What is transactional marketing? Transactional marketing is a business strategy that focuses on single, "point of sale" transactions.

The emphasis is on maximizing the efficiency and volume of individual sales rather than developing a relationship with the buyer.
The transactional approach is based on the four traditional elements of marketing, sometimes referred to as the four P's:
   

Product -- Creating a product that meets consumer needs. Pricing -- Establishing a product price that will be profitable while still attractive to consumers. Placement -- Establishing an efficient distribution chain for the product. Promotion -- Creating a visible profile for the product that makes it appealing to customers. An alternative to the transactional model, relationship marketing, emphasizes customer retention and future interaction with the company. There are advantages and disadvantages to both approaches. According to customer relationship management ( CRM) expert Michael Lowenstein, because transactional marketing does not value customer retention, it can lead to "passive, reactive and short-term customer relationships." However, traditional elements of marketing such as those listed above will al ways be crucial to success. The main disadvantage of the relationship-based model is its relative expense. However, fostering ongoing interaction with buyers through customer relationship management (CRM) strategies typically improves return on investment ( ROI) in the long run. Most organizations include components of both approaches in their strategy.

Transactional Marketing By Paul Herbig

Transactional Marketing is a form of marketing that concentrates on individual transactions and not much else. It is a theory that includes low-price competition, cost cutting, and ROI. This form of marketing does not allow for brand building. Companies that utilize transactional marketing believe that price alone will be a purchasing factor. They also believe they can reach enough of the market with price that customer loyalty is not a major factor. The internet has allowed for low cost ways to reach customers. Mass e-mailing has allowed for these companies reach a broad market. In transactional marketing there is no post sale consulting and service. Once the sale is final the firm looks for the next sale. Transactional Marketing is done by the purchasing of consumer information in the form of databases. The company then reaches the consumer by telemarketing, direct mail, or mass e-mail.
Transactional Marketing is not popular among the masses. Many companies take a relationship marketing approach. Most companies believe in the importance of maintaining strong customer relationship through brand building, personal selling, customer follow ups. It is for the most part a

consensus that it costs more money to obtain new customers then it does to retain your current ones. This philosophy is why more and more companies are heading toward relationship marketing. There is a niche for outsourced transactional marketing firms. Companies like Simpli.com have made money by offering what they call "target solutions". Their claim is that they helped a schoolteacher make 1.7 million from a $250 dollar investment. These companies have been able to help companies that either have little to invest in marketing or are not willing to invest the money, yield high ROI to their businesses. Building brands and relationships is vital for customer retention which is why most companies are leaning that way. The world of business is evolving to make relationships crucial because of the amount of competition that there is in many industries. There are, however certain business situation where price would be the number one factor or when the business doesn't have much of a marketing budget when a transactional approach could be a better approach. A company must look internally to decide which method is best for them. A combination of both relationship and transactional could be appropriate. By mixing up methods you could still obtain a reasonably high ROI which at the same time build lifelong customers.

Transactional Marketing:
Transactional marketing relies heavily on one's ability to deliver the marketing verbally. Relationships generated by transactional marketing could be passive or long -term in nature. Obviously the latter is desired as a loyal customer will help you in your job of marketing by promoting your service and highlighting a positive relationship. Transactional marketing tends to put a value on each customer that is relative to their transaction frequency and amounts. One business field where transactional marketing is used frequently is by real estate professionals. Real estate professionals will communicate their successes with others. They not only do this verbally, but they have developed what they call "Just sold" and "Just listed" postcards that are designed to promote property to potential buyers. These postcards are sent to individuals in the real estate agent's "Sphere of influence." This sphere of influence consists mostly of those past and current customers involved in the agent's realm of transactional marketing. Other individuals likely to become a target for transactional marketing include geographic or demographic groups in which a real estate agent has an interest in gaining market share advantages. Transactional marketing is something that marketing managers are trying to move away from. Relationship marketing is being pushed harder than transactional marketing for some specific reasons. Relationship marketing has the potential to earn a greater increase from customer revenue than does transactional marketing. Transactional marketing focuses more emphasis in gaining the respect and developing a relationship with the frequent and financially resourceful. In other words, in transactional marketing it is better to

market to a customer with a lot of money versus a customer that frequents your business less and contributes less to your bottom line. Relationship marketing is growing in popularity because it exposes one very problematic flaw with the process of transactional m arketing. That is that the high rollers are not necessarily the best outsource for marketing. Sometimes your wealthier customers expect certain treatment and to be given services for free. Sometimes these transactional marketing magnets are actually so picky that even your best services are criticized. What does all this mean? Instead of simply researching a customer's purchasing patters and making marketing decisions on those facts alone, the relationships that exist between buyer and vendor are very important. Customers should be segmented and selected on the basis of relationships and rather than by the size of their transactions. Additionally, transactional and relationship marketing brings up the point that it may not be worth the effort to be trying so hard to attract customers that are not going to be profitable. Transactional marketing is counter intuitive in that it encourages the customer to spread their business between many competitors in order to receive as many benefits from each as possible. Bu sinesses obviously want customers to patronize their establishment because the customers want to do business with them, not because potential buyers have a hidden motive of getting as much as they can out of each business that they visit with. With relationship marketing the customer is encouraged to commit to long-term and loyal relationships with vendors. In doing so, the customer is rewarded with highly personalized attention and service and the vendor benefits from the marketing of a satisfied customer who will most likely bring more customers to their business.

