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Tom Duncan & Sandra E.

Moriarty

A Communication-Based iVIarketing
iViodei for iVianaging Reiationships
The authors propose a communication-based model of relationship marketing and discuss how communication
(rather than persuasion) is the foundation of the "new" customer-focused marketing efforts. The authors trace recent
parallel shifts in communication and marketing theory and show the intersections between communication and mar-
keting. Although communication always has been a critical element in marketing, the authors show how the
increase in interactivity makes communication an even more valuable element of marketing by identifying those
many points that link the two disciplines. Using the three key points at which the two disciplines intersect—mes-
sages, stakeholders, and interactivity—the authors develop a communication-based model of marketing. They
demonstrate how interactive communication at three levels—corporate, marketing, and marketing communica-
tion—leads to the brand relationships that drive brand value.

marketing, and marketing communication levels; (5) man-

I
n lhe opening session of the 1997 AMA Summer Educa-
tors" Conference, the chief executive officer of Harte- aging brand communication must take into consideration
Hanks Dutu Technology called tor a new marketing stakeholders otber tban just customers—employees, suppli-
iiKxicl to guide marketing in the interactive future (Swith- ers, channel members, the media, government regulators,
enhank 1997). The communieation-hased marketing model and tbe community; and most important, (6) communica-
presented here provides that type of direction for compa- tion is the primary integrative element in managing brand
nies wanting to foeus their efforts better in acquiring, relationships.
retaining, and growing reiationships with customers and Our objective, therefore, is to provide a deeper under-
other stakeholders. standing of communication theory, so that companies can
The increasing need to manage relationship building bas identify and manage better the brand comniunication tbat
brougbt fortb a variety of "new generation" marketing determines the quantity and quality of tbeir brand relation-
approaches—customer-focused, market-driven, outside-in, ships, wbich we define as the relationships tbat exist
one-to-one marketing, data-driven marketing, relationsbip between a brand or company and its stakcbolders. We look
marketing, integrated marketing, and integrated marketing first at communication theory developments that parallel
communications (IMC) (Cross and Smith 1995; Day 1992; marketing theory developments and tben review points of
Parvatiyar and Sbetb 1994; Payne I99.S: Reichheld 1996; intersection at which communication and marketing theories
Stewart 1995; Webster 1992. 1994; Whiteley 1991). overlap. We show how a communication-based model of
The increasing importance of communication in market- marketing addresses tbe needs of relationsbip building bet-
ing is demonstrated by its ability to differentiate the.se new ter than does the traditional 4Ps marketing model.
marketing approaches from traditional ones. Each approach
emphasizes two-way communication through better listen-
ing to customers and interactivity and the idea that commu- A Review of the Fourth P
nication before, during, and after transactions can build or To explain the evolution of brand communication, we start
destroy important brand relationsbips {Duncan and Moriarty with Borden's (1964) seminal work on the marketing mix,
1997; McKenna 1991; Peppers and Rogers 1993; Schultz et which identified 12 elements—product, pricing, branding,
al. 1993; Zinkhan et al. 1996). In this article, we argue tbat disiribution. personal selling, advertising, promotions, pack-
the new generation marketing is best explained, understood, aging, display, .servicing, physical handling, and fact finding
and accomplished with a communication-ba.sed model of and analysis. McCarthy's (1964) 4Ps model—product,
relatitmsbip marketing. price, place, and promotion—simplified tiorden's work and
We show tbat (I) there are common theoretical roots of has been the instructional guideline for most marketing
comniunication theory and marketing theory that parallel courses. Over tbe years, various scholars have attempted to
and enrich each other; (2) marketing today is more com- modify McCarthy's work by adding functions to the set
munication dependent; (3) brand communication includes (Christopher. Payne, and Ballantyne 1991; Mindak and Pine
more tban marketing communication; (4) brand communi- 1981; Rafiq and Ahmed 1995; Shapiro 1985). These modi-
cation (both one- and two-way) operates at tbe corporate. fieations, however, continue to perpetuate the functional
approach to marketing.
Recognizing the need for an approach ihat more realisti-
Tom Duncan is an associate professor and founder, and Sandra E. Mori-
cally rcOects tbe relationships embedded in the marketing
arty is a professor. Graduate Program of Integrated Marketing Communi-
cation. University of Colorado. mix. Waterschoot and Van den Bulie (1992) concluded ihai
a major flaw of tbe 4Ps model is tbat it equates communica-

Journal of Marketing
Vol. 62 (April 1998), 1-13 Communication-Based Model / 1
tion with persuasion. They argue thai all the Ps are persua- and mid- and high-priced consumer goods (e.g., cars, appli-
sive or at least designed to be. Promotion (i.e., persuasion) ances, cotnputers) have critical .service components
is separated from the fourth P and becomes a common increases the pervasiveness of communication activity.
denominator that underlies the four mix categories: product Another example is in sales force automation, in which tbe
mix, price mix, distribution mix, and communication mix primary objective is to manage data to respond to customers
(mass, personal, and publicity). In other words, their model faster and to increase the personalized aspect of presenta-
identifies promotion/persuasion as a common denominator tions and responses. Communication not only is spread
of the product (e.g., extra sizes, two-for packaging), pricing throughout all marketing activities; it is at the heart of many
(e.g., price deals), distribution (e.g., trade incentives), and marketing functions.
communication (e.g., premiums, contests, sweepstakes, Although persuasion has an important role in marketing,
events). when persuasion is foremost it places undue emphasis on
transactions and the short term. When communication is
foremost and listening is given as much importance as .vay-
The Argument for a ing, interactive relationships become the focus. The result of
Communication Perspective the latter is that a higher percentage of customers are
Although we applaud Waterschoot and Van den Bulte's retained and their value increased.
work, we have several concems. The first is calling the com- I

mon denominator persuasion rather than communication. The Centraiity of Communication


