The Rapport between Total Quality Management and Relationship Marketing

Introduction

The aim of this assignment is to look into Total Quality Management (TQM) and its roots, uncovering its effects on the development of recent marketing strategies. Paying particular attention to Relationship Marketing and further, its developments into new ideologies like Total Relationship Management (TRM) and Total Quality Marketing (TQMk). From the considered material it is agreed that TQM and Relationship Marketing have a common aim understanding and satisfying the needs of the customer. Organisations have been implementing TQM for many years now but with differing levels of success. The more successful implementations of the TQM philosophy are well known such as Toyota, Honda and Motorola to name but a few. However two American consulting firms A. T Kearney and Arthur D. Little in studies published in The Economist (1992) found that 80% of 100 firms in the UK had reported no significant impact and two thirds of 500 American firms had achieved no competitive gains. These kind of results question of the totality of the philosophy and the suitability in other business areas. Working in more competitive environments has created the need to gain an edge where marketing theory has moved from transaction based philosophies towards a relationship approach, by keeping contact with the customer after the product has changed hands. From here there appears an opportunity to further improve organisations and the way they do business, by analysing the strengths and weaknesses of TQM and Relationship Marketing, as well as the different tools employed in their implementation and integrating these approaches to provide the customer with a total solution.

Total Quality Management

One of the areas Total Quality Management (TQM) has evolved from was Dr W E Deming’s work on quality and management. His three fundamental principles can be seen below:

Figure 1. Deming’s Triangle (Deming 1982)

These ground rules are the basis for today’s understanding of TQM, ISO 8402 defines it to be:

“a management approach of an organisation, centred on quality, based on the participation of all its members and aiming at the long-run success though customer satisfaction, and benefits all members of the organisation and society”

It is widely accepted as a business philosophy. Commonly used in the Automotive Industry, it was pioneered at Toyota then spread to other manufacturers such as Honda and Ford. They aimed to achieve customer satisfaction through increased quality of products and processes, where everybody is responsible for ensuring and improving the quality. It has been said that this keystone ideology is also part of marketing orientation where customer focus, continuous improvement and commitment are all important. (Barthie and Sarkar 2002)

Implementing the TQM philosophy, organisations are visualised as a series of internal customers all responsible for ensuring the quality required by their next and the overall customer are met. Is it then necessary, for each business function to provide the relevant information regarding the quality of their step in the process, this approach suggests that instead of remaining as a single independent function that in fact marketing becomes a part of the management function of each area of the business. However, organisations adopting the TQM philosophy are continually improving processes and implementing quality plans but marketing is only used to assess the overall customer’s needs (Zineldin 2000).

Relationship Marketing

The Relationship Marketing concept, is a move from traditional transaction marketing where often the customer interaction ends with the sale, to a relationship approach which involves identifying and satisfying the customers long term needs so they will return (Berry 1983, Gummesson 1987, Webster 1992).

On the contrary Anderson and Narus (1991) have suggested that the traditional marketing should still be applied for certain products or situations for example; when supplying standard, generic products where costs associated with maintaining long term customer relationships and the current market can have a large adverse effect on profitability.

Total Relationship Management (TRM) (Zineldin 2000) is described as a philosophy born out of Relationship Marketing where all business relationships (internal and external such as suppliers, collaborators, bankers etc.) are managed and the customer requirements are reflected in these relations too. Optimising these relationships focuses on the productivity and profitability as well as the effectiveness and efficiency of satisfying the customer needs. This like TQM requires the commitment and involvement of all people within the organisation. Barthie and Sarkar (2002) also concluded relationship marketing is focused on the needs of the customer as well as quality also highlighting the need for a total or holist approach enabling the long-term relationships to be sustained, which they termed as Total Quality Marketing (TQMk).

Their Rapport

Many people will recognise the term marketing mix and know the 4P’s Gronroos (1996) suggests that the past focus on product and production or Scientific Management fostered this philosophy but many western firms have been noticing its lack of effectiveness as competition intensifies customers are increasingly expecting a more complete and better level of service with their products. To provide this total service an organisation must only carryout the operations that create value for the customer removing any actions that don’t, eradicating waste. The traditional business functions provide a particular service, which is only part of what the customer receives, therefore a customer focus would need to consider the complete package. Organisations should look at the process removing the functional barriers and enabling the work to flow.

Barthie and Sarkar (2002) described TQM as a change in focus from productivity to customer satisfaction, where the idea of built in quality is spread from operations to the wider functions of the organisation. While there has been a shift in marketing strategy from being transaction based to relationship focused. They also discussed that even though both philosophies focus on the needs of the customer there is an opportunity for these functions to remain separate. These separate functions have both developed tools for spreading the customer focus within the organisation, TQM by implementing measurable quality techniques and marketing by focusing on internal branding, but maintaining this focus can be a problem. Where Barthie and Sarkar (2002) suggest:

“using the principles of relationship marketing to operationalise TQM approach, and TQM to operationalise marketing internally in an organisation.”

This idea they define as Total Quality Marketing (TQMk). It is similar to what Zineldin (2000) defines as TRM approach. The TRM philosophy looks at the business interactions, to satisfy the customer as well as the productivity and profitability of the organisation. It aims to maintain the long-term relationships by continuously improving the 5Qs; Quality of product, Quality of processes, Quality of infrastructure, Quality of interaction, Quality of atmosphere, thus encompassing TQM in its philosophy and also applying tools used in TQM to achieve its aim.

The Result

Figure 2. A customer focus: the firm as a service business (Gronroos 1996)

From his research in this area Christian Gronroos (1996) has summed up in the above diagram the connection between TQM and Relationship Marketing. By changing the organisations view of the process the customers needs can be seen more easily. Applying the total quality management philososphy, by identifying the process and only undertaking the value added activities ensures quality in the product and the service the customer receives. Defining this process enables all functions to work together to provide a total solution. This idea is shared by Gummmesson (1987) where he suggests that gathering and retaining the right customer information for long term profitable relationships is the function of the full-time marketers. However they are not always present at exchanges with customer to collect the valuable information for securing long term customer relationships, it then relies on the members of the organisation, who he defines as the ‘part-time marketers’, to be able recognise what will be useful.

Gronroos (1993) highlights a possible solution for the problems some organisations have been faced with when trying to implement TQM. The main focus for TQM is based around the customer satisfaction and utilises quality techniques in all areas of the business to ensure their met, however the marketing function is seldom featured and is the best equipped to measure the organisation’s effectiveness in satisfying the customers needs. This as Christian Gronroos (1996) later explains is due to the focus on the product and not the services the business provides. Quality is often seen as a physical characteristic of the product and is underestimated in the other business functions here use the relationship marketing approach to improve all interactions in and outside the organisation can be used to raise the profile of the these areas of the business to all and make them more profitable by focusing on personnel, technology, knowledge and time all part of the total customer solution, thus becoming more of a management function than a marketing role also described as total relationship management or total quality marketing.

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