Difference Between Transactional Marketing And Relationship Marketing Marketing Essay

Transactional marketing is completely focused on making sales. It has strategies such as; advertising and promotions which direct the processes towards instantaneous sales. “A sale is a onetime event.” This is transactional marketing, according to Ginger S. Myers, Regional Marketing Specialist for the Western Maryland Research and Education Center, “the transactional marketing approach seeks to make the largest number of sales possible.” In other words, this is clearly a business tactic that concerns on “point of sale” transactions alone rather than improving a connection with the buyers.

Relationship marketing has severed targets comparatively to transactional marketing. This is highly focused on improving and building up an enduring connection with its clients. According to Nagasimha Kanagal, in her article in the Journal of Management and Marketing Research Role of Relationship Marketing, “knowledge and application of relationship marketing helps in achieving customer satisfaction, customer retention, and customer acquisition.” Basically, the aims and goals of relationship marketing are to build up a long-lasting relationship with clients, securing future sales of the business.

Difference between Transactional Marketing and Relationship Marketing

Transactional marketing is a business approach that concerns on “single point of sale” business dealing. The prominence is to blow up the effectiveness and capacity of singles sales, in place of focusing on building up a connection with the buyer. Besides, relationship marketing is a business approach that focuses on carrying out a long lasting relationship with its clients rather than pushing the business towards establishing only sales transactions. In here, they do not focus only on distinctive customers, but also on each and every person that adds value to the business.

The writers of the book, “Internal Marketing Directions for Management”; Varey and Lewis explain the way in which transactional marketing distinguish from relationship marketing:

Focus – The focal point of transactional marketing is driving customers towards individual sale, while relationship marketing keeps an eye on retaining the customers.

Orientation – The business orientation strategy of transactional marketing concerns on product essential roots, where as marketing relationship business orientations focus on product advantages and organizational resolutions.

Time Boundary – The time boundary of transactional marketing is short-lived when in fact relationship marketing time boundary is far-reaching.

Customer Concentration -The customer concentration in transactional marketing is low-lying comparatively to relationship marketing where they focus on building a bond with customers.

Information – The information of transactional marketing is essence of communication while relationship marketing is product of communication.

Contact – The contact or the connection of the transactional marketing is very poor when fact in relationship marketing is there is a magnificent connection with customers.

Benefits of Relationship Marketing Over Transactional Marketing

The conception of relationship marketing is implanted with the mind-set that is it inexpensive to hold on to the current customers rather than finding new customers. The benefits of relationship marketing are as follows:

The utmost point of convergence is to contribute a value to its customers and focuses on retaining them.

Can easily achieve competitive advantage; since relationship marketing is an intermix strategy to marketing.

The loyal customer are extremely beneficial as they support the business with word of mouth promotions and a number of cases state that the rate of retaining customers is just a slight proportionate compared to the expense incurs in finding new ones.

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Mudie and Perrie in their third edition of the book “Services Marketing Management” assert that relational customer also tend to increase their purchases overtime either because they are consolidating their purchasing onto preferred supplier due to grown business/ family and it has also been found that there is less need to offer price promotions to this group as these customers are likely to be less price sensitive than others.

Why Transactional Marketing is no longer appropriate in The Happy Gardening Company?

The prominence on relationship is presently a fundamental element that drives a business towards its fortune or success and the conventional method of boosting sales is being restored by the long-term mission and vision i.e. the relationship with the customers.

Achieving a maximum number of single sales is the goal of the transactional marketing strategy and this concept does not draw in creating long-lasting relationships between the company and its clients or promoting a continuous buying manner. This is the best concept in generating sales revenue in the short-run in a fair industrial or economic situation, but during a period of a recession, this approach does not provide any positive effects to The Happy Gardening Company.

Nevertheless, there are number of drawbacks in transactional marketing concepts:

Only price focused – Price plays a major role as it obliged as the exclusive element in transactional marketing, eliminating the focus on the genuine products or the efficiency of the service provided leading the business towards price wars. For instance, if a rival business in the same industry reduces its price on homogenous products, the customers will move on to the lower prices by disregarding your products. Thereafter, as to keep up your ongoing sales ratio, you will have to stand for the price wars which will affect the profit margins of the business and vice versa.

Poor return on investment – In transactional marketing, products and services are sold out with the price assessed along with the profit margin, but the profits remain only in for a short period of time. The nonappearance of the relationship or the connection between the seller and purchaser defines lesser repeated sales. By reason of, finding new customer is costly for a business comparatively to customer retention; transactional marketing should be more concerned over the burden new acquisition of customers. Besides, relationship marketing drives a better return on investment in the long-run.

Relied on Economic Booms – The favourable outcomes of transactional marketing rely upon the economic booms. During an economic boom, financial position of the economy will be efficient, contributing desirable budgets, more valuable demand for goods and services and more customers leading to high levels of trade transactions by completely avoiding the customer relationship. The recessions of the economy, so many financial crisis will arise by; bring down the standard of living of people, will shorten budget size and fewer customers. Therefore, the transactional businesses face a downturn in the profit and will leads to business closure.