Although we strongly agree that all marketing mix elements Communication is the human activity that links people
send messages, we disagree that they always are intended to together and creates relationships. It is at the heart of mean-
be persuasive. The notion of persuasion as traditionally used ing-making activities not only in marketing, but also in a
in short-term, transaction marketing is manipulative (dictio- wide range of political, social, economic, and psychological
nary defmitions o^persuasion use such words as urge, influ- areas. It serves as a way to develop, organize, and dissemi-
ence, entice, impel, and induce—^i.e., winning someone over nate knowledge.
to a certain course of action or point of view). Admittedly, there is a tendency in tbe study of commu-
The second concern is that persuasion, especially in nication to fall into the communication fallacy, which pro-
transaction-based marketing strategies and executions, is poses indi.scriminatciy that all human activities arc driven
primarily one-way communication. We .suggest there are by conimunication. Althougb that might be true in a theo-
communication roles in relationship building other than per- retical sense, we acknowledge there are factors otber than
suasion, such as informing, answering, and listening. In communication that drive brand value. We argue, bowever,
other words, persuasion is more limited in impact and scope that communication, becau.se of its meaning-making and
than communication. Companies interested in being more organizing functions, plays a unique role in building brand
customer focused and in building relationships focus on relationships.
communicalion rather than just persuasion, because com- The traditional communication model (Lasswell 1948).
munication—not persuasion—is the platform on v^-hich rela- which includes a soutve that encodes the message, the chan-
tionships are built. nel or medium through which the message is transmitted,
Third, we believe that implying that the marketing mix noi.se that interferes with the communication processing, a
is tbe only or primary source of brand messages is too lim- receiver who decodes it, and feedback that sends the
iting. Everytbing a company does, and sometimes does not receiver's response back to the source, could be a metaphor
do, can send a brand message with varying impact (Schultz for marketing (.see Figure 1). The source is the company, the
et al. 1993). For example, a company's hiring practices, its message the product, the channel the distribution system,
environmental polices and behavior, and its fmancial per- noise tbe clutter of competitive products and claims, the
receiver the customer, and feedback the information
formance have communication dimensions that cue or sig-
received through customer service, sales, and marketing
nal important meanings that affect brand relationships.
research, ln other words, the connections between market-
Furthermore, psychologist.s have long recognized that you
ing theory and communication theory go beyond the sim-
cannot nor communicate (Watzlawick, Bavelas, and Jackson
plistics of the communication fallacy. •:i
1967, p. 51), Companies and brands must manage better
what they do not say as well as the broad spectrum of
r/ie Integrative Role of Communication \
planned (marketing communication), unplanned (e.g., word
of mouth, media inve.stigations), product (price, distribution, From the perspective of communication theory, Water-
design/performance), and .service messages they deliver. schoot and Van den Bulte's model, which positions persua-
Fourth, many marketing roles, particularly in services, sion as the integrative marketing communication function,
are fundamentally communication positions that take com- reverses the relationship between communication and per-
munication deeper into the core of marketing activities. suasion. In most communication models, persuasion is an
Bankers, for example, have found that their role has shifted element of communication and communication is the inte-
to financial counseling, which involves the processes of lis- grative factor, not the other way around. Schramm(l973,p.
tening, aligning, and matching—alt of which require com- 46) makes the relationship clear: "Persuasion is primarily a
munication and active listening skills, as well as persuasion. communication process." Here, and in other models of
The fact that more than three-fourths of the gross domestic communication in communication textbooks, persuasion is
product is now service based, and most business-to-business only one of tbe traditional areas of study and research.

2 / Journal of Marketing, April 1998


FIGURE 1 (Dervin et al. 1989). As Everett Rogers observed at the lime,
Parallel Communication and Marketing Processes there have been two decades of fractious debate in the com-
munication community that has produced this paradigm
Communication Marketing shift.
Process Process During the past decade, a similar rethinking took place
in marketing. In Webster's (1992) call for a paradigm
- ^ Source Company change, he suggested that marketing should shift emphasis
from products and firms to people, organizations, and social
processes. He observed that the narrow conceptualization of
marketing as a short-tcmi profit maximi/.ation function
Message Product seems increasingly out of date. He identified ihc cbange as
one that focuses on relationship management rather than
transaction management. Similar thinking has led Jagdish
Channel Distribution Shelh and his colleagues at Emory University lo refocus that
marketing program on relationship marketing.

Reiationships
Noise Competition
The debates in communication studies and in marketing
have arrived at the same conclusion: There should be less
focus on functionalism and production and more on rela-
Receiver Customer tionships and meanings. Regarding communication, Planalp
(1989) observes that personal and social relationships
became particularly important areas of study during tbe
Sales, Customer 1980s. Schramm (1973, p. 3) notes that the study of com-
Feedback
munication is fundamentally a study of relationships: "Soci-
Service, and
ety is a sum of relationships in which information of some
Market Research
kind is shared." He also slates thai "to understand human
communication we must understand how people relate to
one another." Relationships, in other words, are impossible
which also include mass, interpersonal, nonverbal, and
without communication.
organizational communication.
Similarly, as ihe traditional marketing mix elements bave
The notion that communication i.s a central integrative
become cominoditized, companies are realizing that their
process in marketing is demonstrated in the evolving theo-
most valuable assets are relationships with customers and
ries of integrated and relationship marketing. In a special
other key stakeholders. This is because the net sum of brand
session on IMC and relationship marketing at Emory Uni-
relationships is a major detentiinant of brand value (Duncan
versity's 1996 relationship marketing conference, Zinkhan
and Moriarty 1997). The importance of reliilionships as mar-
and colleagues (1996) argued that these two are comple-
ket-based assets tbat ultimately contribute to sb;ireholder
mentary metaphors.
value is discussed by Srivastava, Shervani, and Fabey (1998).
There are also important points of intersection between
communication and marketing theory that support the argu- In Webster's (1992) view, ongoing customer relation-
ment for a communication-based model of relationsbip mar- ships are the company's most important business asset. Esti-
keting. When properly done, communication is tbe mates that it costs six to nine times more to acquire a new
integrative element that belps tear down functional silos customer than il does to retain a current one demonstrate the
iiuernally wbile closing tbe distance between the company, value of relationships (Peppers and Rogers 1993). In addi-
its customers, and other stakeholders. tion, profits per customer increase with customer longevity,
because the longer customers are with a company, the more
willing tbey are to pay premium prices, make referrals,
Points of Theory Intersection demand less hand holding, and spend more money (Reich-
held 1994). The more a company can do to strengthen cus-
Both miirkctiiig and conimunicatitHi theory are in the midst
tomer and other stakeholder relationships, the more
of fundamental changes that ure similar in origin, impact,
cost-effective its marketing effort will be.
and direction. Parallel paradigm shifts move both fields
from n functional, mechanistic, production-oriented model Relationship marketing literature, however, often fails to
lo a more humanistic, rclutionship-based model. include the communication process as a critical dimension
In his introduction to communication studies, Fiske in relationship building, focusing instead on elements such
(1990) idenlifies two schools of thought—the functionalist as trust and commitment, which arc products of communi-
approach und the newer interpretive approach, which cation. There is a blurring of functions as well. Gronroos
focuses on the receiver. Others suggest that the functionalist (1990) observes that In the service category it is difficult, if
approach is giving way to a more humanistic and interpre- nol impossible, to separate service operations and delivery
tive communicalion model (Jensen 1988; Ncwcotnb 1988). from relationship building. This is another reason wby the
This shift in communication theory was explored in Fer- role of hrand communication musl be recognized to under-
ment in ihe Field., an inlemationa! symposium held in 1983 stand and manage relationships better.

