Competitive advantage in today’s dynamic business environment has moved on enormously since the time Michael Porter (1980) devised the generic strategies. This is supported by Jay Kandampully and Ria Duddy whom state “Traditional approaches to management and marketing are an inadequate means of keeping abreast with an escalating competitive market” (Management Decision 1999). They go on further to suggest “A firm’s competitive advantage is their ability to serve customers present and future needs”.
Forward looking organisations are today exploiting new sources of competitive advantage, relationships is now seen as a key source of creating and sustaining a competitive advantage. The long-term success of a business can be argued is due to there “ability to expand and maintain a large and loyal customer base” (management decision 1999). Many Business's have recognised the importance of customer loyalty such as Tesco’s who have the ‘loyalty card’ whereby customers who consistently use their card are rewarded; this will help in building a ‘long term’ relationship.
As Doyle and Stern state relationship marketing is a long term, continuous series of transactions between parties. In today’s environment forward thinking organisations are realising “the annual profits generated from a customer who has been with a company for seven years are typically more than five times the amount it generates in the first year” (Doyle Stern). Thus “Organisations have realised that it is five times more expensive to attract a new customer than it is to retain an existing one” (Heskett et al., 1990). Doyle and Stern (2006) make a point that profits today are derived from customers won in the past, this goes along with the previous point.
Sanderson (1998) states Porte ...