Jagdish N. Sheth & Atul Parvatiyar | Relationship marketing is considered a paradigm change in both academic and practitioner literature. However, despite its popularity, relationship marketing has not yet evolved into becoming a discipline. The authors propose focus on eight areas to help relationship marketing evolve into a discipline. They compare the successful evolution of consumer behavior, services marketing and marketing strategy with the failure of international marketing, social marketing and business marketing as a discipline.
Relationship marketing, at least at the practice level, is recognized as a major paradigm shift in marketing comparable to what the marketing concept in the 1960s (with its focus on customer needs and wants) and more recently the quality concept (with its focus on customer satisfaction) did in transforming business practices and philosophy (Gruen 1997; Gummesson 1999; Lambe, Spekman and Hunt 2000; Mattsson 1997; Webster 1992). Indeed, at Procter and Gamble, the company that pioneered the modern marketing organization and integration of four Ps of marketing (product, place, promotion and price) has recently renamed its trade department as “Customer Business Development” and has shifted focus toward its immediate customers such as large retailers and supermarkets. Similarly, many business-to-business companies such as Xerox, IBM, and Citicorp are investing in global account management processes to serve their key accounts more uniformly across national and cultural boundaries (Yip and Madsen 1998; Parvatiyar and Gruen 1999). Finally, with databases, many service companies such as airlines, banks, insurance, telephone, and direct marketing companies including the catalog companies, have begun to implement one-to-one marketing and loyalty programs with their end user customers (Breshnahan 1999).
Relationship marketing with a focus on customer retention and customer commitment as well as on share of the customer business instead of market share has also generated enormous research interest. Hundreds of papers have been presented at dozens of conferences. Several papers have been published in top journals and many books have been written on this topic, as indicated by the literature reviews presented in Sheth and Parvatiyar (2000).
Journey from Domain to Discipline
Will relationship marketing create a paradigm shift? Will it become a discipline out of a domain? Nobody knows for sure. However, to us this is “déjà vu” all over again. Therefore, we can learn some key lessons from situations in the past in which new concepts or domains either succeeded or failed to become distinct disciplines of marketing.
In order for a domain to become a discipline, it needs to go beyond description and into explanation of the phenomenon by providing hypotheses and theory; and at the same time, it needs to go beyond observation and become a science by utilizing methodological rigor (See Figure 1). Therefore, our concern here is with paradigms that guide disciplined enquiry. It can be characterized by the way their proponents respond to the ontological (nature of reality), epistemological (nature, sources and limits of knowledge), and methodological (process of conducting inquiry) questions (Guba 1990). They form the starting points or givens that determine what inquiry is and how it is to be practiced. For a paradigm to be adopted as a discipline it must adequately summarize knowledge of related entities, laws, and mechanisms in the form of time-and context-free generalizations. Values and other biasing or confounding factors must be excluded from influencing the outcomes; and questions and/or hypotheses should be empirically tested through rigorous methodology (Guba 1990).
In the past three decades, there have been at least three successes and three failures in the journey from domain to discipline. The three successes are consumer behavior, marketing strategy, and services marketing. The three that have failed to become a distinct discipline even though domain knowledge exits are international marketing, social marketing, and business marketing. By analyzing and understanding, why they failed or succeeded in becoming disciplines of marketing, we may learn some insights and even engage in intervention to make sure that relationship marketing becomes a distinct discipline in marketing.
Consumer Behavior versus International Marketing
In the 1960s, consumer behavior made a successful transition from domain to discipline but international marketing did not. Consumer behavior quickly focused on only the buying behavior of consumer and attempted to provide explanation for the systematic preferences of consumers to choose a particular brand within a product class. At the same time, it began to utilize the operations research techniques of stochastic processes (Markov chains) and underlying theory of learning over time to measure quantitatively the degree of brand loyalty exhibited by household customers.
