Relationship Marketing vs. Transactional Marketing

The key focus of marketing should be on developing and maintaining relationship with customers.

Relationship Marketing vs. Transactional Marketing

Author, Prof. Nor Azila Mohd Noor

Changes in the technological development and market liberalization, in addition to the intensification of global competition, have shifted the conventional marketing practice so called Transactional Marketing (TM) to a new approach known as Relationship Marketing (RM). RM is a new marketing phenomenon that proposes the idea that the key focus of marketing should be on developing and maintaining relationship with customers.

Though marketing activities in general emphasize on gaining customers and maximizing profits, RM and TM has different perceptions on the role of the customer. In the TM approach, customer is viewed as a medium for sales and emphasis is on maximizing the highest number of sales possible, but in RM, what is more important is to establish a valuable relationship with the person behind the sale. RM focuses on developing enduring relationships with customers to secure long-term sales in the future.

The assumption here is that, the expenses involved in retaining the existing customers are cheaper than the cost incurred on attracting new customers, so by building effective relationships with existing customer base, profitability of the company will improve. Hence, RM focuses on the understanding of consumer needs and wants, which is beneficial to generate profitable exchanges in the future. Customers nowadays are very influential, therefore selling to them required a focused strategic approach which RM aims to fulfill.

Frequent contact with a customer helps to emerge relationship; maintaining existing relationship, develop customer willingness to continue to do business with the other party of the relationship; and enhancement of an on-going tie helps customer decides to boost the content of the relationship. Building, maintaining and enhancing marketing relationship with the customers is pivotal for any marketer as it impacts positively on the company’s economic performance, customer satisfaction and retention, joint value creation, competition, and images.

It has been proven that a company practicing relationship marketing strategy will endeavor to generate more value for the customer compared to the core product itself and this additional value creates customer satisfaction. Thus, marketing planning must begin with the customer, not with the organization. In this regard the importance of understanding customers’ needs and wants encourages the development of long-term collaborative relationships.

Prof. Nor Azila is Professor of Marketing and the Director of DBA Program at OYAGSB, UUM. Follow her on Instagram.