Discuss User for MBA

Posted on

Relationship marketing and customer value

What is customer value? How does relationship marketing create value for the customer and the firm?

This post was part of TyroCity discussion forum
Question asked by abiral_joshi

Oldest comments (6)

shantamilan profile image

Customer value is what the customer desire, believe and expect from the product they purchase. They prefer the product that they perceive to have the greatest value over what they are paying, may it be physical or emotional value. Customer value more specifically comprised of quality, service and price. It has a direct correlation with quality and service and negative correlation with price meaning that the value rises with increase in quality and service and decrease with the rise in price. (Kotler & Kellar, 2012)

Customer relationship marketing (CRM) is concerned with creating long term relation with various business stakeholders such as customers, vendors, suppliers, financial communities and bankers. It is a part of holistic marketing which implies that everything matters in marketing. As the name suggests this marketing strategy prefers to create a long term relation with the customers by gaining their loyalty rather than a one time dealing by catering to their needs. Most firms target new customers but disregard them after sales. But there is a catch in CRM. To increase profit, CRM analyses and targets those segment of customers that have potential to give more profit and cater services specifically for them. Try and sell more products to the same customer is the name of the game. It is all about creating a strong network with stakeholders that bring profit into the company. Cross selling is one way how firms can bring profit. "Banks fail to treat phone and email interactions as potential sales opportunities, rather than pure service channels-thereby losing the opportunity to convert customer inquiries into sales by offering the customer cross sell recommendations. (Fatma, 2014)”

In this way relationship marketing can bring in profit into the company.


Fatma, S. (2014). CUSTOMER RELATIONSHIP MANAGEMENT: THE STUDY OF CUSTOMER PERSPECTIVES ON RETAIL BANKS IN INDIA. International Journal of Management Research and Reviews; Meerut , 27-38.

Kotler, P., & Kellar, K. L. (2012). Purhase decision. In K. L. Philip Koter, Marketing Management (pp. 170-171). New Jersey: Prentice Hall.

ncitujjwal profile image

Marketing creates, communicates and delivers value to the customer. Customer value is the satisfaction the customer experiences (or expects to experience) by taking a given action relative to the cost of that action. Woodruff defines customer value as "a customer perceived preference for an evaluation of those product attributes, attributes performances, and consequences arising from use that facilitate (or block) achieving the customer’s goals and purposes in use situations.

As an entrepreneurial firm must delivering value along the dimensions that matter most to its customer. For example, from a customer’s perspective, the value of a cup of tea enjoyed with a friend at a Tea shop might be greater than the value of a take-out cup of tea. While the monetary cost of the cup of Tea in both cases might be the same, the value the customer exacts as a difference.

Relationship marketing is the strategies that emphasize customer retention, satisfaction, and lifetime customer value. Relationship Marketing can be defined as marketing to current customers Vs new customer acquisition sales and advertising (Shanker, 2017). No matter how high tech relationship marketing becomes the high touch elements of personal support will always be the foundation that excellent customer service is built on.

The value of a customer for the company is also the best indicator for measuring and effectiveness and efficiency of long-term resource allocation (CZARNIEWSKI, 2014). An important part of modern management is not only choosing the right customers but above all marketing, a relationship will team in order lead to higher level of profitability. To achieve this goal, companies must continually measure the value of their correct and future customers. Developing relationship with the loyal customer has value when it contributes to moving comprehension knowledge of their needs, and as a result, to the building marketing strategies that increase the value of a customer for the company (Werner, 2017).

CZARNIEWSKI, S. (2014). Building Customer Value in Relationship Marketing. America: International Journal of Academic Research in Accounting, Finance and Management Sciences.

Shanker, A. (2017). What Is Customer Value and How Do You Deliver It? UK: Technology Innovation Management Review.

Werner, R. (2017). Relationship Marketing and the Concept of Customer Value. America: 6.

ujjwalpoudel profile image

Kotler & Keller (2016), in their book Marketing Management, marketing is the social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. The authors focus for creating customer value, which customer put into while purchasing the product and return or say satisfaction they get from the product. Here, every companies must focus on the 3v’s of marketing when it comes to crating the customer value i.e. value of segment, value of proposition, value of network that helps firms to know whom to offer, what to offer and how to offer depending on the nature of the business and clients. For instance; Southwest Airline soars on low-price strategy. It is making the idea of "low price” indelible to keep any competitor from matching their position. In the same way, it focused on ensuring arrivals and departures were only 30 minutes apart compared to the industry average of 45 minutes. This is how Southwest Airline is creating value to their customer and result into success which story starts with a great positioning idea and works its way through the organization as the single-minded (Maggiore, 2017).

