what is the main point of the following article and summaries please: The Relati

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what is the main point of the following article and summaries please:

The Relative Influence of Economic and Relational Direct Marketing Communications on Buying Behavior in Business-to-Business Markets

Abstract:

Business-to-business firms spend significant resources in direct marketing to manage close relationships with their customers. Nevertheless, there is limited understanding of how the effectiveness of direct marketing communications varies by value propositions. Typically, direct marketing efforts are geared toward explicitly featuring economic or relational values. To implement an effective communication strategy catering to customers’ preferences, firms should understand how customers consistently evaluate these organizational marketing communications, which ultimately affect their buying behaviors. Therefore, the authors analyze marketing messages and employ content analysis to capture the two distinct types of direct marketing communications. Using data from a Fortune 500 business-to-business service firm and a robust econometric model, they find that the (1) effects of economic and relational marketing communication on customer purchase behaviors interplay and vary over time, (2) latent stock of direct marketingcommunication affects customer purchase behaviors, and (3) evolution of customers’ perceived importance can be recovered using transaction data. Overall, the authors provide a marketing resource reallocation strategy that enables marketers to customize marketing communications and improve a firm’s financial performance. [ABSTRACT FROM AUTHOR]

Business-to-business firms spend significant resources in direct marketing to manage close relationships with their customers. Nevertheless, there is limited understanding of how the effectiveness of direct marketing communications varies by value propositions. Typically, direct marketing efforts are geared toward explicitly featuring economic or relational values. To implement an effective communication strategy catering to customers' preferences, firms should understand how customers consistently evaluate these organizationalmarketing communications, which ultimately affect their buying behaviors. Therefore, the authors analyze marketing messages and employ content analysis to capture the two distinct types of direct marketing communications. Using data from a Fortune 500 business-to-business service firm and a robust econometric model, they find that the ( 1) effects of economic and relational marketing communication on customer purchase behaviors interplay and vary over time, ( 2) latent stock of direct marketing communication affects customer purchase behaviors, and ( 3) evolution of customers' perceived importance can be recovered using transaction data. Overall, the authors provide a marketing resource reallocation strategy that enables marketers to customize marketing communications and improve a firm's financial performance.

Business-to-business (B2B) firms constantly send direct marketing communications, or targeted messages, to their B2B customers to build strong relationships. Because these interactions between clients[ 1] and firms are quite frequent in B2B markets, B2B customers constantly change their evaluations of the B2B firms on the basis of their experience with the firms (Bolton, Lemon, and Bramlett 2006). From managerial interviews and a review of the literature, we find that B2B customers perceive the overall value of the B2B firm differently in line with the types of organizational marketing inputs provided by the B2B firm (Dwyer, Schurr, and Oh 1987). Although each marketing effort contains different kinds of messages, previous studies have largely overlooked the content of direct marketing communication efforts targeting B2B customers (Zhang, Netzer, and Ansari 2014). Furthermore, more than three-quarters of global businesses still claim that they do not use much technology to manage overall customer relationships or to better understand which marketing efforts do and do not work (Duffy 2016).

Business-to-business firms commonly use direct marketing efforts (email, phone, in-person, etc.) to minimize customer churn and cultivate profitable relationships (Venkatesan and Kumar 2004). In general, these direct marketing communications explicitly feature two types of values: economic values (EV) and relational values (RV) (Bolton, Smith, and Wagner 2003; Dwyer, Schurr, and Oh 1987; Gassenheimer, Houston, and Davis 1998; Geyskens and Steenkamp 2000). Economic values include the monetary aspects of direct marketing communication messages (e.g., promotion), which customers evaluate using rational judgment. Marketing efforts focused on making the relationship more financially attractive to create financial bonds with the customers are considered economic marketing communication (EM; Berry 1995; Gassenheimer, Houston, and Davis 1998). In contrast, relational (social) values are the nonmonetary aspect of direct marketing communication messages (e.g., support service), which evoke emotional responses (Liu 2006; Ulaga and Chacour 2001). Marketing efforts focused on making the relationship more personal and socially attractive to create social bonds are considered relational marketing communication (RM; Berry 1995; Gassenheimer, Houston, and Davis 1998).

In business practice, B2B firms acknowledge that direct communications have significant influence on customers' buying decisions (Edinger 2016). In particular, companies highlight the benefits of company inputs in their communication strategies as economic or relational benefits (Bettencourt 2016). However, aside from experience-based knowledge about the importance of delivering RM in the earlier stage and then moving to EM in the later stage (Altman 2015), it is difficult to find an established norm that can help firms solve their dynamic marketing budgeting problems. Not all customers require the same level or the same kind of marketingcommunications due to their experience and underlying perceptions. Thus, to build strong and profitable B2B relationships, firms need to consistently engage in directmarketing communications that fit customers' preferences, help foster positive perceptions, influence purchase behavior, and eventually improve financial performance (Narayandas and Rangan 2004). Furthermore, to customize marketing messaging on the basis of each customer's preferences, it is important to understand what has been explicitly featured in each marketing communication and find the differential effects of marketing efforts by the values emphasized.

