Instructor Manual for the Case: Parkin (Singapore) Pte. Ltd

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The concept of relationship marketing was formally introduced by Berry (1983), who defined it as attracting, maintaining and enhancing customer relationships. Gronroos (1991) defines relationship marketing as establishing relationships with customers and other parties at a profit by mutual exchange and fulfilment of promises. Some researchers interpret guanxi as the Chinese version of relationship marketing (Simmons and Munch, 1996). Relationship marketing is rooted in North American and European culture, while guanxi is rooted in Chinese culture. Luo (1997) defines guanxi as a special type of relationship that bonds the exchange partners through a reciprocal exchange of favours and mutual obligations, while Fan (2002) defines it as a process of social interaction that initially involves two individuals. Despite the similarity in the literal meanings of relationship marketing and guanxi, the conceptual meanings of these two terminologies in western academia and oriental culture are significantly different (Yau, Lee, Chow, Sin and Tse, 2000).

Yau et al. (2000) suggest four dimensions in the concept of relationship marketing: bonding, trust, reciprocity and empathy (see Figure 1). They call them the components of relationship marketing orientation.

The following is a brief description of each component.

Bonding: Bonding is defined as the dimension of a business relationship that results in two parties (customer and supplier) acting in a unified manner towards a desired goal (Callaghan et al., 1995). Various bonds exist between parties that indicate different levels of relationship. They serve to effectively control social and business behaviour in society (Chiao, 1982), and to contribute to removing doubt, creating trust and forming close relationships (Hinde, 1997). The dimension of bonding as it applies to relationship marketing orientation involves the development and enhancement of consumer and brand loyalty, and, according to Levitt (1983), a long-term relationship (a "bonded relationship") with the seller. Thus, a long-term relationship requires a bond to exist.

Empathy: Empathy is the dimension of a business relationship that enables the two parties to see the situation from the other's perspective. It can be defined as seeking to understand somebody else's desires and goals. It involves the ability of individual parties to view the situation from the other party's perspective in a truly cognitive sense (Hwang, 1987). The empathy dimension plays a major role in Chinese business relationships (Hwang, 1987; Brunner et al., 1989) and is also apparent in western business relationships (Ferguson, 1990; Houston et al., 1992). Empathy is therefore a necessary condition to foster a positive relationship between two parties.

Reciprocity: Reciprocity is the dimension of a business relationship that causes either party to provide favours to or make allowances for the other in return for similar favours to be returned or allowances to be made at a later date (Callaghan et al., 1995). In social action between two individuals, it involves bilateral contingency, interdependence for mutual benefit, and equality of exchanged values (Lebra, 1976), and can be regarded as "sociological dualism" and as referring to "mutual legal obligations of repaying" (Malinowski, 1959). Houston et al. (1992), Ellis et al. (1993), and Smith and Johnson (1993) all highlight the links between reciprocity and empathy on the one hand, and relationship marketing and exchange on the other. Reciprocity and bonding are linked in that a reciprocal arrangement is indicative of cooperation.

Trust: Trust is defined as a belief or conviction about the other party's intentions within a relationship. In the context of relationship marketing, trust can be defined as the dimension of a business relationship that determines the level to which each party feels they can rely on the integrity of the promise offered by the other (Callaghan et al. …


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