Unfortunately, for whatever reason, international marketing did not or could not generate its own focus or theory. The debate about standardization versus adjustment of marketing mix across cultures and countries did not result in any well-accepted theory. Also, researchers in this area did not use scientifically accepted methodologies especially statistical analysis and inferences to rise above observation.
A number of other factors also contributed toward consumer behavior becoming a discipline. First, it attracted scholars trained in economic, behavioral and quantitative sciences to devote their time and talents on this domain. This enhanced the respectability of the domain. Second, most marketing curricula in schools of business developed a separate course on consumer behavior as part of marketing core knowledge. Third, a separate journal, namely the Journal of Consumer Research (JCR), was established with the blessings of several disciplines and organizations. JCR now ranks among the top three journals in marketing. Fourth, consumer behavior researchers had the good fortune of having access to longitudinal household panel data from the Chicago
Tribune and MRCA, which enabled access to significant amount of empirical research without the enormous cost and time constraints.
Finally, several theories of consumer behavior — some very simple, such as Bauer’s (1960) theory of risk reduction and Festinger’s (1957) theory of cognitive dissonance, and some very comprehensive, such as Howard and Sheth’s (1969) theory of buyer behavior — added legitimacy to the transition of consumer behavior from a domain into a discipline.
Unfortunately, none of these factors was available to international marketing. On the contrary, there were traditional scholars who believed at that time that international marketing is strictly a contextual phenomenon requiring no unique constructs or theory, and therefore it should not be a distinct discipline. Marketing departments had a tough time to create separate courses in international marketing, although it is now more prevalent.
Marketing Strategy versus Social Marketing
The decade of the 1970s saw a similar race between two other domains to become disciplines; namely, marketing strategy and social marketing. Marketing strategy became a discipline but social marketing did not. A number of enabling events were very helpful to marketing strategy. First of all, business strategy was mandated by the accreditation process of the American Assembly of Collegiate Schools of Business (AACSB) as part of core business education. This resulted in an evolution of academic journals in business strategy similar to the evolution of management science and operation research journals in the 1960s. Second, and perhaps more importantly, the Strategic Planning Institute allowed academic institutions to license and use industry benchmarking data called the PIMS, which proved to be a gold mine for exploration and discovery. Also, the PIMS advocates discovered several lawlike generalizations anchored to the impact of market share and customer satisfaction on financial performance.
The transition of marketing strategy from a domain to a discipline was further propelled by the impact of Porter’s (1980) book on competitive strategy and its links to market strategies of differentiation and focus. Also, a number of alternative theories, such as population ecology and transactions cost, became popular in marketing strategy as explanations for market behaviors. Finally, most marketing curricula developed capstone courses anchored to marketing strategy. This was further enhanced by several computer simulation games, such as the MarkStrat and the Beer Game that encouraged a more analytical approach to education and learning.
In contrast, social marketing suffered, right at its inception, from definition debate. Is it marketing of non-profit and social services (education, healthcare, population control) or is it the malpractices of marketing such as misrepresentation, deception, and ecological and cultural harm that marketing practices create? Even today, this debate has not been resolved. At the same time, there was a strong movement toward consumerism and “consumer bill of rights,” including truth in lending and truth in advertising. Even public policy research could not provide a focus for this domain. Unfortunately, there was also an advocacy—or evangelistic fervor—among well-known marketing scholars who braved research in this area. This made objective scientific inquiry untenable.
Finally, as in the case of international marketing, most scholars believed that social marketing is an extension of marketing theory and practice, and therefore, needed no unique constructs or its own theory. It is unfortunate that despite good scholars publishing in top journals, social marketing could not make the transition from a domain to a discipline.
