Paradigm Shift in MarketingMarket place has been evolving under the convergingpressures of changing demographics, global politics,economics, technology and so on.Prominent marketing scholars like Philip Kotler and FrederickWebster have expressed that there has been a shift from atransactions to a relationship focus.Driving Forces• Customer orientation focus on profitability rather than sales volumes and emphasis on market segmentation are gaining importance.• New trend in marketing has replaced “products and “services” with “value”.• Relationship Marketing concept requires specific resource resource commitments, key part of which is the use of marketing research
Paradigm Shift in MarketingThemes for New MarketingThe 4Ps are also loosing credibility. They are moreproduction than customer orientedand poses lot of flaws in its definitionA creative process to look at the market;• Understand potential customer needs and wants• Consider the basic capabilities of the firm;• Conceive potential product offerings based on the present and potential capabilities;• Design and develop products and services for their customers
Relationship ManagementOrganisation‟s Marketing activities: - Create customers(bringing buyers and sellers). - Firm‟s success depends upon getting customers but keepingcustomers is crucial. Retaining customer is challenging than acquiringcustomer. Successful firms keep long term relationship with customersRelationship Management : Interaction with customers over a long timeperiod. A Sale is not the end of marketing(courtship) process but beginningof relationship(marriage) with customer. Customer is satisfied : receives more than what it expects fromorganisation. Will repeat purchase when it has been treated well in past. Establishing relationship increases long term sales and reducemarketing costs.Marketers job – use resources to create, interpret and maintainrelationship with customers. Firm must focus on both getting and keeping customers.
Traditional Marketing vs RM Traditional Marketing RMGoal: Expand customer base, Goal: Establish a profitable, long-term,increase market share by mass one-to-one relationship withmarketing. Gaining more and more customers; understanding their needs,new customers preferences, expectations rather than isolated individual transactionsProduct oriented view. Less Customer oriented view. Idea toattention to expectation, develop loyal customer for the purposesatisfaction etc. of retaining them forever.Does not focus long term Focuses long term perspective byperspective retaining customersCustomer is viewed as an outsiders, Customer is insider to organisation,less attention to customer service aims to long term never endingand commitments relationship with them.Mass marketing / mass production Mass customization, one-to-one marketingStandardization of customer needs Customer-supplier relationship
Why Organisations Lose Customers ?• Price related reasons : mismatch in price and value• Product related reasons : technology. New brand making entry willbe capable of offering better performance and will induce brand switch.• Service related reasons : not only the brand the accompanyingservices at pre, during and post sales.• Benefit related reasons : appealing benefits offered by competitors• Competitor related reasons :• Personal reasons :Organisation should analyze periodically reasons and accordingly developcustomer retention plan which should be the basis for building a strong andlong term relationship with customer.Strategies for building relationship• People : all should work towards satisfying customers.• Process : need identification of customer till its fulfillment• Product : offered must be constantly provide value addition• Organisation : response must be faster than competitors• Setting satisfactory service standard : pre, during and post services• Concentration on competitors :competitor performance, Increase own strength and reduce weakness
Strategies for building relationship• Customer analysis : present consumers using products/service of theorganosation and prospective customers who are using competitors.• Cost analysis : without reducing quality• Concentration on the paying ability of customers : fixation of price• Knowledge on purchase behavior pattern : % of purchase decision Purchase, Rejection, Postponement, Search for substitute,• Differentiation in price and quality standards• Focus on reducing dissatisfaction : complaints must be well attended.• Attention on changing requirements of customers :• Concentration on Performance : in each stage of value chain• Training to supply chain employees :• Empowerment to service providers• Augmenting Intangible Benefits : courtesy, effective listening made by service providers, point of purchase atmosphere, expertise services offered etc.• Visit to point of usage of the product• Develop partnership with customers : buyback arrangements, training employees, extending managerial support to customer organisation• Organizing customer clubs : would focus mutual belonging, understanding, and sharing of common problems and emotions etc.
