The Disadvantage of Transactional Marketing – Or Why Relationship Marketing is Here to Stay



Transactional marketing is the traditional method of selling a product or service that has been taught for years: focus on the four P’s of Product, Place, Price, and Promotion to maximize the benefit of the transaction to each party. With this method the marketer is not concerned with any future exchanges, customer satisfaction, or customer loyalty to the business. An example of this would be the company that makes a statement about their product (We have the best X in the world!) and sits back to watch consumers pick their product over their 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 gives out free oil-change coupons after the purchase of a new car or the restaurant that allows customers to join an email list that sends out frequent-dining discounts or promotions.

Relative Advantages and Disadvantages

While the basic elements of product, price, etc. will always be important, the obvious disadvantage of transactional marketing is that it is short-sighted 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 that they believe cares about them. The long-term “friendship” advantage of relationship marketing is weighed against the challenge of knowing your target segment. To succeed with this model companies need to know far more about their customers than ever before in order to be able to create effective marketing campaigns and win over the customers for life. Businesses will need a personal, intimate, working knowledge of their target market sector in order to make the transition to relationship marketing.

So What to Do?

Since relationship marketing is the only real choice to produce stronger, lifetime purchasing and word-of-mouth activity for your product, the companies that succeed today will have to reach their target markets with their desired messages. And they will need to pinpoint these messages to drive brand identity, loyalty, and a deep emotional tie to the product or company. While traditional advertising media like television, radio, print, and outdoor will always be viable options, they are dwarfed in their reach, scope, and ability to segment audiences by the Internet. The World Wide Web is an advertising behemoth that has the global reach and ability to pinpoint any segment on earth in order to build that desired relationship.

And the good news is that these relationships can be built with little or no advertising budget by those that have the knowledge to do so. Web 2.0 sites such as Facebook, Twitter, MySpace, YouTube, and countless others allow companies to build their brand and generate excitement for their products without cost. And this does not just work for the big companies. These sites allow John Smith from Ohio, who sells Homemade Widgets, to have the same global reach as a Microsoft or a Wal-Mart. So as savvy companies and Mom-and-Pop 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 the companies that say “We will be successful marketing because we have been around for 100 years” and do not embrace these new methods will soon find that no one is following them on Twitter, no one is a fan on Facebook, and no one desires the products they sell any more.

Source by Keith Hartung

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