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Chapter 2


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A Handbook of Key Customer Relationship Management - Ken Burnett

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Chapter 2

  1. 1. Is your organization really customer driven?<br />KKB<br />
  2. 2. The Evolution<br />
  3. 3. The Marketing Concept- Revisited….<br />The Basic Concept was – Make things Customer Wants<br />Modern Marketing was developed during 60’s<br />During 1850’s There were marketing researches, Pricing Policies<br />During 1900 it became a subject to be studied<br />The flaws came out in 1957 with Ford<br />
  4. 4. The Marketing Concept of ages<br />
  5. 5. Factors Enhancing the role of Purchasing<br />
  6. 6. Purchasing is Complex because<br />
  7. 7. The Changing Face of Purchasing<br />Until the mid 1980s, it had never been considered as a major player<br />Now it is considered as a strategic weapon to achieve competitive advantage<br />The emphasis is not just on doing things right but on making sure that the right things are being done in the first place<br />Today&apos;s buyers are more proactive<br />The objective is to have close business collaborations<br />
  8. 8. The Role of Purchasing Management…<br />Direct and Indirect Material Costs<br />Vertical Integration<br />Technological Change<br />Cost of Capital<br />Quality<br />Competitive Structure<br />
  9. 9. Purchasing Task is a Complex One<br />Rapid Fluctuation of Demand and Supply<br />Price Volatility of Raw Materials<br />Constant Innovations<br />Continuous Shifts in Currency Values<br />Government Intervention<br />
  10. 10. How Do Purchasing Policies Impact on KCRM <br />High<br />3. Guarantees of <br />Availability<br />1. Technical <br />Cooperation<br />Supply Risk<br />4. Efficient Order <br />Processing<br />2. Optimization of <br />Savings Potential<br />Low/ Standard <br />Product<br />Value<br />Low<br />High<br />Figure: Supply Risk & Financial Implication Matrix<br />
  11. 11. Selling Strategies….<br />
  12. 12. Customer Driven Marketing<br />
  13. 13. Gaining and Sustaining Competitive AdvantageCompetitive advantage is created in two ways<br /><ul><li>Cost leadership permitting pricing polices that enable your target customers to compete in their markets.
  14. 14. Distinctive competence giving your target customers a competitive edge in their markets.</li></li></ul><li>Cost leadership Strategy<br />Resulting from:<br />Production efficiency<br />Economies of scale<br />Use of resources<br /> The aim is to provide acceptable Quality at the lowest possible delivered cost.<br />The key to success is to understand the cost structure of both customers and their own company. <br />
  15. 15. Distinctive Competence Strategy<br />Results from:<br />Innovation<br />Responsiveness to customer needs<br />Superior service<br />The objective here is to create a unique position for the company in the Market.<br />Distinctive competence permits premium prices.<br />Profitability depends in part on the sustainability of Competitive advantage.<br />
  16. 16. Value Driven Strategy<br />Key to stability and gain with key customers.<br />How much value the customer is getting over and above the price that is paid. <br />
  17. 17. Issues to be addressed…..<br />
  18. 18. Pitfalls of going for superior value<br /> Creating difference that buyers do not value.<br /> Pricing in excess of values delivered.<br /> Failure to understand the real cost of differentiation.<br /> Looking only to the core product as the basis of differentiation. <br />
  19. 19. How To Develop Competitive Advantage<br />
  20. 20. Steps to competitive advantage<br />
  21. 21. Motivation? Who Needs it?<br />Motivation is the internal condition that activates behavior and gives it direction; energizes and directs goal-oriented behavior. Allowing incentives and letting the employees feel “I am an important part of the organization” are considered significant motivational facts. <br />Awarding employees their due credits strengthens their motivation. <br />Motivation begins with keeping employees in the know of corporate successes. <br />Informing and motivating employees should be continuous, dynamic, instant and fun! <br />For example: Jaguar Cars <br />
  22. 22. What Employees have to do<br />Understand that they are serving customers. <br />Be customer driven <br />because they all have customers, either internal or external.<br />Acquire the proper understanding of the company morale <br />“Delight” customers and retain them profitably.<br />
  23. 23. Factors contributing to competitive service edge<br />
  24. 24. What is malaise and recovering from it<br />Malaise is dissatisfaction, depression, discomfort, etc.<br />Occurs due to dissatisfying job and increment systems and other social pressure<br />Organizations can go for performance based payment systems enabling ‘value’ or ‘value additions’ to the basic salary.<br />Create awareness activities and greater bonding.<br />
  25. 25. Getting rid of management myopia<br />
  26. 26. The End<br />