Communication-Based Modet / 3
Although in their new approaches to marketing, man- ship marketing. For example, Hutt, Walker, and Frankwick
agers have moved toward a more humanistic and relation- (1995) identify the lack of a shared understanding as a cen-
ship-based model, often they have done so intuitively, not tral challenge lo strategic change. They include this in a dis-
fully understanding the critical role of communication. In cussion of communication barriers and make the point thai
many cases, companies have not adopted a process for effi- departments (employees) must develop a "shared language
ciently and effectively managing all their interactivity with that reflects similarities in members' interpretation, under-
customers and other stakeholders. For example, in a major standing, and response to information" (p. 23). They
cost-cutting move, US WEST reduced its customer service ob.serve that "organizational members unfamiliar witb it |the
personnel to the point at which customers and potential cus- code] may distort and misinterpret it and find communica-
tomers could not call their phone company because the lines tion with the departmental members difficult" (p. 23).
were always busy. Although this resulted in millions of dol- The contribution of the communication notion of
lars in fmes from public utilities commissions and much exchange is the addition of two-way (or transactional) com-
negative publicity, ironically the company simultaneously municalion to a model of marketing that has been primarily
was spending nearly $50 million on mass media advertising, one-way and focused on transactions. Sending brand mes-
some of which was for products to improve their customers' sages is important, but responsiveness and shared under-
customer service (Duncan and Moriarty 1997). standing is just as important in relationship marketing.
In addition to the shift to a relationship foeus, there are
other theoretical concepts that are basic to both communica- The Concept of Channeis
tion and marketing, such as transaction and exchange; the In Schramm's basic communication model, information
concepts of signals, channels, and feedback; and informa- Hows through channels of communication, or media. Chan-
tion and intormation sharing, Looking at these as additional nels in marketing studies refer to distribution instead of
points of intersection helps identify the mutual concept communicalion, and "flow" is repre.sentcd by the movement
development between the two fields. It also identifies the of goods. In marketing's value chain, Schramm's .stream
critical dimensions of a communication model of relation- metaphor contributes the idea of upstream (suppliers/ven-
ship marketing, as shown subsequently. dors) and downstream (distributors, customers). What is
common to both is that a channel is a conduit through which
Exchange and Transaction a stream of something (products, information) tlows.
The notion of exchange in tnarketing theory is similar lo the In addition to sharing the channel metaphor, distribution
notion of exchange in communication, Lin (1973, p. 9) also has a significant communication component in the
defines communication as a field in which "the nature of physical and technological handling of a product. Innova-
human symbolic exchange" is studied. Inherent in the mar- tions such as just-in-time delivery and Wai-Man's Oow-
keting concept of exchange is a communication element. A through distribution centers are based as much on
person cannot exchange money for goods without some information innovation as on the physical movement of
communication about what is being offered and what is goods. To demonstrate the communication dimensions in
being asked for in return. The notion of transaction, bow- distribution, Buzzell and Ortmeyer (1995) analyze distribu-
ever, connotes different meanings. tion in terms of exit and "voice" relationsbips, models that
In communication, excbange involves two-way commu- also showcase the important role of communication. Stew-
nication—a process called tran.sactional communication— art and colleagues (1996) make the argument that a blurring
which reflects communication scholars" emphasis on of the distinctions between channel management and com-
conversation and dialogue. As marketing has shifted to a munication has occurred.
relationship focus (in which a series of transactions define a
relationship), it also has become more concemed with the Feedbaci(
transactional dimensions of marketing, rather than just the An important part of any communication model is feedback,
transactions themselves. The focus of a transactional by which the receiver's response is made known to the
approach to marketing—as opposed to a transaction sender. Schramm (1973, p. 51) describes feedback as a
approach—is on close, long-term, interactive (two-way) "reversal of the flow, an opportunity for communicators to
relationships. react quickly to signs resulting from the signs they have put
We make a distinction here that is not found in most out." Feedback is central to two-way communication; with-
marketing literature. Gundlach and colleagues (1995), for out it there is no dialogue. Even a nonreaction qualifies as
example, discuss the paradigm shift from transactional to feedback (Windahl and Signitzer 1992. p. 121).
relationship marketing. They are not talking, however, about Traditional marketing has used market research studies
two-way communication but ratber are using transactional as well as sales results to monitor the success of marketing
to refer to purchase-focused (sell/buy) strategies. Altbough activities. Although these practices have guided companies
this might seem like a semantic nuance, understanding the in making changes that made their products more acceptable
distinction between transaction (sell/buy) and transactiona! and improved brand loyalty, the new interactive technolo-
(two-way communication) can help the development of gies significantly change the concept of feedback. As media
marketing theory by adding the communication notions of and computer technology increasingly converge, feedback
balance, symmetry, and reciprocity (i.e., interactivity). will be more instantaneous, more far reacbing. and in
The notion of shared understanding, which is the prod- greater quantities. In other words, the quantity, quality, and
uct of transactional communication, is important to relation- speed of feedback today is another area that separates rela-

