Relationship Marketing in Action:
The UK Mobile Telecommunications Market

[pic] [pic] [pic]

Managing Business Relationships

Word Count: 1918

Relationship Marketing (RM) is a strategy designed to foster customer loyalty, interaction and long-term engagement. It focuses more on customer retention rather than customer acquisition; in other words, it is about keeping your existing customers happy. Christopher et al. (1991) proposed that RM is where “customer service, quality management and marketing come together” whereas Grönroos (1994), cited by Varey (2002, p.17) includes the concept of other stakeholders, not just customers. He states that it involves “identifying and establishing, maintaining and enhancing and, when necessary, terminating relationships with customers and stakeholders...so that the objectives of all parties involved are met,” and that this is achieved through mutual exchange and fulfilment of promises.

A greater need for RM is observed in saturated markets such as the UK mobile telecommunications market (MTM). It has been estimated that approximately 27% of a given provider’s customers are lost each year (Vandenbosch and Dawar, 2002). According to Andic (2006), in the UK, mobile phone operators are losing more than a third of their young customers to other rivals’ networks every year, which costs them over £949m in revenue. Thus, the main challenges that face mobile operators in today’s competitive business are how to acquire new customers and retain existing ones (Seth et al., 2005).

Few main providers with high market share play important roles in the UK’s MTM. Vodafone, O₂ and Orange are market leaders. Until late 2010, O₂ was the largest network in the UK in terms of customer numbers. O₂’s strong market position in which they control a 27% share can be contributed to the strong