Relationship Marketing in the Digital Age

Robert Palmatier, Lena Steinhoff

• Publisher: Routledge
• Year: 2019
• ISBN:
  9781351388238
• Edition: 1
• Topic: Business
• Subtopic: Marketing Research
• Index: Business

The concept of relationship marketing has been discussed among marketing academics and managers since the early 1980s. But instead of reaching its maturity stage, relationship marketing is nowadays encountering its next upsurge. Due to a confluence of trends driving the global business world—including the transition to service-based economies, faster product commoditization, intensified competition worldwide, growth among emerging markets, aging populations, advertising saturation, and (above all) the digital age—strong customer relationships are more than ever vital to company strategy and performance.

Relationship Marketing in the Digital Age provides a comprehensive overview of the state-of-the-art of relationship marketing, offering fruitful insights to marketing scholars and practitioners. In seven chapters, divided into two main sections on understanding (Part I) and effectively applying (Part II) relationship marketing, an introductory and a concluding chapter, readers learn how to successfully manage customer–seller relationships.

Part I
Understanding Relationship Marketing

2
Relationship Marketing Theory

Learning Objectives

• Retrace the historic development of relationship marketing theory and acknowledge the various research disciplines that have informed it from the 1950s to the 2010s.
• Recognize how evolutionary psychology serves as an overarching theory to understand and explain relationship marketing phenomena.
• Understand the key theoretical perspectives and constructs that inform interpersonal, interfirm, and online customer–company relationships.
• Build an integrative, comprehensive theoretical framework of relationship marketing by synthesizing key theories and constructs.

Introduction

Because researchers from many different disciplines have studied the impact of relationships on human behavior, marketing has a rich theoretical landscape from which to draw to understand relationship marketing. Many of these different disciplines take central positions in the development of relationship marketing theory. This chapter organizes that resulting theory into three parts. The first part provides a temporal overview, briefly delineating diverse disciplines’ contributions to relationship marketing theory as it has evolved over time. The second part presents key insights from evolutionary psychology as an overarching theoretical framework to understand the mechanics of marketing relationships. The third part synthesizes multiple theoretical perspectives and constructs to distill three key types of customer–company relationships, focused on (1) interpersonal relationships (either business-to-consumer [B2C] or business-to-business [B2B]), (2) interfirm relationships (B2B), and (3) online relationships (B2C or B2B) mediated by technology. The fourth part integrates these three types of marketing relationships to weave a comprehensive theoretical framework of relationship marketing.

Overview of the Evolution of Relationship Marketing Theory

Over time, a variety of scientific disciplines has informed and contributed to the understanding of marketing relationships. This section briefly depicts the temporal evolution of relationship marketing theory. Overall, a review of the literature shows a broad pattern of more institutional, macro-level theories (e.g., economics, sociology) giving way to more individual, micro-level theoretical perspectives (e.g., social psychology, psychology) over time. Figure 2.1 provides a timeline of this evolution of relationship marketing theory.

1950s–1970s

The earliest research into marketing relationships sought to add sociological and psychological insights to the dominant institutional economics perspective, which predicts that rational economic actors are driven by value maximization and market efficiency goals. Yet because people are inevitably involved in marketing, an effective theory needs to include noneconomic factors, such as power structures, two-way exchanges of commitments, communication channels, and emotional reactions (Alderson 1958).

From sociology, for example, channel researchers introduced the power–dependence framework of social exchange theory to explain the emergence and critical role of middlemen in business exchanges and thus the complicated relationships among channel partners (Emerson 1962). These early relational exchange contributions assigned a central theoretical role to dependence, but it has since been recast in a supporting role. That is, dependence might have a positive effect on performance, because a dependent partner wants to maintain a relationship to achieve its goals rather than undertake the cost of finding another, replacement partner (El-Ansary 1975; Frazier 1983). Yet instead of a clear driver of relationship performance, dependence really might represent a contextual or background variable (Morgan and Hunt 1994; Palmatier, Dant, and Grewal 2007), such that it affects the development of the relationship. It is not necessarily an immediate “precursor” of relationship performance (Palmatier, Dant, and Grewal 2007, p. 183) but rather appears to affect performance indirectly, through relationship quality and cooperation.

Interdependence is a related but distinct concept. Interdependence among exchange partners certainly can enhance cooperation and performance, but asymmetric dependence (i.e., dependence imbalance) can generate conflict and undermine cooperation (Bucklin and Sengupta 1993, Gassenheimer, Davis, and Dahlstrom 1998; Hibbard, Kumar, and Stern 2001; Kumar, Scheer, and Steenkamp 1995a). It has substantial direct and indirect effects on performance, mediated by relationship-specific

Figure 2.1 Temporal Overview of the Evolution of Relationship Marketing Theory

investments and cooperation. Conceptually, then, it may be necessary to differentiate dependence and interdependence but assess them simultaneously (Scheer, Miao, and Palmatier 2015).