Services Marketing vs. Business Marketing
The decade of the 1980s saw a similar parallel between services marketing and business-to-business marketing. The former has begun to become a discipline, whereas the latter continues to be a domain. What is the difference? First of all, by the 1980s, the economy had become predominantly a services economy, and the total quality management philosophy, with its focus on customer service, had become very popular. Both the government and the industry were willing to commit money to improve product and service quality, especially in consumer mass markets. This led to the emergence of government quality awards (Malcolm Baldrige Award) and private quality awards (J. D. Power), and to performance metrics such as airline on-time arrival and baggage delivery, to rate superiority of one company over others. Soon thereafter, the Marketing Science Institute supported major research funding that led to the development of SERVQUAL, a methodology to measure service quality (Parsuraman, Zeithaml and Berry 1988). At about the same time, several books were published to articulate how and why services are different from products (Batesan 1989; Grönroos 1990; Lovelock 1991). This led to the conceptualization of several unique properties of services such as intangibility, interactivity, perishability, and proximity. A number of universities and schools of business started separate centers of research and education in services marketing in addition to offering separate courses.
Services marketing started the journey toward becoming a discipline by establishing its own scholarly journal (Journal of Services Research), by focusing its research on services as unique and distinct from products, and by having access to large-scale databases related to customer support services.
Business-to-business marketing in the United States has not enjoyed the same benefits. Although there are some research centers and some focus, it is not a significant phenomenon. On the other hand, in Europe research in business-to-business marketing has led to multi-country, multi-industry consortia research and has now become the IMP school of thought, with an emphasis on networks of alliances and relationships both vertically and horizontally (Håkansson and Snehota 2000). Unlike the rest of the world, U.S. marketing is focused more on consumer marketing. Industrial marketing, therefore, has not attracted as many scholars. Also, business-to-business marketing is closely related to organization behavior and management, which employ comparable concepts and research techniques. In other words, business-to-business marketing has not been able to create its own distinct domain and still remains synonymous with marketing activities in business-to-business companies, which are predominantly sales support activities, and not have the degree of centrality that brand management enjoys in a packaged goods company.
Lessons for Relationship Marketing
What lessons can relationship marketing learn from the above examples? How can it evolve into a discipline of marketing? We believe it needs to focus on the following eight areas:
Delimit the Domain. The concept of relationship and relational behavior is universal. It is in physical, animal, plant and human sciences. Therefore, every discipline has applications and implications of relational behavior. Indeed, it is so universal that the most widely used statistical technique is correlation, or the relationship between two or more phenomena, whether bivariate or multivariate in nature. Therefore, it is not only easy but also tempting to extend the concept of relationship beyond marketing and beyond business—but then it would lose its identity and uniqueness. This is analogous to consumer behavior, which is only one subset domain of all human behaviors—that is, the behavior and the roles people manifest as consumers in contrast with the roles of producers or middlemen or citizens or kinship. In short, relationship marketing must be limited to the discipline of marketing, which is focused on understanding and managing customers and their buying, paying and consuming behaviors (Sheth, Mittal and Newman 1998).
Furthermore, not all marketing can be relationship marketing. Relationship marketing has to be a subset of marketing. In other words, not all marketing relationships are relationship marketing. Just as we have services marketing, international marketing and social marketing, there is or should be a unique domain called relationship marketing whose objectives, processes, performance and governance are unique with respect to organization’s marketing and non-marketing resource allocations. The objective of relationship marketing is to increase customer’s commitment to the organization through the process of offering better value on a continuous basis at a reduced cost. This can be achieved partly within the organization and partly through partnerships with suppliers and even competitors. The measure of success is the growth of the share of a customer’s business and its profitability.
Agree on a Definition. Relationship marketing has been proliferated with many definitions and many programs (see Parvatiyar and Sheth 2000). It includes affinity marketing, loyalty marketing, cross selling, up selling, co-branding, co-marketing, and customer-supplier partnering. In professional services, it includes personalized one-to-one relationship with individual clients and dedication of organization’s resources to the individual relationship. In business-to-business marketing, it includes key account management and solution selling.
Analogous to social marketing, there is already a definitional debate about relationship marketing. Some have argued that it is an old concept already incorporated in existing schools of marketing thought, and therefore, needs no separate identity; others have suggested that it overlaps with so many domains of marketing (services, channels, global, and direct marketing) that is needs no separate identity. Still others believe that relationship marketing is synonymous with direct marketing, and, thus, it is more appropriate in business-to-business marketing and services marketing (Baker 1998; Fournier, Dobscha and Mick 1998).
