The benefits and liabilities of relationship marketing

¶ … Relationship Marketing

In assessing the benefits and liabilities of relationship marketing, the company chosen as the basis of this analysis is Microsoft Corporation. Microsoft is the world's leading developer and marketer of computer software, peripherals, and is increasingly competing with Google and Yahoo in the Internet search and online advertising industry. Microsoft's recent announcement of their intention to acquire Yahoo while at the same time the introduction of their latest releases of Microsoft Dynamics ERP systems last week at the Convergence 2008 Conference in Orlando, Florida illustrates how the company's future strategies rely more than ever on relationship marketing. In selling search-based advertising services to small businesses, Microsoft will need to generate higher levels of trust than their rival Google, who dominates this market with AdWords. In the ERP arena, Microsoft is facing entrenched and well0funded competitors Oracle and SAP. Clearly relationship marketing is more critical than ever to Microsoft today. To date, the service quality of Microsoft' advertising model has been mediocre at best, a clear liability when attempting to be successful at relationship marketing (Eisingerich, Bell, 2008). On the ERP side of their business where relationship marketing will be the tipping point of their success or not, Microsoft is still working with its channel partners to sort out what will be their role in the product direction. This came out during the Convergence 2008 event in Orlando last week. Clearly Microsoft must create more cohesiveness and focus in their channels to make relationship marketing work as well (Dong, Swain, Berger, 2007). There are many areas of relationship marketing within Microsoft as there are literally thousands of products that comprise their divisions. What Microsoft has done well is create a series of communities that provide for a high level of trust to be attained, specifically in their developer communities. The cultivating of trust in communities is essential for successful relationship marketing (Porter, Donthu, 2008) and this includes development partners and resellers as well (Kennedy, Keeney, 2006). Of all Microsoft's challenges, their developer marketing programs and communalization of developers, including their segmentation by desktop applications, server and enterprise products, or Internet-based applications is one of the best executed segmentation programs in the software industry.

Main Conclusions

Microsoft is an enigma when it comes to relationship marketing. On the one hand, the company excels at building relationships with developers, developing entire communities of them, in addition to creating and sustaining trust with enterprise-level executives including Chief Information Officers (CIOs) with regard to their need for reliable office automation and increasing, Internet-based applications. Relationship marketing is highly effective in Microsoft also for defining entirely new gaming markets supported with their Xbox Series product lines. In short, Microsoft has been successful in relationship marketing in their core businesses in addition to sustaining momentum in the global application and software development community. The company has struggled however in its effort to use relationship marketing in the areas of Internet-based advertising models, sales of enterprise server components and applications including Enterprise Resource Planning (ERP), Customer Relationship Management (CRM) and Supply Chain Management (SCM). These are all enterprise software areas that require an inordinate amount of trust and continual relationship building to be successful. In these areas Microsoft is challenged. Add to this the fact that Microsoft's channel strategy has at times been contradictory, and there is ample evidence of the company not being trusted in many reseller and indirect channels globally.

Recommendations

Microsoft's success with developers and the willingness to openly collaborate with them in the creation of entirely new applications underscore what researchers have found to be the cornerstone of effective relationship marketing, and this is the creation of trust (Porter, Donthu, 2008). Microsoft must take these lessons learned and apply them to their channel strategies starting with consistency and leading to high levels of collaboration if their indirect selling strategies are to be successful (Dong, Swain, Berger, 2007). Second, Microsoft needs to concentrate on their enterprise applications business, specifically focusing on the development of relationship strategies that more finely segment the market than just by size of business, as it is done today. Third, Microsoft needs to address the lack of trust throughout much of its partner base in the areas of enterprise software including CRM, ERP and SCM by creating a cohesive relationship marketing strategy specific to the needs of their purchasers. Again Microsoft focuses primarily on demographics to win in this market, when collaboration and higher levels of trust need to be generated (Singh, Mitchell, 2005)