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INTRODUCTION
Product and quality focused strategies are developed in the retailing of twentieth
century. Customer focused strategies have been replaced its in over time. Previously
customers were only buying they are offered to they, but nowadays customer’s wants
and expectations has considered. With development: Customer Relationship
Management (CRM) a long-term relationship between customer with firms has been
necessary. Firms offer customers product and service which their will have satisfaction.
Firms should try to make satisfied customers loyal to firm with realized CRM
applications. However, customers’ shopping behavior is of great importance.
Retail business is one of the rapidly growing sectors in Turkey. The companies have to
work customer centered in order to sustain in that market. Today, the main goal for the
companies is sustainability instead of profitability. That point out the retail companies
have to hold the customers continuously. It is not enough to make higher investments in
advertisement and to get new customers in order to compete in the market. The
companies have to understand the customers’ expectations in order to provide customer
satisfaction and to manage the customer relationship successfully.
Consumers’ of shopping behavior and expectations is being tried to understand with
Customer Relationship Management (CRM) and it aims to establish a more profitable
and a long-term relationship. Especially in retailers who have lots of customer
understanding of customer behavior has become quite difficult. Therefore, profitable
customers and this customers’ expectations, their shopping behaviors tried to be
understood with store cards, several surveys and one-to-one communication.
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PART 1
RETAILING
Retailing is the process of selling products and services to consumers for their personal
or family use. A retailer is the final business in a distribution channel that links
manufacturers with consumers. Although a retailer can also be manufacturer or a
wholesaler in the distribution chain, most retailers direct their efforts to satisfying needs
of ultimate consumers. (Burton S. Kaliski; 2007:643)
From the very beginnings of recorded history, and even back into those ages for which
only the archaeologists’ excavations give us a record, we find that men have traded with
each other to obtain the necessities and luxuries of life. In today’s complex life we must
not forget this simple truth –that the object of all business, retailing included, is the
satisfaction of human wants. It is this objective, the more complete satisfaction of our
wants, which has led us on through countless centuries of business history. The
shopkeepers of ancient Rome, the peddlers of the Middle Ages, the early American
general storekeepers, and the operators of today’s glistening supermarkets –all are a part
of family tree, for each in his own way has studied the desires of mankind and has
served mankind in fulfilling them. Today’s retailer finds investment, work, and risk still
his lot, but be also has the same rewards awaiting him. (Anderson and Butterworth;
1956:1, 3):
The role of retailing must be understood clearly both by the business-man and by the
business student if today’s retailers and today’s students –who are tomorrow’s retailers
–are to make the most of their rich opportunities.
Each day the modern shopper turns to the retail store to give him all the things that
make up what we call “the American way of life”. The retail stores of the nation each
day serve the tens of millions of Americans across this continent. Before we become
aware of our own needs, the retailer has foreseen them and has searched the world to get
the things that will satisfy them.
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The retail sector has been experiencing a rapid and continuous change worldwide. There
have also been profound changes in Turkey, especially after the 1980s. Both the retail
sector and the urban retail environments have been altered radically. One of the most
significant indicators of this change is the proliferation of western-type large-scale retail
developments. Past experiences in developed countries have shown that the
uncontrolled development of large-scale retail areas results in some undesired
socioeconomic and physical outcomes, such as decline in the cultural and commercial
activities of city centers, damage in existing retail workforce structure, and change in
local retail hierarchy, nearby land uses, traffic loads and original architectural identity.
Many countries have put into practice restrictive and regulatory policies to prevent these
negative effects. As similar transformations have also been realized in Turkish retail
environments, many institutions think that similar legal regulations must be
implemented in Turkey as well. The present study investigates the ongoing retail change
within the Turkish context, explores the legal and structural regulatory policies of the
Organization for Economic Co-operation and Development (OECD) countries, and
critically discusses the appropriate retail regulation policies for Turkey. (Megaron;
2009:90)
1. Types of Retailers
Retail stores come in all shapes and sizes -from your local hairstyling salon or family
owned restaurant to national specialty chain retailers. (Kotler ; 2012:399)
Over time, different types of retailers have emerged and prospered because they have
attracted and maintained a significant customer base. A retail institution is a group of
retailers that provide a similar retail mix designed to satisfy the needs of a specific
segment of customers. The most basic characteristic of a retailer is its retail mix, which
include decisions and strategies regarding the type of merchandise sold, the price of the
merchandise, the assortment of the merchandise, and the level of customer service.
(Kaliski; 2007:645)
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1.1. According to Amount of Service
Different types of customers and products require different amounts of service. To meet
these varying service needs, retailers may offer one of three service levels: self-service,
limited service, and full service. (Kotler ; 2012:400):
Self-service retailers serve customers who are willing to perform their own “locate-
compare-select” process to save time or money. Self-service is the basis of all discount
operations and is typically used by retailers selling convenience goods (such as
supermarkets) and nationally branded, fast-moving shopping goods. Limited-service
retailers, such as Sears or JCPenny, provide more sales assistance because they carry
more shopping goods about which customers need information. Their increased
operating costs result in higher prices.
In full-service retailers, such as high-end specialty stores (for example, Tiffany or
Williams-Sonama) and first-class department stores (such as Nordstrom or Neiman
Marcus), salespeople assist customer in every phase of the shopping process. Full-
service stores usually carry more specialty good for which customers need or want
assistance or advice. They provide more services resulting in much higher operating
costs, which are passed along to customers as higher prices.
1.2. According to Product Line
Retailers can also be classified by the length and breadth of their product assortments.
Some retailers, such as specialty stores, (for example; REI or William-Sanoma) carry
narrow product lines with deep assortments within those lines. Today, specialty stores
are flourishing. The increasing use of market segmentation, market targeting, and
product specialization has resulted in a greater need for stores that focus on specific
products and segments. (Kotler ; 2012:400,401,402):
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In contrast, department stores (such as Macy’s or Sears) carry a wide variety of product
lines. In recent years, department stores have been squeezed between more focused and
flexible specialty stores on the one hand and more efficient, lower-priced discounters on
the other. Others have stepped up the use of store brands and single-brand “designer
shops” to compete with specialty stores. Still others are trying catalog, telephone, and
Web selling. Service remains the key differentiating factor.
Supermarkets (like, Kroger or Safeway) are the most frequently shopped type of retail
store. Today, however, they are facing slow sales growth because of slower population
growth and an increase in competition from discount supercenters (Walmart) on the one
hand and specialty food stores on the other. Supermarkets also have been hit hard by the
rapid growth of out-of-home eating over the past two decades. In fact, supermarkets’
share of the groceries and consumables market plunged from 89 percent in 1989 to less
than 50 percent in 2008.
Convenience stores are small stores that carry a limited line of high-turnover
convenience goods. After several years of stagnant sales, convenience stores are now
experiencing healthy growth. Last year, U.S. convenience stores posted sales of $624
billion, an 8 percent increase over the previous year. About 75 percent of overall
convenience store revenues come from sales of gasoline; a majority of in-store sales are
from tobacco products and better and beer and over beverages.
Superstores are much larger than regular supermarkets and offer a large assortment of
routinely purchased food products, nonfood items, and services. Walmart, Target,
Meijer and other discount retailers offer supercenters, very large combination food and
discount stores. Whereas a traditional grocery store brings in about $333,000 a week in
sales, supercenter brings in about $1.5 million week.
Recent years have also seen the explosive growth of superstores that are actually giant
specialty stores, the co-called category killers (e.g., Best Buy, Home Depot, and
PetSmart). They feature stores the size of airplane hangars that carry a very deep
assortment of a particular line with a knowledgeable staff. Category killers are prevalent
in a wide range of categories, including electronics, home –improvement products,
books, baby gear, toys, linens and towels, party goods, sporting goods, and even pet
supplies.
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Finally, for many retailers, the product line is actually a service. Service retailers
include hotels and motels, banks, airlines, collages, hospitals, movie theaters, tennis
clubs, bowling alleys, restaurants, repair services, hair salons, and dry cleaners. Service
retailers in the United States are growing faster than product retailers.
1.3. According to Relative Prices
Retailers can also be classified according to the prices they charge. Most retailers
charge regular prices and offer normal-quality goods and customer service. Others offer
higher-quality goods and service at higher prices. Retailers that feature low prices are
discount stores and “off-price” retailers. (Kotler ; 2012:402,404,405):
A discount store (e.g., Target, Kmart, and Walmart) sells standard merchandise at lower
prices by accepting lower margins and selling higher volume. The early discount stores
cut expenses by offering few services and operating in warehouse like facilities in low-
rent, heavily traveled districts.
As the major discount stores traded up, a new wave of off-price retailers moved in to
fill the ultralow-price, high-volume gap. Ordinary discounters buy at regular wholesale
prices and accept lower margins to keep prices down. In contrast, off-price retailers buy
at less-than-regular wholesale prices and charge consumers less than retail. Off-price
retailers can be found in all areas, from food, clothing, and electronics to no-frills
banking and discount brokerages.
The three main types of off-price retailers are independents, factory outlets, and
warehouse clubs. Independent off-price retailers either are independently owned and
run by smaller independents, most large off-price operations are owned by bigger retail
chains.
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Factory outlets –manufacturer- owned and operated stores by firms such as J.Crew,
Gap, Levi Strauss, and others- sometimes group together in factory outlet malls and
value retail centers, where dozens of outlet stores offer prices as much as 50 percent
below retail on wide range of mostly surplus, discounted, or irregular goods. Whereas
outlet malls consist primarily of manufacturers’ outlets, value-retail centers combine
manufacturers’ outlets with off-price retail stores and department store clearance
outlets. Factory outlet malls have become one of the hottest growth areas in retailing.
Warehouse clubs (or wholesale clubs or membership warehouses), operate in huge,
drafty, warehouse like facilities and offer few frills. However, they offer ultralow prices
and surprise deals on selected branded merchandise. Warehouse clubs have grown
rapidly in recent years. These retailers appeal not only to low-income consumers
seeking bargains on bare-bones products but also all kinds of customers shopping for a
wide range of goods, from necessities to extravagances.
1.4. According to Organizational Approach
Although many retail stores are independently owned, others band together under some
form of corporate or contractual organization. The major types of retail organizations
are corporate chains, voluntary chains, retailer cooperatives, and franchise
organizations. (Kotler; 2012: 405,406):
Chain stores are two or more outlets that are commonly owned and controlled. They
have many advantages over independents. Their size allows them to buy in large
quantities at lower prices and gain promotional economies. They can hire specialists to
deal with areas such as pricing, promotion, merchandising, inventory control, and sales
forecasting.
The great success of corporate chains caused many independents to band together in one
of two forms of contractual associations. One is the voluntary chain –a wholesaler-
sponsored group of independent retailers that engages in group buying and common
merchandising. The other type of contractual association is the retailer cooperative –a
group of independent retailers that bands together to set up a jointly owned, central
wholesale operation and conduct joint merchandising and promotion efforts. These
organizations give independents the buying and promotion economies they need to meet
the prices of corporate chains.
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Another form of contractual retail organization is a franchise. The main difference
between franchise organizations and other contractual systems (voluntary chains and
retail cooperatives) is that franchise systems are normally based on some unique
product or service; a method of doing business; or the trade name, goodwill, or patent
that the franchisor has developed. Franchising has been prominent in fast-food
restaurants, motels, health and fitness centers, auto sales and service, and real estate.
Once considered upstarts among independent business, franchises now command 40
percent of all retail sales in the United States. These days, it’s nearly impossible to stroll
down a city street without seeing a McDonald’s, Subway, Jiffy, Lube, or Holiday Inn.
One of the best-known and most successful franchisers, McDonald’s, now has 32,000
stores in 118 countries, including almost 14,000 in the United States. It serves 58
million customers a day and racks up more than $54 billion in annual system wide sales.
Nearly 80 percent of McDonald’s restaurants worldwide are owned and operated by
franchises. Gaining fast is Subway, one of the fastest-growing franchises, with more
than 32,000 shops in 91 countries, including more than 23,000 in United States.
2. Retailer Marketing Decision
Retailers are always searching for new marketing strategies to attract and hold
customers. In the past, retailers attracted customers with unique product assortments and
more or better services. Today, retail assortments and services are looking more alike.
Many national-brand manufacturers, in their drive volume, have placed their brands
almost everywhere. You can find most consumer brands not only in department stores
but also in mass-merchandise discount stores, off-price discount stores, and all over the
Web. Thus, it’s now more difficult for any one retailer to offer exclusive merchandise.
(Kotler; 2012: 406,407):
Service differentiation among retailers has also eroded. Many department stores have
trimmed their services, whereas discounters have increased theirs. Customers have
become smarter and more price sensitive. They see no reason to pay more for identical
brands, especially when service differences are shrinking. For all these reasons, many
retailers today are rethinking their marketing strategies.
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2.1. Retailer Marketing Strategy and Mix
Strategic planning and operations management model, suggests that a retailer must
engage in two types of planning and management tasks: strategic planning and
operations management. (Dunne and Lusch; 2008:52-58):
Strategic planning is concerned with how the retailer responds to the environment in an
effort to establish a long-term course of action. In principle, the retailer’s strategic
planning should best reflect the line(s) of trade in which the retailer will operate, the
market(s) it will pursue, and the retail mix it will use. Remember, strategic planning
requires a long-term commitment of resources by the retailer. An error in strategic
planning can result in a decline in profitability, a loss of competitive position, or
bankruptcy. On the other hand, effective strategic planning can help protect the retailer
against competitive onslaughts.
