3. Relationships, Partnerships and Networks

Question 1

Types of Network Relationships

Answer 1

• Outsourcing
• Franchising
• -Collaborations with competitors
• Public-private partnerships
• Distribution chain
• Longterm relationships with customers

Question 2

Relationship Marketing: Leaky Bucket Model

Answer 2

-Emphasis on retaining customers rather than recruiting new ones
-Increased profitability from higher customer retention
-Existing customers valuable
> spend more
> bring in new customers, WOM
> less costly to retain than recruiting new ones: don’t have to incentivise, advertise, recruit
-“Leaky bucket”: cut leaks and you will not need to top up with new customers
-Relationships add to service benefits of a product

Question 3

Ladder of Loyalty

Answer 3

> Advocate
Supporter
Client
Customer
Prospect
-Higher up: emphasis on long-term loyalty, further down: emphasis on one-off transactions
-Differentiate between behavioural vs. emotional loyalty

Question 4

Relationship Breakdown

Answer 4

• Distinguish: unavoidable vs. avoidable breakdown

- Customer defection: cognitive dissonance, costly to recruit replacement customers

Question 5

Main Components of Customer Relationship Management

Answer 5

• Data collection and management
• Customer analysis and profiling
• Computer-aided sales support
• Customer information and service

Question 6

Challenges to Customer Relationships

Answer 6

• Increased variety seeking > bored, alternative
• Optimal stimulation level > promotion, novel
• Increasing consumer confidence > information, curious about alternatives, cynical
• Lower perceived risk of switching
• “There’s no brand loyalty that can’t be broken by one cent off”

Question 7

The Buying Process

Answer 7

> Need recognition
> Information search
> Evaluation
> Decision
> Post-purchase evaluation

Question 8

Factors Affecting Perceived Risk

Answer 8

• The level of tangible evidence: tangible cues
• Buyer’s level of involvement in service
• Novelty of purchase to buyer
• Purchaser’s individual risk threshold, risk averse?
• Situational factors
• Legal safeguards available to consumers

Question 9

The Decision Making Unit

Answer 9

• Influencers
• Decision maker
• Gatekeeper
• Buyer
• Users

Question 10

Search, Experience and Credence Qualities

Answer 10

• Search qualities: Can be assessed before consumption, e.g. appearance of restaurant
• Experience qualities: Can only be assessed during consumption, e.g. ambience
• Credence qualities: Difficult to assess e.g image