ECONOMY

Resetting marketing principles

No matter how the conditions of the entrepreneurial environment may change, one parameter will remain stable: Profitability is linked to the acquisition of as large as possible a client base. Conditions are, indeed, changing; the gradually emerging force of e-business heightens competition, offering businesses the possibility of posting attractive packages on the «global village» of the Internet and reaping benefits in easier ways than in the past. But in the new environment, they also have to take into account the behavior of consumers, who may be more guarded vis-a-vis the new marketing methods. William T. Ross Jr, a professor of business administration at Pennsylvania State University, spoke to Kathimerini about the urgent need for a redefinition of the principles of marketing concerning the relations between businesses and consumers. Professor Ross, who was recently in Athens at the invitation of the Athens Laboratory of Business Administration (ALBA), has conducted studies in behaviorism and cognitive psychology, focusing on individual decision-making processes. His speech at ALBA’s seminar on «Business to Business Marketing Management» mainly concerned the building of a relationship between client and company. He argued that this is the point where the key to securing the long-term growth of a business most frequently lies. He calls this «relationship marketing,» the basic aim of which is to create benefits on both sides so that they may continue their partnership for a long time. «In this framework, the creation of benefits for the client in business language is translated as ‘client ownership,’ conceived as a kind of seal on a close relationship. Nevertheless, it must be made clear that this in no case comes as a result of deceiving or exploiting the client. On the contrary, this practice is intertwined with the enrichment of the product or service provided with special advantages that make it comparatively attractive,» he says. Ross believes that such marketing practices are an excellent weapon in today’s particularly competitive business arena; lack of them necessarily implies for the majority of enterprises their participation in the merciless game of competition, involving strong pressures on prices and profit margins. «And if we are talking about small enterprises that do not wield some specific comparative advantage vis-a-vis competitors, the price war is bound to lead to their economic demise.» Ross strongly believes that marketing built on a long-term relationship of trust between firm and client is the most suitable strategy in today’s difficult times. «It is a fact that most firms are forced to apply this practice when they face difficulties, that is, mostly at times of recession. But this is a mistake. Firms must seek to create long-term relationships with potential clients irrespective of economic juncture – and this applies both to client-consumers and client-suppliers, which makes for inter-business relationships. Both the profitability of enterprises and their potential for innovation are largely based on their ability to cultivate and maintain long-term relationships,» says Ross. Innovation, a crucially important factor in attaining differentiation within a sector, largely depends on the smooth application of marketing relationships, according to Ross, demanding, as it does, a strong client base and efficient supplier networks. Relationship marketing is a practice that secures both these requirements. He believes that the strategy needs to be applied even by public organizations, hospitals and universities so that they may improve their position in the market and their relationships with other peers. «When we speak about relationships with consumers, private enterprises and public organizations are equals since they compete in a common and often merciless business environment, and their efforts, therefore, have to focus on cultivating long-term, effective relationships. Modern, inter-business marketing, through its rapid growth in the last 10 years, is helping organizations focus better on applying relationship marketing, projecting more forcefully what is called ‘value provision,’ that is, how the value of an organization will grow.» In conclusion, Professor Ross said the application of relationship marketing gradually shifts the target from acquiring clientele to its maintenance, which can make all the difference.