Nordic school of relationship marketing

nordic school of relationship marketing

BUSINESS MARKETING – A NORDIC SCHOOL PERSPECTIVE. Christian .. Relationship Marketing and Service Management,. Hanken. Relationship marketing: the Nordic school perspective. Christian Grönroos Handbook of relationship marketing. - Thousand Oaks, Calif. [u.a.]: Sage Publ. JADRANKA IVANKOVIĆ: Relationship marketing and managing value delivery to .. Nordic school, (countries strongly associated with relationship marketing).

When service was highlighted in research in the s this rapidly gave birth to a critical mass of researchers from many universities. The hegemony of the marketing management of mass-produced and mass-distributed consumer goods was challenged and a relational approach to marketing in general became wide-spread.

Service firms and government organizations began to understand the need for service marketing and management. Both together with researchers and on their own, practitioners developed new strategies. Despite this progress, the findings have not been properly integrated into a more valid general marketing theory. Further theory generation and practical application is imperative. Although there are similarities between countries there are also differences both in markets, culture, business practice, theory development, and marketing education, and national languages make the marketing history inaccessible internationally.

By studying the development of marketing in many cultures we enhance the understanding of diversity and the different contributions. The approach and the results from the Nordic School are in part original with the recognition of influences from international collaboration.

Marketing theory had its roots in microeconomics where price is the core variable; it is often called price theory. But this is unfair to Smith; he was not as simple-minded as that. Such free markets do not exist, yet they form the foundation of microeconomic theory and have turned it into a mere theory of anomalies. This goes 23,4 under the name of behavioral economics but is still committed to forcing data into the costume of price theory thus superimposing unrealistic restrictions to future developments.

Microeconomists do not cite research in marketing; they probably do not even know about it. The marketing discipline used to refer to economics but during the past 50 years the references have practically disappeared. The reason is simple; economics has little to offer. The textbooks of marketing, which influence the attitudes of young students in their formative years, are still structured around marketing mix theory from the s.

The 40 years of developments have gone unnoticed and not generated more inclusive and general theory. This is unfortunate but intriguing and cannot be explained intellectually; it has to do with power, recognition, money and other aspects that should ideally not control what is meant to be a scholarly environment. In their article on the history of services marketing, Fisk et al. The stages stood out as reasonable at the time. But maturity is not a stable state; in nature it is superseded by decline, death and rebirth.

Now being able to draw on a further two decades, we would like to offer a revised classification, defined by three paradigms: Such chronological classifications are merely rough efforts to facilitate the interpretation of ongoing changes. The changes are non-linear; they do not appear simultaneously in all contexts; and they may be in progress for a long time before they become part and parcel of the mainstream.

During the past decades the Nordic School has pointed to many of the conclusions that now form the s integrative service paradigm. They are recognized in service-dominant S-D logic introduced by Vargo and Luscha, b. Among other concepts that have raised the most interest are co-creation of value and service, and integration of resources between stakeholders giving an active operant role to customers.

In the s, IBM introduced its long-term service science research program with its orientation towards practice. IBM was once an acronym for International Business Machines, but IBM has kept shifting its business mission from office machines to data processing to computer science and in the s began the journey towards service science.

In these efforts the necessity to address complexity and to use network and systems theory are recognized as well as special applications such as those from the IMP Group, many-to-many marketing Gummesson,and the viable systems approach Barile and Polese, A rich literature has followed in the wake of these contributions.

Although the basic The new service ideas of S-D logic are widely accepted, criticism towards aspects of its premises and marketing some of its conclusions has been voiced, also by Nordic School scholars Heinonen et al. Nordic School actors and institutions Covering a period from the s up tothe article is based on our self-lived history of marketing and service and our current involvement.

The great advantage of action research is the privileged and first-hand access to focal phenomena. It is subjective and personal but is open to alternative interpretations. We realized that giving a full and balanced account of all contributors and contributions to service research from the Nordic countries was beyond our capacity; the risk of bias was too big.

So the strategy became: Although working independently, Nordic School affiliates are diligent participants in and organizers of international conferences; they utilize references and research results from around the world; and write articles in international journals. They have also strived to bridge the gap between academe and practice through cooperation with business firms and government organizations.

The next section introduce the pioneers of the Nordic School and the main institutes which have been established. For ten years the thesis was used as a textbook in the Nordic countries. Through empirical case study research he showed that traditional consumer goods-based marketing concepts and models did not fit services. He distinguished between a traditional marketing function, including conventional marketing mix tools, and an interactive marketing function that relates to the interactions between firms and their customers.