The initial steps in strategic planning are to define the firm’s mission, establish goals
and objectives, and perform a SWOT analysis. The next steps are to select the target
market and appropriate location(s). It is important to note that most retail managers or
executives have very little control over location decisions. A newly appointed manager
for a chain department store could change promotional strategy, personnel, service
levels, credit policies, and even prices, but in all likelihood would be constrained by a
long-term lease agreement. In fact, only the senior management of most chains is ever
involved in location decisions. For the smaller retailer just starting out, however, or
retailers considering expansion, location is an important decision.
Strategic planning opportunities are to be found in the realities of a constantly changing
environment. An effective retail strategy can result only from matching environmental
forces (consumer behavior, competitor behavior, supply chain behavior, socioeconomic
environment, technological environment, and legal and ethical environment) with a
retail marketing program that satisfies the customer better than anybody else.
Operations management is concerned with maximizing the efficiency of the retailer’s
use of resources and with how the retailer converts these resources into sales and
profits. In other words, its aim is to maximize the performance of current operations.
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Table 1: Retailer Marketing Strategy (Kotler; 2012:407)
Most of retailer’s time and energy is devoted to the day-to-day activity of operations
management. Operations management involves managing the buying and handling of
merchandise, pricing, advertising and promotion, customer services and selling, people
and facilities. All of these activities requıre day-to-day attention. For example, the
selling floor must be maintained, customer serves, merchandise bought and handled,
advertisements run, and pricing decisions made each and every day. In other words,
operations management is running the store.
The must develop a retail marketing strategy with strong financial elements. A fully
developed marketing strategy should address the following considerations:
a) The specific target market. A target market is the group or groups of customers that
the retailer is seeking to serve. It is important for retailers to understand that different
product offering. For this reason, successful retailers must determine which customers
make them the most money, segment them carefully, them realign their stores and
empower employees to target those favored shoppers with products and services that
will encourage them to spend more and come back often.
Retail Strategy
Retail Segmentation and
Targeting
Store Differentiation and
Positioning
Retail Marketing Mix
Product and Service
Assortment
Retail Prices
Promotion
Distribution
(location)
Create value for targeted retail customers
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b) A location(s), whether a traditional store in a geographic space, a person’s home in a
relation to print catalog or television shopping, or a virtual store in cyberspace, that is
consistent with the needs of the desired target market.
c) The specific retail mix that the retailer intents to use to appeal to its target market,
and thereby meet its financial objectives. The retail mix, is the combination of
merchandise, price, advertising and promotion, location, customer services and selling,
and store layout and design that the retailer uses to satisfy the target market.
d) The retailer’s value proposition is a clear statement of tangible and/or intangible
results a customer receives from shopping at and using the retailer’s product services. It
is the difference between the benefits offered by one retailer and those of the
competition. A good value proposition answers the question “Why should I buy this
product or service from this retailer?”
2.2. Product Assortment and Services Decision
Retailer must decide on three major product variables: product assortment, services mix,
and store atmosphere. (Kotler; 2012: 408-411):
The retailer’s product assortment should differentiate the while matching target
shoppers’ expectations. One strategy is to offer merchandise that no other competitor
carries, such as store brands or national brands on which it holds exclusives. For
example, Saks gets exclusive rights to carry a well-known designer’s labels. It also
offers its own private-labels lines –the Saks Fifth Avenue Signature, Classic, and Sport
collections.
The service mix can also help set one retailer apart from another. For example, some
retailers invite customers to ask questions or consult service representatives in person or
via phone or keyboard. Nordstrom promises to “take care of customer, no matter what it
takes.” Home Depot offers a diverse mix of services to do-it-yourselfers, from “how-
to” classes and “do-it-herself” and kid workshops to a proprietary credit card.
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The store’s atmosphere is another important element in the reseller’s product arsenal.
The retailer wants to create a unıque store experience, one that suits the target market
and moves customers to buy. Many retailers practice “experiential retailing.” None does
this better than The Dubai Mall. More than just a place to go shopping, the Dubai Mall
is a place to relax and have fun.
Today’s successful retailers carefully orchestrate virtually every aspect of the consumer
store experience. The next time you step into a retail store –whether it sells consumer
electronics, hardware, or high fashion –stop and carefully consider your surroundings.
Think about the store’s layout and displays. Listen to the background sounds. Smell the
smells. Chances are good that everything in the store, from the layout and lighting to the
music and even the smells, has been carefully orchestrated to help shape the customer’s
shopping experience –and open their wallets.
In fact, retail establishments sometimes become small communities in themselves –
places where people get together. These places include coffee shops and cafés, shopping
malls, bookstores, children’s play spaces, superstores and urban greenmarkets. For
example, today’s bookstores have become part bookstore, part bookstore, part library,
part living room, and part coffeehouse.
2.3. Price Decision
A retailer’s price policy must fit its target market and positioning, product and service
assortment, the competition, and economic factors. All retailers would like to charge
high markups and achieve high volume, but the two seldom go together. Most retailers
seek either high markup on lower volume (most specialty stores) or low markups on
higher volume (mass merchandisers and discount stores). (Kotler: 2012;411):
Retailers must also decide on the extent to which they will use sales and other price
promotions. Some retailers use no price promotions at all, competing instead on product
and service quality rather than on price. For example, it’s difficult to imagine Bergdorf
Goodman holding a two-for-the-price-of-one sale on Chanel handbags, even in a down
economy. Other retailers –such as Walmart, Costco, and Family dollar –practice
everyday low pricing, charging constant, everyday low prices with few sales or
discounts.
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Still other retailers practice “high-low” pricing –charging higher prices on an everyday
basis, coupled with frequent sales and other price promotions to increase store traffic,
create a low-price image, or attract customers who will buy other goods at full prices.
The recent economic downturn caused a rash of high-low pricing, as retailers poured on
price cuts and promotions to coax bargain-hunting customers into their stores. Which
pricing strategy is best depends on the retailer’s overall marketing strategy, the pricing
approaches of its competitors, and the economic environment.
2.4. Promotion Decision
Retailers use any or all of the five tools –advertising, personal selling, sales promotion,
public relations (PR), and direct marketing –to reach consumers. They advertise in
newspapers and magazines and on the radio, television, and the Internet. Advertising
may be supported by newspaper inserts and catalogs. Store salespeople greet customers,
meet their needs, and build relationships. Sales promotions may include in-store
demonstrations, displays, sales, and loyalty programs. PR activities, such as store
openings, special events, newsletters and blogs, store magazines, and public service
activities, are always available to retailers. Most retailers have also created Web sites,
offering customers information and other features and selling merchandise directly.
(Kotler: 2012; 411)
2.5. Place Decision
Retailers often point to three critical factors in retailing success: location, location, and
location. It’s very important that retailers select locations that are accessible to the target
market in areas that are consistent with the retailer’s positioning. (Kotler: 2012;411,
412):
Most stores today cluster together to increase their customer pulling power and give
consumers the convenience of one-stop shopping. Central business districts were the
main form of retail cluster until the 1950s. Every large city and town had a central
business district with department stores, specialty stores, banks and movie theaters.
When people began to move to the suburbs, however, these central business districts,
with their traffic, parking, and crime problems, began to lose business. In recent years,
many cities have joined with merchants to revive downtown shopping areas, generally
with only mixed success.
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3. Shopping Center in the Retailing
A shopping center is a group of retail businesses built on a site that is planned,
developed, owned, and managed as a unit. A regional shopping center, or regional
shopping mall, the largest and most dramatic shopping center, has from 50 to more than
100 stores, including 2 or more full-line department stores. It is like a covered mini
downtown and attracts customers from a wide area. A community shopping center
contains between 15 and 50 retail stores. It normally contains a branch of a department
store or variety store, a supermarket, specialty stores, professional offices, and
sometimes a bank. (Kotler:2012; 412)
The term “shopping center” has been evolving since the early 1950s. Industry
nomenclature originally offered four basic terms: neighborhood, community, regional,
and super-regional centers. However, as the industry has matured, these four
classifications no longer remain adequate to get rid of ambiguity and accommodate new
shopping center formats. Shopping Center is a group of retail and other commercial
establishments that is planned, developed, owned and managed as a single property,
with on-site parking provided. The center’s size and orientation are generally
determined by market characteristics of the trade area to be served. The three main
physical configurations of shopping centers are malls, open-air centers, and hybrid
centers. (Kuyumcu:2010;11)
3.1. Development and Transformation of Shopping Centers
Shopping as a phenomenon, which has existed since the early history of humanity to
meet needs, is an indispensable activity of today. Throughout the history, shopping
places has been constructed according to physical, economic and cultural characteristics
of the area, and they have been transformed in time with the changes and necessities in
life. Increasing population, changing living conditions and technology depending on
this growth have an enormous impact on production and consumption activities of
communities. Particularly the 21st century has led to a profound change in living
standards of individuals. With the global liberal economy surrounding the whole world,
such kind of transformation has caused in changing social attitudes like increasing
demands and consumption; moreover, the trade centers in cities are also subject to
change in time. (Kuyumcu:2010;1,20):
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Changing consumption behaviors, increasing consumption, product variety, and
technological improvement, which ensures mobility and production with ease, have
provided shopping center formation. Along with the construction of shopping centers,
people find chance to enjoy their leisure time with the activities like shopping, dining,
traveling and relaxing in shopping centers. Throughout time these centers has also
developed new creative functions for the comfort of their visitors.
Today, shopping centers constructed with a modern architecture are generally preferred
to traditional shopping area. Present day Shopping center construction began in the
1960s in USA, and Turkey met with the initial concept of shopping center in 1988 with
the construction of Galleria in İstanbul. After Galleria Shopping Center, which had 42
thousand m2 areas, Turkey has around 250 shopping centers with seven million m2 of
total area today. According to Real Estate Investment Trusts’ (REITs) report, which is
named “Retail Market in Turkey and Prognoses for Shopping Centers by 2015”, Turkey
is a potentially appropriate place for the investors. Although İstanbul is considered as
the main point for many shopping center construction projects today, the other cities in
Anatolia are also seen as the other potential places. 83 percent of the total shopping
centers in Turkey are situated in İstanbul. In conjunction with İstanbul, in other big
cities of Ankara and İzmir, the total number of shopping centers is 110; and in the other
cities in Anatolia, this number surmounts 130.
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With the influence of retail corporations from developed countries upon the sector of
commerce in Turkey, Migros has given start to such investments in 1950s and this
development has been followed by the establishment of Gima in 1956. In 1970s the
supply of foodstuff stores, which were constructed by municipalities with the intention
to organize the sector, has covered the common habits of customers for cheap and
collective shopping, and with the major shift in politics towards import substitution for
industrialization, consumers’ interests to imported goods have increased in 1980s.
Therefore, the emerging need to sell these products has entailed the construction of
shopping centers as a necessity, and by the 1990s, retailers and shopping center
establishments have rapidly grown with the foreign capital. In 1988, the first example in
this sector in Turkey, namely the Galleria Shopping Center for which “The Galleria” in
Huston has been an inspiration, was built in Ataköy İstanbul by state partnership. In
those periods, as a shopping center located in Ataköy Tourism Center, Galleria was
influential upon not only Ataköy, but also the entire city of İstanbul. When it was first
opened, the leasing conditions within the shopping center drew unexpected attention of
the entrepreneurs such that almost all the chain-shopping stores began to have a place in
this center, although the leasing conditions of the center were heavier than those of
street storekeeping of the time.
In Turkey, the metropolitan cities were the first targets of the shopping center
developments, and İstanbul is considered as the first city providing all the conditions
and sites available for shopping center facilities. Following this, there has been a rise in
the number of shopping centers built in other big cities. Atakule and Karum Shopping
Centers in Ankara were the other centers built after Galleria in Ataköy. Recently, the
construction of such buildings has begun to be seen in other Anatolian cities as well.
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PART 2: CUSTOMER RELATIONSHIPS MANAGEMENT (CRM)
1. History of CRM
Within marketing theory and practice, “there has been a long-standing and clear
tendency…to focus on the sale, the single event of a transaction, as the objective of
marketing of marketing activity and the dependent variable for analysis”.
(Peelen:2005;12,13,23,24):
The expectation is that happiness will translate into future repeat purchases. Within
transaction marketing, the process between two or more transactions is neither analyzed
nor influenced. The attention for the relationship and the investments in the relationship
is lacking.
The attention for individual customer –supplier relationships began to grow in the late
1980s and early 1990s.The concept of relationship marketing began to gain in
popularity and was advanced as an alternative to transaction marketing.
Too many companies encountered problems in the implementation of relationship
marketing. Individual knowledge of customers was lacking and the costs of a
differentiated customer approach were perceived to be too high.
Changing daily routines and structures is not easy as it seems. The positive economic
climate throughout the 1990s changed. But this time it is not appropriate to announce
the next “premature death of relationship marketing”. There is too much at stake.
Information technology can enable the dialogue between (large groups) of individual
customers and their suppliers in an efficient way, independent of time and place. To
same extent, there is recognition of the value of individual customer knowledge.
Around 1990, the International Marketing and Purchasing Group with, among others,
designed a conceptual model for relationship marketing in business-to-business
markets. The interaction and networking between buyers and sellers became the subject
of research of this international group.
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At the beginning of the 1990s, an after-effect of analyses and discussion on customer
relationships was that customer retention and lifetime values entered the stage of
marketing research. Relationship marketing, with its origin in the service industry and
business-to-business markets, was in this period also applied to the consumer markets
for branded goods.
The current IT applications for CRM also emerged at the same time that relationship
marketing resurged. Solutions for call centers, Internet and websites, e-commerce, the
data warehouse, campaign management and so forth all developed and spread
throughout the market among.