4 / Journal of Marketing, April 1998


tionship marketing from traditional marketing. A good tion, leads to relationship building through infomialion
example is General Klcctric's Answer Center, which handles .sharing. In Menon and Varadarajan's (1992) marketing
approximately three million calls each year at a cost of $10 knowledge model, knowledge utilization plays lhe role of an
million. This interaction builds customer relationships both "infomiation linkage system" within the firm and between
directly and indirectly by enabling the company lo Iraek and among partners and perfomis a critical role in organiza-
needs, wants, and product performance and to respond to all tional leaming. They observe that there is a general consen-
of Ihese more quickly. sus that companies could make better use of infomialion "if
Day's (1992) market sensing concept is a strategic modest reforms were made in the process of communicating
approach to marketplace feedback that involves four steps: research findings" (p. 37).
open-minded inquiry, synergistic infomiation distribution, Both the old paradigm of information processing and lhe
iiiutually Infomietl interpretations, and accessible memories. newer view of infonnation sharing and sensing are points al
This model joins infomialion processing with qualitative which communication theory has made important coiuribu-
and interpretative research. Note that all four steps are com- tions to marketing theory. This cross-fertilizaiion has
munication based. In other words. Day emphasizes that occurred both formally—note the communication theories
merely receiving feedback is not enough. Its full value is not and scholars cited in mosi consumer behavior books—and
realized until il is distributed, interpreted with mutual under- infomially, with infomialion becoming a critical marketing
standing, and retained for future use. element unhinged from its communication roots.
I cedback is also important in organizational communica-
tion and in the diffusion of information about new products. Signs and Signals
Hult, Walker, and Frankwick (1995) argue that signifieanl Various articles on signaling in marketing literature reflect a
changes, such as technological changes, can tax the fonnal new found interest in signs and symbols and how they com-
and informal communication in any organization, a prohletn municate (Bagwell and Riordan 1991; Dawar and Parker
that best can bo monitored through ongoing feedback pro- 1994; Kilhstron and Riordan 1984; Milgrom and Roherts
grams. This problem Is particularly critical for marketing, 1986; Moore 1992; Robertson, FJiashberg, and Rynion
because of its involvement in new product development and 1995). In communication studies, these topics appear in
its need for strong internal marketing to employees and sales interpretive and cullural studies (Fiske 1989; Jagtom and
depariments. Gilly and Wollinharger (1998) note that Gardner 1981) and semiotic analysis {Berger 1984; Eco
employees do notice and evaluate their employer's advertis- 1979; Fry and Fry 1983).
ing, Furthemiore, there might be gaps between the percep- Levy's (1981) seminal 1959 piece "Symbols by Which
lions of the employees and the advertising decision makers We Buy" introduces interpretive communication methods to
that have important managerial implications. marketing. This tradition continues in the works of Mick
(1986, 1988), McCraeken (1989a, b), and others
Information (Hirschman 1990/91; Sherry 1987; Vcrba and Camden
lnfi>rniation—the product of communication—is the tie that 1985). In particular, lhe consumer behavior odyssey
binds in any relationship, including commercial relation- reported in Highways and Buyways {Be\k 1991) is an impor-
ships with customers and other stakeholders. Discussion of tant milestone in lhe more interpretive approach to ihe sludy
inlormation How, informalion processing, and inforniullon of consumer behavior. This body of work represents mar-
sharing are found in both consumer behavior and communi- keting and advertising investigations conducted as studies of
cation literature. Informalion, described by Schramm (1973. signs and symbols and how they signal meaning to con-
p. 38) as "lhe .stuff of communication," is defincJ more for- sumers. The analysis of shared meanings and interpretation
mally by him as "whatever content will help people struc- is particularly important in understanding the more subjec-
ture or organize some aspects of their environment that are tive dimensions of corporate reputation and hrand image.
relevant to a situation in which they must acl." In other Consumer behavior scholars make the point that all con-
words, information is something that makes decision mak- sumer decisions occur within a constellation of consumption
ing easier by reducing uncertainly. The centralily of infor- activities, situations, social environmenls, and related prod-
mation processing lo both fields illustrates how imporiant ucts. In other words, consumers assimilate signals Irum
this concept is to the iwo disciplines. many sources, including pt>pular culture, as they ascribe
Information processing ha.s dominated most approaches meaning to their consumption activities (Deighton 1992;
to marketing communication, which suggests that commu- Klein and Keman I99I; Solomon and Assael 1987). This
nication can be managed or controlled. If niarkelers under- meaning-constructing process happens through an exchange
stand the complex chain of mental events thul consumers go of shared signs and symbols; research in this area focuses on
through in making a purchase decision, they can integrate the interpretation of these signs.
clilfereni ways of communicating their messages to ensure Another marketing research siream focuses on signals
that the necessary mental events take place in lhe niosl by looking specifically al price and advertising and how
effective infomiation environment (Penrice 1995), they deliver messages that affect competitors as well as cus-
The communication-based model of relationship mar- tomers. According to Rao and Rtiekert (1994), marketplace
keting, however, adds the idea that inforniaiii)n sharing also signals deal wilh a problem they identify as "hidden infor-
can strengthen brand relationships and help integrate orga- mation" by providing infomiational devices ihat cue certain
nizations and strategies. Day's (1992) market-sensing meanings. For example, when quality is hidden, signaling is
approach, which is buili on the notion of close communica- used by referring to such devices as guarantees and war-

