Customer Relationship managements (CRM)
The aim of customer relationship management is to produce high customer equity. Customer equity is the total of the discounted lifetime values of all of the firm's customers. Clearly, the more loyal customers, the higher the customer equity.
Rust, Zeithaml and Lemon distinguish three drivers of customer equity:
Value equity
Brand equity
Relationship equity
This formulation integrates value management, brand management and relationship management within a customer-centered focus. So how much should a company invest in building loyalty so that costs don't exceed the gains? Here are five different levels of investments in customer relationship building.
1. Basic Marketing > The salesperson simply sells the product
2. Reactive marketing > The salesperson sells the product and encourages the customer to call if he or she has questions, comments or complaints.
3. Accountable marketing > The salespersonl phones the customer to check whether the product is meeting expectations. The salesperson also asks the customer for any product or service improvement suggestions or any specific dissapointments.
4. Proactive marketing: The salesperson contacts the customer from time to time with suggestions about improved product uses or new products.
5. Partnership marketing
In our Audi case, the most used one's are approach 2, 3 & 4. With a combination of these 3, the salepersons can pass the received information ahead so any problems are tackled to prevent them from happening again, also trying to improve sales by reminding customers about themselves and new coming models of audi.
CRM program: I have been involved in a CRM program within our own company (established in finland). We were selling sports supplements and we had such a CRM program created by Microsoft access and our own database, that we could easily follow which customer have bought the most based on day, week, month or year. How often they purchase from us, which payment methods they choose and what did they purchase. This was made easy for us, obtaining the information that is, because we had a e-commerce shop also to complement our retailing shop. So the customer had to fill some infomartion before making the order, which made the job for us easier. Through this CRM program and info received from it, we would market our products to the appropriate target customers, decreasing marketing costs.
Technology is a great tool in retaining customer relationships, because it's easy to send out a message to existing and possible customers about new products or offers with very low cost. Technology also makes it possible and easy to obtain information about the customers and storing that information, specially through the internet. Customers seem to be willing to give such information because they also think it's better for them and increases the service quality received as the customers are understood better.
Sources:
Marketing Management 11th edition (Philip Kotler 2003)
Marketing 2nd edition (Hill & O'Sullivan 1999)
http://www.tutor2u.net/
torstai 13. joulukuuta 2007
Theme 9: People as a competitive tool
Internal marketing
The process of eliciting support for a company and its activities among its own employees, in order to encourage them to promote its goals. This process can happen at a number of levels, from increasing awareness of individual products or marketing campaigns, to explaining overall business strategy.
The following are the features of an internal marketing-oriented business:
1. creating enabling culture: this is done when employees are empowered by management through allowing creativity, innovation, allowing initiatives and accountability and responsibility of their decisions.
2. Practising participative hiring: that is involving current employees in the process of hiring new employees.
3. Ensuring equitable cock recognition and reward: business must exercise employee recognition with reward to what employee has achieved.
4. Demonstrating fairness during hardtimes: fair treatment of employees when faced with hardtimes and difficult moments like death of the near family members. this can be achieved by setting aside emergency funds.
5. Good organisation structure that allows learning, total quality management and re-engineering.
Benefits of Internal Marketing
1. Internal Marketing encourages the internal market (Employees) to perform better.
2. Internal Marketing empowers employees and gives them Accountability and responsibility.
3. Internal Marketing creates common understanding of the business organisation.
4. Internal marketing encourages employees to offer superb service to clients by appreciating their valuable contribution to the success of the business.
5.Internal marketing helps non marketing staffs to learn and be able to perform their tasks in a marketing-like manner.
6. Internal Marketing improves customers retention and individual employee development.
7. Internal Marketing integrates business culture, structure, human resources management, vision and strategy with the employees' professional and social needs.
8. Internal marketing creates good coordination and cooperation among departments of the business.
Problems affecting successful implementation of Internal Marketing.
The following are the problems affecting effective implementation of internal Marketing.
1. Managerial Incompetence in interpersonal, technical and conceptual skills is some of the stumbling blocks against successful internal marketing.
2. Poor understanding of internal Marketing concept.
3. Individual conflict and conflict between departments makes the implementation of internal marketing difficult.
4. Rigid organisational structure coupled by bureaucratic leadership hinder success of internal Marketing.
5. Ignoring and not listening to subordinate staffs.
6. the Tendency of ignoring employees importance and treating them like any other tools of the business.
7. Unnecessary protection of information against employees.
8. Resistance to change.
Customer Service - Internal Customers: Many people deal with customers WITHIN their own companies. Internal customers are those people and employees who might use your services and products, who reside in the same company. For example the computer department, and human resources department serve internal needs.
Customer Service – External Customers: Refers to individuals or households that purchase goods and services generated within the economy. The word historically derives from "custom," meaning "habit"; a customer was someone who frequented a particular shop, who made it a habit to purchase goods there, and with whom the shopkeeper had to maintain a relationship to keep his or her "custom," meaning expected purchases in the future.
