Failures of Transactional Marketing: An Analysis

Published Date: 23 Mar 2015 Last Modified: 15 Jan 2018

A. R. Lacey (1996), in Dictionary of Philosophy explains paradigm as "a shared assumption or an accepted theory which governs the outlook of an epoch and its approach to scientific problems ... [giving]... standard forms of solutions to problems". Within the physical and social sciences, it is common for one paradigm, a dominant paradigm to be prevalent. Currently, the dominant marketing paradigm, the accepted model of how marketing works and should be integrated with the rest of the world, is what has come to be called Transactional Marketing (TM) (Gronroos, 1996; Aijo, 1996; Gummesson, 1987; Berry, 1983; Jackson, 1985; Payne, 1995).

This research is principally concerned with what has been called Relationship Marketing (RM), a term alluded to by Thomas (1976), but first explicitly used by Berry (1983: see Kotler, 1992; Gronroos, 1990, 1991; Hunt and Morgan, 1994; Berry, 1995; Sheth and Parvatiyar, 1995; Turnbull and Wilson, 1989). The foundations of Relationship Marketing are inextricably mixed with the development and practice of Transactional Marketing. The underpinning theories and conceptualisations of RM often only exist in relation, or opposition to the theory and practice of Transactional Marketing. It is therefore necessary to understand Transactional Marketing before RM can be fully comprehended.

The American Marketing Association has defined (transactional) marketing as "the process of planning and executing conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organisational objectives." (AMA Board, 1985). The marketing concept is a very simple but powerful idea. The best way for a company to meet its objectives, profit making or otherwise, is by satisfying customers-"the achievement of corporate goals through meeting and exceeding customer needs better than the competition" (Jobber, 2001). This is best done by all members of the firm seeking to serve the needs of the customer, even at the expense of producer inconvenience. If this concept is adopted by the organisation, it leads to what is called a marketing orientation. The analysis and subsequent review of transactional marketing will be in two parts, an appraisal of its theoretical origins, development and weaknesses and an examination of the standard ways in which firms implement it. The next section will critique the Transactional Marketing Paradigm on two main fronts. These being firstly, criticisms based on theoretical weaknesses or omissions, and secondly, criticisms about the way in which theory and models have been misunderstood or ignored by firms. Both of these categories however, emerge out of the unique economic and social environment within which the transactional marketing paradigm developed (Webster, 1992; Aijo, 1996).

1.1. THE BIRTH OF MARKETING THEORY

The origins of Transactional Marketing are in microeconomics, North America and the 1950's. Prior to WWII, economists developed price theory to embrace what they called oligopolistic competition (Chamberlain, 1933; Sheth, Gardner and Garrett, 1988; Waterschoot and Van Den Bulte, 1992). This theoretical development led early marketing theoreticians (McGarry, 1950; McKitterick, 1957; Alderson, 1957: see Gronroos, 1994, 1996) to create 'lists' of marketing variables deduced from econometric, profit optimising equations- the so called functionalist school of marketing (McGarry, 1950). In turn, this inspired Borden (1954) to introduce the concept of the marketing mix, a list of 12 variables (product, price, branding, distribution, personal selling, advertising, promotions, packaging, display, servicing, physical handling, fact finding and analysis which "the marketer would have to consider in any given situation.... [And] would blend the various ingredients or variables of the mix into an integrated marketing program." (Gronroos, 1994b:350).

In a seminal work, McCarthy (1960) presented the marketing mix management approach, reconstructing Borden's original 12 variables into the now familiar '4P' model (Price, Product, Promotion and Placement). The theoretical foundations of this model have been severely questioned (Waterschoot and Van Den Bulte, 1992; Gummesson, 1987; Sheth et al, 1988; Webster, 1992; Duncan and Moriarty, 1998). Principally, these questions stem from the fact that the original microeconomic variables, derived through empirical induction had solid theoretical foundations, whilst Borden's list had only second-order links to these foundations and, crucially, was not intended as an exhaustive definition or method of implementation but merely as a set of guidelines within a fully integrated marketing program. Real world developments and its inherent simplicity ensured the rise and rise of the 4P model and its attendant Marketing Mix Management theory. 1950's North America -a huge domestic market of apparently homogenous and insatiable customers -led to rapid increases in the demand for standardised consumer goods and the crowning of the United States as the dominant marketing culture. In time it became the basis of 'modem' transactional marketing (Takala and Uusitalo, 1996; Kotler, 1992; Aijo, 1996).The simplicity and communicability of the marketing mix paradigm, in combination with its apparent success, combined to turn marketing into "a highly effective impact machine" (Gr6nroos, 1996c: 16). Transactional Marketing rapidly became the overwhelmingly dominant marketing paradigm (Dixon and Blois, 1983, Kent, 1986).