This also made him aware of the importance of preparing employees working in the customer interface not only for doing their job well in a technical sense, but also for dealing with customers in a service-oriented way. This required internal marketing, a new concept at the time also simultaneously introduced in France and North America for a synthesis, see Ballantyne, He also realized that service firms do not have products in the conventional consumer goods fashion; the equivalent of the product is an interactive process and its outcome.

JOSM As a third element he included an image factor, filtering the perceptions of the service 23,4 process and its outcome, and adding a dynamic aspect to the otherwise static model.

In the late s and s he extensively argued for the relational aspects of service marketing, and demonstrated that relationship marketing is depending on a service perspective. Rather it blocks an organization from becoming service and relationship orientated. He stepped down from this position in and his former PhD student Kristina Heinonen took over as chair and executive director.

Research within CERS includes a vast array of topics with service and relationships as a common denominator. For several years, successful firms in Finland were honored by CERS with an award for excellence in relationship marketing and management.

Subsequently Strandvik did his PhD on service quality and as professor of marketing continued his work on service and relationship topics Storbacka et al. His research has continued to challenge what he considers a lack of true customer centricity in service and relationship research, and even in the new emerging service perspective.

Together with a research group he has developed the notion of a customer-based dominant logic for marketing as a complement or even a replacement of the service perspective Heinonen et al.

His attention marketing was drawn to service when moving from consumer goods to an international management consulting firm. Its marketing of consulting services was highly successful but did not follow marketing textbook recommendations. This observation resulted in articles, books, and a PhD thesis presented at Stockholm University in In his thesis the marketing and purchasing practices of 20 professional B2B service firms were compared with marketing theory. He found that neither services nor B2B were but marginally noted in the literature although they constituted the major share of all marketing expense.

Marketing textbooks were based on US data and experiences from mass consumer goods but was presented as generally valid. The findings were published in several international papers Gummesson,a, b. As consumer goods marketing theory did not match the marketing of services and B2B it was natural to look at these as different.

It was vital to study them inductively, letting theory emerge from the data and not forcing data into extant theory. It struck Gummesson that service research and IMP arrived at similar results, which he condensed to the concepts of relationships, networks and interaction.

Through continuous assignments at Ericsson he got deeper into B2B and the currently topical issue of the services of manufacturing companies. He found that selling telecom systems meant building long-term relationships with customers and networks of other suppliers, and close cooperation between design, engineering and manufacturing. But equally important were the service provided by preventive maintenance, repair, access to spare parts and professional advice, financial solutions, the training of customer staff, and the provision of software upgrades.

This is claimed to be a new issue in the s but it was long established even before the s. However, the problem has not yet been solved. He hesitated, afraid that the academic culture would distance him from the reality of the business world. In the s universities and professors were freer to design their work than they are today and a reasonable solution was found. At its School of Business, the biggest in Sweden, the departments were not silos but made cross-disciplinary work possible.

Service became the subject of PhD dissertations, and courses were introduced. They became conceptualized as relationship marketing, customer relationship management CRM and one-to-one marketing. The idea was that long-term customer-supplier relationships are more effective than single transactions which were the prime object of marketing management. To make relationship marketing more actionable, Gummesson defined concrete relationships that later became 30, the 30Rs, thus paraphrasing the 4P model.

His book in Swedish in became an immediate bestseller and is published in English as Total Relationship Marketing Gummesson, For Gummesson, networks gradually stood out as the overriding concept resting on the legs of interaction and relationships Gummesson, Many-to-many marketing is a network approach that integrates lessons from service marketing, the IMP B2B approach, and relationship marketing. Whereas one-to-one draws the attention to individual customers in dyadic relationships, many-to-many acknowledges all stakeholders in marketing situations.

It takes relational properties in the direction of a general marketing and management theory, linking B2B, B2C and customer-to-customer C2C interaction, further explained in Gummesson and Polese Disgruntled by the slowness of the acceptance of new developments he published a critical review of approaches to service quality Gummesson, and in an article objected to inadequate distinctions between goods and services Lovelock and Gummesson, During many years SMG became the leader in service consultancy.

An internationally oriented Swede he took up residence in Paris with the bulk of his clients in Sweden and Finland but also in the USA, Italy and other countries.