2. Definition and Development of CRM
The term “CRM” seems to be new and concept witnessed only in the last five years. In
terms of its actual content, CRM obviously involves a much older principles have been
in existence, customer –supplier relationships have been the goal of number of them at
the very last. (Peelen:2005;3)
An increasingly popular technology for cultivating and maintaining the right customers
is customer relationship management (CRM). CRM is composed of an integrated
information system where the fundamental unit of data collection is the customer,
supplemented by other relevant information about the customer including purchasing
behavior. Customer data at the most micro level is captured, including merchandise and
services purchased, store location, time of purchase, demographic information, and
satisfaction data such as customer complaints. (Dunne and Lush:2008;177)
In spite of the progress that being made, there is still some confusion about the meaning
and implications of CRM. In order to illustrate the differences in views, we will present
two extreme and two “standard” definitions. (Peelen:2005; 3-6):
CRM as “the definition of horizontally integrated business processes involving front
office customer contact points (marketing, sales, service and support) via multiple,
interconnected delivery channels”. In this description, CRM is positioned in the “IT
corner”.
19
An entirely different definition suggests that CRM is “a process that addresses all
aspects of identifying customers, creating customer knowledge, building customer
relationships, and shaping their perceptions of the organization and its products”. The
role of technology is not even mentioned in this definition.
CRM is a business strategy and therefore more a functional strategy alone. It affects the
organization as a whole: marketing, IT, service, logistics, finance, production and
development, HR, management, etc. The CRM strategy will have to provide direction to
each department or employee that maintains contact with customers. The employees’
and managers’ customer-oriented approach will have to improve.
In short, it is preferable for CRM to be regarded as business strategy from the start, one
that is aimed towards developing long-term, mutually profitable, individual customer –
supplier relationships and is based on an IT infrastructure to be developed, one that
enables well-defined and controlled processes, and places capable personnel in a
position function optimally.
2.1. Concept and Particular of Customer Relationship
Customer relationship management is perhaps the most important concept of modern
marketing. Some marketers define it narrowly as a customer data management activity.
By this definition, it involves managing detailed information about individual customers
and carefully managing customer “touch points” to maximize customer loyalty.
(Kotler:2012;36):
Most marketers, however, give the concept of customer relationship management a
broader meaning. In this broader sense, customer relationship management is the all
process of building and maintaining profitable customer relationship by delivering
superior customer value and satisfaction. It deals with all aspects of acquiring, keeping,
and growing customers.
Two word “relationship” conjures up thoughts of the feeling that two people have for
another: annual and respect, consideration, dependency and the like. (Peelen:2005; 25):
20
Within the field of psychology, a distinction is made between primary and secondary
relationships. The first type of involves basic long-term interpersonal relationships
which are based primarily on emotional bonds and the love relationship between a man
and woman, are unlike secondary relationships, rather diffuse and comprise many roles,
behaviors and situations. Normally they are not another extremely well. In primary
relationships, limited by strict rules governing contact, and the people involved
generally know one another extremely well. In primary relationships, one person cannot
automatically be replaced by another. Secondary relationships, such as those between
customer and supplier, are by contrast relatively short-term interpersonal relationships
with a limited degree of social interaction, fairly clear rules of etiquette and reasonably
well-defined social roles. In contrast with primary relationships, deep emotional
involvement rarely occurs; the various players may be more easily replaced in general.
2.2. Customer Satisfaction and Creation of Customer Loyalty
American business seems to have developed an absolutely myopic obsession with
customer satisfaction. Bookstore business sections are crammed with customer
satisfaction “how-to” tomes. Every week, millions of people are sent brochures
informing them of customer satisfaction seminars and conferences. Sales
representatives and, increasingly, senior managers are given incentive compensation
and/or recognition for attaining customer satisfaction. (Lowenstein: 1997; 1)
Customer satisfaction depends on the product’s perceived performance relative to a
buyer’s expectations. If the product’s performance falls short of expectations, the
customer is dissatisfied. If performance matches expectations, the customer is satisfied.
If performance exceeds expectations, the customer is highly satisfied or delighted.
(Kotler:2012; 37):
Outstanding marketing companies go out of their way to keep important customer
satisfied. Most studies show that higher levels of customer satisfaction lead to greater
customer loyalty, which in turn results in better company performance. Smart
companies aim to delight customers by promising only what can deliver and then
delivering more than they promise. Delighted customers not only make repeat purchases
but also become willing marketing partners and “customer evangelists” who spread the
word about their good experiences to others.
21
Satisfaction-Based: The supplier company approaches customers in a largely passive
and reactive manner, confident that it can select, acquire, understand, and readily retain
them as desired. Sales operations are emphasized. Management operates from a
traditional bureaucratic model. Processes for performance measurement are
rudimentary, and so is internal and external communication. Staff has minimal
empowerment. (Lowenstein: 1997;4,5)
Companies that stop improving products will soon be out of business. It may be difficult
for many in the food industry today remember when cheese came in wheels or blocks to
be sliced in the store. Some may still come in wheels, but for the most part cheese is not
only sliced, but also packaged by the supplier because it is better for both the customer
and the store operator to have it done that way. There is no rind left on the cheese, it is
evenly sliced, and wrapped in airtight, sanitary packages. This permits the customer to
keep it for days or even weeks without its drying out. The pre-sliced, pre-packaged
cheese relieves the store organization of taking the time to slice it. (Moseley:1972;115)
Performance-Based: The supplier company has greater awareness and sensitivity
regarding customers. Though management still tends to operate from a traditional
hierarchy, the company has formal processes in place for measuring performance and
collecting/acting on complaints. Some companies engage in evaluating customer needs,
training staff to be more proactive with customer, and/or creating teams or assigning
individuals to upgrade customer services. In addition, performance-based companies
more frequently compensate sales and other staff at least partially on customer
satisfaction scores. (Lowenstein: 1997;4,5):
22
Commitment-Based: The supplier company is entirely customer-driven, proactively
approaching customers as partners. Companies are strategically directed toward keeping
customers, with attaining commitment and loyalty (of both staff and customers), a
paramount objective. Management style is often lattice or horizontal, with company
focus on continuous improvement in all activities: understanding and serving customers,
creating knowledge an information flow around customer needs, staff communication
and empowerment, team process, and so forth. Performance measurement is ongoing,
with improvement activity prioritized around customer retention, their intended market
action, and proclivity to remain loyal. Since everyone in the company contributes to
success through keeping customers, everyone receives incentives and recognition based
the company’s level of customer loyalty, sales, and profits.
3. Elements of CRM
It is not the technology but the business strategy which must lead or provide guidance.
The manner in which we aim to achieve a lasting competitive advantage in our industry
is the primary matter of importance. (Peelen:2005;7-10):
The four cornerstones of CRM which must be mentioned first are:
1. Customer Knowledge: Knowledge of the individual customer is essential in order,
ultimately, to develop a long-term relationship and to supply customization.
Companies must develop the competency or capability to develop this type of
individual customer knowledge for a large number of customers. Databases will have to
be filled with correct and current data which will be transformed by analyses into
individual customer information. Individual customer data will have to be supplemented
by the outcomes of anonymous (qualitative) market research so that a more complete
image of the customer may be created.
The aim is still to develop long-term relationships that are mutually profitable. The
information must result in companies being better able to help customers on time, in a
more targeted manner, and with more appropriate solutions. Data that do not contribute
to the achievement of this goal are not worth registering and storing.
23
2. Relationship Strategy: The individual customer information must be used to develop
a long-lasting customer –supplier relationship. In other words, a marketing or other type
of strategy must be implemented which truly differs from a strategy which merely
focuses on the stimulation of transactions and thus requires other competencies.
Companies have a certain means of communication, a short-term horizon and a number
of completed transactions. Market share represents a very important criterion for
success. On the other hand, organizations with a relationship strategy in place have a
longer-term horizon, “tell” and “listen” more than they “sell”, and have a broader and
deeper interest in the right customers.
3. Communication: In the communication between customer and supplier, the
relationship strategy will have to prove itself to a great extent. Is the supplier capable of
carrying on a dialogue with individual customers? Many companies have no experience
in carrying on dialogue of any substance. The situation becomes even more complicated
if we involve the role of information and communication channels, must be developed
through which it is possible to communicate “anywhere, anytime, anyplace”.
4. The Individual Value Proposition: An organization that takes the initiative to get to
know an individual customer, to develop a relationship with him or her, and to carry on
a dialogue with him or her really cannot avoid also offering these customers an
individual circumstances. Together with the customer, for example, the company may
design his or her ideal product.
Adopting the price to the value that the proposition represents for an individual
customer at a certain time and at a certain location offers the supplier an interesting
prospect for increasing sales and profits.
24
One of the pitfalls involved in the development of the customized propositions is that
companies create a complexity which is too large. An attempt is made to combine this
large-scale aspect with flexibility. Companies do not wish to sacrifice the benefits
associated with economies of scale; the advantage of the low costs and the consistent
and high level of quality are vital in order to rise above the competition in any way with
standard products. The result is that, in many cases, a great deal of investment must be
made in order to make the production machines flexible: to be able to switch from one
product to the next and incur very few costs in the process. However, we have learned
in practice that operating in this manner sometimes results in the creation of a great deal
of complexity that is difficult to control.
The development of these four competencies must occur in a step-by-step, balances
manner. The unavoidable situation then arises in which too much is invested in one of
the sub-elements; the expected yield -financial as well as in terms of activity -will fail to
materialize and frustration will develop. The creation of the CRM strategy will be
delayed and in this unfortunate scenario, top management’s commitment to the CRM
strategy falls away and a modified strategy is likely to materialize.
4. The Dynamic in Relationships
How do relationships begin and grow? Trust and commitment cannot be forced; they
must grow. Marketers will have to gain insight into the pattern by which relationships
develop and the manner in which they can influence this process. (Peelen:2005; 35,36):
A relationship which is initially characterized by a discretionary aspect and a focus on
transactions and cross-selling will have to develop into a long-term partnership in which
the supplier functions as a “total solution provider” for the customer. A service provider
who, for example, has the confidence to and is capable of creating an analysis of the
transactions completed with the customer in the past can lay the foundation for a
consultational relationship: what was the point of the purchase, what did you hope to
achieve and how can you gain additional benefits from this supplier? The mutual
respect (status) can continue to grow. The exchange of more personal and non-concrete
resources can cause an increase in the value of the customer –supplier relationship for
both parties.
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In order to increase the level of intimacy, the personal exchange of resources, trust and
commitment, both customer and supplier must have a capacity for empathy. Empathy is
the ability to see the world trough someone else’s eyes, from moment to moment. A
supplier can place itself within the frame of reference of the customer, and at the same
time make the customer aware of the fact that it understands him or her. A condition
necessary for this to occur is that both parties must supply information that is open and
must dare to “expose” themselves.
In terms of the negotiations to be conducted and transactions to be completed, empathy
is a difficult aspect for marketers and salespeople. The marketer and salesperson benefit
from showing their products and organization and in putting their vulnerable side,
listening, and putting themselves in other person’s position.
The development of the relationship may be detailed further on the basis of insights into
relationships originating from the field of social psychology. Dwyer, Schurr and Oh
identify five phases in a relationship. During the first phase, both parties become aware
of each other. Both parties position themselves and take actions designed to
demonstrate their appeal to the other party. The second phase begins that of exploration
or sounding out. This phase begins with attraction. Attraction may develop because both
parties think that they aspire to the same goals or it may originate from the perceived
personality: he or she is honest or capable.
The capacity for empathy plays a much larger role during this second phase. More
interaction takes place and negotiations will be conducted. The future orientation is still
limited and the cooperation is still easy enough to terminate at this stage.
In the growth phase, the third phase, the interaction processes from the previous phase
are continued. Both parties continue to attract the other, negotiations will continue to
take place, norms and expectations will become specified in more detail, and the parties
will also evaluate the situation every now then. However, in comparison with the
previous phase, more risks are now taken; activities are performed to try and test out the
relationship.
26
In fourth phase of the commitment or saturation, the relationship reaches its maximum
level commitment, mutual dependency, trust and respect. Many resources are
exchanged, including those of a personal and less concrete nature.
The final phase is that of the decline. Directness and a focus on others may indicate that
the continuity of the relationship is at issue. The causes of an eventual break may lie
with differences in expectations and individual characteristics of the partners, such as
differing needs for freedom or renewal.
A relationship life cycle has been constructed which describes the pattern in which the
purchases and the commitment in the relationship change over time under the influence
of interactions.
5. New Dimensions of Customer Relationships
Good customer relationship management creates customer delight. In turn, delighted
customers remain loyal and talk favorably to others about the company and its products.
Studies show big differences in the loyalty of customers who are less satisfied,
somewhat satisfied, and completely satisfied. Even a slight drop from complete
satisfaction can create an enormous drop in loyalty. Thus, the aim of customer
relationship management is to create not only customer satisfaction cut also customer
delight. (Kotler: 2012; 44):
The recent economic recession put strong pressures on customer loyalty. It created a
new consumer frugality that will last well into the feature. One recent study found that,
even in an improved economy, 55 percent of consumers say they would rather get the
best price than the best brand. Nearly two-thirds say they will now shop at a different
store with lower prices even if it’s less convenient. It’s five times cheaper to keep an old
customer than acquire a new one. Thus, companies today must shape their value
propositions even more carefully and treat their profitable customers well.
