Public Relations and Relationship Marketing: Their similarities and differences

1. Public Relations and Relationship Marketing: Their similarities and differences Chun-ju Flora Hung Hong Kong Baptist University July 5, 2008 Bled, Slovenia

2. Introduction Berry (1983) and Ferguson (1984) emphasized the importance of relationships in marketing and public relations. The focus on relationships in public relations was not fully developed until 1997 (Broom, Casey, & Ritchie, 1997, 2000). In marketing, due to its goal in serving customers to achieve profits, research on relationship marketing has been one of the major centers of attention.

3. Contribution of the relational approach in public relations & marketing Marketing: a relationship between customers and suppliers or service providers creates additional values for both sides (Gr�nroos, 2000, 2004) and long-term customer relationships are the basis for cost-effective business (Reichheld & Sasser, 1990; Reichheld, 1993; Storbacka, 1994). Public Relations: the relationships maintained and cultivated by public relations enhance the reputation of the organization (J. Grunig & Hung, 2002; Yang & J. Grunig, 2005), bottom-lines, and organizational effectiveness (L. Grunig, et. al, 2002).

4. Relationship marketing The idea of relationship marketing was originated in the 1950s (McGarry, 1950, 1951, 1953, 1958) but was first mentioned by Berry in 1983. 2 schools of thoughts on the importance of relationship marketing Industrial Marketing and Purchasing (IMP) Group: Networks of companies are the main focus where relationships are seen as the criteria for developing and managing these networks (H�kansson, 1982; H�kansson & Snehota, 1995). The Nordic school: Scholars from this school believe �internal marketing� and engaging the whole company in relationship development with customers account for the effectiveness of marketing and service delivery (Gr�nroos, 1981).

5. Definition Gr�nroos (2004): �the process of identifying and establishing, maintaining, enhancing, and when necessary terminating relationships with customers and other stakeholders, at a profit, so that the objectives of all parties involved are met, where there is done by a mutual giving and fulfillment of promises� (p. 101). Harker (1999): �relationship marketing occurs when an organization engages in proactively creating, developing and maintaining committed, interactive and profitable exchanges with selected customers or partners over time� (p. 16).

6. Relationship Marketing In the contemporary era of hypercompetition, customer retention and loyalty became crucial for the marketers (Dick & Basu, 1994; Reichheld, 1996). Many marketers even believe retaining existing customers is more effective and cost-saving than to seek for the new ones (Hayes, Wheelwright & Clark, 1988; Spekman, 1988). As a result, companies tend to maintain long-term relationships with customers than to make one-time sales (Cannie & Caplin, 1991; Rosenberg & Czepiel, 1984).

7. Transactional marketing vs. relationship marketing (Stephens, 1992; Baye, 1995; Hung, et. al. 2008)

8. Stephens (1992) Relationship expectational continuum

9. Types of Organization-public Relationships (Hung, 2002, 2005, 2006)

10. Relationship cultivation strategies J. Grunig & Huang (2000), Hon & J. Grunig (1999), Hung (2002, 2006), Hung & Chen (2007), Rhee (2004) & H. Kim & Rhee (2006) Openness or disclosure Positivity Access Assurance of legitimacy Networking Sharing of task Cooperating Being unconditionally constructive Saying win-win or no deal Keeping promises Being attentive Education Personal relationships Organizational credibility Adherence to cultural & relational rules Visible leadership Listening Responsiveness Continued dialogue Respect Face to face communication

11. Research Questions In practices, what are the differences between transactional marketing and relationship marketing? In practices, what are the similarities and differences between relationship management and relationship marketing?

12. Research Design Literature review on public relations, transactional marketing, relationship marketing, and interpersonal communication. Qualitative interviews from the marketing perspective Each interview lasted from one hour to 90 minutes. Interview notes were sent back to participants for their confirmation and verification. All interviews were conducted in Hong Kong in English in June 2008. Interview data were compared with Hung�s previous studies (Hung, 2002, 2004; Hung & Y. Chen, 2007) on cultivation strategies and types of relationships.

13. Cultivation Strategies in OPR Hung (2004), Hung & Y. Chen (2007, 2008)

14. Relationship b/w OPR Types & Cultivation Strategies Hung (2004), Hung & Y. Chen (2007, 2008)

15. In relationship marketing Most of the cultivation strategies in OPR were applied to relationship marketing In terms of communication dimensions, relationship marketers used more mediated communication, compared with public relations managers �As in people�s business, without good relationship, (it) makes hard to be in the industry.� �Relationship is the foundation. It�s always like the pyramid. You build up the quality foundation, and they go up one after one and step by step��

16. Relationship marketing vs. transactional marketing Involvement, participation & loyalty: �[For transactional marketing,] if you are not involved, it is a buyer-seller relationships, then there is a conflict, then they will go.� �For our company, transactional marketing is very inconsiderable because we look for long-term relationship, a good image and recognition� relationship marketing would be important for us.� �For transactional marketing, it focuses on sales and products. It is hard to evaluate how well we�ve done to lead to that transaction. If they [clients] focus heavily on transactional marketing, they won�t come to us.�

17. �In the past, marketing focused on mass�, ten or twenty years ago because everybody was looking for us for buying houses. The investment returns were so high. In the past, they were begging us to sell�� �Today is different, change. We have to do it proactively rather than they do it proactively. Today, the total relationship marketing� we build the relationship with agents because they hold the consumers�� Relationship marketing vs. transactional marketing

18. Findings: Relationship termination In relationship marketing practices or current marketing practices: It is not possible to terminate a relationship with customers �We never make enemies. As a public company, we shouldn�t make enemies� you shouldn�t make enemies with the worse opinion parties. You should listen to them� In this market or this world, you need to have anti-voices� Let the people judge by themselves.�

19. Findings: Types of relationships President, Asia, Bates Advertising: �They all exist in the relationships� When we enter into relationships, it could be any type of them.� Manipulative relationships Transactional (exchange) relationships The marketing director from the property company: Win-win Exchange relationships: �It�s a give and take approach� if you don�t offer, if you don�t invest� you will never gain what you expect to receive.� Communal relationships �Manipulative relationship in a positive way� Symbiotic relationships The PR director from the public transportation company: Communal relationships: with customers (for passengers� safety) Contractual relationships: with travel agencies and advertising agencies

20. Findings: Types of relationships Director from a multinational PR firm: Exchange relationships: �Giving more is to receive more.� Communal relationships Marketing director from the airlines: Exchange relationships Communal relationships Contractual relationships

21. For companies, it is easier for them to terminate a relationship when it is a contractual or exploitive one. Profit is still a key indicator for relationship marketers. Relationships between companies and agents Relationships between companies and employees Findings: Types of relationships and relationship termination

22. Findings: Types of relationships and relationship cultivation in relationship marketing

23. Hung�s (2002)

24. Benefits/outcomes differences: Both contribute to tangible and intangible benefits for an organization In public relations: Public supports Organizational effectiveness Bottom lines Reputation CSR In relationship marketing: �Fame and Money� Partnership Co-creation Customer loyalty Competitive advantage Propensity to stay

26. Relationship Management & Relationship Marketing

27. Limitation Theoretical framework Interviewed participants