Chapter 8 Contemporary Topics in Marketing PDF

lOMoARcPSD|19953698 Chapter 8 Contemporary topics in Marketing banking (Universiti Teknologi MARA) Scan to open on Studocu Studocu is not sponsored or endorsed by any college or university Downloaded by dh...

lOMoARcPSD|19953698 Chapter 8 Contemporary topics in Marketing banking (Universiti Teknologi MARA) Scan to open on Studocu Studocu is not sponsored or endorsed by any college or university Downloaded by dheee dhuuu ([email protected])  lOMoARcPSD|19953698 CUSTOMER RELATIONSHIP MANAGEMENT Customer relationship management (CRM) focuses on understanding customers as individuals instead of as part of a group. To do so, marketers make their communications more customer-specific, like the personalized marketing efforts used by Amazon. com. CRM was initially popularized as one-to-one marketing. But it has become a much broader approach to understanding and serving customer needs than one-to-one marketing. Customer relationship management is a company-wide business strategy designed to optimize profitability, revenue, and customer satisfaction by focusing on precisely defined customer groups. This is accomplished by organizing the company around customer segments, establishing, and tracking customer interactions with the company, fostering customer-satisfying behaviors, and linking all processes of the company from its customers through its suppliers. For example, Spotify.com targets consumers who listen to streaming audio. Then, by requiring users to log in, Spotify.com tracks their musical preferences and usage. Listen.com can leverage this information to offer special promotions and make recommendations to specific target markets and individuals. The difference between CRM and traditional mass marketing can be compared to shooting a rifle and a shotgun. If you have good aim, a rifle is the more efficient weapon to use. A shotgun, on the other hand, increases your odds of hitting the target when it is more difficult to focus. Instead of scattering messages far and wide across the spectrum of mass media (the shotgun approach), CRM marketers now are homing in on ways to effectively communicate with each individual customer (the rifle approach). The Customer Relationship Management Cycle On the surface, CRM may appear to be a rather simplistic customer service strategy. But, while customer service is part of the CRM process, it is only a small part of a totally integrated approach to building customer relationships. CRM is often described as a closed-loop system that builds relationships with customers. Exhibit 21.1 illustrates this closedloop system, one that is continuous and circular with no predefined starting or end point. Downloaded by dheee dhuuu ([email protected])  lOMoARcPSD|19953698 EXHIBIT 21.1 A Simple Flow Model of the Customer Relationship Management System To initiate the CRM cycle, a company must first identify customer relationships with the organization. This may simply entail learning who the customers are or where they are located, or it may require more detailed information on the products and services they are using. Bridgestone a tire manufacturer and tire service company, uses a CRM system called OnDemand5. The system initially gathers information from a point-of-sale interaction. The types of information gathered include basic demographic information, how frequently consumers purchase goods, how much they purchase, and how far they drive. Next, the company must understand the interactions with current customers. Companies accomplish this by collecting data on all types of communications a customer has with the company. Using its OnDemand5 system, Bridgestone can add information based on additional interactions with the consumer such as multiple visits to a physical store location and purchasing history. In this phase, companies build on the initial information collected and develop a more useful database. Using this knowledge of its customers and their interactions, the company then captures relevant customer data on interactions. As an example, Bridgestone can collect information such as the date of the last communication with a customer, how often the customer makes purchases, and whether the customer redeemed coupons sent through direct mail. Downloaded by dheee dhuuu ([email protected])  lOMoARcPSD|19953698 How can marketers realistically analyze and communicate with individual customers? How can huge corporations like FedEx manage relationships with each and every one of their millions of customers on a personal level? The answer lies in how information technology is used to implement the CRM system. Fundamentally, a CRM approach is no more than the relationship cultivated by a salesperson with the customer. A successful salesperson builds a relationship over time, constantly thinks about what the customer needs and wants, and is mindful of the trends and patterns in the customer’s purchase history. A good salesperson often knows what the customer needs even before the customer knows. The salesperson may also inform, educate, and instruct the customer about new products, technology, or applications in anticipation of the customer’s future needs or requirements. This kind of thoughtful attention is the basis of successful CRM systems. Information technology is used not only to enhance the collection of customer data, but also to store and integrate customer data throughout the company and, ultimately, to