Prior theoretical research in relationship marketing has acknowledged that a firm' s different marketing activities could influence the customer-firm relationship at varying levels (Berry 1995; Dwyer, Schurr, and Oh 1987). Substantial research has provided empirical evidence on this topic by showing the effects of different exchange mechanisms on customers' behavioral intention in the B2B service context (Bolton, Smith, and Wagner 2003) and studying how clients value different elements as the relationship evolves through distinct stages in the marketing channel context (Jap and Ganesan 2000). Rust and Verhoef (2005) study two types of marketing interventions (action-oriented and relationship- oriented) to understand the heterogeneous responses to customer relationship management (CRM) interventions in the business-to-customer (B2C) context. However, prior empirical studies linking firm efforts and performance outcome in the B2B context have often used cross-sectional surveys, which can lack an objective performance measure (Katsikeas et al. 2016). Yet recent B2B studies using observed customer behaviors to investigate the dynamic effects of marketing communicationhave largely overlooked the differential message content of each direct marketing communication (Kumar et al. 2011; Luo and Kumar 2013, Zhang, Netzer, and Ansari 2014). Furthermore, it is critical to understand how organizational marketing communications influence consumers' perceived importance of the different values offered by the firm to implement an effective communication strategy catering to customers' preferences. However, previous research focusing on perceptions has largely overlooked the evolving nature of customer perceptions (Hennig-Thurau and Klee 1997). To fill this gap, we aim to address the following research questions:

RQ1: How do the effects of EM and RM on customer purchase behavior vary in the long run? (a) How do the effects of EM and RM vary across customers? (b) How do the effects of EM and RM interact?

RQ2: How can we understand the ongoing customer evaluations of the firm' s direct marketing communication by extracting the evolving nature of customers' perceived importance using transaction data rather than survey data?

This study makes two unique contributions to the marketing literature. First, we study the dynamic and heterogeneous effects of two different types of marketingcommunication efforts, EM and RM, in a single modeling framework. Extant research studying the time-varying effects of marketing has typically used the aggregated measure of marketing communication without investigating the notion that different marketing communication types can have heterogeneous time- varying effects and an interaction effect. Therefore, extending the findings of Rust and Verhoef (2005) on the heterogeneous responses to the two types of CRM interventions, we examine the interplay between EM and TM as well as how they affect customer purchase behavior in the long run. Second, we apply customer analytics to address B2B problems, which has been listed as one of the Institute for the Study of Business Market's top research priorities (Lilien 2016). Because the direct communications with B2B clients are frequent and there are ongoing evaluations by B2B clients about the B2B firms, we use the state-space modeling approach to empirically uncover the latent stock of a firm's direct marketing efforts on purchase behavior and extract how customers continually evaluate the importance of the value provided by the firm. Because of the increased accessibility of rich data in B2B settings, B2B practitioners requested guidance in using these data to address business problems (Lilien 2016, p. 549). Thus, we empirically identify EM and RM by employing content analysis to analyze the qualitative comments in the direct marketing communication efforts. By categorizing the content of the messaging in line with the definition provided in the prior literature, we examine the relativeeffects of the different types of direct marketing communication efforts on each customer's purchase behavior in the B2B context.

We address the research questions by empirically analyzing a unique customer-level data set of a Fortune 500 B2B service firm. The data set contains rich information consisting of customer-level transactions, direct marketing communication interventions, and customer characteristics over an observation period of four years. Not all clients respond favorably to EM or RM. Each client responds differently to the direct marketing communication on the basis of its experience with the firm' s past marketing efforts. We also recognize the importance of accounting for the dynamic effects of directmarketing communication. Therefore, we offer guidelines for managers in terms of how much, when, and to whom the two types of marketing communication should be deployed.

The rest of the article is organized as follows. First, we review the prior research related to the current study and discuss the gaps in the academic literature. Then, we develop the modeling framework drawing on a review of the prior literature. Next, we describe the data and the key measures employed in this research. We then present the estimation results and discuss theoretical and managerial implications of the research. We conclude with a discussion of the limitations and future directions of this research.