What Is CRMCRM “is a business strategy that aims to understand,anticipate and manage the needs of an organisation‟scurrent and potential customers”It is a “comprehensive approach which provides seamlessintegration of every area of business that touches thecustomer- namely marketing, sales, customer services andfield support through the integration of people, process andtechnology”CRM is a shift from traditional marketing as it focuses on theretention of customers in addition to the acquisition of newcustomers“The expression Customer Relationship Management (CRM)is becoming standard terminology, replacing what is widelyperceived to be a misleadingly narrow term, relationshipmarketing (RM)”.
What Is CRM“CRM is concerned with the creation, development andenhancement of individualised customer relationships withcarefully targeted customers and customer groups resulting inmaximizing their total customer life-time value”CRM system brings together lots of pieces of informationabout customers, characteristics, sales transactions, markettrends etc.An effective CRM describes customer relationship in sufficientdetail so that all aspects of organisation can accessinformation, match customer needs with satisfying productofferings, remind customers of service requirements, knowwhat products a customer has purchased etc.
Purpose of CRM “The focus [of CRM] is on creating value for the customer and the company over the longer term”. When customers value the customer service that they receive from suppliers, they are less likely to look to alternative suppliers for their needs. CRM enables organisations to gain „competitive advantage‟ over competitors that supply similar products or services.
Why is CRM important? “Today‟s businesses compete with multi-product offerings created and delivered by networks, alliances and partnerships of many kinds. Both retaining customers and building relationships with other value-adding allies is critical to corporate performance”. “The adoption of CRM is being fuelled by a recognition that long-term relationships with customers are one of the most important assets of an organisation”.
Why did CRM develop?CRM developed for a number of reasons:• The 1980‟s onwards saw rapid shifts in business that changed customer power.• Supply exceeded demands for most products.• Sellers had little pricing power.• The only protection available to suppliers of goods and services was in their relationships with customers.
CRM Process as a hub of applied learning Cultivate & develop Recognize interest, Acquire Needs/wants Trust, desire Customer & of defined Establish a segments relationship Collect, warehouse and analyze Customize data Customize Channel Promotion, Outlets, Information, locations interaction Customize Offers, Products and Services
Potential Returns of CRM SystemsCustomers are different : bring different level of profit to theorganizationSuccessful organisations : best customersROI in acquiring customer : comparison of revenue and costs Benefits Costs Organisation Customer focus Privacy Customer retention Opportunity Share of customer Lifetime value of the Long term profitability relationship Benefits Continuity Costs Customer Contact touch points Infrastructure- Personalized service Investments Enhanced satisfaction Reactions to process Safety Potential Costs and Benefits of CRM Systems
Potential Returns of CRM SystemsBenefits to the OrganisationCustomer Focus : learn enough about the customer• Retention : firm satisfies customer and offer variety such that customer repeats transactions. It cost six times more to get a new customer than to retain one. Higher retaintion rates increases revenue and reduces costs.• Share of customer/wallet : -Cross selling : marketing complementary products to existing customers -Bundling : -Up-selling : higher value customers to existing/new customers• Long Term profitability : customer focus, retention of loyal customers and greater share of customer implies long term profit.
Potential Returns of CRM SystemsPotential Costs to the Organisation• IT Infrastructure :• Process Change : It is the people who implement and customers must appreciate, use them with ease, and feel safe in the process.Potential Benefits for Customers• Continuity : Firm has to consistently meet customer’s need over time• Contact Point : customer communicate and explain their need, enabling the organisation to learn more about each customer’s need• Personalization : one-to-one marketing – tailor made offerings to individuals(increased customization of goods and personalisation of services.Potential Costs for Customers• Privacy :• Opportunity costs :
Relationship : Lifetime ValueCustomer is a member of household or organisation(suppliers, retailstores, wholesalers). Relationship focuses on net gain to each party inan exchange over time when interaction occurs. CRM may be expensive to implement, the long term benefit will be apparent as time progresses, repeat purchase occurs and customerloyalty deepens.