Exploring relationship marketing in membership associations

SAGE Reference - Membership Customers and Relationship Marketing

exploring relationship marketing in membership associations

Finnair, relationship marketing, airline industry, customer retention, customer satisfaction, This study aims to explore the effect of of marketing which organizations attempt to improve and enhance close relationship with .. Since , Finnair is a member of the Oneworld alliance which consists of 15 members in. Conjoining international marketing and relationship marketing: Exploring consumers' cross-border service research. © , American Marketing Association. Exploring Relational Strategies in Marketing John Egan (eds) Emerging Perspectives on Services Marketing, Chicago: American Marketing Association, pp.

If and when the consumer decides to become a member, this type of membership requires some sort of initiationCnormally some sort of time or monetary resource investment. The Walden Books Preferred Reader Program is a good example of a full-choice membership for a frequent customer program Barlow A key question regarding full-choice memberships is whether or not the choice of membership is simply a function of use.

There should be some correlation between the two. On the other hand there are several reasons why the economic pricing rationale will be violated. The rationale for membership cannot be strictly viewed as participation as some theories-like exchange theory-would suggest Homans Besides the obvious nature of the exchange involved, an alternative reason for individuals to join an organization is that they choose to identify with the organization.

Such a relationship provides the individual with a social identity: For example, in Protestant churches, many members seldom if ever attend Sunday morning services, while most of these churches have a core group of non-member "regular attenders. The second broad category of membership is one where consumers can choose whether or not to join, but there is little reason not to join. Generally the consumer is not required to put forth any effort or money to obtain the membership.

This describes a consumer behavior proposed by Olshavsky and Granbois where no choice process occurs. The marketer offers the consumer the promise of attractive future benefits, but the consumer offers nothing in exchange for the membership.

Examples of this type of membership include frequent flier programs and other frequency of use programs that reward consumers for reaching a certain level of usage. Frequent buying programs make the assumption that members and non-members can be placed on a single continuum with members normally being more actively involved in purchasing and use of the associated goods than non-members.

Marketing managers assume that consumers that purchase more regularly from their company will want to join the membership program, and these marketers hope to retain or increase their share of their better customers through the use of these membership programs. Similarly, managers hope that there is also a segment of less loyal users that will become more loyal through their affiliation with the program.

This type of membership is derived from the price-driven membership, but is reserved for the very best users of the organization's goods. Often these are "clubs within clubs" and are aimed at ensuring the loyalty of the organization's most profitable segment Raphel These are commonly found with rental cars agencies, hotels, and airlines.

These provide privileges to those who earn them by purchasing a certain level of goods, and there is no other way to obtain membership. For example, Hyatt Hotels offer a Gold-Passport club for their top 1, customers where members never have to make a reservation and a room is always available Raphel One assumption these programs make is that once individuals reach a level where they are admitted into the club, they will want to remain in the club.

The main purpose is to ensure consistent purchasing across episodes where the length of an episode can be stretched from a single use to the remaining length of the membership. Further, the member may be more forgiving of the sponsoring organization when there is a quality failure because switching to a competitor may mean loss of desired benefits from the exclusive membership club. From a marketer's perspective, earned memberships are often used in conjunction with a price-driven membership when many competitors e.

The fourth category of membership is one where membership is required in order to obtain access to the organization's goods. The access membership can be further sub-categorized as "inclusive memberships"-those which offer access to all who are willing to pay-and "exclusive memberships"-those that restrict potential members on the basis of certain requirements. A primary example of an inclusive club is the recent retail phenomenon of the warehouse membership clubs Cotter, Arnold, and Tigert For an annual fee, members can take advantage of the presumed price savings offered by these low-overhead retailers.

Other examples would be associations like the American Automobile Association. Most major airlines offer clubs e.

Financial advisory services are also offered in a membership context as are other subscription based services particularly in the not-for profit arena. In summary, there are four membership categories relevant to this study. Each membership category represents a different choice process on the part of the consumer when joining, and each has different implications resulting from the membership.

Theories Of Consumers' Membership Choice This section describes existing theoretical frameworks that can help uncover the driving forces behind consumers and their membership choices. A theory that offers great explanatory potential is social identity theory SIT Tajfel ; Turner According to SIT, people classify themselves through a process termed self-categorization into social categories using characteristics such as organizational membership, religious affiliation, age, race, and status Turner ; Ashforth and Mael This social classification permits the individual to cognitively segment and order the social environment.

An important concept of SIT is that self-image is tied to the individual's perception of the group's image. The group's image is seen in reference to other groups. One's own group would be an in-group, while other competing groups would be considered as out-groups. When an individual becomes a member, the member would perceive the other members as part of the in-group while the non-members would be considered an out-group.

The person's perception of the strength of the differences between one's in-group and the relevant out-groups indicates the level of the person's social identification with the in-group Ashforth and Mael A basic premise of SIT is that people are motivated to establish a distinctiveness for a group they wish to identify with from relevant out-groups.