1.2. MARKETING IN CONTEMPORARY ORGANISATIONS

Given the great number of organisations which pay at least lip-service to the importance of marketing, a diversity of methods of implementing transactional marketing is inevitable (Brodie et al, 1997). The most typical structure, and one commonly found within the context of end-user orientated firms (Christy et al, 1996) is to have within the organisation a sub-unit, separate from the rest of the firm, with responsibility for 'marketing' - market analysis, advertising, sales promotion, pricing and distribution (Buttle, 1996; Deshpande and Webster,

1989; Gurnmesson, 1994). The principal focus of this research is on the 'relationship' between such firms, and their customers.

"In everyday marketing vocabulary....marketing department, an organisational unit, is used as a synonym for marketing function" (Gronroos, 1994). The implication is clear, Transactional Marketing theory suggests that marketing can be treated as a separate, discrete function, rather than as an integrated one (Berry and Parasuraman,1995; Waterschoot and Van Den Bulte, 1992; Palmer, 1994; Payne, 1995; Thomas, 1996). The existence of these 'marketing departments' echoes much about the functionalist, scientific [econometric] origins of transactional marketing. The philosophy of implementation prevalent within western business is that "specialists should themselves take care of a task for specialists" (Gronroos, 1996). In many businesses, the marketing department is seen as having total responsibility for "...various marketing tasks, such as market analysis, market planning, advertising, sales promotion, pricing, distribution and product packaging" (Gronroos, 1994). This begs the question that if the marketing department takes care of these entire fundamental issues, what exactly is the rest of the business for?

One of the primary and most traditional Justifications of adopting a marketing orientation rather than a sales or production orientation is that marketing integrates the other functions of the business (Bennett, 1996; Jackson, 1985) into a more coherent whole, built around the needs and wants of the customer. The outcome of creating a 'marketing department' is to bring about a situation where, within an organisation, "marketing department... is used as a synonym for marketing function, which is the process of taking care of the fulfilment of customer needs and desires. As a consequence, the rest of the organisation is alienated from marketing, and the marketers are isolated from design, production, deliveries, technical service, complaints handling, and other activities of the firm " (Gronroos, 1994). Marketing is being treated as a specialist management function, rather than a general management issue (Gronroos, 1996).

Within such organisations, there is a clear-cut distinction [inferred from marketing mix management theory] between those who 'are' involved with marketing, and those who 'aren't'. This process has been called the "Ghettoisation" of marketing (Gummesson, 1987).

It has been strongly argued (Gummesson, 1987,1990,1994; Duncan and Moriarty, 1998; Aijo, 1996; Christy et al, 1996; Heide and John, 1995) that the distinction between the marketer and non-marketer is an artificial one. Opportunities for marketing activity are not limited to those 'inside' the marketing department. "What do the following people have in common: a telephone operator connecting a customer with a salesperson; an installation team from the supplier spending two weeks on the buyer's premises installing and testing new equipment: a management consultant presenting a progress report in an assignment?" (Gummesson, 1991). The answer is of course, that these are all people outside the marketing department, [therefore by definition "not responsible" for marketing] where, nevertheless, "their attitudes and way of doing their job have an impact on the customer's perception of the firm" (Gronroos, 1996).These "non-marketers", with their influence on the firm's ability to market itself efficiently and effectively have been called 'part-time marketers' (Gummesson, 1987).

1.3. SUMMATION OF THE PROBLEMS INHERENT TO THE 'MARKETING MIX'

The origins of marketing mix management theory, and the transactional marketing paradigm it gave rise to be in the USA, the nineteen-fifties and microeconomics. The theoretical foundations of this paradigm are questionable in terms of its 'translation' from econometric modelling and its pedagogical simplification. At best, the 4P model was suitable for the unique marketing environment created by the post WWH American autarchy. The theoretical weaknesses of the transactional marketing paradigm have been highlighted by radical changes in the business environment, such as the globalisation of competition and the increasing sophistication of consumers and products. These weaknesses are especially apparent in contexts that are significantly different from that of its origins -most noticeably services marketing and European markets. The academic response has been to avoid the problem by papering over the theoretical cracks. Within firms, the creation and stagnation of marketing departments has 'ghettoised', neutered and isolated marketing from the consumer and even the rest of the firm. As a result of this, transactional marketing treats the consumer as passive and fails to fully recognise the marketing importance of interaction between front-line staff and customers.

Transactional Marketing fails its own definition. It is a production orientated definition of marketing, not a customer orientated one.

