Relational Social Exchange: A new logic for SME consumer relationship management

Aim/Research QuestionRelationships are vital for small firms to overcome the liabilities of newness and smallness as they pursue their goals (Partanen et al., 2014). Relationships are not a novel form of managing exchange,... [ view full abstract ]

Aim/Research Question

Relationships are vital for small firms to overcome the liabilities of newness and smallness as they pursue their goals (Partanen et al., 2014). Relationships are not a novel form of managing exchange, rather were introduced into consumer markets by Dwyer, Schurr and Oh (1987, 12) who noted that, consumer marketers could “benefit from attention to conditions that foster relational bonds leading to reliable repeat business”. Rooted in relationship marketing theory (RMT), promises made by adopting a relational approach to marketing are appealing and centre on the development of relational trust and commitment leading to enhanced consumer loyalty and retention (Donnelly et al., 2011). RMT has advanced knowledge in large firm business-to-consumer markets and Social Exchange Theory (SET) in business-to-business markets. Within a large firm mass marketing context, relationship marketing literature has concentrated primarily on examining the use of relationship marketing instruments such as loyalty programs and direct mailings (Nguyen and Mutum, 2012; Harrigan and Miles, 2014) with minimal attention given to small, owner/managed firms. This paper addresses this salient gap and contributes to the literature by developing a conceptual model of SME consumer relational social exchange (RSE) using small, owner managed Irish fashion retail outlets as an empirical base.

In recognising that the nurturing of relationships is beneficial for small firms, and the fact that the area remains virtually unexplored in a B2C SME context (Peltier et al., 2012; Harrigan and Miles, 2014), we develop and empirically examine a conceptual model of consumer relational social exchange including the antecedents, operational processes and outcomes of SME relational social exchange integrating both relationship marketing and SET (see, figure 1). This research is timely given that we know surprisingly little about relationship marketing in an SME business-to-consumer context with relationships facilitating SMEs to survive selection pressures and potentially grow their business (Brass et al., 2004).

Figure 1: A model of consumer relational social exchange

Design/methodology/approach 

To empirically examine our model we employed an abductive qualitative case study design (Yin, 2010). This approach was appropriate given the wide scope of the research objective, with its rich and exploratory nature useful given the lack of prior research examining relationship marketing in an SME context (Peltier et al., 2012).  Eight cases were selected from a suburban district shopping centre in Cork City, Ireland, a number consistent with qualitative research guidelines and the theory-building nature of the research (Eisenhardt & Graebner, 2007).

We used semi-structured interviews as the main technique for data collection (Wilson and Vlosky, 1997).  Data was also gathered from company websites and social media sites, company brochures, marketing materials and newspaper articles facilitating triangulation (Yin, 2010). Participants were selected using theoretical sampling (Corbin and Strauss, 2014) with cases selected due to their suitability “for illuminating and extending relationships and logic among constructs” (Eisenhardt and Graebner, 2007: 27).

The data was analysed through thematic analysis (Miles and Huberman, 1994) with themes derived by systematically analysing the data for strength and consistency within and across the cases then compared with the literature (Eisenhardt and Graebner, 2007). Some interesting themes which emerged included the owner managers understanding, perception and intuitive use of consumer relationship marketing (Harrigan and Miles, 2014). Additional themes include their engagement with social media, and more specifically Facebook, to connect and communicate with customers (Michaelidou et al., 2011) and their building of  interaction based relationships with consumers for survival, loyalty and customer retention (Brodie et al., 2013).

Findings

In an overall sense, our findings supported our model of consumer relational social exchange. Findings suggest that although the SMEs were not familiar with the term ‘relationship marketing’, and had no formal or structured consumer relationship marketing plan, they engaged in relational consumer interactions in an intuitive manner building interpersonal relationships based on social and economic exchanges with consumers. Relational intention was strong, primarily as a means to survive.

Consumer relationships developed over time through repeated personal interactions which acted as a trust and commitment building mechanism in the retailer/customer relationship.  Consumers developed trust in the retailers’ opinion which, along with commitment was strengthened through reciprocal operational process such as; allowing consumers to bring merchandise home prior to payment, informing them of an upcoming sale, flexibility in payment and returns policies. The retailers had extensive knowledge of the needs and preferences of their core consumers which were leveraged to ensure that the consumer had first choice of brand selections and styles designed to appeal to their tastes. Database and social media information was gathered by the majority of the participants, albeit usually in a sporadic, ad hoc and unplanned manner.  For the retailers, loyalty and retention were driven by interpersonal relationships, personal touches, the service provided and their confidence in selling a high quality product.

Research limitations/implications

One of the limitations of the study concerns the fact that the paper is centered on the fashion sector. The authors tried not to impose artificial boundaries on the relational concept however, a broader study including SMEs from other sectors, using a qualitative methodology, may bring to light other factors impacting consumer relationships.  This could lead to a larger scale empirical testing of our model, which would be another step in advancing knowledge in this under researched area. Given the increasing emphasis on sustainability in the sector, this issue could be an integral part of future research.

Practical implications 

This study has important implications for managers. Marketing in a small business is resource constrained. One potential source of creating marketing resources, consumer loyalty and retention is through relationships. Our model acknowledges the need for SMEs to become more cognisant of their relationship marketing to enhance operations and outcomes. This understanding would enhance the marketing success that many SMEs have achieved while using relationships intuitively. It would also relieve some of the resource/time pressure on SMEs by providing them with an appreciation of the multiple strategic routes through which they can conduct their marketing. SMEs could use their existing relationships with valuable customers to access similar lucrative customer segments and concentrate on cultivating a long-term mutually beneficial relationship with key valuable prospects within these segments.

Originality/value 

To date, there has been a paucity of literature addressing relationship marketing in an SME consumer context (Harrigan et al., 2011). We address this gap and contribute to the literature by developing and empirically examining a conceptual model of consumer relational social exchange. Our model represents a pathway towards the development of SME consumer relationships. It accommodates the inherent and ingrained characteristics of SMEs and explicitly recognizes that SME can lack the repertoire of resources essential to gaining advantages through formal relationship marketing programmes. Our model builds on insights from recent research on consumer relationship marketing, but challenges and extends it by integrating social exchange theory and applying it in an SME fashion retail context. It responds to a call for more research to provide greater insight into relationship processes and outcomes, particularly in a business-to-consumer context (O’Malley, 2014).

References

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