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We usually describe a product or service in terms of several dimensions or
characteristics. For example, after receiving a service, we might describe the service
provider as fast, always available when needed, and unpleasant. These descriptions
represent three different aspects of the service: responsiveness, availability, and
professionalism, respectively. These are a subset of all possible dimensions by which
the service can be described. The composite of all possible dimensions describes the
entire product or service. (Hayes:1992;6):
We can regard customer requirements as those characteristics of the product or service
which represent important dimensions. They are the dimensions on which customers
base their opinion about the product or service.
The purpose of determining customer requirements is to establish a comprehensive list
of all the important quality dimensions that describe the service or product. It important
to understand the quality dimensions so that will you know how customers define the
quality of your service or product. Only by understanding the quality dimensions will
you be able to develop measures to assess these quality dimensions.
5.1. Total Quality Management in Customer Relationships
Although there may be some standard quality dimensions that generalize across many
products or services, some dimensions will apply to specific types of products or
services. Quality dimensions applicable to many service organizations include
availability, responsiveness, convenience, and timeliness. These quality dimensions
seem applicable to many service industries, such as the banking, hotel, and hospital
industries. This list of quality dimensions, however, is not comprehensive for each of
these industries. The hospital industry might include additional quality dimensions such
as quality of food and quality of care. Similarly, other industries may possess quality
dimensions that uniquely define their services and products. It is important that each
company identify all quality dimensions to ensure understanding of the definition of
quality for its products or services. (Hayes:1992;6):
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Quality dimension development involves the people who provide the service or product.
They should be in a good position to understand the purpose and function of the service
or product. These people could range from individuals within a quality circle
addressing a particular problem to individuals working independently to better
understand their customers’ requirements. In either case, these people are closely
involved with the business process.
5.2. Value Creation for Customer
Companies wishing to create and sustain a customer commitment-based culture and
infrastructure must also create and sustain real value for the customer. Value can be
expressed in terms of tangibles (time, money, efficiency, quality, etc.) or intangibles
(pride, and well-being). Customers have become increasingly selective and less strictly
logical in their search for more attractive quality, service, price, and other equity
elements. Like needs, problems, expectations, and complaints customer-perceived value
is constantly changing. Value authority Robert B. Tucker has identified four key drivers
in what he calls the “value revolution”. (Lowenstein: 1997;12,13,14,45,46) :
1. The New Consumer: “The new consumer demands to be more involved in what your
products is how it functions, and how much you charge for it. The new consumer is
better informed, more demanding, and has vastly greater choices in what and where he
or she purchases”. The customer, whether consumer or business-to-business, is now
considerably more concerned with the delivery of benefit –value– within the product or
service.
2. Bypass Competition: Companies are offering new areas of competitive advantage.
Traditional retailers, for example, used to be only source for certain kinds of goods.
Time-pressed multi-career baby boomers and senior citizens can have their groceries
selected and delivered by companies. The rapid proliferation of home computers, the
Internet and the World Wide Web are also changing the competitive arena.
29
3. Value Innovators: Companies are increasingly finding that they have to create (or
recreate) value for customers that goes beyond statements of need or expectation. For
example, recognizing that they are known for service, but still vulnerable to other forms
of retailing, have staff in many stores who give advice, help customers shop for the right
gift holiday time, and even accompany them from department to department (something
that has been done in Japan for decades). Motorola will virtually customize cellular
phone features according to individual customer specifications. Ikea has dramatically
changed the furniture buying landscape by creating a new value equation for furniture
customers.
4. Buyer Information Power: Customers now have more information about the products
and services they purchase than at any time in the past. Periodicals, books, newspapers,
databases, and newsletters evaluate, rate, or describe the features of hundreds of
products.
These drivers mean that having high quality, low prices, excellent service, and customer
satisfaction do not ensure customer loyalty. Lowering price, without creating
commensurate value, is a perception for probable failure.
Finally, the belief that customer satisfaction and customer loyalty are an identical, or
even a closely related, concept must change. Over the years, millions have been spent
measuring customer satisfaction has relatively little to do with bottom line performance.
Satisfaction is a passive state. Loyalty is proactive and more complex. It involves the
customer’s own criteria for value. At best, the relationship between customer
satisfaction and customer loyalty is unreliable and inconsistent. At worst, it is a false
prophet, leading companies to invest resources in satisfaction- producing efforts in that
belief that customers will reward them for it.
The long-term value strategy is built on creating strong relationships with customers
and anticipating their requirements. A significant new challenge is emerging with
regard to value. Companies must now strategize with respect to both the physical
product and “virtual” product, such as information. Overlaps in physical and virtual
product occur in many industries, particularly those where a tangible product, such as
information support, coexist.
30
Executives must pay attention to how their companies create value in both the physical
world and virtual world. But the processes for creating value are not the same in the two
worlds. By understanding the difference and the interplay between the value-adding
processes of physical world and those of the information world, senior management can
see more clearly and comprehensively the strategic issues facing their organization.
(Harvard Business:1997)
The world of business increasingly demands a shift from supply-side to demand-side
thinking. As companies gather, select, synthesize, and distribute information in the
marketplace while managing raw and manufactured goods in the marketplace, they have
the opportunity to “sense and respond” to customers’ desires rather than simply to make
and sell products and services.
Senior managers must evaluate their business –its opportunities and risks– along the
value chains of both worlds, virtual and physical. Today events in either con make or
break a business.
5.3. Customer Lifetime Value
CRM vendors are now providing the ability to calculate a customer lifetime value of a
customer based on various criteria. One of the models determines the customer lifetime
value on a formula based on the recency, frequency, and monetary values for a
customer:
 Recency –amount of recent purchases by the customer.
 Frequency –the frequency of purchases by a customer.
 Monetary values –the monetary values of purchases by a customer.
The ability to track customer lifetime value and to segment customers more precisely
for eventual offering of unique services and products depending on their current and
products perceived value. (Goldenburg:2002;42)
The lifetime value is the net present value of the feature contribution by a customer to
the overhead and the profit of a company. The customer makes a contribution to the
result if the income from transactions exceeds the expenses incurred in completing them
and maintaining the relationship. (Peelen:2005;275,276):
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From a theoretical viewpoint, the most accurate calculation of the contribution is
obtained when all of the customer-specific incomes and expenses are allocated to each
customer. Not only the expenses incurred in completing a transaction, but also those
involved in acquisition and relationship management are allocated so that the most
complete insight possible may be gained into the customer’s profit contribution.
However, this is not practicable in most situations. Incomes may generally be attributed
to a certain customer, but this is more difficult when it comes to expenses. Companies
usually have no insight into the actual expenses that are incurred for a specific
customer. Calculations of standard costs should give an indication of the expenses that
are incurred when efficient methods are used to acquire, serve and manage the
relationship, etc. Depending upon the degree to which reliable cost estimate may be
prepared or to choose to categorize them under the overhead costs. If insight into the
costs of relationship management are lacking, it may be wise to include only the
transaction costs in the lifetime value calculation. In this regard, reliability is more
important than thoroughness.
In order to arrive at the actual calculation of the financial customer value, the customer
will have to be identified. This can be more difficult in practice than it seems, perhaps
as a result of working with intermediaries, direct customer contact is lacking or perhaps
because there is no central registration of customer identification data. In principle,
someone is a customer as soon as the first transaction has been completed. The
customer value calculation will then have to incorporate all of the transactions
performed during the time the person is officially a customer. The expenses will have to
be determines during the period from acquisition up to and including the departure. This
can involve actual realized cash flows (person is already a customer) as well as results
to be obtained in the future which will have to be predicted.
5.4. The Changing Nature of Customer Relationships
Significant changes are occurring in the ways in which companies are relating to their
customers. Yesterday’s big companies focused on mass marketing to all customers at
arm’s length. Today’s companies are building deeper, more direct, and lasting
relationships with more carefully selected customers. Here are some important trends in
the way companies and customers are relating to one another. (Kotler:2012;40,41):
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Relating with More Carefully Selected Customers:
Few firms today still practice true mass marketing –selling in a standardized way to any
customer who comes along. Today, most marketers realize that they do not want
relationships with every customer. Instead, they target fewer, more profitable
customers. “Not all customers are worth your marketing efforts”, states one analyst.
“Some are more costly to serve than to lose.” Adds another marketing expert, “If you
cannot say who your customers are not, you probably cannot say who your customers
are.”
Many companies now use customer profitability analysis to pass up or weed out losing
customers and target winning ones for pampering. One approach is to preemptively
screen out potentially unprofitable customers. Progressive Insurance does this
effectively. It asks prospective customers a series of screening questions to determine if
they are right for the firm. If they are not, Progressive will likely tell them, “You might
want to go to Allstate.” A marketing consultant explains: “they did rather send business
to a competitor than take on unprofitable customers.” Screening out unprofitable
customers lets Progressive provide even better service to potentially more profitable
ones.
Relating More Deeply and Interactively:
Beyond choosing customers more selectively, companies are now relating with chosen
customers in deeper, more meaningful ways. Rather than relying on one-way, mass-
media messages only, today’s marketers are incorporating new, more interactive
approaches that help build targeted, two-way customer relationships.
Two-Way Customer Relationships: New technologies have profoundly changed the
ways in which people relate to one another. New tools for relating include everything
from e-mail, Web sites, blogs, cell phones, and video sharing to online communities and
social networks, such as Facebook, YouTube, and Twitter.
33
This changing communications environment also affects how companies an brands
relate to customers. The new communications approaches let marketers create deeper
customer involvement and a sense of community surrounding a brand –to make the
brand a meaningful part of consumers’ conversations and lives. “Becoming part of the
conversation between consumers is infinitely more powerful than handing down
information via traditional advertising,” says one marketing expert. Says another,
“People today want a voice and a role in their brand experiences. They want co-
creation.”
However, at the same time that the new technologies create relationship –building
opportunities for marketers, they also create challenges. They give consumers greater
power and control. Today’s consumers have more information about brands than ever
before, and they have a wealth of platforms for airing and sharing their brand views
with other consumers. Thus, the marketing world is now embracing not only customer
relationship management, but also customer-managed relationships.
Greater consumer control means that, in building customer relationships, companies can
no longer rely on marketing by intrusion. Instead, marketers must practice marketing by
attraction –creating market offerings and messages that involve consumers rather than
interrupt them. Hence, most marketers now augment their mass-media marketing efforts
with a rich mix of direct marketing approaches that promote brand-consumer
interaction.
For example, many brands are creating dialogues with consumers via their own or
existing online social networks. To supplement their marketing campaigns, companies
now routinely post their latest ads and made-for-the-Web videos on video-sharing sites.
They join social networks. Or they launch their own blogs, online communities, or
consumer-generated review systems, all with the aim of engaging customers on a more
personal, interactive level.
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6. Communication with Customers
The relationship between two people, also known as the dyad, is considered the most
elementary form of social relationship. However, in reality, we find more complex
relationships between groups of people and the position that each individual occupies
with respect to others. This position is defined within sociology as that individual’s
social position. A social position may be defined as the position which a person
occupies in a complex of people interacting with one another. Some positions are
reserved for only one person within society (queen, prime minister). Other positions
may be held by several people simultaneously (police officer, teacher, and nurse).
(Peelen:2005;38-41):
Recently, the attention given to these types of social structure has grown substantially.
The possibility of forming communities on the Internet is chiefly to blame for this. The
Internet bridges distances and time and brings people together and thus also customers
and suppliers. The term “communities” is used rather loosely in practice to refer to a
group of users or customers and suppliers who interact with one another, without the
need to analyze what the connection is within the social structure.
The supplier may be one of them; he might even stand outside of the community and
have very little influence on it. Certain behavior will probably even be punished
because it does not fit within the norms and value patterns or the goals of the
community.
Formulating and implementing a CRM strategy without stopping and giving careful
thought to the meaning of a relationship between a customer and supplier is unwise.
Attention is required for issues which are far removed from the task at hand: attracting
and keeping customers, developing a new communication infrastructure and individual
customer knowledge. Issues such as empathy, trust, mutual commitment, relationship
development and communities would have been interpreted in a company-specific
manner.
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6.1. Communication Models and Elements
First of all, we can construct a continuum that runs from “one-to-many” to “one-to-one”
communication; websites, e-mail and telephone may then be placed in the middle.
These channels, supported by IT, make it possible to interact with a large group of
people at relatively low cost. These channels are fairly independent of time and place;
they may be utilized at the most varied locations and at any given time.
(Peelen:2005;120)
Noise
Message Message
FEEDBACK
Table 2: General Communication Model (Odabaşı:2010;69)
As a result of technological developments, we have seen the communication power of
the channels grow both independently of one another and in connection with one
another. Owing to the emergence of technologies such as and force-based technology,
it has become possible to create the illusion of a reality for users by simulating nearly
all of the human senses. This contrasts sharply with channels in in which exclusively
static information is still being used and only a small number of senses are being
simulated. An example of the latter would be a newspaper. (Peelen:2005;121,123):
Although the channels supported by IT do very well, the mass media and personal
contacts continue to play a vital role. The fact remains that mass media may be used to
convey a certain message to a large group of people at a low cost, whereas in terms of
the social dimension, face-to-face conversations continue to score higher than contact in
which machines function as the interface between two people.
CHANNELSOURCE RECEIVER
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The use of multiple channels contributes to the construction of a network of touch
points equipped with sufficient sensory aspects, interactivity, accessibility, reality and
efficiency. The quality and efficiency of the contact are distributed along the three
dimensions: the limitations of the individual channels are overcome by the coherent
application of different channels. Consumer an supplier are connected.