THE ORIGINS OF RELATIONSHIP MARKETING

THE 'OTHER' MARKETING THEORIES

The origins of Relationship Marketing are in Europe, the nineteen-eighties, and dissatisfaction with the Transactional Marketing paradigm. It was noted earlier that transactional marketing theory was principally developed from its origins in end-user, consumer markets. Relationship Marketing draws on a broader theoretical base (within a marketing context), with concomitant development within the services and business to business (B2B) marketing literatures. The term 'Relationship Marketing', alluded to by Thomas (1976) was first explicitly used by Berry (Berry and Parasuraman, 1991; Berry, 1995; Gummesson, 1987; Gronroos, 1996; Payne and Richard, 1993; Robicheaux and Coleman, 1994; Payne and Frow, 1997). It has also been called "customer-focused management" (Gummesson, 1994), or "relationship management" (Payne, 1996). Berry (1983) used the term within the context of criticising services marketing literature, arguing that "researchers and businessmen have concentrated far more on how to attract consumers to products and services than on how to retain those customers". He advocated a switch from a transactionary approach, where marketing effort was focussed on customer attraction, to a relational approach, where the attraction of new customers should be viewed only "as an intermediate step in the marketing process" (Berry, 1995), and the primary objective was retaining customers.

Berry (1983) defined Relationship Marketing as "attracting, maintaining and -in multi-service organisations -enhancing customer relationships". Simultaneously, Hammarkvist, Hakansson and Mattson (1982), working within the arena of business-to-business marketing (Gronroos, 1996), advanced similar definition (Andersson and Soderland, 1988; Anderson, Hakansson and Johanson, 1994) "all activities by the firm to build, maintain and develop customer relations. " (Hammarkvist et al, 1982: cited Gurnmesson,1987). That relationships should be managed and built has become a cornerstone of both the Nordic and the Industrial Marketing and Purchasing (IMP) School of marketing (Mattsson, 1997; Gronroos, 1996c). This parallel development within separate areas of research is far from coincidental (Takala and Uusitalo, 1996). As with the Transactional Marketing literature, each of these streams of research emanates from within a specific business environment (Aijo, 1996).

SERVICES MARKETING

It was argued earlier that the Transactional Marketing Paradigm habits origins within a unique and highly specific business environment, that of the North American consumer goods markets of the 1950's. It was further suggested that these origins limited the value of TM as a universal theory of marketing, and that primarily within the context of end-user orientated literature, development consisted of re-jigging a redundant theoretical format.

The deviation from this specific business environment was greatest within the domains of service marketing and business to business marketing (Mattsson, 1997), albeit in very different ways. The theory and practice of transactional marketing assumes that consumers are available in great numbers and behave passively. Within industrial and service markets, the interactive Participation of the customer is required to successfully complete the exchange (Gummesson, 1987), within business, customer-firms are often limited in numbers. An ancillary implication of treating the customer as passive, someone "to whom things are done" (Dixon and Blois, 1983) is to instil within the business the philosophy of competing with customers, rather than interactive co-operation.

Transactional Marketing Theory maintains the assumption of its microeconomic origins in that the marketing mix is a tool used to help a company 'optimise' [maximise] its profit function (Waterschoot and Van den Bulte, 1992; Gronroos, 1991). It is because of this that firms consider marketing objectives met at the point of customer attraction -i.e. moment of exchange. When marketing a service, it is argued that the objectives should not only be to only to attract, but to then keep and maintain the customer-to develop a long-term relationship with them (Bitner et al, 1994; Cravens and Piercy, 1994; Gronroos, 1991; Gummesson, 1987b). When selling a physical product, the costs of production are offset by the revenue of the purchase. With a service, the majority of costs are often incurred whilst 'setting-up' the service (Berry and Parasuraman, 1991; Booms and Bitner, 1981), for example; accountancy and banking. The implication of this is that longer-term strategy, in conjunction with placing significant emphasis on customer retention will yield dividends (Berry, 1995; Payne and Richard, 1993; Parasuraman et al, 1991; Gronroos, 1990), and indeed, empirical evidence to support this has been found. "Reichheld and Sasser (1990) have demonstrated across a variety of service industries that profits climb steeply when a company successfully lowers its customer defection rate...the researchers found that the firms could improve profits from 25 percent to 85 percent by reducing customer defections by just 5 percent. Not only do loyal customers generate more revenue for more years, the costs to maintain existing customers frequently are lower than the costs to acquire new customers" (Berry, 1995). Other studies have provided further evidence of the benefits of a long-term, customer retention strategy within competitive consumer-service markets, Storbacka (1997), Gwin (1988) and Perrienet al (1993) in banking, Crosby and Stephens (1987) in insurance. 'Moments of Truth' and the Crucial Role of the Part-Time Marketer. Firms producing end-user products often sell through an intermediate, retailing company. As such, opportunities for marketing are indirect via mass-media 'and market research (Henry, 1994). The interaction required within service and business-to-business marketing enforces a more direct approach (Gronroos, 1994). The image and reputation of the firm cannot solely be constructed through promotion. Interaction between a consumer and the firm's "part-time marketers" (Gummesson, 1987) will result in that consumer have a positive or negative perception of the company (Price et al, 1995; Cravens and Piercy, 1994) a process that Gronroos (1982) calls perceived service quality.