SIT includes the notion of a psychological group Turner An important characteristic of a psychological group is that individuals can identify with the group and derive self-identity without necessarily engaging in interpersonal interaction with members of that group Tsui, Egan, and O'Reilly This aspect of SIT helps explain consumer behavior in situations such as when frequency of use doesn't necessarily predict membership in full-choice memberships.

The implications of SIT to the four types of memberships described in the earlier section are relatively straightforward.

exploring relationship marketing in membership associations

Since the group is rather abstract often the other members remain anonymous to the potential member the consumer will examine the potential distinctiveness offered by the membership. Non-members become the relevant out-group.

The benefits need to provide the consumer enough distinction from the benefits that could be obtained as a non-member in order for the membership to be sought or accepted.

Further, while the benefits need to offer distinction, a favorable cost-benefit ratio is not required Turner A more utilitarian perspective that focuses on the consumer's perceived rewards of the membership is exchange theory. From a social-psychology perspective, Homans suggests that provided that a reward satisfies an important need of the individual, the individual will invest in roles that provide a favorable balance of rewards to costs Loebel Homans states that the degree of reward received from an activity is judged in relation to an alternative reward from an alternative activity.

From an economic perspective, a consumer would be expected to join an organization as long as the value of the perceived benefits exceeds the opportunity costs Ulbrich and Wallace From a marketing perspective, Houston and Grassenheimer define the exchange relationship as exchanging value for value.

When at the point of enrollment the member pays a fee dues in exchange for perceived future benefits over the period the dues are to coverthe parties are on unequal footing Ferguson and Brown The consumer behavior of the member toward the marketing organization when the exchange is unbalanced may then be viewed as trying to utilize benefits in order to "balance the scale. Groups may have access to information sources that are not available to the individual, and the individual may find it worthwhile to associate with the organization become a member if that is required to have access to this information.

Depending on one's perspective, this information could be considered a good as an end in itself or information as a sub-goal means to an end.

exploring relationship marketing in membership associations

The consumer's need for protection is the basis that many groups are founded upon Kantor In the consumer area, membership groups have been started in self-defense to the selling organizations' power or unwillingness or lack of ability to provide adequate information. The self-defense response to selling organizations' power and the inadequate information response are similar, although the antecedents and consequences of each are distinguishable.

An exemplar that may be created from either of the above two responses is the formation of computer users groups. While individuals may have some desire for social identity through the user group, a better explanation for their membership is the need to protect their investment and insure the promised productivity gains. This self-defense response creates an adversary relationship between the user group with the vendor. However, other user groups help members make connections with other members to answer their questions Kantor Many of these are formed by the vendor to assist the vendor in prioritizing upgrades and offering solutions that the user groups deem marketable.

A common thread for both responses is the need for information caused by the consumption of the good Olshavsky The user group was formed because the members could not count on the vendor to answer their questions or otherwise fulfill their need for information.

The simplification "theory" of consumer behavior toward memberships suggests that the membership provides the member rationale to say no to certain opportunities and yes to others. The possibilities become fewer and life gets simplified. In this case, one can hypothesize that a driving force to become a member is to simplify subsequent choice processes-once one determines a membership, subsequent decisions in the area covered by that membership become more manageable.

Exploring relationship marketing in membership associations

The concept here is that the consumer will seek to not have to make a choice in subsequent episodes. Such a situation could occur where a choice process is extremely difficult.

One way that the choice process becomes simplified is through attribution of the decision. When a choice process is very difficult, a person may find solace in being able to justify the decision by attributing it externally.

In summary, five basic rationales for becoming a member have been presented. Each provides a plausible explanation for consumer behavior toward memberships. The next section presents some preliminary research which examines these rationales in combination with the values toward and the categories of membership. Since the primary focus of the assignment was the learning experience of the students they were graded on the assignmentthe research element had to be sacrificed to some extent.

Nevertheless, given the exploratory nature of this paper, the information provided by the students sheds considerable light on the topic at hand.

Copies of the assignment are available from the author. Five of the eighteen were international students and the remainder American students. Since the students were being graded on the assignment, each provided thorough answers to each of the questions.

The students were asked to list in detail the various memberships they currently held. In order to stimulate their thinking further about memberships, they were also required to ask a non-student adult for their list of membership affiliations. The critical question for this study was one that asked the students to identify the needs and values specifically related to memberships.

In order to avoid the demand effects associated with a question that directly asked the students for their rationale for joining organizations, the question contained three sections where they could reveal their thoughts without personal bias.

Specifically the question read: What is the driving force behind businesses or non-profits to use the membership concept? Do consumers behave differently when they consider themselves "members?