What we need is a definition that will articulate the uniqueness of the concept with its own distinct properties, similar to what services marketing has done. There are at least three aspects unique to relationship marketing. First, it is a one-to-one relationship between the marketer and the customer. In other words, relationship cannot be at an aggregate level; it has to be at an individual-entity level. Second, it is an interactive process and not a transaction exchange. This is a fundamental distinction, because marketing is founded on the principle of exchange and transactions. Relationship marketing, however, is all about interaction and activities; it is co-production and co-consumption in which time, location and identity boundaries between the supplier and the customers are blurring into one extended supply-and-demand chain of management. At the same time, each member in the value chain is a distinct and independent organization with its own capital and management and, therefore, it is a virtually integrated network of organizations and not a traditional vertically integrated organization.
The third, and equally important, uniqueness of relationship marketing is that it is a value-added activity through mutual interdependence and collaboration between suppliers and customers. Just as hardware and software create a symbiotic value addition, and one without the other is less useful to users and consumers, relationship marketing must add value through collaborative and partnering mindsets and behaviors of suppliers and customers. This is very obvious in services industries where the user must cooperate and collaborate with the provider whether it is a doctor, accountant, lawyer, or a teacher. It is becoming more the case with automated services such as automatic teller machines, telephone answering systems and gasoline pumps. Finally, with electronic ordering and Internet commerce, it is also becoming prevalent for traditional product offerings, especially in business-to-business marketing.
Build Respectable Databases. Perhaps the single biggest lesson we can learn from marketing strategy is the access to PIMS databases with measures of financial performance. We believe relationship marketing needs to access similar data from corporations and service bureaus. It was the availability of household panel data on more than 200 consumer products that led to quantitative performance measures of brand loyalty in consumer behavior. Today, it is the availability of scanner data through IRI and A.C. Nielsen that is propelling scientific research on brand equity.
Develop Performance Metrics. It is equally important that we develop some standardized metrics to measure relationship marketing’s performance as well as antecedents that are likely to be its determinants. For example, SERVQUAL, a standardized instrument to measure service quality, is now utilized across national boundaries, similar to the Myers-Briggs personality test or the 360-degree feedback for management performance.
It is not sufficient to develop scales to measure constructs such as trust, commitment and long-term orientation (Doney and Cannon 1997; Fein and Anderson 1997; Gruen, Summers and Acito 2000); it is equally important to measure performance outcomes using well-accepted financial and accounting measures. Recent studies by several scholars concerning the merging and purging existing public financial and customer-supplier databases and utilizing them to examine the impact of relationship marketing on the performance of the firm are very encouraging (Kalwani and Das 1995; Naidu, et. al. 1999; Reddy and Czepiel 1999). However, we need to do more. We do not believe that psychological instruments, not matter how well they are validated, will be sufficient. What we need to know is not what informants say or believe therein, but rather what organizations do. This is equally true for household customers. It is, therefore, encouraging to see that many services companies (such as telephone, insurance, airlines, and utilities) have begun to analyze actual behavioral or usage data of their customers through billing and customer service and to develop standardized performance measures by linking them to the cost of serving each customer.
Employ Longitudinal Research Methods. Relationship marketing, like product life cycle and diffusion of innovation, is a time-centric process. It is an evolutionary and dynamic phenomenon over time. Therefore, it is important to utilize research techniques such as longitudinal panels, which measure changes over time; we need time series data similar to what psychologists use in measuring learning or econometricians use to measure business cycles and trends.
Although it is easy to use cross-sectional data as surrogates, this method is not as legitimate as the use of longitudinal data. We believe the need for longitudinal data will create more difficulties for young scholars, who have to publish quickly to get tenure and promotions. It was the access to longitudinal household panel data that enabled consumer behavior scholars to analyze brand loyalty relatively quickly. Similarly, it is the time series data obtained from government agencies or the stock market that enables scholars in economics, finance and accounting to test time-centric concepts in their respective disciplines. The point we are trying to make is that we should not compromise the integrity of research methodology because of publishing urgency.
