Ming Hua

The "new" relationship marketing perspective: once upon a time.
In a village in ancient China there was a young rice merchant, Ming Hua. He was one of six rice
merchants in that village. He was sitting in his store waiting for customers, but the business was not
good.
One day Ming Hua realized that he had to think more about the villagers and their needs and desires,
and not only distribute rice to those who came into his store. He understood that he had to provide
the villagers with more value and not only with the same as the other merchants offered them. He
decided to develop a record of his customers' eating habits and ordering periods and to start to
deliver rice to them.
To begin with Ming Hua started to walk around the village and knock on the doors of his customers'
houses asking how many members were there in the household, how many bowls of rice they cooked
on any given day and how big the rice jar of the household was. Then he offered every customer free
home delivery and to replenish the rice jar of the household automatically at regular intervals.
For example, in one household of four persons, on average every person would consume two bowls
of rice a day, and therefore the household would need eight bowls of rice every day for their meals.
From his records Ming Hua could see that the rice jar of that particular household contained rice for
60 bowls or approximately one bag of rice, and that a full jar would last for 15 days. Consequently,
he offered to deliver a bag of rice every 15 days to this house.
By establishing these records and developing these new services, Ming Hua managed to create more
and deeper relationships with the villagers, first with his old customers, then with other villagers.
Eventually he got more business to take care of and, therefore, had to employ more people: one
person to keep records of customers, one to take care of bookkeeping, one to sell over the counter in
the store, and two to take care of deliveries. Ming Hua spent his time visiting villagers and handling
the contacts with his suppliers, a limited number of rice farmers whom he knew well. Meanwhile his
business prospered.
This old story from China demonstrates how Ming Hua, the rice merchant, through what today
would be called a relationship marketing strategy, changes his role from a transaction-oriented
channel member to a value-enhancing relationship manager. Thus, he creates a competitive
advantage over his competitors who continue to pursue a traditional strategy. His strategy includes
three typical tactical elements of a relationship strategy:
1 Seek direct contacts with customers and other stakeholders (such as rice farmers);
2 Build a database covering necessary information about customers and others;
3 Develop a customer-oriented service system.
We can also distinguish three important strategic issues of a typical relationship marketing approach:
1 To redefine the business as a service business and the key competitive element as service
competition (competing with a total service offering instead of with rice alone);
2 To look at the organization from a process management perspective and not from a
functionalistic perspective (to manage the process of creating value for the villagers);
3 To establish partnerships and a network to be able to handle the whole service process (close
contacts with well-known rice farmers).
The story of Ming Hua tells us first of all that relationship marketing is not something new that has
emerged in the 1980s or 1990s. A story of this kind illustrates not only an isolated phenomenon, but
a common way of thinking at least in some context at some period of time. In modern western
economic history, at least the industrial revolution and the evolution of scientific management, which
helped society to achieve other important goals, in spite of some examples of the contrary,
turned relationship thinking into a secondary issue. Mass orientation and the occurrence of the
middleman in distribution channels, as well as specialization and the division of labour, became top
priorities. The dominance of the mass marketing-oriented and highly management-
oriented marketing mix approach to marketing from the 1960s onwards has not allowed for
a relationship perspective either.
Second, the story of Ming Hua illustrates six key aspects of a successfully implemented relationship
marketing strategy, three strategic issues (service business orientation, process management
perspective, partnership and network formation) and three tactical issues (direct customer contacts,
customer databases, customer-oriented service system). In the rest of this article, relationship
marketing as a philosophy will first be touched on, and then the strategic and tactical issues of such a
strategy will be examined to some extent.

Ming Hua

Uploaded by

Copyright:

Available Formats

Ming Hua

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Ming Hua

Uploaded by

Copyright:

Available Formats

The "new" relationship marketing perspective: once upon a time.

2 Build a database covering necessary information about customers and others;

3 Develop a customer-oriented service system.

You might also like