A holistic approach of relationship marketing in launching luxury new products

Marketing of the 21st century is marked by its relationship orientation. Without altering its essence, marketing is refocusing its efforts of increasing organizational performance through the development of long-term relationships with all its partners (suppliers, customers, other stakeholders). Such a mutation, takes place on the basis of shift from transactional marketing to relational marketing, the latter requiring a new approach to business relationships among all the partners mentioned above. Customer orientation [1], emphasized by relationship marketing, directs the entire controlling activity towards monitoring the profitability generated by company’s relationship with its demand holders. The meaning this approach has for the organization, takes a new qualitative dimension, through two concepts, more commonly found in the theory and practice of developed countries: customer lifetime value and customer profitability. Both concepts are common to interactive marketing and seek to ensure ability to identify and capitalize difference between customers.

Holistic orientation of marketing

On the background of increasingly complex exchange at the beginning of the third millennium contemporary marketing presents new physiognomy changes. Satisfying demands expressed on the market by consumers employs organization in a more diversified set of connections, not only with its beneficiaries but with its employees also, with the surrounding environment, raising ethical responsibilities, towards legislation and community to more higher levels. Thus, the holistic orientation of contemporary marketing is shaped. Figure 1 depicts the structure of this orientation:

Figure 1. Dimensions of Holistic Marketing

Based on holism theory (Gk. Holas = whole), which says that the whole always has priority, more than the total sum of individual parts, holistic marketing requires development and implementation of marketing programs, processes and measures with a wide spectrum and correlated with each other. Stressing that the whole is important, an integrated marketing concept which is at the same time relational, integrated, omnipresent within the organization and socially responsible[2]. This way, on the same level of importance are placed relationship marketing (which develops a strategic and long term vision for the organization with all its partners), marketing in action (integration of all components of marketing mix), implementation of marketing – as business perspective – in all departments of the organization and marketing responsibility towards the surrounding environment, the community where enterprises operate in accordance with business ethics requirements and of the law in force. Holistic marketing is exhibited as a complex model in Figure 2.

Focused around explorating the demand and delivering value to the customer, holistic marketing addresses these themes in a matrix approach, at the confluence with the focused efforts towards customers, competencies and partnering relationships. Economic environment has the ability to think in a strategic manner the architecture of a business and to model supply offered to the market in a more nuanced, fashion in relation to the motivational complex of demand, the medium and long term solvency of demand holder and the capacity to employ an efficient system of marketing activities. It is required, a rethinking of the criteria for ranking customers both in respect of their relational capacity, and the company’s long-term performance in satisfying a very exacting high-demand[3].

Fgure 2. A Complex Marketing Model

Marketing of luxury products

Within present economical context the perception of luxury is very different among potential buyers. The variety of expressions invented by the communication specialists have filled business vocabulary [4]. “New luxury”, “real luxury”, “hyperlux”, “trading up”, “ultra-premium”, “accessible luxury”, etc. are just a few of them. Rather than clarifying luxury concept this semantic explosion creates more confusion. Luxury is not simply a word that defines a certain degree of wealth but also a sociological and psychological complex concept. Creation, proliferation and marketing of the luxury is not just a job, or know-how (savoire-faire) specific to selling jewelry, collection cars, unique clothing, or residential housing. It represents a distinct manner, with an emphasized empathic nature of understanding the customer and of service management which is called to satisfy the demands. Luxury in the contemporary society has undergone a democratization process under the influence of certain major factors that act on demand, such as: general increase of the average purchasing power, globalization of needs, communications at worldwide level available even in real time, communications etc.

Contrasting mass marketing, marketing of luxury items increasingly captures the attention of business people. Luxury is not merely targeted to small market niches, but rather gains more ground in the areas where persuasion is combined with medium and long term rationality [5]. Situated at the confluence of high solvency, fashion, art and consumer’s personality luxury attempts to position itself, from an economical standpoint, on a vector system, although such a process can be often considered ambiguous. Such a positioning test is exhibited in Figure 3, in the form of a positioning triangle.

Luxury

Social imitation Ephemeral ity

Social evaluation

Atemporal

For free Gift

Pri c e/p erforma nc e ratio

Investments

Performance

Fashion

Premium

Frivolousness .4.

Seriousness

Figure 3. The Distinction Between Luxury, Fashion, Premium: triangle of the positioning vectors

Marketing of luxury products constitute a favorable field for applying relationship marketing concept in particular, and requires in general, a holistic

approach. Customer satisfaction is central to the marketing approach and represents the starting point for customer attachment strategies vis a vis a product/a brand considered to be a luxury one. Being a complex psychological process of comparability between experience as beneficiary of a service and the representations of the manner and level to which the respective product/service satisfies a need, satisfaction is the main premise in increasing loyalty, being a real key for modeling customer buying behavior. These processes turn to three groups of variables: cognitive (based on superior quality of the goods, considering performance), emotional (based on emotions caused to the buyer) and relational (based on the interaction between provider and customer in the purchase).

Research of the demand for housing in residential complexes

The applied part of the empirical survey undertook by the authors has focused on a market area that is situated at the confluence of luxury and rationality: residential housing facilities. In this current economical situation real estate market in general and residential complexes, in particular, have registered in last three quarters a major downturn. In order to support boost of this market it is essential that, the systematical and analytical survey of the demand to monitor the evolution of perception and willingness of the buyers to acquire luxury items. The demand for these products, perceived by the average customer as being luxury ones has a certain potential, which still has to be identified and developed using specific marketing instruments.

During the 5th to 12th of April, 2008 authors conducted a study on the local market of Oradea regarding public’s attitude -potential customers- towards new houses located in residential complexes. Survey has been performed through an individual questionnaire containing scale questions, multiple choice questions and open ended questions. The questionnaire has been administered to a representative sample of 852 citizens of Oradea (of a total of 206.080 officially registered inhabitants), representing a random and stratified sample. Sample size was determined considering a confidence interval of 95% and a sampling error of 3,5%. Approximately 15% of the approached subjects refused to provide any answer.

1.41%

2.35%

4.23%

| 4.93%

1 9.04%

1 15.26%

I 17.96%

Other

Washhouse Dry ing Room

Fitness hall of the facility

Internet connection

Cable TV

Location of the facility

Permanent security

Garage'own parking

Neighbourhood Garden of the facility

Warehousing facilities available for rent

Grill barbeque

48.94%

57.28%

168.43%

Chart 1. Perception of Oradea’s Inhabitants Regarding Luxury in a Residential Complex

Considering their own housing, luxury as it is perceived by inhabitants of Oradea is related to the nature of comfort and space provided. Environment control in respect of temperature control in each room, along with the large living space and high-quality of finishing are the main items considered luxury. Endowments in terms of household appliances -more readily available in recent years- are perceived as normal. Chart no. 2 below provides an overview of perception of luxury within the house.

Other Dish washer Fireplace Wood parquet Large bathroom with jacuzi Own balcony/porch Household appliances Air conditioning High end finishings Large living space Independent heating system/temperature control in every room

0.47%

3.40%

18.90%

20.31%

20.42%

20.42%

9.51% । 17.14%

54.23%

^^B 56.22%

61.50% ^M

Chart 2. Perception of Oradea Inhabitants Regarding Luxury Within The

House