Given the intangibility of service 'products', this perceived service quality is of the utmost importance, the consumer has little else by which to judge the firm outside of his direct interaction with it (Ferguson,1996; Bitner et al, 1994). The marketing effort of the part-time marketers therefore forms the bulk of the firms marketing impact (Gronroos, 1996), "often they are the only marketers around" (Normann, 1983). "Research shows that the customer will judge the quality of the service and form an attitude to the provider both from the experience of the production1delivery process and of the future benefits of the service" (Lehtinen, 1985).

In a situation where the majority of marketing activity does not come from the full-time marketers within the marketing department, it makes little sense to plan the activities of this department separately. It was argued earlier that if such a department is considered by the rest of the firm to be taking care of the marketing function', it will become increasingly difficult to create an interest in marketing amongst unwitting part-time marketers (Gronroos, 1982; Christy et al, 1996). A marketing orientation is only achieved when all members of an organisation has asked them "how do I contribute to excellence in customer relations and to revenue" (Gummesson,1991: 60).

An auxiliary concept to that of the "part-time marketer" is that of 'points-if-marketing" (Normann, 1983), more poetically called "...moments of truth. These are natural opportunities emerging in the production and delivery process; for example, the interaction between a doctor and a patient " (Gummesson, 1991). For these occasions to be positively resolved, marketing must be designed-into the process, rather than "tacked-on".

RELATIONSHIP MARKETING DEFINITIONS FROM 'SERVICE' LITERATURE

Since Berry (1983), other authors have presented alternative definitions of Relationship Marketing within the services marketing literature. "RM concerns attracting, developing, and retaining customer relations " (Berry and Parasuraman, 1991). "establishing a relationship involves giving promises, maintaining a relationship is based on fulfilment of promises; and, finally, enhancing a relationship means that a new set of promises is given with the fulfilment of earlier promises as a prerequisite. " (Gummesson, 1991). The core of these ideas from services marketing is the interpersonal interaction between buyer and seller interaction. The organisation should be structured and managed so that promises worth making can be kept. Clearly, a relationship between two parties is something that grows in strength through repeated exchanges over a period of time, it is not instantaneously generated.

BUSINESS TO BUSINESS AND NETWORK MARKETING

Such 'moments of truth' also exist within a business-to-business context. If the interaction between producer and consumer is crucial in services marketing it is doubly so within B2B marketing -principally because of the relatively low number of customers/suppliers (Andersson et al, 1994; Blois, 1997; Dabholkar et al, 1994). These dyads do not exist in isolation. Within the business marketing literature it has become clear that the theoretical foundations of contemporary work are not shared with the "Kotlerian " (Andersson and Soderland, 1988) marketing mix theory, which has microeconomic ancestry. Instead, 'network-theory', which attempts to model the process of resource exchange in markets where both buyer and seller are firms or other organisations has its origins in empirical work conducted over the last 20 years, principally in Northern Europe (Mattsson, 1997). The results of these studies, when assessed as a body of work, highlight several commonalities in the exchange behaviour between firms that contradict business philosophy derived from the transactional marketing paradigm (Elg and Johansson, 1996). B2B partners are characterised as active and mutually dependent, with the buyer and seller both able to initiate an exchange. Interaction between the organisations was not the sole purview of a marketing department but instead between the equivalent departments in each firm -'inter functionally'.

In practice, it was recognised that the marketing emphasis had switched from optimising the marketing mix to the management of the firm's relationships (Andersson and Soderland, 1988). Network theory suggests that markets are heterogeneous, rather than homogenous (Matthyssens and Van Den Bulte, 1994). The marketing objectives of the firm became to establish, develop and decide when to terminate its relationships with the customers and suppliers in its network (Hammarkvist et al, 1982).

This divergence from the transactional marketing paradigm was driven by factors in the business environment (Blois, 1997; Andersson and Soderland, 1988). Many of the economic and social characteristics of Scandinavian countries [where much of the empirical work was conducted] helped to highlight the differences between consumer markets and business to business markets (Andersson and Soderland, 1988). These economies have been traditionally noted for high levels of concentration in industry, a considerable amount of interaction between firms, the state and labour unions, and the national dependence on the export of highly complex products (Porter, 1985). In general terms, business-to-business markets are characterised by a limited number of potential customer-firms, encouraging businesses to maintain relations with their partners over-time (Anderson and Narks, 1984, 1990), rather than the start-stop philosophy of transactional marketing. The increased level of interaction between the partners and the individualistic requirements of each customer obviate the need for a standardised marketing program (Dabholkar et al, 1994). Relationships must be tailored, not off the peg (Harland, 1996).

The management of relationships is a complex issue, Hakansson and Johanson (1992) acetones relationship management problems as either limitation or handling problems. Limitation problems concern the firm's management of its 'portfolio' of relationships -its collection of dyadic interactions. These problems concuern which, if any, of the firm's relationships should be emphasised (Andersson and Soderlund, 1988). To misquote Clausewitz, he who emphasises everything, emphasises nothing'. Handling problems concern the manner in which relationships are established, and once established, how they are maintained, developed and judged appropriate for termination.