It is said that everything matters on marketing. In order to limit the extent there would be a need of holistic marketing through internal marketing, performance marketing, relationship marketing and integrated marketing which ultimately tend to generate the customer loyalty and benefits to business. When marketing environment of company changes dramatically responding to and dealing with change ensuring maximum customer value and satisfaction; at the point of time relationship marketing creates value for the customer and the firm. It is an important factor of effective customer relationship management. Relationship marketing is about creating a satisfied, sustainable, long lasting, long term relation with customers. Here, there would equal role of vendors, suppliers, financial institutions and banks in order to retain the customer satisfaction. It is also suggested that a reduction in customer‐perceived costs may be a most recommendable method of providing value to the customer which ultimately improves the internal cost efficiency (Ravald & Grönroos, 1996).

To sum up, the value concept is a basic constituent of relationship marketing. The ability to provide superior value to customers is an essence when trying to establish and maintain long‐term customer relationships.


Kotler, P., & Keller, K. L. (2016). Marketing Management. Boston: Pearson.

Maggiore, D. (2017). Southwest Airlines value proposition soars on low-price strategy. In positionistview. Retrieved from positionistview.com/southwest-airl...

Ravald, A., & Grönroos, C. (1996). The value concept and relationship marketing. European journal of marketing, 30 (2), 19-30.

dipadhungana profile image

Marketing is all about creating, communicating and delivering value to the customers. Customer value is the difference between what customers get in exchange of the price they pay. The customers will be delighted if the value is positive, satisfied if it is neutral and unhappy or dissatisfied if it is negative. The value triad (triangle of customer value) explains that customer value is determined by quality, service and price. Quality and service have positive correlation with customer value while price has negative correlation. This means customer value increase with increase in quality and service and decrease in price (Kotler & Keller, 2016). However, customer value is all about subjective perceptions that can only be influenced not controlled.

Relationship marketing is one of the components of holistic marketing that is related with creating long-term and sustainable relationship with customers, vendors, suppliers, bankers and financial institutions. Relationship marketing helps in creating value for the customer and firm by building trust, loyalty and commitment. The concept of relationship marketing supports the argument that value is co-created by company and customers. Customers are likely to purchase the product with highest customer value amongst the offerings available and relationship marketing can influence customers’ perception of value. A customer may compromise and buy a product because of the relationship with supplier even though the product does not matches exact requirement. In addition they also tolerate occasional inferior performance because they value the relationship. So value creation is not all about product offered but also about relationship maintained (Gronroos & Ravald, 1996) .

In order to give continuity to the customer relationship, the company should take the responsibility to offer products and services that match the expectations of customers. If there is relationship marketing, people will feel safe and secure while buying products from the company and the repurchase rate is also high. It is profitable for both customers and company. So the essence of marketing these days is not only on producing products but on maintaining customer relation to create and sustain a loyal customer base for growth and sustainability of the business.


Gronroos, C., & Ravald, A. (1996). The Value Concept and Relationship. European Journal of Marketing.

Kotler, P., & Keller, K. L. (2016). Marketing Management. Boston: Pearson Education Limited.

angel profile image
Angel Paudel

Customer value involves two major aspects in the desired value and perceived value (Kotler, 2017). The desired value is something that the customer wants with the product or service like return policy, a 2-year guarantee and the service level of the company. Whereas, perceived value has to do with the customer belief of the value he/she obtained from the purchase. So, the customer value is something that an individual customer places on a service or a product for that offering. If we’re to convert the same into an equation: Customer Value = benefits - cost

Customers are most likely to purchase an item with the highest customer value among all the offering in the market. The highest quality product or service doesn’t ensure that it’ll provide the highest customer value as the benefit of each product is measured against the cost. Some customers are willing to pay a premium price for a high level of service or high-quality product while others can make the decisions that the same benefits aren’t worth the cost (Oresky, 2014). An example of this can be if we’re presented with an opportunity to choose between a five-star hotel with a fancy lobby, room, and a wonderful view at a premium price and a normal hotel at a very low cost with good enough bed to sleep at. The choice will differ from person to person and so does the customer value for each individual.

Value is something that is co-created together by a customer and the company. And, it is important to create a value for both the customer and the firm. Relationship marketing is one of the component of holistic marketing which contributes towards creating value. It does so by:

  • Creating a long-lasting sustainable relationship with the customers, vendors and the financial community
  • Loyalty: Apple, a tech giant is a good example of the same. They come up with new improved devices under the same category with some improvement every single year and people often go for them. The company not so long ago announced with replacing the batteries at half the cost and provide added benefits to the customers amid a growing concern from the users of their mobile device. The device was old enough and the issue showing up was obvious, but the company did something that showed their soft side and also that they truly care about their customers.
  • Positive Promotion: If a customer is satisfied with the product, he/she associates oneself with the product. And, while recommending to the friends and family, the person is more likely to suggest the use of the product. It gives a positive marketing of the product and helps increase sell.


Kotler, P. (2017). Customer Value Management. Journal Of Creating Value, 3(2).

Oresky, M. (2014). Customer Value Creating and Customer Profitability Modeling. SSRN Electronic Journal.