Exploring Consumer Behavior With Respect to Memberships by Thomas W. Gruen

The question successfully elicited the intended values-related needs and on average each student listed two or three usable responses. A summary of the identified needs, the frequency of identification, and the related values appears in Table 1. A two-stage content analysis approach was used obtain and assign the data Kasserjian First, the specific phrases one to four words which indicated an expressed need were extracted from each of the assignments and listed on a spreadsheet.

Those which overlapped were combined and their frequency was noted. To the greatest extent possible, exact or near exact wording appears in Table 1, however in a few instances the listing of the expressed needs by the students was subject to minor interpretation. Second, the linking of needs to values was made by the author by systematically comparing the phrases' wording and intent in relation to the descriptions of the LOVs plus power as presented by Kahle Following this linkage of the needs to the LOVs, the total number of phrases mentioned was multiplied by the number of associated LOVs.

For example, sharing similar interests with other members counted as four for 2 and four for 3. These computations were summed for each of the nine values. This analysis provides several interesting findings. After sense of belonging, the next most frequently mentioned needs dealt with prestige and exclusivity.

These relate to the two "respect" values 5 and 7. Another frequently mentioned need was that of gaining a closer relationship with the sponsoring organization. More than half of the students listed increased loyalty as a consequence of membership programs. Based on the earlier discussion where some membership programs particularly price-driven apparently fail to link members to the sponsoring organization, this finding holds considerable research interest.

For example, in the relationship marketing literature, membership has been suggested as one means to building and maintaining relationships Gruen and Ferguson Three students stated that exclusivity could be a negative factor where non-members would shy away from the sponsors' goods.

The least mentioned associated values were security and power.

exploring relationship marketing in membership associations

This may be due to the nature of the student sample that may be less concerned with security and power issues. A similar caveat needs to considered for other findings due to the sample's relative homogeneity. While this initial study examined students' overall view of consumer behavior with respect to memberships, it did not examine their specific reasons and motivations for joining or for not joining each specific organization. A follow-up study which explores these specific linkages will be helpful in gaining further understanding of consumer behavior with respect to membership.

Review Of Marketers' Membership Programs In order to gain additional insight into consumer behavior with respect to membership as well as provide a context for the theories and membership categories developed in this paper, a content analysis of business publication articles from to mid about membership programs was made.

The method was similar to the content analysis in the student assignment study except that this analysis searched for three types of phrases: In the cases listed in Table 2, the memberships offered to consumers are the result of a program generated by the sponsoring organization. In order to provide some boundaries to the articles used in the content analysis, some categories of memberships available to consumers-such as association memberships where the membership tends to be more of an end in itself-are not considered here.

The first assumes that marketers have a fairly good idea of the needs of their customers when designing a loyalty or membership program. The second assumes that only the better or major failures membership programs will receive press coverage.

These assumptions governed a search of the recent popular business literature which reported these programs. Promotions managers work with marketing managers to help determine what promotions or benefits a company can offer an organization in an affinity partnership. This individual brainstorms the various potential benefits and promotions to offer affinity partners, and cross references them with the marketing manager to determine their impact.

Promotions managers help to plan out advertising strategies for the partnership, discovering ways to reach customers. Education and experience Promotions managers are required to obtain at least a bachelor's degree before landing the job.

Usually, these individuals seek degrees in marketing, business, advertising, or public relations. Promotions managers must have a strong foundation in business communication that allows them to work proactively with marketing managers and partner leaders. Marketing Specialists What do they do? Marketing specialists are brought into a company to consult about marketing strategies.

These professionals typically have years of experience developing marketing campaigns, allowing them to provide guidance in the campaign. Many marketing specialists are independent contractors with great reputations for success.

The marketing specialist sometimes takes the role of the marketing manager, while others take a much broader role in the overall campaign, overseeing multiple areas from negotiations to promotions. Education and experience Most marketing specialists hold at least bachelor's degrees in marketing, but experience is truly the largest indicator of an effective marketing specialist. Most marketing specialists obtain at least 10 years experience before entering the independent contracting field.

Affinity Marketing Skills and Marketing Schools Examine some of the classes students take to help them implement effective affinity marketing strategies later in life. Principles of Marketing — Identifying target markets, Branding strategies Marketing Management — Assessing an affinity group's need, determine partners Resource Allocation — Managing a sustainable marketing budget Advertising and Marketing Communications — Business Etiquette, online communication with affinity groups, proposal presentation Strategic Management — tackle new problems that arise after employing affinity marketing campaign Organizational Behavior — understand how organizations are structured, managing marketing teams How can a marketing school help you succeed in this field?

A marketing degree program asks the essential question of marketing: For strategists implementing affinity marketing techniques, this is the first question they must ask to discover how to market products to new affinity groups.

Marketing programs introduce future professionals to the background and skills needed to effectively communicate their brands to different affinity groups.

exploring relationship marketing in membership associations

One of the biggest skills stressed in marketing school carries these individuals to success later in life: Business and marketing communication skills are essential to develop an effective affinity marketing partnership with an organization.