In the situation most worth striving for, the successive contacts fit together seamlessly
so that an uninterrupted dialogue can arise. The initiative originates from both parties,
and both react promptly to one another’s communication. They listen and respond to
one another. In terms of substance, there is no unnecessary repetition, and diverse
subjects are raised for discussion. The conversation is captivating and binding.
6.2. Forms of Communication with Customers
In technical and creative terms, the IT-supported channels offer good opportunities to
conduct a dialogue and create an experience, if so desired. However, before the use of
multichannel can grow to become a success, it will have to be ascertained whether
customers are actually using these channels. And this is not limited to whether or not
they are surfing the Internet from time to time, but specifically concerns the application
of these media by a variety of customers to certain purchase and use situations.
Customers differ from one another in the manner in which they use the different
channels. Having knowledge of this behavior and these preferences is essential to being
able to create a dialogue and/or the desired effect. (Peelen:2005;127,128):
37
On the basis of the stable personality traits consumers were divided into eight types:
1. Conservative/Passive/Social
2. Conservative/Passive/Instrumental
3. Conservative/Active/Social
4. Conservative/Active/Instrumental
5. Open/Passive/Social
6. Open/Passive/Instrumental
7. Open/Active/Social
8. Open/ Active/Instrumental
There are many different conservative and open consumers. First, some of them are
passive and have a strong tendency to focus on judgement cast upon them by others or
to attach a great deal of importance to these opinions. They are more likely to trust
others and very relationship oriented. Others, however, are active and have a need for
control, prefer to follow their own lead and ignore “true” advice from others.
Second, consumers may be instrumentally or socially oriented. With the instrumentals,
it is the result that counts; they are efficient and purposeful and more individually
oriented. They do not derive security from a “good feeling”, but from more “objective
aspects”. Social consumers “just” find contact with others pleasant, they prefer face-to-
face contact to the telephone, and most certainly prefer it to the Internet. Efficiency is
not the highest goal; it is considered important to get a “good feeling” from the things
that are done.
The eight types of consumer differ from one another in the degree to which they would
like to have and are prepared to make use of IT-support channels. Consumer type 1 is
the least open to new channels and is not after control; type 8 is the opposite in this
regard.
38
7. Customer Service
Consumers usually face a broad array of products and services that might satisfy a given
need. How do they choose among these many market offerings? Customers form
expectations about the value and satisfaction that various market offerings will deliver
and buy accordingly. Satisfied customers often buy again and tell others about their
good experiences. Dissatisfied customers often switch to competitors and disparage the
product to others. (Kotler:2012;31):
Marketers must be careful to set the right level of expectations. If they set expectations
too low, they may satisfy those who buy but fail to attract enough buyers. If they set
expectations too high, Buyers will be disappointed. Customer value and customer
satisfaction are key building blocks for developing and managing customer
relationships.
7.1. The Quality of Customer Service
Quality control principles and practices that we uncovered, while pertinent to evaluating
and ensuring goods quality, were inadequate for understanding service quality. This
inadequacy stems from the three fundamental ways services differ from goods in terms
of how they are produced, consumed, and evaluated. (Zeithaml, Parasuraman and
Berry:1990;15,16):
First, services are basically intangible. Because they are performances and experiences
rather than objects, precise manufacturing specifications concerning uniform quality can
rarely be set. Unlike automobiles and audiocassettes, airline transportation and aerobic
exercises cannot be measured tested, and verified in advance of sale to assure quality.
Moreover, when what is being sold is purely a performance, the criteria customers use
to evaluate it may be complex and difficult to capture precisely.
Second, services –especially those with a high labor content – are heterogeneous: their
performance often varies from producer to producer, from customer to customer, and
from day to day. The quality of the interactions that bank tellers, flight attendants, and
insurance agents have with customers can rarely be standardized to ensure uniformity
the way quality of goods produced in a manufacturing plant can.
39
Third, production and consumption of many services are inseparable. Quality in
services often occurs during service delivery, usually in an interaction between the
customer and the provider, rather than being engineered at the manufacturing plant and
delivered intact to the customer. Unlike goods producers, service providers do not have
the benefit of a factory serving as a buffer between production and consumption.
Service customers are often in the service factory, observing and evaluating the
production process as they experience the service.
While the literature on quality has been predominantly goods-oriented, a few
contributions have focused on service quality. From these writings emerge the
following themes:
 Service quality is more difficult for customers to evaluate than goods
quality. Therefore, the criteria customers use to evaluate service quality
may be more difficult for the marketer to comprehend. How customers
evaluate investment services offered by a stockbroker is more
complicated and varied than how they evaluate insulation materials.
Customers’ assessment of the quality of health-care services is more
complex and difficult than their assessment of the quality of automobiles.
 Customers do not evaluate service quality solely on the outcome of a
service (e.g., how a customer’s hair looks after a haircut); they also
consider the process of service delivery (e.g., how involved, responsive,
and friendly the hair stylist is during the haircut).
 The only criteria that count in evaluating service quality are defined by
customers. Only customers judge quality; all other judgments are
essentially irrelevant. Specifically, service quality perceptions stem from
how well a provider performs vis-à-vis customers’ expectations about
how the provider should perform.
40
7.2. The System of Customer Service
The foundation of the customer data is formed by the dat7.2. The System of Customer
Service which may be used to identify customers. It is the description, expressed in
administrative characteristics with which the customers may be picked out in a crowd,
as it were. The quality of these data must be controlled: are they current, complete,
correct, and unique? Various methods and (intelligent) systems can be employed and
organizational measures can be implemented to manage the quality.
(Peelen:2005;187,188):
Relationship data used to identify a customer include:
 The basic data consisting of name, address, gender and company name;
 Supplementary data on the date of birth or incorporation date, nationality
or industry, telephone number, legal form, company registration number.
Typical of these customer data is that they are used by the entire organization and
therefore form part of the infrastructure of company. The exchange of customer data
takes place between nearly every one of the processes in the value chain. Data many
develop in a process or change when:
 The service department determines that the customer has moved;
 The accounts department announces that the customer is on stop and may
not receive any further shipments;
 The distribution department receives a returned package due to correct
yet improper address;
 The marketing department receives mailing a returned with the
notification “person no longer works here” ;
 The invoice does not arrive;
 A customer is also a supplier.
41
Data are input into the system from a coupon that comes in as a result of direct response
advertisement, a mailing or telephone call from a customer to the call canter or via the
Internet. Transactions take place and the data are used for commercial purposes
(mailing, call center, by account managers, analyses), service (the service engineer) and
in production systems (insurance policy documents, account statements, order
confirmations, invoices, etc.). Different departments and different people use the
database in their own way and with their own goal in mind. In this type of environment,
the quality of the customer data must be monitored to prevent deterioration thereby
lowering the company’s profitability.
For these reasons, it is advisable to set up a central database. From the outset, the
priority may lie with the preservation and monitoring of quality. People will not be able
to make changes on their own initiative and time will be reserved to update the
identification data. One person or a number of people within the organization will be
dedicated to managing the quality of this data in a professional way. Using access codes
and other facilities, others will only experience the advantages of this system.
8. Customer Retention
Retention, in a market sense, means holding on to customers. If a company becomes
aware in time of those customers who demonstrate an increased likelihood of ending the
relationship, then it may take action to prevent this. (Peelen:2005;239):
In order to be able to determine this likelihood or profitability, companies must arrive at
definitions of former and current customers. Does someone become a departing
customer at the moment who or she no longer buys a certain product; a consumer, for
example, does not buy fresh meat any more et the particular supermarket but keeps on
shopping for all sorts of packaged goods? Or is another level of aggregation used
whereby a customer is referred to as having left he or she does not execute any
transactions with the supplier involved over a period of year, for example? The choice
for the product or organizational level is dependent upon the size of the outflow and the
position of the responsible manager within the company: is he or she responsible for the
product or for the customer?
42
8.1. Model of Customer Retention
For many companies, ensuring that they have available the sorts of data that will be
reliable predictors of the possible defection of a customer is a challenge. If the customer
and the organization do not interact intensively and the company only has static
customer information on names, address, lifestyle, etc. available in the database it
becomes harder to find data that trigger the potential customer defection. During the
relationship it soon becomes important to think about the collection of data that will
predict churn. (Peelen:2005:240,241):
Not only is the data’s availability of crucial importance, their quality also plays a role.
Feeding all of the available data into the models without sufficient preparation offers
little hope of obtaining a stable model with good predictive power. Within the scope of
retention analysis, an investment company will introduce the amount of the capital
invested as a variable. It will focus on the different ways in which this information may
be measured. This level may be gauged at the moment that someone becomes a
customer, at the time the level reached its peak, on the last day of the year, on the last
day of the previous month, and so forth. Apart from the amount itself, the changes in the
amount may also be measured. The differences may be expressed in absolute terms or
as percentages. The difference between the current amount invested may also be
expressed in absolute terms, but an index number is likely to have batter powers of
prediction when used in a model. In addition to the rise and fall, the spend with which
positive or negative developments have occurred may also be measured.
43
Up until now, companies have focused solely on the ways in which the level of
investment may be measured, and all sorts of other variables which influence customer
retention have fallen by the wayside. These include:
 Investment behavior: How often does an investor modify his or her
portfolio?
 The number of different products that the customer purchases;
 The financial climate;
 The earned rate of return;
 Customer satisfaction;
 The customer’s investment objectives; and
 The communication behavior.
These variables may also be measured in a variety of ways.
8.2. Development of Customer Retention Programs’
One of the challenges involved in performing a retention analysis is the compilation of a
qualitatively good data set. The share of former customers as a percentage of the sample
must be determined. If a random sample is taken from the current customer database,
the share represented by former customers will probably be relatively small. Very title
relevant empirical material is taken available for the development of the model. If, on
the other hand, a data set of exclusively former customers is created, it remains
uncertain in what sense former customers differ from customers who have decided to
continue the relationship. (Peelen:2005;242-252):
In order to be able to evaluate the power of prediction of the model to be developed, it is
advisable to split the data set into a training and a validation set. The first is used to
develop the model and the second to test it for reliability. The developed model will be
filled in for the customers in the validation set; the prediction obtained in the process
regarding “staying” or “leaving” will be compared with the actual behavior that has
been recorded in the validation set.
44
The decision may also be made to develop more than one prediction model. Customers
from different segments do vary. For the one investor, for example, a disappointing
return may be reason enough to accept his losses and seek refuge in savings, whereas
for another investor this may provide him with a reason to invest even more.
Furthermore, there are considerable differences between active and non-active
customers. Both may be loyal or disloyal, yet the chance of departure for customers
from the active group will have to be deduced from other characteristics than those used
for the less active customers. There are no behavior variables available for this last
group and, as such, dynamic data are lacking and the model will have to be based on
static characteristics.
The analysis capacity within companies is scarce. In order to achieve a maximum return
from this resource, only the most crucial questions should be researched. Within the
scope of making selections –that is, who should be selected for a certain offer –two
main points deserve attention:
a) The retention analysis designed to identify customers with an increased
profitability of ending the relationship. Approaching these customers
must lead to a reduction in the probability of their departure.
b) The cross-sell analysis designed to determine the probability of the
purchase of another product from a different product category.
Knowledge of these probabilities gives the agent in the contact center
the opportunity to determine whether a calling customer will be offered
another product or not. The marketer can use this knowledge to
determine which customers will be approached for a cross-sell effort.
The success of this can be crucial to maintenance and development of
the relationship during the growth phase.
45
8.3. Handling of Customer Complaints
A lot of customers like the idea of sending their favorite suggestions to the president of
a company. Many companies have therefore established a system whereby customers
are invited to use the postage-free suggestion blanks that are provided and that are
usually addressed to the president, as chairman of the suggestion committee. The
customer receivers an acknowledgement of the receipt of the suggestion and is told
what action will be taken on it. This kind of response builds confidence in the company.
Even if a suggestion is not accepted the customer likes to feel it has been given an
honest hearing. This program also gives the company an opportunity to explain its
position and make a friend. (Moseley:1972;147-163):
The positive attitude of a complaining customer who has been converted into a booster
can be multiplied two to ten or more times because it is usual for each customer to have
at least that many friends who are influenced by her point of view.
For some twenty years now, long before customer protection became a concern of the
President and member of Congress, a major food store chain has felt that its best
guarantee of continuing is business is the goodwill of its customers. It undertook to see
to it that the customer got a fair shake every time she patronized one of the stores. A
dialogue was established and is still in operation.
In each store there is a customer suggestion corner which contains postpaid letter forms
addressed to the president along with a ballpoint pen. Customers are invited to write
their suggestions or criticisms.
Complaints by telephone are as important as written complaints. They deserve, and
usually get, as much attention. The thing to bear in mind in handling these complaints is
that the caller usually expects immediate action. The person receiving such complaints
should follow these guidelines to make certain that satisfactory action is taken.
A son soon to be on leave from the service wrote to his mother requesting roast turkey
with stuffing and lots of gravy for his homecoming meal. Friends and relatives were
invited for dinner to help celebrate his return. The serviceman remembered his mother’s
artistry in the kitchen. He had promised his best girl the meal of her life on that very
special day.
46
When a company gives a guarantee, it may be willing to refund the money, pleasantly,
but a refund is not enough. When a customer finds it necessary to return merchandise
and ask for a refund, much of her/him goodwill has already been lost. She may never
feel quite the same about the store again. The unsatisfactory merchandise may have
embarrassed her/him in the presence of her/him family or friends. It has forced her/him
to make another trip to the store to get her money back. The extra trip may be an
inconvenience cannot be undone. There is often a feeling of resentment against the store
for having sold her a product that did not live up to its billing.