Within a network, what are the relational objectives of an organisation? Transactional Marketing advocates a competitive stance, the results of any interaction between a buyer and seller must result in one 'winning' -and one 'losing' (Doyle and Engermann, 1992; Donaldson, 1996). Network theory espouses co-operation to produce a win-win situation (Deshpande and Webster, 1989). Despite this, network theorists consider that firms must work to deepen chosen relationships, to achieve some level of power -also called 'bonds' over their partners whilst striving to remain free of such bonds themselves (Andersson and Soderlund, 1988). Relationships can create bonds of several types, planning, knowledge, legal and social (Berry, 1985).The end of the relationship will incur switching costs, not necessarily purely financial. The original quote being 'He whose fends everything, defends nothing'

BUSINESS-TO-BUSINESS RELATIONSHIP MARKETING DEFINITIONS

Since Hammarkvist et al (1982) defined "relationship marketing" within the context of business network marketing, others have proposed alternatives. "RM is an emergent disciplinary framework for creating, developing and sustaining exchanges of value between the parties involved, whereby exchange relationships evolve to provide continuous and stable links in the supply chain " (Ballantyne, 1994) ..... Is not directly aimed at immediate transactions but is based on building, supporting and extending customer relationships" (Matthyssens and Van denBulte, 1994). "RM is the process of co-operating with customers to improve marketing productivity through efficiency and effectiveness" (Parvatlyar, 1996). At the heart of these ideas is the concept of a partnership where both parties require co-operative behaviour from the other in order for the relationship to be mutually beneficial -neither has many other alternatives, to buy from or supply to. The focus is not at the level of one-on-one interaction of services marketing, but is instead much wider -it is necessary for large groups on both sides to contribute.

THE RELATIONAL CONSTRUCTS OF 'COMMITMENT' AND 'TRUST'

Until quite recently, little attempt had been made to provide network theory with the conceptualisations necessary to understand the processes of relationship maintenance and development. Whilst an initial model was presented by Dwyer, Schurr and Oh (1987), the first serious attempt test a model in a structured manner was in a seminal paper by Morgan and Hunt (1994), (see Kalatatis and Miller, 1996; Hunt, 1997; Gronroos, 1996a; Gummesson, 1997).

"Relationship Marketing refers to all marketing activities directed towards establishing, developing and maintaining successful relational exchanges." Morgan and Hunt (1994)

They further argue that Relationship Marketing requires the successful management of relationships with the firm's partners. Such management requires the establishment, maintenance and development of relationships, in which understanding of concepts like 'commitment' and 'trust' are keys. Morgan and Hunt have suggested that commitment and trust are amongst the key mediating variables that distinguish productive, effective relational exchanges from those that are inefficient and ineffective (Morgan and Hunt, 1994). Furthermore, commitment and trust between partners in a network leads directly to "co-operative behaviours" in three ways. Firstly, they predispose the partners towards actively preserving relational 'investments'. Secondly they help to prevent partners from adopting short-term, opportunistic behaviours. Thirdly, they help to support the view of high-risk actions as being prudent in the longer term (Hunt, 1997). Morgan and Hunt construct what they call a KMV (Key Mediating Variable) model to show the central importance of commitment and trust in marketing relationships.

THE BEGINNINGS OF A RELATIONAL PARADIGM?

The increasing awareness of the limitations of the Transactional Marketing Paradigm, in conjunction with the development of 'Services' marketing and 'Network' marketing has led to calls for a substantial change in the marketing philosophy, practice and ethos (Daskou, 1997; Clarkson et al, 1997; Palmer, 1994). " in the author's view, the present marketing concept, as it appears in research, textbooks and seminars is unrealistic and needs to be replaced " (Gummesson, 199 1). "The need for a paradigm shift in Marketing, based on a Relationship Theory is being advocated more and more strongly "( Gronroos, 1990).

This change is not skin-deep, it will not be quick, and it will not be painless. "RM suggests different focus and different underpinning values for marketing that, in my view; justify calling RM a new paradigm and the beginning of a new marketing theory." (Gummesson, 1994). "It requires a totally new approach to some of the fundamental thoughts in marketing...the transition from a transaction-orientated marketing mix-based practice of marketing to a relationship-oriented one is not an uncomplicated process. The old paradigm has deep roots in the minds of marketers as well as non-marketers in a company. "(Gronroos, 1996).