Relationship marketing:
Relationship Marketing was first defined as a form of marketing developed from direct response marketing campaigns which emphasizes customer retention and satisfaction, rather than a dominant focus on sales transactions. As a practice, Relationship Marketing differs from other forms of marketing in that it recognizes the long term value of customer relationships and extends communication beyond intrusive advertising and sales promotion. With the growth of the internet and mobile platforms, Relationship Marketing has continued to evolve and move forward as technology opens more collaborative and social communication channels. This includes tools for managing relationships with customers that go beyond simple demographic and customer service data. Relationship Marketing extends to include Inbound Marketing efforts, (a combination of search optimization and Strategic Content), PR, Social Media and Application Development. Relationship Marketing is a broadly recognized, widely-implemented strategy for

managing and nurturing a companys interactions with clients and sales prospects. It also involves using technology to organize, synchronize business processes, (principally sales and marketing activities), and most importantly, automate those marketing and communication activities on concrete marketing sequences that could run in autopilot, (also known as marketing sequences). The overall goals are to find, attract and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service. [1] Once simply a label for a category of software tools, today, it generally denotes a company-wide business strategy embracing all client-facing departments and even beyond. When an implementation is effective, people, processes, and technology work in synergy to increase profitability, and reduce operational costs. Relationship Marketing refers to a long-term arrangement where both the buyer and seller have an interest in providing a more satisfying exchange. This approach attempts to transcend the simple purchase-exchange process with a customer to make more meaningful and richer contact by providing a more holistic, personalized purchase, and uses the experience to create stronger ties. According to Liam Alvey relationship marketing can be applied when there are competitive product alternatives for customers to choose from; and when there is an ongoing and periodic desire for the product or service. Fornell and Werner used the term "defensive marketing" to describe attempts to reduce customer turnover and increase customer loyalty. This customer-retention approach was contrasted with "offensive marketing" which involved obtaining new customers and increasing customers' purchase frequency. Defensive marketing focused on reducing or managing the dissatisfaction of your customers, while offensive marketing focused on "liberating" dissatisfied customers from your competition and generating new customers. There are two components to defensive marketing: increasing customer satisfaction and increasing switching barriers. Modern consumer marketing originated in the 1960s and 1970s as companies found it more profit ble a to sell relatively low-value products to masses of customers. Over the decades, attempts have been made to broaden the scope of marketing, relationship marketing being one of these attempts. Arguably, customer value has been greatly enriched by these contributions. The practice of relationship marketing has been facilitated by several generations of customer relationship management software that allow tracking and analyzing of each customer's preferences, activities, tastes, likes, dislikes, and complaints. For example, an automobile manufacturer maintaining a database of when and how repeat customers buy their products, the options they choose, the way they finance the purchase etc., is in a powerful position to develop one-to-one marketing offers and product benefits. In web applications, the consumer shopping profile can be built as the person shops on the website. This information is then used to compute what can be his or her likely preferences in other categories. These predicted offerings can then be shown to the customer through cross-sell, email recommendation and other channels. Relationship marketing has also

migrated back into direct mail, allowing marketers to take advantage of the technological capabilities of digital, toner-based printing presses to produce unique, personalized pieces for each recipient. Marketers can personalize documents by any information contained in their databases, including name, address, demographics, purchase history, and dozens (or even hundreds) of other variables . The result is a printed piece that (ideally) reflects the individual needs and preferences of each recipient, increasing the relevance of the piece and increasing the response rate.

Difference between transactional and Relationship Marketing:

Essentially, transactional marketing focuses on getting the customer to buy a certain product and walk away, whilst relationship marketing sees the sale as the first step in the building of a relationship.

Transactional marketing, in the perspective of luring the customer for a one off purchase, focuses strongly on price and short term benefits and product performance, with limited service. Relationship marketing is all about generating repeated sales and customer interactions, thus focusing on bringing value to the customer, and assuring long term performance and service - all aspects of quality become major concerns.

Relationship marketing brings customer centricity to the spotlight. This vision has implicit the fact that a customer does not buy a product, but instead buys a solution for a specific problem or need. By satisfying this need, a company has access to many other opportunities that the customer will have at some point. Thus, if the company can build a relationship with the customer - find out who he is, what these needs will be - , it will be able to gain a lot more than just a single sell.

Two illustrative approaches to the relationship vs transaction approaches are Tesco and WalMart. Whereas Tesco tries to engage in relationship with it's local customers resorting to loyalty programmes and such, WalMart lives under the "If you want loyalty, get a dog" motto set by Sam Walton, and focuses on giving customers "every day low prices", regardless of any past interactions.