The manager is not only a planner, coordinator, and leader, he is also a teacher. He must
reinforce the training given to employees by company and professional schools. His role
as a teacher never ends. Besides training employees in the technical side of running a
store, the best managers also give through orientation in how to handle customer
complaints –or what might be called sensitivity training. Most simple complaints can be
dealt with by the employee, who sees to it that the customer receives what she/he wants.
The manager should emphasize the importance of handling complaints so that the
customer leaves the store as a friend and not with a residue of bitterness. When training
employees, the manager should also give special force to the value of taking immediate
action on promises made to the customer.
9. Benefits of CRM
The most frequently stated benefits resulting from CRM include:
 Better Sales/Marketing Information –For example, customer names,
customer background, customer needs, competitive positioning, etc. are
just some of information collected as a result of inputting a CRM system.
 Improved Productivity –For example effective target market
identification, reduction in the number of cold leads, and the ability to
provide accurate and on-the-spot quotations, look up inventory
availability quickly, enter orders directly from the field, etc., all of which
help shorten the sale cycle.
47
 Enhanced Customer Care –For example, more time to spend with
customers due to a reduction in the sales administrative workload, an
ability to monitor customer service levels, and ability to highlight existing
or potential customer service problems and to react more quickly to
customer needs, etc. (Goldenburg:2002;60,61):
An increasingly important objective, and area that is related to each of the
aforementioned benefits, is improved customer retention/loyalty. Corporations in the
U.S. lose approximately half of their customers within five years. If the CRM system
really focuses on the customer and above benefits are realized, a company can expect to
retain more customers over time. It has been shown that longer a customer is retained,
the greater the profitability will be for the retained customer.
The good news is that there are a growing number of detailed tangible and intangible
benefits associated with CRM, and there are ways to measure these benefits. For each of
the following measurements, we have assumed that similar and valid measurement
information is available today in some format within your company, or that similar and
valid measurement information will be available by the start of any CRM project within
your company.
9.1. Tangible Benefits
Increase in spent by sales personnel with existing customers per day. To determine this
benefit, consider measuring the number of service calls made per day by sales personnel
or the number of hours spent by sales personnel in face-to-face contact with existing
customers. (Goldenburg:2002;61-63):
Increase in the number of new customer prospects persuade by sales representatives.
Remember that most representatives prefer to call on their existing customers, with
whom they have ongoing relationship. To determine this benefit, consider measuring
the number of the number of new prospects versus existing customers contacted by the
sales representative per day, per week, per month, or per quarter.
48
Increase in time spent by sales managers in contacting customers and working with
sales representative on customer issues. “Coaching” sales personnel is critical, and
managers never seem to have enough time for this. To determine this benefit, consider
measuring the number of hours per day which sales mangers spend in contact with
customers and prospects, and with sales representatives discussing customer issues.
Increase in customer service efficiency. Customer service may be the key differentiator
between those companies that lead and those companies that wonder what happened!
To determine this benefit, consider measuring the turnaround time for customer service
issues, as well as the number of customer service errors made as a result of
misinformation.
Increase in timeliness of follow-up corresponding to customers/prospects. To determine
this benefit, consider measuring the number of days between the date the
customer/prospect was contacted and the date that the customer/prospect follow-up
information is sent.
Increase in revenue per month per sales representative. This is an important benefit of
CRM, though careful management is required to ensure that time saved as a result of
automation is used productively to deliver more sales. To determine this benefit,
consider measuring the increase in base revenue generated per month per sales
representative.
Increase in frequency that your company’s name is in front of your customers and
prospects. The “out-of-sight, out-of-mind” syndrome can be quite harmful to your sales
efforts. To determine this benefit, consider measuring the number of pieces of
correspondence sent to customers and prospects by sales and marketing personnel.
Increase customer satisfaction. To determine this benefit, consider using a customer
satisfaction survey rating and hanging these ratings in a location for all personnel to
review.
Improve communications within your company. As more and more personnel spend
time in the field with customers and prospects, there is a growing need to secure
effective communications between personnel. To determine this benefit, consider
measuring the time spent giving and getting information between the field and regional
or headquarters offices.
49
9.2. Intangible Benefits
Overall smoother functioning within your company. To determine this benefit, consider
measuring the time spent time looking for needed information be versus time spent
utilizing information and getting on with your job. It can be shocking to learn how
much time is spent by sales personnel on unnecessary administrative matters, or amount
of time a new salesperson spends getting up to spend in a new territory!
Increased employee motivation and satisfaction. While this may be difficult to measure,
consider measuring feedback from those employees who use CRM. A n alternative
measurement is employee turnover rate for those personnel who use the CRM system.
50
PART 3: SURVEY OF CUSTOMER RELATIONSHIPS MANAGEMENT IN
THE SHOPPING CENTERS
The Results of the Research
150 people participated the survey that I have made in about Customer Satisfaction in
the Shopping Centers. These are 89 women and 61 men.149 people go to Shopping
Center from these participants. The survey is attached at the end of this study. The
results are given in the following the tables:
Graphic 1: Group of Age
16-24 25-33 34-42 43-51 52-59 60-68 68-…
73
32
25
14
4 2 0
GROUP OFAGE
NUMBER OF PERSON
51
Graphic 2: Distribution of Location
Graphic 3: Distribution of Income
11
2
6
11
6
4
1
10
13
5
1
3 3 2
23
3
9 8
1
8 8 7
5
1.Ataşehir
2.Bahçelievler
3.Bostancı
4.Beşiktaş
5.Fatih
6.Göztepe
7.Içerenköy
8.Kadıköy
9.Kartal
10.Kağıthane
11.Kasımpaşa
12.Kurtköy
13.Levent
14.Maslak
15.Maltepe
16.Ortaköy
17.Pendik
18.Sarıyer
19.Sancakte…
20.Şişli
21.Ümraniye
22.Üsküdar
23.Zeytinbu…
DISTRIBUTION OF LOCATION
Series1
6
36
32
57
19
0-999 1000-1999 2000-2999 3000-4999 5000-ve üstü
DISTRIBUTION OF INCOME
NUMBER OF PERSON
52
Graphic 3: Education of People
Graphic 4: Distribution of Jobs’
1 4
30
115
Literate Elementary School High School University
EDUCATION
NUMBER OF PERSON
0 3 5 1 1 0
18
0 2
8 3
11
73
13 12
DISTRIBUTION OF JOBS'
NUMBER OF PERSON
53
Graphic 5: Preferred Mall
22
52
65
41
32
61
15
39
17
40
8
23
11
20
17 17
PREFERRED MALL
CHOOSE THE NUMBER OF PEOPLE
54
Graphic 6: Reasons for Choosing Shopping Centers
25%
19%
17%
11%
15%
2% 6%
2%
2%
1%
REASONS FOR CHOOSING SHOPPING
CENTERS
NEARLY THE HOUSE
THERE ARE EVERY BRANDS'
STORES
CINEMAS ARE GOOD
THERE ARE I AM LOOKING FOR
EVERYTHING
I CAN SPEND TO TIME WITH
MY FRIENDS
STORES' PRICES ARE VERY
CHEAP
RESTAURANTS AND CAFES ARE
QUALITY
THERE ARE GAME AREAS FOR
CHILDREN
THERE ARE FACILITIES MANY
SINGER'S AND ARTIST'S
OTHER…
55
Graphic 7: Mall Visit Frequency
Graphic 8: Why do people prefer the Shopping Centers?
2
85
47
16 0 0
0
10
20
30
40
50
60
70
80
90
EVERY DAY SEVERAL
TIMES A
MONTH
ONCE A
MONTH
SEVERAL
TIMES A
YEAR
ONCE A
YEAR
NEVER
MALL VISIT FREQUENCY
NUMBER OF PEOPLE
95
83
80
29
33
14
7
FOR FINDING EVERY STORES TOGETHER
FOR SHOPPING EVERY SEASON
FOR SPENDING TIME
FOR FOOD
THEY ARE SAFER THAN ROADS AND STREETS
THEIR CHILDREN CAN SPEND TIME FOR
ENTERTAINING
OTHER…
WHY DO PEOPLE PREFER TO
SHOPPING CENTERS?
NUMBER OF PEOPLE
CRM_(tez)
CRM_(tez)
CRM_(tez)
CRM_(tez)
CRM_(tez)
CRM_(tez)
CRM_(tez)
CRM_(tez)

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CRM_(tez)

  • 1. 1 INTRODUCTION Product and quality focused strategies are developed in the retailing of twentieth century. Customer focused strategies have been replaced its in over time. Previously customers were only buying they are offered to they, but nowadays customer’s wants and expectations has considered. With development: Customer Relationship Management (CRM) a long-term relationship between customer with firms has been necessary. Firms offer customers product and service which their will have satisfaction. Firms should try to make satisfied customers loyal to firm with realized CRM applications. However, customers’ shopping behavior is of great importance. Retail business is one of the rapidly growing sectors in Turkey. The companies have to work customer centered in order to sustain in that market. Today, the main goal for the companies is sustainability instead of profitability. That point out the retail companies have to hold the customers continuously. It is not enough to make higher investments in advertisement and to get new customers in order to compete in the market. The companies have to understand the customers’ expectations in order to provide customer satisfaction and to manage the customer relationship successfully. Consumers’ of shopping behavior and expectations is being tried to understand with Customer Relationship Management (CRM) and it aims to establish a more profitable and a long-term relationship. Especially in retailers who have lots of customer understanding of customer behavior has become quite difficult. Therefore, profitable customers and this customers’ expectations, their shopping behaviors tried to be understood with store cards, several surveys and one-to-one communication.
  • 2. 2 PART 1 RETAILING Retailing is the process of selling products and services to consumers for their personal or family use. A retailer is the final business in a distribution channel that links manufacturers with consumers. Although a retailer can also be manufacturer or a wholesaler in the distribution chain, most retailers direct their efforts to satisfying needs of ultimate consumers. (Burton S. Kaliski; 2007:643) From the very beginnings of recorded history, and even back into those ages for which only the archaeologists’ excavations give us a record, we find that men have traded with each other to obtain the necessities and luxuries of life. In today’s complex life we must not forget this simple truth –that the object of all business, retailing included, is the satisfaction of human wants. It is this objective, the more complete satisfaction of our wants, which has led us on through countless centuries of business history. The shopkeepers of ancient Rome, the peddlers of the Middle Ages, the early American general storekeepers, and the operators of today’s glistening supermarkets –all are a part of family tree, for each in his own way has studied the desires of mankind and has served mankind in fulfilling them. Today’s retailer finds investment, work, and risk still his lot, but be also has the same rewards awaiting him. (Anderson and Butterworth; 1956:1, 3): The role of retailing must be understood clearly both by the business-man and by the business student if today’s retailers and today’s students –who are tomorrow’s retailers –are to make the most of their rich opportunities. Each day the modern shopper turns to the retail store to give him all the things that make up what we call “the American way of life”. The retail stores of the nation each day serve the tens of millions of Americans across this continent. Before we become aware of our own needs, the retailer has foreseen them and has searched the world to get the things that will satisfy them.
  • 3. 3 The retail sector has been experiencing a rapid and continuous change worldwide. There have also been profound changes in Turkey, especially after the 1980s. Both the retail sector and the urban retail environments have been altered radically. One of the most significant indicators of this change is the proliferation of western-type large-scale retail developments. Past experiences in developed countries have shown that the uncontrolled development of large-scale retail areas results in some undesired socioeconomic and physical outcomes, such as decline in the cultural and commercial activities of city centers, damage in existing retail workforce structure, and change in local retail hierarchy, nearby land uses, traffic loads and original architectural identity. Many countries have put into practice restrictive and regulatory policies to prevent these negative effects. As similar transformations have also been realized in Turkish retail environments, many institutions think that similar legal regulations must be implemented in Turkey as well. The present study investigates the ongoing retail change within the Turkish context, explores the legal and structural regulatory policies of the Organization for Economic Co-operation and Development (OECD) countries, and critically discusses the appropriate retail regulation policies for Turkey. (Megaron; 2009:90) 1. Types of Retailers Retail stores come in all shapes and sizes -from your local hairstyling salon or family owned restaurant to national specialty chain retailers. (Kotler ; 2012:399) Over time, different types of retailers have emerged and prospered because they have attracted and maintained a significant customer base. A retail institution is a group of retailers that provide a similar retail mix designed to satisfy the needs of a specific segment of customers. The most basic characteristic of a retailer is its retail mix, which include decisions and strategies regarding the type of merchandise sold, the price of the merchandise, the assortment of the merchandise, and the level of customer service. (Kaliski; 2007:645)
  • 4. 4 1.1. According to Amount of Service Different types of customers and products require different amounts of service. To meet these varying service needs, retailers may offer one of three service levels: self-service, limited service, and full service. (Kotler ; 2012:400): Self-service retailers serve customers who are willing to perform their own “locate- compare-select” process to save time or money. Self-service is the basis of all discount operations and is typically used by retailers selling convenience goods (such as supermarkets) and nationally branded, fast-moving shopping goods. Limited-service retailers, such as Sears or JCPenny, provide more sales assistance because they carry more shopping goods about which customers need information. Their increased operating costs result in higher prices. In full-service retailers, such as high-end specialty stores (for example, Tiffany or Williams-Sonama) and first-class department stores (such as Nordstrom or Neiman Marcus), salespeople assist customer in every phase of the shopping process. Full- service stores usually carry more specialty good for which customers need or want assistance or advice. They provide more services resulting in much higher operating costs, which are passed along to customers as higher prices. 1.2. According to Product Line Retailers can also be classified by the length and breadth of their product assortments. Some retailers, such as specialty stores, (for example; REI or William-Sanoma) carry narrow product lines with deep assortments within those lines. Today, specialty stores are flourishing. The increasing use of market segmentation, market targeting, and product specialization has resulted in a greater need for stores that focus on specific products and segments. (Kotler ; 2012:400,401,402):
  • 5. 5 In contrast, department stores (such as Macy’s or Sears) carry a wide variety of product lines. In recent years, department stores have been squeezed between more focused and flexible specialty stores on the one hand and more efficient, lower-priced discounters on the other. Others have stepped up the use of store brands and single-brand “designer shops” to compete with specialty stores. Still others are trying catalog, telephone, and Web selling. Service remains the key differentiating factor. Supermarkets (like, Kroger or Safeway) are the most frequently shopped type of retail store. Today, however, they are facing slow sales growth because of slower population growth and an increase in competition from discount supercenters (Walmart) on the one hand and specialty food stores on the other. Supermarkets also have been hit hard by the rapid growth of out-of-home eating over the past two decades. In fact, supermarkets’ share of the groceries and consumables market plunged from 89 percent in 1989 to less than 50 percent in 2008. Convenience stores are small stores that carry a limited line of high-turnover convenience goods. After several years of stagnant sales, convenience stores are now experiencing healthy growth. Last year, U.S. convenience stores posted sales of $624 billion, an 8 percent increase over the previous year. About 75 percent of overall convenience store revenues come from sales of gasoline; a majority of in-store sales are from tobacco products and better and beer and over beverages. Superstores are much larger than regular supermarkets and offer a large assortment of routinely purchased food products, nonfood items, and services. Walmart, Target, Meijer and other discount retailers offer supercenters, very large combination food and discount stores. Whereas a traditional grocery store brings in about $333,000 a week in sales, supercenter brings in about $1.5 million week. Recent years have also seen the explosive growth of superstores that are actually giant specialty stores, the co-called category killers (e.g., Best Buy, Home Depot, and PetSmart). They feature stores the size of airplane hangars that carry a very deep assortment of a particular line with a knowledgeable staff. Category killers are prevalent in a wide range of categories, including electronics, home –improvement products, books, baby gear, toys, linens and towels, party goods, sporting goods, and even pet supplies.