He was the epitome of a thinker and high achiever but sadly died of cancer in at the age of Marketing had positioned itself in the core of service research but recognized that services were closely interwoven with general management and other functions.

It was a milestone in the conceptualization of their service logic, tied to the IKEA case. He had a PhD from Uppsala University on new product development and observed that companies often expressed a desire to develop new and better services. His seminars on the service economy created considerable interest, also in the media. He raised the interest of others; particularly the entrepreneur and service firm executive Leif Magnusson. Karlstad University, as it later became, was looking for profiling opportunities and The Service Research Center CTF was founded in with Gummesson as its first professor and Edvardsson as its director.

nordic school of relationship marketing

The first tasks were to find a strategy, establish research and education programs and gain credibility in the academic world. Instead of trying to first establish credibility in Sweden, why not follow a leapfrogging strategy skipping the local stage and go directly to the international community? Going international from the start was a lucky move.

In the s quality management had moved from manufacturing to embrace all functions of an organization, services and customers. CTF dedicated its early research to service quality. Edvardsson built a team of researchers, among them Anders Gustafsson.

He has stayed on as its director, today together with Professor Patrik Larsson. CTF researchers have become prolific writes of articles, book chapters and books.

CTF is especially known for research in service development and innovation. In a frequently cited article by Edvardssonkey concepts of new service development JOSM are presented. Customer involvement in the development process and observations of 23,4 customers in real action is the theme of an article in Technovation Edvardsson et al.

The focus is on the outcome of a co-creation process in which customers and other actors play a key role and value is socially constructed. This is further developed in Edvardsson et al. The authors contend that value should be understood as value-in-social-context and as a social construction. One of the key focus areas for CTF has been customer satisfaction. In this research stream the focus has been on the national satisfaction indices and how to develop these Johnson et al.

The Service and Market Oriented Transportation is a ten year program for the transportation sector in Sweden. CTF researchers are actively engaged in the current developments of the new service paradigm and cooperate closely with S-D logic and service science researchers.

Other areas of research are customer experiences, employee relationships in service organizations, customer loyalty and relationship dynamics, service business models and the transition from products to service in manufacturing companies Gebauer et al. CTF is now a leading international center with a current research staff close to It works with universities around the globe and with businesses and government organizations. Every year CTF organizes the Service Academy where cutting edge research is presented in cooperation with business.

In CTF could celebrate its 25th anniversary with seminars and international guest speakers. Other researchers The interest for service spread quickly in Finland and Sweden and soon became an established research field and subject for courses.

The two research centers that were established are among the biggest internationally, but we should be reminded that much is going on in smaller groups and among individuals in practically all business schools in Sweden and Finland. Taken together this is impressive. It is only the size of this article that prevents us from going deeper into other contributions and what is currently going on. Gummesson The new service worked more broadly with marketing issues, especially through consultancy and marketing education dealing with service in B2B.

Edvardsson related to practice through presentations and consultancy. After 40 years MTC is still actively engaged in promoting the practical application of service research. He had learnt from two previous CEO positions in the travel sector that the customer was set aside.

Relationship marketing : the Nordic school perspective

SAS at that time — like most airlines — saw aircraft and employee administration as its core activity and passengers as disturbances. He established two-day service training sessions for all staff; flattened the organization; and made structural changes in timetables, destinations, and fares.

At the time his efforts rescued SAS. Interviewed 25 years later, Carlzon maintains that the message is just as topical today. In this way the concept of, for example, a relationship could be examined from a number of different perspectives e. Alternatively an approach can be used whereby the various research streams are analysed; these are often referred to as 'schools of thought'.

The schools-of-thought approach is more commonly used in the literature e. This method is also followed by Sheth and Parvatiyarone of whose specific objectives was to provide a point of reference for research in the field. The schools- of-thought approach suggested by Sheth and Parvatiyar will, therefore, be used in this paper. In the following we therefore review independently the literature that has been the result of each of the different relationship marketing schools in order to determine the nature of said schools.

One school of thought originated from the field of services marketing: The Nordic school appeared in the late s in response to perceived shortcomings in the transactional approach to marketing. Another research group with links to Scandinavia is the Industrial or International Marketing and Purchasing IMP group that is associated with business-to-business markets and the 10 understanding of organisational relationships Turnbull, Ford, and Cunningham, As with the Nordic school this group of researchers formed in the s, identifying the distinctive characteristics of business-to-business relationships and the factors that caused these relationships to evolve.