Communication-Based Model / 5
ranties. Branding is another signaling concept. Rao and TABLE 1
Ruekert argue that an important function of hrand names is Intersections Among Marketing, Communication,
to give consumers condensed infonnation about a product. andIM
People who write about marketing signals often define
them in terms of their own area of investigation. For exam- Common Elements Related
ple, Rao and Ruekert (1994) define signals in terms of qual- in Marketing and Key Factors in
Communication Integrated Marketing
ity cues. Eliashberg and Robertson (1988), in their article on
new product announcements, define a signal as an Customers &
Relationship
announcement or move that precedes a new product intro- Exchange other stakeholders
duction. Regardless of the applied nature of this concept, a
signal is a sigti that cues or influences some action or inter- Channels Interactivity
pretation by customers, competitors, or other stakeholders, Feedback
and it is very much a communication function.
Information Everything sends
Figure 2 visually summarizes the points of intersectioti Signs/Signals a message
we have discussed. The figure identifies pairs of conceptu-
aMy linked intersections. Customers and other stakeholders,
for example, connect to an organization through relation- Shapiro (1985) notes in his review of marketing mix lit-
ships. Interactivity is only possihle if there are channels for erature that the marketing mix must be planned as an inte-
communication and feedback to tum one-way communica- grated whole by applying sucb ideas as consistency and
tion into two-way. Messages are signs or signals that are integration. He explains (p. 28), "While consistency is a
composed of information. Figure 2 also depicts how these coherent fit, integration is an active harmonious interaction
pairs intersect with each other on a platform of communica- among the elements of the mi\." Likewise, a concern for
tion. In Table 1, we summarize these intersections as tbree better coordination among the various marketing mix pro-
critical factors—stakeholders, messages, and interactivity— grams was demonstrated by Texas Instruments when it
in a communication-based model of relationship marketing. devised a turnaround strategy in 1995 that focused on cre-
ating internal marketing cooperation (Smith 1995).
Solomon and Englis (1994) discuss the important role of
The Integration Perspective product complementarity in integrated communications. As
As explained in Driving Brand Value (Duncan and Moriarty noted by Kreutzer (1988), markeling mix integration and
1997). customers and other stakeholders automatically inte- standardization is an even greater challenge in intemational
grate brand messages. Marketers must decide wbether to programs.
abdicate this integration to customers and stakeholders or to Implied in the phrase "Everything sends a brand mes-
manage it. A communication-based model of relationship sage" is the need (1) for brand messages to be strategically
marketing underlines the importance of managing all brand consistent to positively influence the perception of these
communications as they collectively create, maintain, or messages, (2) to focus on stakeholders and not just cus-
weaken the profitahle stakeholder relationships that drive tomers, and (3) to ensure that brand communications are not
brand value. just one-way, but interactive. Following is a discussion of
the integration implications of these three principles and
FIGURE 2 how they operate at the corporate, marketing, and marketing
Communication and Marketing Intersections communication levels.

Messages
Brand messages originate at the corporate, marketing, and
marketing communication levels. In other words, all corpo-
rate activities, marketing mix activities, and marketing com-
munications have communication dimensions.
At the corporate level, messages sent by the company's
overall business practices and philosophies have communi-
cation dimensions. For example, its mission, hiring prac-
tices, philanthropies, corporate culture, and practice of
responding or not responding to inquires all send messages
that reconfirm, strengthen, or weaken brand relationships.
At the marketing level, a communication-driven model
of marketing requires that brand messages sent by other
aspects of the marketing mix also must be managed for
consistency. Product messages, for example, are the ones
customers and otber stakeholders infer from the product's
performance, appearance, design, pricing, and where and
how it is distributed. Tupperware, the home-party distribu-
tion of kitchen and other household containers, found that