Customer service in my own opinion is extremely important, sometimes almost as important as the quality of the product or service offered, since customer service at best can be very fulfilling to the customer. Getting the adequate answers to your questions and being treated good makes the customer feel good and more willing to do the purchase. As to bad customer service, where the customer is belittled and answers are not given, that drives the customer away to another retailer or shop no matter how good the product is. Also in my opinion and experience, it’s bad to treat customers the same way, because not all customers are the same with equal value. Better customers should be treated better since they bring in more money and you don’t want to lose them, other customers should also be treated well so they might one day become regular customers also.
Sources:
Internal Marketing (Jeff Pervaiz 2005)
www.tutor2u.net
www.wikipedia.com
The process of eliciting support for a company and its activities among its own employees, in order to encourage them to promote its goals. This process can happen at a number of levels, from increasing awareness of individual products or marketing campaigns, to explaining overall business strategy.
The following are the features of an internal marketing-oriented business:
1. creating enabling culture: this is done when employees are empowered by management through allowing creativity, innovation, allowing initiatives and accountability and responsibility of their decisions.
2. Practising participative hiring: that is involving current employees in the process of hiring new employees.
3. Ensuring equitable cock recognition and reward: business must exercise employee recognition with reward to what employee has achieved.
4. Demonstrating fairness during hardtimes: fair treatment of employees when faced with hardtimes and difficult moments like death of the near family members. this can be achieved by setting aside emergency funds.
5. Good organisation structure that allows learning, total quality management and re-engineering.
Benefits of Internal Marketing
1. Internal Marketing encourages the internal market (Employees) to perform better.
2. Internal Marketing empowers employees and gives them Accountability and responsibility.
3. Internal Marketing creates common understanding of the business organisation.
4. Internal marketing encourages employees to offer superb service to clients by appreciating their valuable contribution to the success of the business.
5.Internal marketing helps non marketing staffs to learn and be able to perform their tasks in a marketing-like manner.
6. Internal Marketing improves customers retention and individual employee development.
7. Internal Marketing integrates business culture, structure, human resources management, vision and strategy with the employees' professional and social needs.
8. Internal marketing creates good coordination and cooperation among departments of the business.
Problems affecting successful implementation of Internal Marketing.
The following are the problems affecting effective implementation of internal Marketing.
1. Managerial Incompetence in interpersonal, technical and conceptual skills is some of the stumbling blocks against successful internal marketing.
2. Poor understanding of internal Marketing concept.
3. Individual conflict and conflict between departments makes the implementation of internal marketing difficult.
4. Rigid organisational structure coupled by bureaucratic leadership hinder success of internal Marketing.
5. Ignoring and not listening to subordinate staffs.
6. the Tendency of ignoring employees importance and treating them like any other tools of the business.
7. Unnecessary protection of information against employees.
8. Resistance to change.
Customer Service - Internal Customers: Many people deal with customers WITHIN their own companies. Internal customers are those people and employees who might use your services and products, who reside in the same company. For example the computer department, and human resources department serve internal needs.
Customer Service – External Customers: Refers to individuals or households that purchase goods and services generated within the economy. The word historically derives from "custom," meaning "habit"; a customer was someone who frequented a particular shop, who made it a habit to purchase goods there, and with whom the shopkeeper had to maintain a relationship to keep his or her "custom," meaning expected purchases in the future.
Customer service in my own opinion is extremely important, sometimes almost as important as the quality of the product or service offered, since customer service at best can be very fulfilling to the customer. Getting the adequate answers to your questions and being treated good makes the customer feel good and more willing to do the purchase. As to bad customer service, where the customer is belittled and answers are not given, that drives the customer away to another retailer or shop no matter how good the product is. Also in my opinion and experience, it’s bad to treat customers the same way, because not all customers are the same with equal value. Better customers should be treated better since they bring in more money and you don’t want to lose them, other customers should also be treated well so they might one day become regular customers also.
Sources:
Internal Marketing (Jeff Pervaiz 2005)
www.tutor2u.net
www.wikipedia.com
Theme 8: Nicely available
1.Manufacturer >>>>>>>>>>>>>>>>>>>>>>>>>> Consumer
2.Manufacturer >>> Retailer >>> Consumer
3.Manufacturer >>> Wholesaler >>> Retailer >>> Consumer
4.Manufacturer >>> Wholesaler >>> Jobber >>> Retailer >>> Consumer
We can see different marketing channels used by companies, I think in our case concerning Audi, they use a combination of number 2 and 3, my conclusion to this is that they will use approach 2 when it concerns a bigger retailer, who can also import the cars straight from the manufacturer in this case being Audi. But mainly they use approach 3, making it so that Audi Finland imports the brand new Audi cars and sells it to retailers around finland and them selling it to the end-user, the customer.
This approach makes most sense concerning profitability and turnover of cars.