What then, is the association between Transactional and Relational marketing? Any meaningful answer to this critical question requires a definition of 'Relationship marketing'. The first definition of RM offered as a general rather than a business/services/consumer marketing specific definition is to be found in Gronroos (1991). "Marketing is to establish, maintain and enhance, and where necessary end relationships with customers and other parties at a profit so that the objectives of the parties involved are met. This is done by a mutual exchange and fulfilment of promises. "

As Aijo (1996) notes from the work of Sheth et al (1988), "Throughout its history...marketing has been generally dominated at any one time by one prevailing perspective". The implication of this is firstly, that the transactional paradigm will be completely replaced by the relational paradigm, and that secondly, the association between the alternative paradigms is competitive, rather than complementary. For some brief time, this view received wide support, no doubt influenced by the weaknesses of the transactional paradigm and incredible growth of relational literature (Berry, 1990; Gronroos, 1989; Dixon and Blois, 1989; Gurnmesson, 1991). Quickly, this simplistic view of the (non) association between transactional and relational was superseded by more sophisticated thoughts (Brodie et al, 1997;Aijo, 1996). Gronroos (1991) considered that the true decision facing firings was not Transactional Marketing or Relationship Marketing, but rather where on a "marketing strategy continuum " the company should place itself In some cases, a firm could be justified in maintaining a purely transactional approach. "For some types of products and in some situations or for some types of customers a one-deal-at-a-time approach may be good strategy" (Gronroos, 1991). This idea has great appeal, especially when it is considered that some sections of the wider marketing literature have discussed for years the interaction between the customer and aspects (we might say avatars) of the impression/relationship the firm has made in the mind of the customer-obvious examples of this would be store location strategies and especially branding. Indeed, the argument could be made that if the objective of the research project is to examine customer perspectives on their relationships with firms, an assessment of branding would be a key part of the literature review and would feed into the design of the research questions and fieldwork. A subtle but important distinction needs to be made between the 'relationship' a customer has with a firm and the perspectives that customer has on 'relationship marketing' as applied to them by the company. This research project is centred on the latter, not the former.

This Transactional Marketing-Relationship Marketing continuum forms the basis of a simple model that developed by Gronroos. In this model he attempts to place various categories of goods/services at the appropriate place on the continuum. Starting at the Transactional Marketing end of the continuum, the category he considers most appropriate for a completely transactional approach is consumer packaged goods, followed in order by consumer durables, industrial products, at the Relationship Marketing end of the spectrum, he places services. Justifying this, Gronroos (1991) suggests that "the manufacturers of 'consumer packaged goods' mass-produce and almost invariably have no direct contact with the end consumer, negating any opportunity to establish a direct relationship with them".

As the service element of firm's product-service bundle increases in importance, so does the opportunity to utilise Relationship Marketing techniques. Furthermore, that Relationship Marketing techniques can be used is, according to Gronroos convincing argument that they should be used. The model is further developed by specifying eight key "marketing strategy criteria". For each of these criteria, it can be seen that RM and TM are essentially defined as opposites.

This is not the only view in the literature. Christy, Oliver and Penn (1996) suggest that transactional marketing, however flawed, has the generalise ability, through its tools and concepts to be applied to any marketing situation. "It seems likely that individual product-markets will exhibit different levels of 'relationship-friendliness'. Which will depend upon characteristics of both the product field and the customer segment"? A company must assess, according to specified customer/product criteria, what degree of shift to relationship marketing is advisable. A 'closed' market is transactional, 'open' is relational. A two-stage matrix based model is proposed. The first stage assesses whether or not there is any potential to use relationship marketing techniques on the basis of time-scale and degree of customisation/standardisation. The second stage judges the level of potential according to the degree of involvement of the customer, the uncertainty presenting the exchange, the extent to which the core product can have relational value (training, servicing, warrantees, status- enhancing) added (Christy et al, 1996). Aijo (1996) proposes a not dissimilar model, albeit with different dimensions, duration and depth of relationship with number of participants and scope/extant of the processes.

THE MARKETING CONTINUUM IN THE REAL WORLD

A further interpretation of the association between transactional and relational marketing is given by Palmer (1994). RM is most suitable in those markets which have, from the point of view of the end-users, considerable uncertainty and/ or risk, a long time-scale, a potential for the relationship to deliver preferential or superior treatment and finally, that the relationship provides external, social benefits to the individual through his close association with the firm "Successful marketing should focus attention not just on how to gain new customers, but how to develop loyalty from those that an organisation has previously and expensively gained. It is about seeing a relationship from the customers' perspective and understanding just what they seeking a relationship" (Palmer, 1994). Marketing has multiple levels of relational intent.

THE THEORY AND PRACTICE OF RELATIONSHIP MARKETING IN CONSUMER MARKETS

CONSUMER MARKETS

The growth in value of consumer services has been the biggest change in the business world since 1950's. In terms of both value and proportion of employment, the services sector typically accounts for 60% of the GNP of developed nations (Gummesson, 1987). The transactional marketing paradigm was able to dominate within this context as consumer goods marketing constituted the 'lion's share' of marketing activity (Berry, 1995).