  • 6. 6 Finally, for many retailers, the product line is actually a service. Service retailers include hotels and motels, banks, airlines, collages, hospitals, movie theaters, tennis clubs, bowling alleys, restaurants, repair services, hair salons, and dry cleaners. Service retailers in the United States are growing faster than product retailers. 1.3. According to Relative Prices Retailers can also be classified according to the prices they charge. Most retailers charge regular prices and offer normal-quality goods and customer service. Others offer higher-quality goods and service at higher prices. Retailers that feature low prices are discount stores and “off-price” retailers. (Kotler ; 2012:402,404,405): A discount store (e.g., Target, Kmart, and Walmart) sells standard merchandise at lower prices by accepting lower margins and selling higher volume. The early discount stores cut expenses by offering few services and operating in warehouse like facilities in low- rent, heavily traveled districts. As the major discount stores traded up, a new wave of off-price retailers moved in to fill the ultralow-price, high-volume gap. Ordinary discounters buy at regular wholesale prices and accept lower margins to keep prices down. In contrast, off-price retailers buy at less-than-regular wholesale prices and charge consumers less than retail. Off-price retailers can be found in all areas, from food, clothing, and electronics to no-frills banking and discount brokerages. The three main types of off-price retailers are independents, factory outlets, and warehouse clubs. Independent off-price retailers either are independently owned and run by smaller independents, most large off-price operations are owned by bigger retail chains.
  • 7. 7 Factory outlets –manufacturer- owned and operated stores by firms such as J.Crew, Gap, Levi Strauss, and others- sometimes group together in factory outlet malls and value retail centers, where dozens of outlet stores offer prices as much as 50 percent below retail on wide range of mostly surplus, discounted, or irregular goods. Whereas outlet malls consist primarily of manufacturers’ outlets, value-retail centers combine manufacturers’ outlets with off-price retail stores and department store clearance outlets. Factory outlet malls have become one of the hottest growth areas in retailing. Warehouse clubs (or wholesale clubs or membership warehouses), operate in huge, drafty, warehouse like facilities and offer few frills. However, they offer ultralow prices and surprise deals on selected branded merchandise. Warehouse clubs have grown rapidly in recent years. These retailers appeal not only to low-income consumers seeking bargains on bare-bones products but also all kinds of customers shopping for a wide range of goods, from necessities to extravagances. 1.4. According to Organizational Approach Although many retail stores are independently owned, others band together under some form of corporate or contractual organization. The major types of retail organizations are corporate chains, voluntary chains, retailer cooperatives, and franchise organizations. (Kotler; 2012: 405,406): Chain stores are two or more outlets that are commonly owned and controlled. They have many advantages over independents. Their size allows them to buy in large quantities at lower prices and gain promotional economies. They can hire specialists to deal with areas such as pricing, promotion, merchandising, inventory control, and sales forecasting. The great success of corporate chains caused many independents to band together in one of two forms of contractual associations. One is the voluntary chain –a wholesaler- sponsored group of independent retailers that engages in group buying and common merchandising. The other type of contractual association is the retailer cooperative –a group of independent retailers that bands together to set up a jointly owned, central wholesale operation and conduct joint merchandising and promotion efforts. These organizations give independents the buying and promotion economies they need to meet the prices of corporate chains.
  • 8. 8 Another form of contractual retail organization is a franchise. The main difference between franchise organizations and other contractual systems (voluntary chains and retail cooperatives) is that franchise systems are normally based on some unique product or service; a method of doing business; or the trade name, goodwill, or patent that the franchisor has developed. Franchising has been prominent in fast-food restaurants, motels, health and fitness centers, auto sales and service, and real estate. Once considered upstarts among independent business, franchises now command 40 percent of all retail sales in the United States. These days, it’s nearly impossible to stroll down a city street without seeing a McDonald’s, Subway, Jiffy, Lube, or Holiday Inn. One of the best-known and most successful franchisers, McDonald’s, now has 32,000 stores in 118 countries, including almost 14,000 in the United States. It serves 58 million customers a day and racks up more than $54 billion in annual system wide sales. Nearly 80 percent of McDonald’s restaurants worldwide are owned and operated by franchises. Gaining fast is Subway, one of the fastest-growing franchises, with more than 32,000 shops in 91 countries, including more than 23,000 in United States. 2. Retailer Marketing Decision Retailers are always searching for new marketing strategies to attract and hold customers. In the past, retailers attracted customers with unique product assortments and more or better services. Today, retail assortments and services are looking more alike. Many national-brand manufacturers, in their drive volume, have placed their brands almost everywhere. You can find most consumer brands not only in department stores but also in mass-merchandise discount stores, off-price discount stores, and all over the Web. Thus, it’s now more difficult for any one retailer to offer exclusive merchandise. (Kotler; 2012: 406,407): Service differentiation among retailers has also eroded. Many department stores have trimmed their services, whereas discounters have increased theirs. Customers have become smarter and more price sensitive. They see no reason to pay more for identical brands, especially when service differences are shrinking. For all these reasons, many retailers today are rethinking their marketing strategies.
  • 9. 9 2.1. Retailer Marketing Strategy and Mix Strategic planning and operations management model, suggests that a retailer must engage in two types of planning and management tasks: strategic planning and operations management. (Dunne and Lusch; 2008:52-58): Strategic planning is concerned with how the retailer responds to the environment in an effort to establish a long-term course of action. In principle, the retailer’s strategic planning should best reflect the line(s) of trade in which the retailer will operate, the market(s) it will pursue, and the retail mix it will use. Remember, strategic planning requires a long-term commitment of resources by the retailer. An error in strategic planning can result in a decline in profitability, a loss of competitive position, or bankruptcy. On the other hand, effective strategic planning can help protect the retailer against competitive onslaughts. The initial steps in strategic planning are to define the firm’s mission, establish goals and objectives, and perform a SWOT analysis. The next steps are to select the target market and appropriate location(s). It is important to note that most retail managers or executives have very little control over location decisions. A newly appointed manager for a chain department store could change promotional strategy, personnel, service levels, credit policies, and even prices, but in all likelihood would be constrained by a long-term lease agreement. In fact, only the senior management of most chains is ever involved in location decisions. For the smaller retailer just starting out, however, or retailers considering expansion, location is an important decision. Strategic planning opportunities are to be found in the realities of a constantly changing environment. An effective retail strategy can result only from matching environmental forces (consumer behavior, competitor behavior, supply chain behavior, socioeconomic environment, technological environment, and legal and ethical environment) with a retail marketing program that satisfies the customer better than anybody else. Operations management is concerned with maximizing the efficiency of the retailer’s use of resources and with how the retailer converts these resources into sales and profits. In other words, its aim is to maximize the performance of current operations.
  • 10. 10 Table 1: Retailer Marketing Strategy (Kotler; 2012:407) Most of retailer’s time and energy is devoted to the day-to-day activity of operations management. Operations management involves managing the buying and handling of merchandise, pricing, advertising and promotion, customer services and selling, people and facilities. All of these activities requıre day-to-day attention. For example, the selling floor must be maintained, customer serves, merchandise bought and handled, advertisements run, and pricing decisions made each and every day. In other words, operations management is running the store. The must develop a retail marketing strategy with strong financial elements. A fully developed marketing strategy should address the following considerations: a) The specific target market. A target market is the group or groups of customers that the retailer is seeking to serve. It is important for retailers to understand that different product offering. For this reason, successful retailers must determine which customers make them the most money, segment them carefully, them realign their stores and empower employees to target those favored shoppers with products and services that will encourage them to spend more and come back often. Retail Strategy Retail Segmentation and Targeting Store Differentiation and Positioning Retail Marketing Mix Product and Service Assortment Retail Prices Promotion Distribution (location) Create value for targeted retail customers
  • 11. 11 b) A location(s), whether a traditional store in a geographic space, a person’s home in a relation to print catalog or television shopping, or a virtual store in cyberspace, that is consistent with the needs of the desired target market. c) The specific retail mix that the retailer intents to use to appeal to its target market, and thereby meet its financial objectives. The retail mix, is the combination of merchandise, price, advertising and promotion, location, customer services and selling, and store layout and design that the retailer uses to satisfy the target market. d) The retailer’s value proposition is a clear statement of tangible and/or intangible results a customer receives from shopping at and using the retailer’s product services. It is the difference between the benefits offered by one retailer and those of the competition. A good value proposition answers the question “Why should I buy this product or service from this retailer?” 2.2. Product Assortment and Services Decision Retailer must decide on three major product variables: product assortment, services mix, and store atmosphere. (Kotler; 2012: 408-411): The retailer’s product assortment should differentiate the while matching target shoppers’ expectations. One strategy is to offer merchandise that no other competitor carries, such as store brands or national brands on which it holds exclusives. For example, Saks gets exclusive rights to carry a well-known designer’s labels. It also offers its own private-labels lines –the Saks Fifth Avenue Signature, Classic, and Sport collections. The service mix can also help set one retailer apart from another. For example, some retailers invite customers to ask questions or consult service representatives in person or via phone or keyboard. Nordstrom promises to “take care of customer, no matter what it takes.” Home Depot offers a diverse mix of services to do-it-yourselfers, from “how- to” classes and “do-it-herself” and kid workshops to a proprietary credit card.
  • 12. 12 The store’s atmosphere is another important element in the reseller’s product arsenal. The retailer wants to create a unıque store experience, one that suits the target market and moves customers to buy. Many retailers practice “experiential retailing.” None does this better than The Dubai Mall. More than just a place to go shopping, the Dubai Mall is a place to relax and have fun. Today’s successful retailers carefully orchestrate virtually every aspect of the consumer store experience. The next time you step into a retail store –whether it sells consumer electronics, hardware, or high fashion –stop and carefully consider your surroundings. Think about the store’s layout and displays. Listen to the background sounds. Smell the smells. Chances are good that everything in the store, from the layout and lighting to the music and even the smells, has been carefully orchestrated to help shape the customer’s shopping experience –and open their wallets. In fact, retail establishments sometimes become small communities in themselves – places where people get together. These places include coffee shops and cafés, shopping malls, bookstores, children’s play spaces, superstores and urban greenmarkets. For example, today’s bookstores have become part bookstore, part bookstore, part library, part living room, and part coffeehouse. 2.3. Price Decision A retailer’s price policy must fit its target market and positioning, product and service assortment, the competition, and economic factors. All retailers would like to charge high markups and achieve high volume, but the two seldom go together. Most retailers seek either high markup on lower volume (most specialty stores) or low markups on higher volume (mass merchandisers and discount stores). (Kotler: 2012;411): Retailers must also decide on the extent to which they will use sales and other price promotions. Some retailers use no price promotions at all, competing instead on product and service quality rather than on price. For example, it’s difficult to imagine Bergdorf Goodman holding a two-for-the-price-of-one sale on Chanel handbags, even in a down economy. Other retailers –such as Walmart, Costco, and Family dollar –practice everyday low pricing, charging constant, everyday low prices with few sales or discounts.
