Definitions
Transactional marketing is the traditional method of selling a product or service that has been taught for years: focus on the four Ps of Product, Place, Price, and Promotion to maximize the profit from the transaction for each party. With this method, the marketer is not concerned with future exchanges, customer satisfaction, or customer loyalty to the business. An example of this would be the company that makes a statement about its product (we have the best X in the world!) And sits down to watch consumers choose its product over its competitors. Relationship marketing, on the other hand, seeks to build a friendship with the target market and focuses on customer retention and lifetime value for the desired market segment. Examples of relationship marketing might be the car dealership that hands out free oil change coupons after a new car purchase, or the restaurant that allows customers to join an email list that sends out discounts or promotions for frequent dinners.
Relative advantages and disadvantages
While the basic elements of product, price, etc. It will always be important, the obvious downside of transactional marketing is that it is shortsighted and does not value the consumer that the company so desperately needs to buy its product. As customers become more sophisticated, they are less likely to be swayed by the usual hype (ours is the best!) And more influenced by the company they think cares about them. The long-term “friendship” advantage of relationship marketing is compared to the challenge of knowing your target segment. To be successful with this model, companies need to know much more about their customers than ever before in order to create effective marketing campaigns and win over customers for life. Companies will need a personal, intimate and practical knowledge of their target market sector to make the transition to relationship marketing.
So what to do?
Since relationship marketing is the only real option to produce lifetime purchases and stronger word-of-mouth activity for your product, companies that succeed today will have to reach their target markets with the desired messages. And they will need to identify these messages to drive brand identity, loyalty, and a deep emotional bond with the product or company. While traditional advertising media such as television, radio, print and outdoor will always be viable options, their reach, reach, and ability to segment audiences over the Internet are dwarfed. The World Wide Web is an advertising giant that has the global reach and the ability to identify any segment on earth to build the desired relationship.
And the good news is that these relationships can be built on little to no advertising budget by those who have the knowledge to do so. Web 2.0 sites like Facebook, Twitter, MySpace, YouTube, and many others allow companies to build their brand and generate buzz for their products at no cost. And this doesn’t just work for large companies. These sites allow John Smith of Ohio, who sells homemade widgets, to have the same global reach as Microsoft or Wal-Mart. So, as savvy businesses and mom and dad sole proprietors invite consumers to follow us on Twitter or become a fan on Facebook, they are embracing the principles of relationship marketing and building lasting friendships with their desired customers. And companies that say “We will be successful in marketing because we have been around for 100 years” and do not adopt these new methods will soon find that no one is following them on Twitter, no one is a fan on Facebook, and no one wants the products they sell.