6 / Journal of Marketing, April 1998


il was perceived as an old-fashioned company, because the Stakeholders, Not Just Customers
appearance of Its products had not chatiged in years. To The review of intersections shows that there are several con-
send a more modern message, tbe company simply changed stituencies important to a brand's success other tban cus-
tbe color of its products, giving them a more contemporary tomers. At the organizational level, a company or brand's
appearance. Price and distribution send important mes- stakeholder relationships involve far more than just cus-
sages, as can be seen in ibe streets of New York, wbere tomers. Ruth and Simonin (1995) refer to a much broader
shoppers are not rushing to buy a Rolex watch for $19.99; set of stakeholders—investors, the financial community,
the price and distribution points both suggest that this vendors and suppliers, employees, competitors, the media,
watch is not authentic. neighbors and community leaders, special interest groups,
Service messages conveyed by distributors, sales staff, and government agencies—tbat are corpt)rate constituencies
customer service representatives, and corporate staff, such who can affect and be affected by a company's marketing
as secretaries and receptionists, also affect brand relation- program.
ships. For example, in an integrated marketing audit we con- The marketing level also has a broader set of con-
ducted for a retail cbain, sales clerks demonstrated good stituents than just customers. Although Webster (1992)
product knowledge and willingness to advise custotiiers in believes that ongoing customer relationships are the com-
iiiakiiig a purchase. However, when tbese same sales clerks pany's most importanl stakeholder group (he states that cus-
were approacbed witb a relumed product, they became dis- tomers are "ftrsl among equals"), he also idenlilies two
tant and made little eye contact, communicating displeasure relationships that are key to marketing's success—suppliers
and sending a negative brand message. and resellers. Gilly and Wolfinbarger (1998) focus altention
Recognizing and managing the indirect, implied, and on the importance of employees. The discussion of
hidden communicatiim dimensions at all marketing and exchange included employees as well as customers; the sig-
corporate-level brand contacts is necessary if a company nal literature includes competitors as well as consumers; the
wants to maximize profitable brand relationships. For discussion of cbannels referred to upstream and downstream
example, when Moniblanc reorganized its whole marketing strategies as targeted to suppliers and distributors as well as
operation in tbe early l9TOs, it eliminated distribution in customers. In other words, there is a variety of stakeholders
discount stores and dropped all modets below a certain other than customers who are involved in, and affected by, a
price point. This was done to .send a strong brand message marketing program.
that Montblanc pens were upscale, status, bigb-quality The wider stakeholder focus is also true at the marketing
writing instruments. communication level. Although customers and prospects are
At the marketing communication level, a basic premi.se primary targets of most marketing communication efforts,
of relationsbip marketing is the need for executional consis- the trade is also imponant. If puhlic relations is included in
tency among all marketing communication messages, so the communication mix, then it also manages communica-
ihiil trust can be built and there is coherence in stakeholder tion programs for employees, the financial communily and
perceptions. At this level, IMC generally bas one voice and investors, govemment and regulators, the local community,
one look for eacb target audience, regardless of tbe market- and the media. In support of an extended view of marketing
ing communication function (e.g., advertising, public rela- constitueticies, Ogilvy and Mather's "brand stewardship"
tions, sales promotion) or media being used. audit includes not just customers, but all key stakeboldcrs.
The key to tnanaging the point of perception is to deliver Another important integration reality that relates directly
and receive messages on a platform o\' strategic consistency. lo stakeholder perception is the notion that stakeholders
That docs not mean all messages say tbe same thing. Strate- overlap; Customers also can be employees, investors, mem-
gic consistency means tbe messages are appropriate for their bers of special interest groups, and neighbors in the com-
audiences; however, there is consistency in the way corpo- munity. (The extent of the overlap will vary hy industry and
rate values are presented, bow products perform, and how company.) This means companies must take into considera-
tbe brand is identified and positioned. As brand messages tion how the intended target audience will respond not only
arc decoded—assuming they arc not inconsistent—tbey are to a brand message, but also wben they wear their other
translornicd into the stakeholder perceptions that are the stakeholder hats.
building blocks of brand relationships. Webster (1992) notes that there is a blurring of boutid-
Perception is more important than reality in managing aries in relationships and that customers can be competiiors
many relationships. The PIMS studies (Iiu/./.cll and Gale and vendors, as well. In another example, we conducted an
1987, p. 103), for example, identify two types of quality— integrated marketing audit of a bank and found thai three-
conformancc quality and perception quality. Altbougb con- fourths of the employees were also shareholders and more
ibrmance quality, meeting a set of specifications or than 90% were customers. If this bank were to tell share-
standards, is important, perception quality, which calls for holders tbut its outlook was extremely positive and ihcn tell
viewing quality from the custotner's perspective, is even employees that raises would be withheld because of com-
more so. Perception quality drives bebavior and often is petitive pressures, the bank would have a lot of explaining
intlucnced by tbe hidden or implied comniunicalii)n dimen- to do, not to mention bow its level of trust would be
sions of tbe corporate philosophy and marketing mix. affected.
Although production is responsible for conformance quality, Identifying a broader set of constituencies bas bottom-
in most companies, marketing is responsible for perception line implications. Kotler and Heskett (1992) found tbat
quatity. firms that emphajiized the interests of tbree constituencies—

Communication-Based Model / 7
customers, employees, and stockholders—outperformed levels. Figure 3 also illustrates the interactivity between the
those that emphasized only one or two. Over an 11-year various message sources in an organization and the various
period, Kotter and Heskett found that the firms focused on stakeholders of the organization.
alt three groups increased their revenues by an average of Because most organizational communication dimen-
682% versus 166% for the groups with a more limited focus. sions (other than marketing communication) are ignored,
They also increased their stock prices by 901% versus 74% not recognized, or taken for granted, brand me.ssages that
for the others. In these high-pertbmiing companies, Kotter originate at the corporate and marketing levels often are not
and Heskett found a value system that communicated the managed strategically. Even marketing communication
importance of all these constituencies, a commitment that messages, especially in larger companies that have separate
often was described by employees as integrity, or "doing the departments and agencies for each of the marketing com-
right thing." munication functions, are often a mixed assortment of mes-
sages and images. For example, advertising messages could
Interactivity promise quality, sales promotion messages could promise
Interactivity is a hallmark of the paradigm shift in both mar- bargains, and product publicity releases could discuss prod-
keting and communication. If relationships are the objec- uct safety. Even when a company does manage to achieve
tive, then impersonal mass communication must be strategic consistency at the marketing communication level,
supplemented, especially in business-to-husiness and ser- these messages might have far less impact than brand me.s-
vice categories, hy personal customized communication that sages coming from other marketing functions and corporate
by definition is interactive. areas, not to mention brand messages originating outside the
At the corporate level, interaction is very much in keep- company (from customers, the media, and the competition).
ing with other business practices, such as total quality man- For a discussion of the strategic applications of communica-
agement, which requires that everyone involved in the tion-based relationship marketing, see the Appendix.
process be made a partner in its outcome. Guillen (1994) Because a communication-based model of relationship
argues that interactive communication is fundamental to marketing recognizes that everything a company does (and
successful teamwork, particularly in lean management mod- sometimes does not do) sends a message tbat can strengthen
els of organization. or weaken relationships, it has several managerial implica-
As interaction is implemented at the marketing level, tions. These implications apply to three areas: corporate
partnerships with suppliers and distributors become more focus, processes, and organizational infrastructure.
important. Buzzell and Ortmeyer (1995) acknowledge that
channel partnerships are based on exchange of infomiation Corporate Focus
and just-in-time communication technologies, which help Because it is more cost-effective to sell to current customers
lower costs and improve service to the customer. In an inte- than new ones, corporate focus should place more emphasis
gration program, both one- and two-way communication on relationships than transactions. Corporate focus also
tools are used strategically to reinforce each other and max- should be on stakebolders rather than just customers, as this
imize interactivity. The role of mass media, for example, is helps companies avoid sending conOicting messages to
to open more direct forms of communication and encourage overlapping stakeholder/customers, as Gilly and Wolfin-
prospects to identify themselves. More important, new two- barger (1998) point out. Stakeholder priorities al,so are
way communication systems are designed to motivate and changing constantly. During a merger or acquisition, for
capture all pertinent interactions, not just transactions. e.tample, the financial community and employees might be
At the marketing communication level, interactivity is the two most important stakeholder groups on which to
generated through a combination of one-way (e.g., mass focus. During a crisis, the media can become the most
media advertising, publicity) and two-way communication important group. As these priorities change, the resources of
(e.g., personal selling, customer service). Direct marketing, the company should be reallocated accordingly.
sales promotion, and event marketing use both one- and
two-way communications. Even packaging can he a mix of Processes
both if the package contains a customer service number or
other response device. More efforts also are being made to A process sbould be in place to facilitate purposeful dia-
introduce response devices in traditional one-way forms, logue with customers and other stakeholders. This dialogue
such as 800 numbers and e-mail addresses in mass media should be purposeful for botb the company and the target
advertising. audiences; otherwise brand messages will he seen as "brag
and boost" or intrusive. A system al.so is needed to ensure
that all brand messages are strategically consistent. There
A Communication-Based Marketing sbould be a process for incorporating the mission of the
company into all operations to continually remind all stake-
Modei and its iVianageriai holders wbat tbe company stands for. Both consistency and
Implications a well-regarded mission helps strengthen the trust on which
Because stakeholder relationships are influenced heavily by brand relaiionships depend.
messages from and to a company, a brand relationship- Finally, there must he a process of zero-based planning
building model should consider brand messages from all for marketing communication that is driven by prioritized
intemal sources. Figure 3 illustrates this model and shows SWOTs (strengths, weaknesses, opportunities, and threats).
the corporate, marketing, and marketing communication Zero-based planning helps identify those marketing com-

