Customer Relationship Management in the Airline Industry

Table of contents

List of Figures

4 Question four

5 Question five

References

List of Figures

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4 Question four

Examine how the concept of relationship marketing might improve the levels of satisfaction with Aer Lingus by its customers and other publics.

In order to examine how the concept of relationship marketing might improve the satisfaction of Aer Lingus’ customers and other publics, it is worthwhile to investigate the terms ‘relationship marketing’, ‘customers’, ‘other publics’, and ‘satisfaction’ in the first place. Finally, the impact of relationship marketing on satisfaction is examined.

In the first part of this section, the concept of relationship marketing is explored from various perspectives, including its theoretical approaches, elements and nature. Gummesson (2003) defines relationship marketing as “marketing based on interaction within networks of relationships”. Hunt (1994) refers relationship marketing to “all marketing efforts directed to establish, develop and maintain successful relational exchanges”. This term was mostly used in the 1990s. Today, Customer Relationship Management (CRM) is the most frequently used term, which is not as broad as relationship marketing as it does not deal with networks but focuses on the customer-supplier interaction. Gummesson (2003) defines CRM as “the values and strategies of relationship marketing – with particular emphasis on customer relationships – turned into practical application”. Another definition by Stone et al (2002) describes relationship marketing as how the company finds the customer, gets to know the customer, keeps in tough with the customer, and tries to ensure that the customer gets what he or she wants.

According to Henning-Thurau and Hansen (2003), the concept of relationship marketing is built upon three theoretical approaches. Firstly, the behavioural perspective of relationships explains the constructs of the relationship like trust and satisfaction. Secondly, the networking approach examines the interactive character of the relationship. Finally, the institutional economics approach applies modern economic theories such as the transaction cost theory to investigate the development and break-down of relationships.

Several authors illustrate the elements of relationship marketing through a comparison of relationship marketing with the concept of transactional marketing (Henning-Thurau and Hansen, 2003). The transactional marketing focuses on the single transaction, whereas the primary objective of relationship marketing is customer retention. Among other elements, relationship marketing is characterised by its long-term perspective, high customer commitment and contact, contracts on a time basis, and orientation on product benefits. On the other hand, transactional marketing stands for a short-term perspective, limited customer commitment, moderate customer contact, contracts on a volume bases, and orientation on product features (Christopher et al., 1994).

To understand the nature of the relationship, it is worthwhile to mention the Morgan and Hunt relationship marketing model (1994) which divides relational exchanges between supplier partnerships, lateral partnerships, buyer partnerships, and internal partnerships. Another model of interest is developed by Ford (1980). He uses a model which distinguishes between the ‘overall relationship’ and the ‘individual relationship’. The overall relationship contains the delivery, price negotiations, and social meetings, which represent the individual episodes. Lastly, the IMP group developed the interactive approach to examine buyer-seller relationships in which the relationship takes place between two parties. The model explains that either the buyer or the seller will take the initiative to look for a partner.

After investigating the term relationship marketing and its nature, it is necessary to define what exactly is meant by ‘the customer’ and ‘other publics’ in order to examine how their levels of satisfaction might be improved? According to Applebaum (1980), one has to differentiate between a customer and a consumer. A customer is a “purchaser of a product or a service”, whereas a consumer is a “user of a product or service”. Often the customer is influenced by the needs of the consumer. ‘Other publics’ is any group, with some common characteristics with which an organisation needs to communicate, including the media, governmental bodies, financial institutions, pressure groups etc. These groups, including the customers, are summarised by Payne (in Cranfield School of Management, 2004) with the help of the ‘six-market model’ or ‘relationship marketing multiple markets model’. He states that relationship marketing recognises a diversity of key ‘markets’. These are shown by the following figure:

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