Another early contribution to the field came from Bagozzi (1975, p. 32), who sought to redirect marketing thought and refine marketing’s focus. He identified two key questions of marketing theory: “(1) Why do people and organizations engage in exchange relationships? and (2) How are exchanges created, resolved, or avoided?” To answer these questions, he applied exchange theory as the core framework underlying marketing behavior. Specifically, Bagozzi (1975) puts forth the notion that marketing encompasses exchanges not only as direct transfers of tangible products between two parties but also as transfers that are indirect, involve intangibles or symbols, or occur between more than two parties.

1980s–1990s

Berry (1983) first used the phrase “relationship marketing,” initiating the development of this research stream. In their 1987 conceptual paper, Dwyer, Schurr, and Oh combine relational contract theory (from political science) with social exchange theory (from sociology and social psychology) to develop a dynamic framework of buyer–seller relationships, which they describe according to a continuum, from discrete to relational transactions (Blau 1964; Dwyer, Schurr, and Oh 1987; Macaulay 1963; Macneil 1980; Thibaut and Kelley 1959). They also identify multiple instrumental relational constructs (i.e., trust, commitment, norms, dependence, justice, conflict, cooperation, and communication). The significant influence of this meaningful contribution prompted approximately two decades of relationship marketing research that was grounded almost exclusively in social exchange and relational contracting theory and that aimed primarily to propose and empirically test nomological frameworks that included the relational constructs that Dwyer and colleagues outlined (Dwyer, Schurr, and Oh 1987).

For example, from a sociology and social psychology tradition, relational exchange theory prioritizes relational norms (Kaufmann and Dant 1992; Macneil 1980), either alone or in conjunction with commitment and trust. These norms help relationship partners respond more effectively to shifting conditions, as well as anticipate actions and responses in the future, because they limit self-interest–seeking behaviors. In turn, exchange performance improves. Relational norms also encourage cooperative behaviors but suppress conflicts, which can lead to improved financial performance (Cannon, Achrol, and Gundlach 2000; Jap and Ganesan 2000; Siguaw, Simpson, and Baker 1998).

According to another empirically well-supported theoretical framework, transaction cost economics (from an economics tradition), people use guile to achieve their self-interests, so specific investments in an exchange must be monitored and safeguarded from partners’ opportunistic behaviors (Rindfleisch and Heide 1997; Williamson 1985; Williamson 1975). When these relationship-specific investments increase, the partners must find a way to protect them. They might prefer to avoid monitoring and safeguarding costs, though, in which case they could seek to integrate vertically or else establish strong relational governance structures (i.e., build relationships). In a sense, relationship governance and vertical integration serve similar functions, at least from a transaction cost perspective: They suppress opportunistic behaviors and transaction costs (e.g., safeguarding and monitoring costs) while also promoting performance-enhancing investments. Empirical evidence affirms that good relationships among partners support performance, because they lead to increased investments, lower transaction costs, and reduced opportunistic behaviors (Gassenheimer, Davis, and Dahlstrom 1998; Heide and John 1990; John 1984; Wathne and Heide 2000; Weiss and Anderson 1992).

By linking social exchange theory with insights from marriage and organizational behavior research (gathered from sociology and social psychology research), Morgan and Hunt came up with the commitment–trust theory of relationship marketing, a theory that remains one of the strongest influences on relationship marketing thought. Focused on the key constructs of commitment and trust, these authors posit that the “presence of relationship commitment and trust is central to successful relationship marketing, not power” (Morgan and Hunt 1994, p. 22). This framework has earned strong empirical support, providing a default theoretical basis for most subsequent relationship marketing research (Morgan and Hunt 1994; Palmatier et al. 2006). With its emphasis on these two relational constructs, Morgan and Hunt’s commitment–trust theory of relationship marketing effectively limits the scope established by Dwyer, Schurr, and Oh’s conceptual framework, yet it ignores dynamic relationship effects (Dwyer, Schurr, and Oh 1987; Morgan and Hunt 1994).

2000s

Across these previous perspectives, both relational governance constructs (i.e., commitment, trust) and relationship-specific investments (i.e., communication, training) have emerged as clear precursors of relationship performance (Palmatier, Dant, and Grewal 2007), whereas dependence and relational norms appear to function mainly as antecedents of commitment, trust, and relationship-specific investments. Such combinations of multiple theoretical perspectives, into a parsimonious, unifying theoretical framework, prompts a resource-based view of interfirm relationships (Dyer and Singh 1998; Jap 1999; Palmatier, Dant, and Grewal 2007). In management literature, proponents of this view assert that resources or assets that are valuable, rare, and difficult to duplicate increase sustainable competitive advantages and promote superior firm performance (Wernerfelt 1984). Of the key precursors of performance, trust and commitment might strengthen the relational bonds needed to support good exchanges, but relationship investments improve other performance-enhancing aspects too. Thus, a relationship marketing approach can increase the joint knowledge of the partners and their informal communication, which may improve the effectiveness and efficiency of the relational exchange while also increasing trust and commitmen...