8 / Journal of Marketing, April 1998


FIGURE 3
A Communication-Based Marketing Model for Managing Relationships

Corporate Level Message Sources

Administration Manufacturing/ Marketing Finance Human Legal


Other Stakeholders
Operations ^^ ^^ Resources
Employees
Investors
Financial Community
Cross-Functional Brand Equity flM) Teatn Government
Regulators

Marketing Level Message Sources


Distributors
Product Price Marketing Distribution Interactivity Customers Suppliers
Mix Mix Communication Mix Competition
Mix

Consumers
Cross-Functional IMC Team Local Community
Media
Interest Groups
Marketing Communication Level Message Sources

Personal Adver- Sales Direct Public Pack- Events


Sales tising Promotion Marketing Relations aging

I
Brand Relationships

Brand Vaiue

inunication functions that are the most cost-effective ways tomers is just as important, if not more so, than acquiring
to leverage critical strengths and opportunities and address new ones.
key weaknesses and threats. For example, a brand with a Tbe most imporiani organizational factor, bowever, is
credibility problem should consider using public relations cross-functional management. Because relationsbip mar-
rather than more mass media advertising. keting (versus traditional transaction-based marketing) is
more communication intensive at eacb level (e.g., corpo-
Organizational infrastructure rate, marketing, marketing communications), cross-func-
Integration is a systemic process that requires certain orga- tional management is needed to plan and monitor
nizational support elements. One infrastructure element is to messages for strategic consistency and inconsistency. A
ensure that managers have a core competency in integration brand level cross-functional team must integrate the cor-
that requires (I) knowing the strengths and weaknesses of porate and marketing levels, and a marketing communica-
the company and how their respective area affects these, (2) tion cross-functional team must integrate activities
understanding bow tbe company works and how communi- between the marketing and the marketing communication
cation impact Is created at various contact points, and (3) levels (see Figure 3), Tbis organizational structure makes
understanding and respecting the strengths of the various it possible to plan and monitor brand messages going to
marketing and marketing communication functions. The and coming from all divisions.
role of core competencies as a necessary factor in marketing An appreciation of the need for cross-functional organi-
mix integration is discussed by Lynch and colleagues zation must begin at the corporate level. Ambler and Barrow
(1996). (1996, p. 186). for example, argue that the separate areas of
Another critical part of the infrastructure, especially for marketing and human resources should work more closely
companies that rely heavily on marketing communication, is together: "Strong corporate equity with tbe brand's cus-
partnering with communication agencies that understand tomer can improve the return on HR, while al the same time
and practice integrated brand communication. These agen- improved HR can improve the return on hrand equity from
cies also must recognize that keeping and growing cus- extemal customers." That will only happen if top manage-