IMPLICATIONS
Theoretical Implications
The theoretical implications of this study to the marketing
literature are threefold. First, our study builds on the extant
relationship marketing literature by empirically identifying the
relative, temporal, and synergistic effects of direct marketing
communication efforts on customer purchase behavior. We
expand on B2B direct marketing communication strategies by
examining the differential message content of each direct
marketing communication, a topic that has been largely
overlooked by empirical studies in the B2B context (Luo and
Kumar 2013; Zhang, Netzer, and Ansari 2014). Second, our
modeling framework and results indicate that there is a longterm
effect of directmarketing communications resulting from
the changes in latent stock of information and perceived
importance of EV and RV. We provide empirical support to
the argument that the relationship-building efforts contribute to
the formation of customer goodwill (Anderson and Narus
1991) and provide evidence to show that, on average, the
effectiveness ofRMis stronger inmagnitude thanEM(Dwyer,
Schurr, and Oh 1987). Third, our results contribute to an
expanding body of literature examining the relationship life
cycle theory—that is, the theory that different relationship
drivers continuously influence the firm’s decisions through
changes in customer perceptions. Our research framework
suggests that there is no fixed number of discrete relationship
states that applies for all customers; yet as the customer’s
perceived importance of different firm-offered values changes
over time, firms can implement customer- and time-specific
direct marketing strategies.
Managerial Implications
This study offers managerial implications for B2B firms to
maximize their financial performance and suggests marketing
resource allocation strategies over time. Specifically, the
current study uses customer analytics readily available to most
B2B firms to better understand customer purchase behavior by
uncovering the evolution of perceptions. Because customers’
stated priorities may not always match with what they actually
want, firms can predict customers’ responses by analyzing the
dynamic effects of EM and RM and use the information to
effectively manage the core messages delivered to each customer.
Because the effectiveness of EMand RMchanges over
time, managers can update their resource allocation strategies
to better align with customer preferences. In particular, marketers
can use the proposed model to strategically allocate a
given marketing budget across two types of marketing communications
after considering a client’s perceived importance. In
doing so, firms can try to improve overall customer relationships
by catering to customers’ needs and desires. Finally, by identifying
the types of customers who are more sensitive to one
interaction over others, managers can segment and target potential
customers differently.
LIMITATIONS AND FUTURE DIRECTIONS
Themethodology discussed in this study is applicable for firms
only when longitudinal data of firm-initiated marketing
communication exist. The current research did not fully examine
relationship life cycle effects, and more comprehensive
data (e.g., customer datawith longer relationship durations and
data about customers who began their relationship with the

(e.g., customer datawith longer relationship durations and
data about customers who began their relationship with the
firm at different time points) should be used to uncover the
effects. Another potential limitation of this study is that we do
not have proprietary customer databases of competing firms.
This limitation is challenging to overcome because acquiring
customer-level purchase andmarketing data of all possible firms
where customers are likely to interact is difficult. However, this
article presents a foundation for future researchers to build on to
conduct a multifirm customer-level study (perhaps using syndicated
data providers) to analyze how customers perceive
values offered by various firms differently and make purchase
decisions in line with these perceptions.
Future researchers can consider the synergistic effects of the
two types of marketing communication efforts discussed in the
current study and employ a dynamic structural model to
recommend an optimal marketing resource allocation model
(Sridhar et al. 2011). The question of how the content type and
the content amount should vary in each time point can be an
answered by employing a dynamic structural model. Specifically,
long-term cost information about EM efforts will allow
the firm to capture the overall cost of marketing investments
and allocate the right type of marketing resources and maximize
the firm’s future profit. Researchers can also consider
accounting for in-bound communications (i.e., customer
feedback) in addition to the out-bound communications. Because
customer engagement is particularly important in the
current age, social aspect of direct marketing communication
could become a subject of future research. Furthermore, because
the article paper focuses on only a retention strategy, an
extension can be made by considering a balance in acquisition
and retention strategies. Employing richer customer-level
mindset data sets collected over time will allow managers
to empirically validate changes in customers’ preference levels
(e.g., satisfaction). The current study is constrained in the B2B
context because RM is more prevalent and critical in B2B
markets, future researchers can extend the proposed modeling
framework and model to the B2C context.

Explanation / Answer

The main point of this article is to study the impact of direct marketing communication on the customer's buying behaviour and to establish strategies in order to improve the direct marketing communication to the customer so as to generate better revenues and growth for the organization.

Summary is as below:

The authors have got below findings through their research:

(1) Effects of economic and relational marketing communication on customer purchase behaviors interplay and vary over time

(2) Latent stock of direct marketing communication affects customer purchase behaviors

(3) Evolution of customers’ perceived importance can be recovered using transaction data

In case of Business-to-business (B2B) firms, the B2B customers constantly change their evaluations of these firms on the basis of their experience with the firms and targeted messages or communications sent by these firms to their customers.

More than three-quarters of global businesses still claim that they do not use much technology to manage overall customer relationships which is the need of the hour. B2B firms commonly use direct marketing efforts to establish relationships with their customers.

Direct marketing communications explicitly feature two types of values:

In order to build strong and profitable B2B relationships, firms need to consistently engage in direct marketing communications that fit customers' preferences, help foster positive perceptions, influence purchase behavior, and eventually improve financial performance.

Authors have studied the dynamic and heterogeneous effects of two different types of marketing communication efforts, EM and RM, in a single modeling framework and examined the interplay between EM and RM as well as how they affect customer purchase behavior in the long run. Also customer analytics has been applied to address B2B problems. The authors have also offered guidelines for managers in terms of how much, when, and to whom the two types of marketing communication should be deployed.

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