Sources:
www.tutor2u.net
2.Manufacturer >>> Retailer >>> Consumer
3.Manufacturer >>> Wholesaler >>> Retailer >>> Consumer
4.Manufacturer >>> Wholesaler >>> Jobber >>> Retailer >>> Consumer
We can see different marketing channels used by companies, I think in our case concerning Audi, they use a combination of number 2 and 3, my conclusion to this is that they will use approach 2 when it concerns a bigger retailer, who can also import the cars straight from the manufacturer in this case being Audi. But mainly they use approach 3, making it so that Audi Finland imports the brand new Audi cars and sells it to retailers around finland and them selling it to the end-user, the customer.
This approach makes most sense concerning profitability and turnover of cars.
Sources:
www.tutor2u.net
Theme 7: At any cost?
Pricing - introduction
Setting the right price is an important part of effective marketing . It is the only part of the marketing mix that generates revenue (product, promotion and place are all about marketing costs).
Price is also the marketing variable that can be changed most quickly, perhaps in response to a competitor price change.
Put simply, price is the amount of money or goods for which a thing is bought or sold.
The price of a product may be seen as a financial expression of the value of that product.
For a consumer, price is the monetary expression of the value to be enjoyed/benefits of purchasing a product, as compared with other available items.
The concept of value can therefore be expressed as:
(perceived) VALUE = (perceived) BENEFITS – (perceived) COSTS
A customer’s motivation to purchase a product comes firstly from a need and a want:e.g.
• Need: "I need to eat
• Want: I would like to go out for a meal tonight")
The second motivation comes from a perception of the value of a product in satisfying that need/want (e.g. "I really fancy a McDonalds").
The perception of the value of a product varies from customer to customer, because perceptions of benefits and costs vary.
Perceived benefits are often largely dependent on personal taste (e.g. spicy versus sweet, or green versus blue). In order to obtain the maximum possible value from the available market, businesses try to ‘segment’ the market – that is to divide up the market into groups of consumers whose preferences are broadly similar – and to adapt their products to attract these customers.
In general, a products perceived value may be increased in one of two ways – either by:
(1) Increasing the benefits that the product will deliver, or,
(2) Reducing the cost.
For consumers, the PRICE of a product is the most obvious indicator of cost - hence the need to get product pricing right.
Audi Case:
Audi uses premium pricing, this aims at using price to maximise the image of quality in a product. Very often it will involve offering a range of cars at different price points. The relationship between price and quality can then be justified in the eyes of the customer by reference to the differences between each level when they can be displayed or demonstrated together using the different models that Audi has to offer with different price points.
I think Audi has a image and quality to maintain, to keep with competitors such as Mercedes Benz and BMW, so going lower in pricing might actually hurt Audi’s profits and sales in the long run, as the perceived value is lowered in the eyes of the customer compared to the competitors products.
Sources:
www.tutor2u.net
Marketing 2nd edition (Hill & O'Sullivan 1999)
Setting the right price is an important part of effective marketing . It is the only part of the marketing mix that generates revenue (product, promotion and place are all about marketing costs).
Price is also the marketing variable that can be changed most quickly, perhaps in response to a competitor price change.
Put simply, price is the amount of money or goods for which a thing is bought or sold.
The price of a product may be seen as a financial expression of the value of that product.
For a consumer, price is the monetary expression of the value to be enjoyed/benefits of purchasing a product, as compared with other available items.
The concept of value can therefore be expressed as:
(perceived) VALUE = (perceived) BENEFITS – (perceived) COSTS
A customer’s motivation to purchase a product comes firstly from a need and a want:e.g.
• Need: "I need to eat
• Want: I would like to go out for a meal tonight")
The second motivation comes from a perception of the value of a product in satisfying that need/want (e.g. "I really fancy a McDonalds").
The perception of the value of a product varies from customer to customer, because perceptions of benefits and costs vary.
Perceived benefits are often largely dependent on personal taste (e.g. spicy versus sweet, or green versus blue). In order to obtain the maximum possible value from the available market, businesses try to ‘segment’ the market – that is to divide up the market into groups of consumers whose preferences are broadly similar – and to adapt their products to attract these customers.
In general, a products perceived value may be increased in one of two ways – either by:
(1) Increasing the benefits that the product will deliver, or,
(2) Reducing the cost.
For consumers, the PRICE of a product is the most obvious indicator of cost - hence the need to get product pricing right.
Audi Case:
Audi uses premium pricing, this aims at using price to maximise the image of quality in a product. Very often it will involve offering a range of cars at different price points. The relationship between price and quality can then be justified in the eyes of the customer by reference to the differences between each level when they can be displayed or demonstrated together using the different models that Audi has to offer with different price points.
I think Audi has a image and quality to maintain, to keep with competitors such as Mercedes Benz and BMW, so going lower in pricing might actually hurt Audi’s profits and sales in the long run, as the perceived value is lowered in the eyes of the customer compared to the competitors products.
Sources:
www.tutor2u.net
Marketing 2nd edition (Hill & O'Sullivan 1999)
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