Publish in Top Journals. The Medium is the message. Therefore, it is very important for an emerging discipline’s researchers to publish in first-tier journals of the main discipline. These journals provide source credibility and legitimacy. Unfortunately, it is also not easy to get published in first-tier journals, especially if the emerging discipline is part of a paradigm shift. Resistance to changing or challenging a discipline’s lawlike generalizations is pervasive, and it takes strong editorial leadership or revolt by a journal’s readership to encourage innovation. There are two alternatives to publishing in mainstream first-tier journals. The first is to create a new journal devoted to the emerging discipline, but the success of this strategy depends to a large extent on the new journal gaining the same level of academic reputation as the traditional journals of the discipline. This is precisely what happened in consumer behavior with the successful creation of the Journal of Consumer Research and, more recently, with
Marketing Science for modeling scholars.
The second alternative is to publish a seminal book on the topic. Indeed, there are numerous examples of this in all disciplines. Books and monographs have often made greater impacts on disciplines that the journals, probably because of their wider reach and distribution. Most journals have very limited circulations when compared with books. That is what happened with the publication of Howard and Sheth’s The Theory of Buyer Behavior (1969) book, as was also the case with Michael Porter’s Competitive Strategy (1980) book. More recently, even such popular professional books on management as In Search of Excellence (Peters and Waterman, 1982) and Reengineering the Corporation (Hammer and Champy, 1993) have had significant impacts on business disciplines.
Encourage Respected Scholars. We must learn from the consumer behavior discipline in marketing as well as from finance and accounting disciplines about this reality. Finance became even more respectable when well-trained and well-known economists got interested in finance. Similarly, rural sociology became more respectable when top sociologists began to focus on that area, which led to seminal theories, such as the diffusion of innovation. Similarly, both behavioral concepts and psychometric methodology enhanced accounting to a discipline from a double-entry system of practice. And consumer behavior became respectable when psychologists, modelers, and economists began to focus their time and talent on the issues of consumer behavior.
Relationship marketing needs a similar infusion of respected marketing scholars, especially those who can add conceptual and methodological rigor to the domain. Since relationship marketing is very popular, at least in practice, we believe it is likely to attract respected scholars.
Develop Explanatory Theory. No domain has ever become a discipline without some explanatory theory, or at least development of some constructs. Fortunately, relationship marketing has a good start in this direction. A number of constructs including trust, commitment and long-term orientation, have emerged as building blocks of a theory. Also, even if we cannot develop a theory, it is important that we develop at least some lawlike generalizations comparable to product life cycle, diffusion of innovation, and PIMS research. However, no matter what we do, it is important that we make sure that the constructs as well as the lawlike generalizations are unique and distinct to relationship marketing. In this regard, trust and commitment may not be as unique, because even for a one-time transaction, such as buying a home, there must be minimum level of trust and commitment between the seller and the buyer. On the other hand, the concept of collaboration is unique because it is not characteristic of other types of marketing relationships.
Fortunately, it should be possible to develop a theory of relationship marketing because of the richness and universality of relationship as a phenomenon. We already have a number of theories (social contract, agency and transaction cost theories) from other respected disciplines. Also, there is a growing and interesting body of knowledge on cooperation, collaboration and co-opetition.
Conclusion
Will relationship marketing become a well-respected, freestanding, and distinct discipline in marketing? Our belief is that it certainly has the potential; we wish that it should happen, because marketing will benefit enormously from it.
The lessons learned from previous efforts, both successful and unsuccessful, of various marketing domains that have tried to become disciplines provide a good road map of how to evolve relationship marketing into a distinct discipline. As an intervention strategy, it would be highly desirable for relationship marketing scholars to organize their own association and their own scholarly journal.
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