The IMP group focuses on the interaction between companies on the basis that transactions are not isolated events but part of a continual stream of engagement Gummesson, The interaction takes place within the context of a relationship and this, in turn, is part of a network of relationships within which the two companies are positioned Wensley, The North American approach derives from a heavy emphasis on customer service, often via a dyadic relationship, and it is in this sense that Sheth discusses a definition of relationship marketing with respect to the customer and supplier only.

Payne defines the Nordic approach as including the services and IMP traditions. Ambler and Styles discuss this in more detail. Brodie, Coviello, Brookes, and Little expand the discussion and identify six streams of research in relationship marketing.

They differentiate the IMP work into two areas, namely that of the interaction between buyers and sellers and that of the network approach describing relationships between firms within industries and markets. They also identify streams of research associated with channel efficiency and effectiveness, the role of value within chains, and the impact of IT on relationships. Despite its prominence they do not include the Anglo- Australian school.

This brief analysis suggests that there are numerous potential permutations available for analysis. Whilst there is no overarching explanation, the approach followed is to address the leading schools of thought: But before the article moves on to do this, however, a number of mid-range perspectives will be discussed in some detail. Mid-Range Perspectives As discussed, relationship marketing is a diverse field with no single best explanation.

As the debate has proliferated there have been attempts to postrationalise the body of work to 12 provide a more unified explanation Aijo, ; Eggert and Stieff, ; Mattsson, ; Palmer, ; Pels, Coviello, and Brodie, Mattsson has proposed that there are various types of relationship marketing; these he refers to as limited and extended.

SAGE Reference - Relationship Marketing: The Nordic School Perspective

The limited view, he proposes, is essentially an elaboration of the transactional marketing approach. In his discussion of the extended view of relationship marketing he suggests that this is more aligned with a network or relationship perspective of marketing. Berry and Palmer largely align with this view, but also introduce and support the notion that there is a philosophical element underlying the adoption of relationship marketing practices.

Eggert and Stieff have built on this by introducing the idea that relationship marketing can be seen as behavioural or attitudinal.

The behavioural approach involves a series of transactions on behalf of the seller designed to achieve repeat transactions through a process of interaction with the buyer, typically driven by economic goals rather than including some of the wider aspects of the exchange such as customer satisfaction.

This aligns with the tactical or marketing mix plus approach suggested by Palmer and Mattsson. As a contrast to this Eggert and Stieff suggest the alternative is the attitudinal perspective. The relationship is characterised not by the desire of the seller to achieve a transaction or series of transactions, but the motivation to achieve a state of mutual acknowledgement that the relationship exists Bliemel and Eggert, In the business-to-consumer area there is some empirical evidence to support these contentions from the discussion of loyalty schemes by Hart, Smith, Sparks, and Tzokas and of purchasing clubs by Liebermann Rather relationship and transaction marketing are concurrently practiced with firms adopting mid- range positions appropriate to the context in which they operate.

The table is based upon the article of Brodie, Coviello, Brookes, and Little In business-to-business markets, buyers and sellers are fewer but larger and transaction values are greater and, therefore, of higher significance.

An early theme emerging was that in such markets transactions are not discrete but occur as part of a continuing stream of interaction between organisations. With changes in the external environment, such as market concentration, higher switching costs, and increased perceptions of risk, buyers and suppliers actively sought to change the nature of the relationship from a basis of competition to co-operation as a strategy of risk reduction Turnbull, Ford, and Cunningham, The interaction between companies, and many individuals within companies, constitutes the relationship.

This is the unit of analysis, rather than the transaction. They are dyadic in nature, but multiple relationships between buyers, suppliers, and other firms aggregate into networks. This is the primary distinction between relationships and networks. The challenge for managers is to manage individual relationships in the short term, but also to manage the long-term portfolio or network of supplier and customer relationships.

The ability of managers to do this determines the ability of the company to compete. This moves competition away from a narrow definition of industries or markets, as in industrial organisation economics Bain, and the thinking inherent in transaction marketing. Competitive advantage can be gained from the appropriate selection and management of network partners.

According to this group it is possible to identify four conceptual cornerstones of relationship marketing. The Nordic School Characteristically as markets mature and technologies within those markets converge and become common the opportunities for differentiation decrease Porter, The management of relationships via the process rather than the conventional marketing mix is thus the focus.

The Nordic school identifies three core processes. The interaction process is shared with the IMP group in the management of the relationship. Additional processes are those of dialogue and value.

