,
                             positivity, quality support, access, sharing
                             tasks, networking, collaboration
Hung’s (2002)
       Type of Relationships                Cultivation Strategies
Covenantal/ win-win Relationships   1. Dialogues and being attentive
                                    2. Positivity
                                    3. Assurances of legitimacy
                                    4. Being unconditionally constructive
Communal Relationships              1. Sharing of tasks
Exchange Relationships              1. Legitimacy
                                    2. Access
                                    3. Cooperation
Exploitive Relationships            1. Asymmetrical strategies (contending)
Manipulative Relationships          1. Asymmetrical strategies
Symbiotic Relationships             1. Symmetrical strategies
                                    2. Asymmetrical strategies
Benefits/outcomes differences: Both
contribute to tangible and intangible benefits
for an organization
 In public relations:
      Public supports
      Organizational effectiveness
      Bottom lines
      Reputation
      CSR
 In relationship marketing:
      “Fame and Money”
      Partnership
      Co-creation
      Customer loyalty
      Competitive advantage
      Propensity to stay
      FAME

             High




Low                 High MONEY




         Low
 Relationship Management & Relationship
 Marketing
                  Relationship Management            Relationship Marketing

Audience        Different stakeholders               Customers are the primary
                                                     audience; Partnership
Communication   One- and two-way, interpersonal,     One- and two-way,
                mediated, ethical                    interpersonal, mediated

Relationship    Similar                              Similar, incentives
Cultivation
Relationship    Shared values                        Shared values, Customer
outcomes                                             loyalty

Types of        All applied                          All applied. Exchange
relationships                                        relationship is emphasized

Outcomes/       Organizational effectiveness,        Fame & money, Propensity to
                public support, bottom-lines, CSR,   stay, competitive advantage
Benefits
                reputation                           Partnership, Co-creation
Limitation

 Theoretical framework
 Interviewed participants

								
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