Epistemology of Relationship Marketing Strategies: An Instance From Online Travel Industry

Introduction

With the advent of the internet, the growth of e-Commerce and trend towards online services in travel and tourism, the traditional way of meeting each traveler’s needs becomes unsustainable. As global competition increases and product differentiation becomes increasingly difficult. The interactivity of Internet technology brings with it a range of opportunities and challenges for the marketer aiming to build customer relationships. It is argued that in the Internet market the competitive environment is close to pure competition, and that the seller has no market power. Therefore, more than ever, the customer is the natural focus of attention in a business process that aims at surviving in long run. However, this can be achieved by improving relationship quality and establishing loyal customers through relationship marketing strategies.

Relationship marketing and e-Commerce are the modern phenomenon of doing business. Relationship marketing has focused on the importance of loyalty and retention with the inclusion of customer lifetime values as a key metric (Gay et al., 2012). The emergence of relationship marketing (RM) as a modern philosophy and its subsequent evolution as a marketing function into CRM has shifted the spotlight from traditional transactional approach to a market orientated business climate focusing on long-term relationships with customers, competitors, and other important influence markets (Gay et al., 2012). With this perspective, many organizations are faced with new challenges since the conduct of business is on the Internet.

The Internet changes the service provision and interaction between business and customers (Eng & Kim, 2006). Many technology-based self-service systems, including bank transaction, shopping, making reservations, and booking tickets via the Internet, have been developed generally in the service industries. E-commerce is growing at an incredible pace and so is the need of relationship marketing into it. The accessibility of the internet makes electronic commerce a realistic possibility for every business. As the amount of business transacted over the web grows, the value of goods, services, and information exchanged over the internet seems to double or triple each year (Sebora et al., 2009). Tourism researchers have emphasized the importance of the Internet on travel and tourism. As a result, the travel industry has witnessed a gradual shift from traditional travel agencies to recent Online Travel Agencies (OTA). An OTA is more like an online booking resource/ website that can provide full service solution to make travel arrangements. For tourism suppliers, the Internet provides a way for them to sell their products globally to potential travelers at any time. These suppliers can remotely control their servers to display information on services/products at an electronic speed (Inkpen, 1998; Law, 2000). The successful factors for a travel Website, from a supplier’s perspective, are lower distribution costs, higher revenues, and a larger market share. For travelers, the Internet allows them to communicate directly with tourism suppliers to request information, and to purchase products/services at any time and any place (Olmeda & Sheldon, 2001).

The rapid growth of the travel industry requires sophisticated information technologies (ITs) for managing the increasing volume and quality of tourism traffic. Prior studies have indicated that modern travelers demand more high-quality travel services, products, information, and value for their money (Christian, 2001; Lubetkin, 1999; Samenfink, 1999). The rise of the internet and e-commerce has changed the way in which customers and organizations interact. For many organizations this has brought opportunities, as they are able to reach more customers than ever before and serve them better by offering greater choice and convenience. However, it has also brought challenges in the form of increased competition for the management of an impersonal relationship with no face-to- face contact with customers. Although some organizations have attempted to harness the potential of online customers by building different types of relational bonds as their relationship marketing strategy, this is still a developing area and requires a deep study. Relationship marketing has generated high interest among academics and practitioners over the last two decades. This high interest had inspired to undertake the present study.