Within the literature, there is some disagreement about what role RM theory should take in consumer markets. Proponents of services marketing theory argue that conventional marketing management endorses a strategy of building sustainable competitive advantage, limiting the ability of opponents to compete on price and even creating a quasi-monopolistic situation (Gummesson, 1997). In general, such strategies are based on absolute cost advantage, technical or resource advantage, (Porter, 1985).

Changes in technology, international trade, consumer sophistication and the maturation and stagnation of many markets mean that such strategies are now of limited effectiveness. "Companies find themselves having to simultaneously lower their costs, improve efficiency, raise the level of quality and service, as well as speed up innovations and the innovation cycle" (Aijo, 1996: 12).

THE FAILURE OF RELATIONSHIP MARKETING

It can be argued that all firms have relationships with all of their customers, that relationship marketing has been discovered, not invented and what varies between firms is the manner in which they operationalise' relationship management'. The rapid rise in the volume of RM literature has prompted many retailers to re-examine their marketing strategies in order to see how they might be made more 'relational' (Christy et al, 1996; Gummesson, 1994). In general, the response has been to invest heavily in database related technology (Perrienet al, 1993,O'Malley et al, 1998). The rationale for this is that the establishment of a customer database allows more highly targeted marketing and promotional initiatives. Other than a "deeper" quantitative understanding of their customers, a firm hopes to receive other benefits (Szmigin and Bourne, 1998; Veloutsou et al, 2002). Examples of these are increased opportunities to cross-sell other group products and alternative brands (Paden, 1996; O'Malley et al, 1998). This strategy has manifested itself in the rapid proliferation of 'loyalty-card' schemes which, in general, offer financial benefits and discounts for repeat purchases over an extended period.

Despite the lip-service paid to RM theory, there is evidence to suggest that "...the basic values of the manipulative marketing mix theory have not changed" (Gummesson, 1994). RM in the eyes of most practitioners is a method of creating a firmer grip on the customer, "much like the fisherman's relationship to the fish" (Gummesson, 1994). The sophisticated technological trappings available are being used to make it more difficult for the customer to 'slip the hook'. Relationship Marketing, as currently operationalised has become a technique of trapping and imprisoning customers. What is required is a more Radical, a more than skin-deep change in the philosophy and practice of marketing (Gronroos, 1996). Loyalty card schemes, as outlined in the previous section are an example of how the marketing leopard hasn't changed his spots. It can be shown that such schemes are not relational in nature, but an almost purely transactional phenomenon. Seven key "components" of RM were derived from the literature in the previous chapter, these being; establishment, development, maintenance, long-term, interactive, outputs and emotional content. This list could be regarded as seven things relationship marketing is. In itself, a loyalty card will not establish a relationship. Some empirical research within the UK grocery market (Passingham,1998) suggests that in the long-term customers do maintain or increase number of visits to the supermarket but do not, as a rule increase (develop) their level of spending. Furthermore, the extent to which loyalty cards schemes can differentiate between loyal and non-loyal customers is unknown. Supermarkets may be incoming financial costs to reinforce loyalty that was already assured (Worthington, 1999). The adoption of such a relationship is entirely within the hands of the individual, firms are effectively passive and unable to select who to develop relationships with. An interactive relationship would have bilateral communication and exchange of information, in the case of loyalty-cards, this information flow is one way only, from the customer to the firm's database. There is evidence to suggest that a significant proportion of customers hold multiple cards, selecting retailer on the basis of comparative rewards, "promotion junkies" (Passingham,1998). The response to supermarkets complaining about consumers exhibiting "fake" loyalty must be to note that the vendors are "faking" commitment (Tynan, 1998). Furthermore, such schemes are easily imitated by rivals, exposing competitive advantage to the threat of rapid diminishment (Uncles, 1994).

There are several reasons why such schemes have tended to predominate attempts to operationalise RM. Firstly, many marketing managers have mis-perceived the depth of change of strategy necessary for a firm to switch to a relational philosophy. This has combined with the natural aversion of senior management to radical and swift change (Gronroos, 1996c). Furthermore, management is often not convinced of the critical importance of mostly untrained and low-paid front-line staff as PTM's. Secondly, such schemes represent a (misleading) opportunity to combine RM theory with doing something they already know how to do -transactional promotion-in a way that will provide in the collected data tangible resource (O'Malley et al, 1998). Thirdly, the fashion ability of such schemes and the fear of being left behind has pressurised many firms into adopting them such as Sainsbury's. It has been suggested that in its early stages, RM was more perspective than paradigm" (Egan, 1998) in marketing's mid-life crisis, perhaps even just the "emperor's new clothes" (Gummesson, 1996).