Communication-Based Model / 9
ment is committed to tearing down the walls between Acommunication-hased model of marketing recognizes
departments. that the management of communication that huiids brand
Cross-functional management not oniy breaks down vaiue invoives more than traditional marketing communica-
walls between departments and stakeholder groups but also tion. Planning toois such as brand message audits, contact
helps institutionalize feedback and leaming. Communica- point anaiysis. and stakeholder maps are needed to identify
tion must be managed as a boundary-spanning activity to message fractures, ignored stakehoiders, and points of mes-
achieve linkage in a leaming organization. Bohn's (1994) sage confusion.
modei for managing technoiogicai knowledge relies heavily An appreciation of tbe cotnpiexities of brand cotiiniuni-
on shared understanding, which is dependent on communi- cation makes it possible to understand the structural changes
cation. Integration is discussed specificaiiy as a factor in needed to faciiitate cross-functionai planning and monitor-
organizationai learning by Bharadwaj (1996), and organiza- ing of ail brand tnessages. When this understanding exists, a
tional leaming is analyzed as an integrative factor in Olavar- company can apply this communication-based model of
rietaand Friedmann".s (1996) work. marketing more easily to deliver more effective relation-
Day (1992. p. 324) observes that market-driven fimis "do ship-building programs.
not suffer from organizational chimneys, silos, or smoke-
stacks which restrict infomiation flow to vertical movements
within functions." Day's market-sensing concept calls for Appendix
synergistic information distribution. Formal information Strategic Applications of
connnectedness facilitates the exchange of information and Communication-Based
reduces the conllicts thai inhibit communication.
For a cross-functional team to be successful, it must
Relationship Marketing
When the corporate focus, processes, and organizational
have the authority to reallocate budgets. Ukrop's, a chain of
infrastructure required for doing comniunication-hased reia-
retail food stores in the eastem part of the United States,
tionship marketing (CBRM) are in place, a company can
provides an example. When it found that its check-out clerks
build the hrand reiationships that drive brand vaiue more
and haggers had the most influence on customer relation-
effectiveiy. Examples of some of the specific appiications
ships, it moved money from mass media advertising and
and benefits of using CBRM are the foiiowing:
sales promotion inlo training to maximize the positive
impact of this intrinsic brand contact point. "Because controlling or influencing brand messages Is the
Hailmark began using cross-functional teams a few basis for managing stakeholder relation.ships, it Ls critical lo
years ago to develop new lines of cards. By bringing various identify the origin of these me.ssages (Duncan 1994). Com-
groups together through a cross-functional team, the com- municaiion-based relationship marketing will identity which
department, program, or person Is the sources of messages
pany was abie to reduce significantiy the traditionai 25 that stakeholders are receiving and where they are being
hand-offs, enabiing a new iine to reach the market eight received. Thi.s is what makes CBRM a customer-foe used, out-
months ahead of the normai scheduie. When Griffin and side-in model.
Hauser (1992) analyzed marketing, engineering, and manu-
•Although product, pricing, and distrihution messages gener-
facturing activities in the development of new products, they ally do not involve human communication between customer
found that cross-functional communication was critical for and company, they can he anticipated and controlled, ihough
success. the cost to control can he significant. For example, if market-
ing research finds that the design of a motorcycle is sending
Key customers also can be involved in cross-functional
negative messages (e.g., old fashioned, slow, fragile), the cost
teams. General Electric, for example, uses cross-company to redesign could be hundreds of thousands of dollars and
teams with its customer, Southem Califomia Electric. The require months or years of work. Prioritizing in terms of mes-
result of this team'.s ability to communicate more accurately sage impact then becomes an important strategic task in cre-
and quickly has heen to reduce outage time and costs (due to ating cost-effective communication.
turbine shutdowns) by 50%. To facilitate the cross-functional •Because CBRM lakes a more macro approach to communi-
process however, requires tracking of customers and the sup- cating with customers, it is not limited hy funclional bound-
port of a database management system that provides univer- aries. For example, the 4Ps concept of promotion is nol
sal customer information and a corporate memory. inclusive enough to describe brand messages Where, for
example, does event marketing or direct marketing tit? Is
direct marketing managed as part of the promotion compo-
nent, or is it a distribution respt)nsibility? Likewise, is pack-
Summary aging a product feature or a promotion responsibility.' And
The social and associational nature of marketing and busi- where does customer service fit? And even more important,
ness in general depend on relationships. It is our premise, how does the 4Ps promolion element take into consideration
therefore, that understanding the role of communication in all the brand messages other than those from markeling com-
munication? This model provides a wider framework for the
estahlishing and maintaining profitahle stakeholder relation-
management of message impact.
ships is essential. Not only has communication always
played a role in attracting and keeping customers (and other •CBRM enables companies to identify and prioritize brand
stakeholders), hut with advances in new media and com- contact points, separating the intrin.sic from the created.
Intrinsic contacts automatically occur when buying or using a
puter technologies, the benefits of understanding and apply-
product. Forexample, wben taking an airline trip, checking in
ing communication theory and strategies to marketing have at the airport is an intrinsic contact point becau.se the product
never been greater. cannot be used otherwise. A created contact point is a planned

10 / Journal of Marketing, Aprii 1998


marketing communication effort and can include product and tomer's profile and interaction history, making the customer
.service messages as well as the usual marketing communica- feel more importain and tlic itiicraction more efficient.
tion tools. If an airline's L'heck-in representaiives are surly and •Through ihe use of relational dalahases thai are universally
inelficienl, ihis should be corrected before investing in adver- accessible in a company, all employees who interact with cus-
tisements that tout the airline's low-cost fares. Contact points tomers have the same customer infomiation.
must be prioritized, with budget allocations going lo those •An integrated marketing audit can be used lo identity and ana-
Ihat have the ino.st impact on the most customers. lyze all corporate and brand messages being sent to determine
•CBRM helps companies identify points of stakeholder over- strategic message consistency and whether brand equity is
lap at which the same person in different roles has the poten- being strengthened or weakened at the various points of
tial to receive reinforcing or conflicting brand messages. contact.
•CBRM views transactions (and other interactions) as relation- •Finally, though communication programs are executed sepa-
ship building blocks. Lexus, for example, maintains a data- rately, CBRM provides a cross-functional management
base of all critical interactions with customers, so that the process for planning and monitoring brand relationships.'
company has the same "memory" as the customer. When a
customer calls or comes into a dealership, no matter where in
the country it is, the Lexus representative can pull up the cus- I Adapted from Duncan and Moriarty (1997).

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182-84.

Marketing Analyst.

Develop plans to increase sales and revenue for Oriental holding corporation.
Research market conditions. Provide information to management. Prepare and
conduct surveys of customers and consumers. Prepare reports for
management. Develop plans for future investments. Gather data on
competitors, costs of production, and consumer desires. Advise on future
expansion, including planning new business sites or expanding to other types
of business opportunities. Requirements: bachelor's degree in economics,
marketing, or business administration with minor in economics or marketing.
Fluent in speaking, reading, and writing Chinese. 40 hrs /week: 10:00 a.m. to
6:00 p.m, $24,000/year.
•7 • . 1

Must have proof of legal authority to work in U.S. If you are not a U.S. citizen
and qualify for employment, please include the type of authorization in the
cover letter or resume. Send your resume to Bernard Childerston, Nebraska
Dep't of Labor, P. 0. Box 94600, Lincoln, NE 68509. Refer to job order NE
0206106. This advertisement is paid for by the employer.

Cotnmunication-Based Model /13

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