Relationship marketing : the Nordic school perspective - EconBiz

The dialogue process is necessary as a means to support the successful establishment, maintenance, and enhancement of the interaction process Schultz, Tannenbaum, and Lauterborn The perception of value by the buyer is important to the understanding of the value delivered by the interaction process; perceived value must at least equal the value that is sacrificed. The value process seeks to ensure that value is created and perceived to be delivered to the customer. The Anglo-Australian Approach This perspective sees traditional marketing as being built upon, and enhanced by, quality and service to form a comprehensive approach to delivering increasing levels of value to customers in enduring relationships with the company Christopher, Payne, and Ballantyne, As with the other traditions this is regarded as a holistic or integrative approach to business, operating in a cross-functional way to provide customer satisfaction and increasing levels of value.

A prominent feature is the normative definition of six markets or stakeholder groups that the firm should address in varying degrees to achieve its objectives Figure 1. The six market model Source: Christopher, Payne, and Ballantyne Quality initiatives were a common feature of businesses through the s as, in particular, Japanese management techniques became more widely adopted.

nordic school of relationship marketing

This was usually associated with the manufacturing function as a way of improving the physical quality of products. Similarly, customer service achieved heightened levels of popularity, particularly in the financial services sector, as companies with largely similar products sought a means of differentiation.

These developments met with mixed success, though. Total quality management was mainly seen as the domain of manufacturing and operations Ballantyne, Product quality improved and costs were consequently lowered as quality techniques became more universal, so competitive advantage and differentiation on the basis of quality, and indirectly lower price, began to diminish Porter, Marketers, on the one hand, are the service promise makers and logistics, on the other hand, are the service promise providers.

Also important is the personal commitment of individuals to provide service, which may be variable due to misalignment of strategic intent, confusing communications, and ill trained and poorly committed staff. The major components of each of these schools of thought are compared with each other and to transaction marketing in Table 2.

However, it is possible to outline a number of broad directions for future research. For example, building upon Cooper, Gardner, and Pullinsa bibliometric study could be carried out in order to assess the current state of relationship marketing. A list of key words for searching the abstracts of articles in top marketing journals and the most cited articles in the relationship marketing literature could be generated. Conclusions as to whether or not there is now a consistent theory of what constitutes relationship marketing could then be reached based upon upon statistical analysis of the cites.

In other words, do we have a dominant paradigm underlying relationship marketing, or is relationship marketing in a state of transition?

In contrast to earlier studies now dating back to the mids, articles from from the European and Australasian marketing literature would be included. Related to this research direction is the examination of the academic and the managerial output of the different relationship marketing schools, for example, in terms of research methodologies, research discoveries, and best practice.

The Effective Implementation of Relationship Marketing If relationship marketing apparently is so important then how do we best design for its implementation? Researchers could seek to develop more knowledge on relationship quality and the relations between relationship quality, customer retention, and shareholder value. For 21 example, relationship marketing as a concept has been well discussed and widely promoted to the marketing profession.

The question arises of how relationship marketing can be characterised in practice. What do relationship marketers do that is different from or better than transaction marketers, and are there any practices that are characteristic of relational practice?

How can relationship marketing be identified, and if there are variations in practice how can these be further delineated? The Continuum of Relationship Marketing? Yet a third avenue would be to consider in more detail the notion of relationships expressed as a continuum with transactional at one pole and relational at another e. This implies that the transition from one style to another is incremental. By contrast could this transition imply changes in culture and attitude that may be difficult or even impossible for the firm to undertake?

Far from being a continuum, could the magnitude of change required imply discontinuity posing significant management issues? The Profitability of Relationship Marketing Investments Future research should, of course, address the profitability of investments in relationship marketing programmes. Over the past few years, umpteen companies have rushed to implement programs such as GoldMine, SAP, and Siebel Systems Buttle,whilst other companies are planning to spend consirable amounts of money of doing so.

Vendors and consultancies of 22 customer relationship management services claim that companies can improve the performance of the businesses significantly: It has been documented, however, that between 55 per cent and 90 per cent of such implementations fail e.

Other companies are failing to get maximum value out of their investments e. Why do not all companies seek to measure the profitability of their investments? Is this because the proper accounting methods have not yet been developed. The work of Buttle and Storbacka would be a good starting point.

Building upon these findings, future research should examine why investments in customer relationship management often fail.