THE DEVELOPMENT OF CONSUMER RM THEORY

The first definition of relationship marketing from within consumer marketing theory comes from Jackson (1985) "they want to build and maintain lasting-and profitable-relationships with their customers". Since Jackson, others have followed (Tzokas and Saren, 1996; Bennett, 1996; O'Malley, Paterson and Evans, 1998, Christopher, Payne and Ballantyne, 1991). In general, this body of work suggests a process of relational development over an extended period, whilst also advocating increased levels of bilateral communication between parties. Discussion has already started within the literature about what characteristics will determine a markets "relationship-friendliness". It is considered that attributes both of the product and the customer will have a large impact, and that it is unwise to consider RM equally applicable to all market segments (Christy et al, 1996).

The vast majority of early implementation of relationship marketing has resulted in the adoption of pseudo-relational transactional methods such as 'loyalty cards'. This has occurred for two reasons.

Firstly, those individuals within organisations have, by and large, failed to recognise the depth and breadth of change necessary.

Secondly, early RM literature was predominantly concerned with the destruction of the transactional, marketing mix model as a marketing paradigm for the 2l't century.

Such criticism, whilst certainly valid removed from practitioners the comfort they had from years of experience with the 4P and associated models whilst failing to replace them with new RM theory. Second order relationship marketing literature has begun to piece together useable models and theories of operationalisation through development of the underlying conceptualisations of RM and empirical study of organisations which, knowingly or not, have marketing strategies which can be convincingly described as relational. Understanding of the consumer's point of view towards 'relationship marketing' is severely underdeveloped. Further empirical research, if performed correctly, would help to answer several critical questions and make a substantial contribution to a stronger relational marketing paradigm. As an example, who is it that decides whether or not the firm and customer enter into a relationship? Is it the firm or the customer? If both, what is the balance of power between the two?

Some attempts have even been made to turn such theory-building into models, the format of which means they could be simply and effectively used by organisations to suggest the correct strategic marketing balance (Aijo, 1996; Christy et al, 1996). In the context of consumer markets, a workable definition of the "marketing relationship" now exists. A managed context within which formal transactions between a consumer and a supplier (in the form of a manufacturer, retailer or service provider) to that consumer are supplemented by voluntary and reciprocated actions by both parties, the effect of which is that the probability of future transactions between the two parties is increased. Customers (and suppliers) are assumed to voluntarily to enter into and remain in relationships of this type because they perceive that they will in some way be better off as a result of doing so" (Christy et al, 1996:).

One of the criticisms of the transactional marketing paradigm was that its theoretical foundations had a too-narrow focus, originating as it did in already questionable microeconomics (Gummesson, 1987, Gronroos, 1996; Sheth, 1988). Considerable effort has been expended in formally recognising and integrating the underpinning theoretical origins of RM, together with studies of its philosophical (Aijo, 1996), ethical origins and structure (Takala and Uusitalo, 1996; Shaw et al, 1998; Kavali et al, 1998). Contributions developing RM as a fully formed theory have come from diverse fields. From outside marketing -social psychology (Moorman et al, 1992), interaction (Hakansson, 1982), trust (Creed and Miles, 1996) and social exchange theory (Dwyer et al, 1987). Internally, marketing academics have used these in the formation of (amongst others) channel theory (Anderson and Narus, 1988), buyer-seller relationships (Wilson, 1995), services marketing (Storbaka et al, 1994;) and business to business marketing (Miller and Wilson, 1995). In turn, these combined to form the beginning of a relational paradigm via subsections of Transactional marketing such as services (Berry, 1983,1991; Gronroos, 1991; Gummesson, 1994) and network (Andersonet al, 1994; Ballantyne, 1997). These diverse origins have led to vigorous, if challenging attempts to integrate the various strands into a coherent whole (Gurnmesson,1996; Gronroos, 1996; Payne, 1995). From this, others have begun to separate out discrete relational constructs, such as 'trust' and 'commitment' (Morgan and Hunt, 1994). Learning from its past mistakes, calls have been made for the structured and underpinned definition of such concepts (O'Malley and Tynan, 1997; Kalafatis and Miller, 1996), preparing them for integrating them into operational theory (Hogg etal, 1998; Broderick, 1998; Gronroos, 1996).

As a paradigm, Relationship Marketing is now at the stage of converting theory into tools and guidelines for practice directly relevant to consumer marketing. Another fundamental lesson has been learned from the failure of the transactional marketing paradigm. Vested interests, combined with a lack of imagination and Intellectual courage led to marketing mix management attaining the status of 'sacred cow' (Buttle, 1996). The resulting lack of criticism and analysis persisted for years (Brodie et al, 1997). Relational marketing is being criticised from several quarters, examples of which include questions over the 'bottom-line' justifiability of RM (Egan, 1998) and worries about analogising RM in terms of human relationships (Tynan, 1997). Sheth (1994) has pertinent questions about the key requirements for relationship marketing success and its practical scope in business. He also asks about how managers will perceive the fundamental changes in their role within the organisation. These criticisms should be welcomed as they help to prevent adoption of inconsistent or ineffectual theory and practice, helping to forge a more cogent paradigm. That which does not kill RM will make it stronger.