  • 13. 13 Still other retailers practice “high-low” pricing –charging higher prices on an everyday basis, coupled with frequent sales and other price promotions to increase store traffic, create a low-price image, or attract customers who will buy other goods at full prices. The recent economic downturn caused a rash of high-low pricing, as retailers poured on price cuts and promotions to coax bargain-hunting customers into their stores. Which pricing strategy is best depends on the retailer’s overall marketing strategy, the pricing approaches of its competitors, and the economic environment. 2.4. Promotion Decision Retailers use any or all of the five tools –advertising, personal selling, sales promotion, public relations (PR), and direct marketing –to reach consumers. They advertise in newspapers and magazines and on the radio, television, and the Internet. Advertising may be supported by newspaper inserts and catalogs. Store salespeople greet customers, meet their needs, and build relationships. Sales promotions may include in-store demonstrations, displays, sales, and loyalty programs. PR activities, such as store openings, special events, newsletters and blogs, store magazines, and public service activities, are always available to retailers. Most retailers have also created Web sites, offering customers information and other features and selling merchandise directly. (Kotler: 2012; 411) 2.5. Place Decision Retailers often point to three critical factors in retailing success: location, location, and location. It’s very important that retailers select locations that are accessible to the target market in areas that are consistent with the retailer’s positioning. (Kotler: 2012;411, 412): Most stores today cluster together to increase their customer pulling power and give consumers the convenience of one-stop shopping. Central business districts were the main form of retail cluster until the 1950s. Every large city and town had a central business district with department stores, specialty stores, banks and movie theaters. When people began to move to the suburbs, however, these central business districts, with their traffic, parking, and crime problems, began to lose business. In recent years, many cities have joined with merchants to revive downtown shopping areas, generally with only mixed success.
  • 14. 14 3. Shopping Center in the Retailing A shopping center is a group of retail businesses built on a site that is planned, developed, owned, and managed as a unit. A regional shopping center, or regional shopping mall, the largest and most dramatic shopping center, has from 50 to more than 100 stores, including 2 or more full-line department stores. It is like a covered mini downtown and attracts customers from a wide area. A community shopping center contains between 15 and 50 retail stores. It normally contains a branch of a department store or variety store, a supermarket, specialty stores, professional offices, and sometimes a bank. (Kotler:2012; 412) The term “shopping center” has been evolving since the early 1950s. Industry nomenclature originally offered four basic terms: neighborhood, community, regional, and super-regional centers. However, as the industry has matured, these four classifications no longer remain adequate to get rid of ambiguity and accommodate new shopping center formats. Shopping Center is a group of retail and other commercial establishments that is planned, developed, owned and managed as a single property, with on-site parking provided. The center’s size and orientation are generally determined by market characteristics of the trade area to be served. The three main physical configurations of shopping centers are malls, open-air centers, and hybrid centers. (Kuyumcu:2010;11) 3.1. Development and Transformation of Shopping Centers Shopping as a phenomenon, which has existed since the early history of humanity to meet needs, is an indispensable activity of today. Throughout the history, shopping places has been constructed according to physical, economic and cultural characteristics of the area, and they have been transformed in time with the changes and necessities in life. Increasing population, changing living conditions and technology depending on this growth have an enormous impact on production and consumption activities of communities. Particularly the 21st century has led to a profound change in living standards of individuals. With the global liberal economy surrounding the whole world, such kind of transformation has caused in changing social attitudes like increasing demands and consumption; moreover, the trade centers in cities are also subject to change in time. (Kuyumcu:2010;1,20):
  • 15. 15 Changing consumption behaviors, increasing consumption, product variety, and technological improvement, which ensures mobility and production with ease, have provided shopping center formation. Along with the construction of shopping centers, people find chance to enjoy their leisure time with the activities like shopping, dining, traveling and relaxing in shopping centers. Throughout time these centers has also developed new creative functions for the comfort of their visitors. Today, shopping centers constructed with a modern architecture are generally preferred to traditional shopping area. Present day Shopping center construction began in the 1960s in USA, and Turkey met with the initial concept of shopping center in 1988 with the construction of Galleria in İstanbul. After Galleria Shopping Center, which had 42 thousand m2 areas, Turkey has around 250 shopping centers with seven million m2 of total area today. According to Real Estate Investment Trusts’ (REITs) report, which is named “Retail Market in Turkey and Prognoses for Shopping Centers by 2015”, Turkey is a potentially appropriate place for the investors. Although İstanbul is considered as the main point for many shopping center construction projects today, the other cities in Anatolia are also seen as the other potential places. 83 percent of the total shopping centers in Turkey are situated in İstanbul. In conjunction with İstanbul, in other big cities of Ankara and İzmir, the total number of shopping centers is 110; and in the other cities in Anatolia, this number surmounts 130.
  • 16. 16 With the influence of retail corporations from developed countries upon the sector of commerce in Turkey, Migros has given start to such investments in 1950s and this development has been followed by the establishment of Gima in 1956. In 1970s the supply of foodstuff stores, which were constructed by municipalities with the intention to organize the sector, has covered the common habits of customers for cheap and collective shopping, and with the major shift in politics towards import substitution for industrialization, consumers’ interests to imported goods have increased in 1980s. Therefore, the emerging need to sell these products has entailed the construction of shopping centers as a necessity, and by the 1990s, retailers and shopping center establishments have rapidly grown with the foreign capital. In 1988, the first example in this sector in Turkey, namely the Galleria Shopping Center for which “The Galleria” in Huston has been an inspiration, was built in Ataköy İstanbul by state partnership. In those periods, as a shopping center located in Ataköy Tourism Center, Galleria was influential upon not only Ataköy, but also the entire city of İstanbul. When it was first opened, the leasing conditions within the shopping center drew unexpected attention of the entrepreneurs such that almost all the chain-shopping stores began to have a place in this center, although the leasing conditions of the center were heavier than those of street storekeeping of the time. In Turkey, the metropolitan cities were the first targets of the shopping center developments, and İstanbul is considered as the first city providing all the conditions and sites available for shopping center facilities. Following this, there has been a rise in the number of shopping centers built in other big cities. Atakule and Karum Shopping Centers in Ankara were the other centers built after Galleria in Ataköy. Recently, the construction of such buildings has begun to be seen in other Anatolian cities as well.
  • 17. 17 PART 2: CUSTOMER RELATIONSHIPS MANAGEMENT (CRM) 1. History of CRM Within marketing theory and practice, “there has been a long-standing and clear tendency…to focus on the sale, the single event of a transaction, as the objective of marketing of marketing activity and the dependent variable for analysis”. (Peelen:2005;12,13,23,24): The expectation is that happiness will translate into future repeat purchases. Within transaction marketing, the process between two or more transactions is neither analyzed nor influenced. The attention for the relationship and the investments in the relationship is lacking. The attention for individual customer –supplier relationships began to grow in the late 1980s and early 1990s.The concept of relationship marketing began to gain in popularity and was advanced as an alternative to transaction marketing. Too many companies encountered problems in the implementation of relationship marketing. Individual knowledge of customers was lacking and the costs of a differentiated customer approach were perceived to be too high. Changing daily routines and structures is not easy as it seems. The positive economic climate throughout the 1990s changed. But this time it is not appropriate to announce the next “premature death of relationship marketing”. There is too much at stake. Information technology can enable the dialogue between (large groups) of individual customers and their suppliers in an efficient way, independent of time and place. To same extent, there is recognition of the value of individual customer knowledge. Around 1990, the International Marketing and Purchasing Group with, among others, designed a conceptual model for relationship marketing in business-to-business markets. The interaction and networking between buyers and sellers became the subject of research of this international group.
  • 18. 18 At the beginning of the 1990s, an after-effect of analyses and discussion on customer relationships was that customer retention and lifetime values entered the stage of marketing research. Relationship marketing, with its origin in the service industry and business-to-business markets, was in this period also applied to the consumer markets for branded goods. The current IT applications for CRM also emerged at the same time that relationship marketing resurged. Solutions for call centers, Internet and websites, e-commerce, the data warehouse, campaign management and so forth all developed and spread throughout the market among. 2. Definition and Development of CRM The term “CRM” seems to be new and concept witnessed only in the last five years. In terms of its actual content, CRM obviously involves a much older principles have been in existence, customer –supplier relationships have been the goal of number of them at the very last. (Peelen:2005;3) An increasingly popular technology for cultivating and maintaining the right customers is customer relationship management (CRM). CRM is composed of an integrated information system where the fundamental unit of data collection is the customer, supplemented by other relevant information about the customer including purchasing behavior. Customer data at the most micro level is captured, including merchandise and services purchased, store location, time of purchase, demographic information, and satisfaction data such as customer complaints. (Dunne and Lush:2008;177) In spite of the progress that being made, there is still some confusion about the meaning and implications of CRM. In order to illustrate the differences in views, we will present two extreme and two “standard” definitions. (Peelen:2005; 3-6): CRM as “the definition of horizontally integrated business processes involving front office customer contact points (marketing, sales, service and support) via multiple, interconnected delivery channels”. In this description, CRM is positioned in the “IT corner”.
  • 19. 19 An entirely different definition suggests that CRM is “a process that addresses all aspects of identifying customers, creating customer knowledge, building customer relationships, and shaping their perceptions of the organization and its products”. The role of technology is not even mentioned in this definition. CRM is a business strategy and therefore more a functional strategy alone. It affects the organization as a whole: marketing, IT, service, logistics, finance, production and development, HR, management, etc. The CRM strategy will have to provide direction to each department or employee that maintains contact with customers. The employees’ and managers’ customer-oriented approach will have to improve. In short, it is preferable for CRM to be regarded as business strategy from the start, one that is aimed towards developing long-term, mutually profitable, individual customer – supplier relationships and is based on an IT infrastructure to be developed, one that enables well-defined and controlled processes, and places capable personnel in a position function optimally. 2.1. Concept and Particular of Customer Relationship Customer relationship management is perhaps the most important concept of modern marketing. Some marketers define it narrowly as a customer data management activity. By this definition, it involves managing detailed information about individual customers and carefully managing customer “touch points” to maximize customer loyalty. (Kotler:2012;36): Most marketers, however, give the concept of customer relationship management a broader meaning. In this broader sense, customer relationship management is the all process of building and maintaining profitable customer relationship by delivering superior customer value and satisfaction. It deals with all aspects of acquiring, keeping, and growing customers. Two word “relationship” conjures up thoughts of the feeling that two people have for another: annual and respect, consideration, dependency and the like. (Peelen:2005; 25):
  • 20. 20 Within the field of psychology, a distinction is made between primary and secondary relationships. The first type of involves basic long-term interpersonal relationships which are based primarily on emotional bonds and the love relationship between a man and woman, are unlike secondary relationships, rather diffuse and comprise many roles, behaviors and situations. Normally they are not another extremely well. In primary relationships, limited by strict rules governing contact, and the people involved generally know one another extremely well. In primary relationships, one person cannot automatically be replaced by another. Secondary relationships, such as those between customer and supplier, are by contrast relatively short-term interpersonal relationships with a limited degree of social interaction, fairly clear rules of etiquette and reasonably well-defined social roles. In contrast with primary relationships, deep emotional involvement rarely occurs; the various players may be more easily replaced in general. 2.2. Customer Satisfaction and Creation of Customer Loyalty American business seems to have developed an absolutely myopic obsession with customer satisfaction. Bookstore business sections are crammed with customer satisfaction “how-to” tomes. Every week, millions of people are sent brochures informing them of customer satisfaction seminars and conferences. Sales representatives and, increasingly, senior managers are given incentive compensation and/or recognition for attaining customer satisfaction. (Lowenstein: 1997; 1) Customer satisfaction depends on the product’s perceived performance relative to a buyer’s expectations. If the product’s performance falls short of expectations, the customer is dissatisfied. If performance matches expectations, the customer is satisfied. If performance exceeds expectations, the customer is highly satisfied or delighted. (Kotler:2012; 37): Outstanding marketing companies go out of their way to keep important customer satisfied. Most studies show that higher levels of customer satisfaction lead to greater customer loyalty, which in turn results in better company performance. Smart companies aim to delight customers by promising only what can deliver and then delivering more than they promise. Delighted customers not only make repeat purchases but also become willing marketing partners and “customer evangelists” who spread the word about their good experiences to others.
  • 21. 21 Satisfaction-Based: The supplier company approaches customers in a largely passive and reactive manner, confident that it can select, acquire, understand, and readily retain them as desired. Sales operations are emphasized. Management operates from a traditional bureaucratic model. Processes for performance measurement are rudimentary, and so is internal and external communication. Staff has minimal empowerment. (Lowenstein: 1997;4,5) Companies that stop improving products will soon be out of business. It may be difficult for many in the food industry today remember when cheese came in wheels or blocks to be sliced in the store. Some may still come in wheels, but for the most part cheese is not only sliced, but also packaged by the supplier because it is better for both the customer and the store operator to have it done that way. There is no rind left on the cheese, it is evenly sliced, and wrapped in airtight, sanitary packages. This permits the customer to keep it for days or even weeks without its drying out. The pre-sliced, pre-packaged cheese relieves the store organization of taking the time to slice it. (Moseley:1972;115) Performance-Based: The supplier company has greater awareness and sensitivity regarding customers. Though management still tends to operate from a traditional hierarchy, the company has formal processes in place for measuring performance and collecting/acting on complaints. Some companies engage in evaluating customer needs, training staff to be more proactive with customer, and/or creating teams or assigning individuals to upgrade customer services. In addition, performance-based companies more frequently compensate sales and other staff at least partially on customer satisfaction scores. (Lowenstein: 1997;4,5):
  • 22. 22 Commitment-Based: The supplier company is entirely customer-driven, proactively approaching customers as partners. Companies are strategically directed toward keeping customers, with attaining commitment and loyalty (of both staff and customers), a paramount objective. Management style is often lattice or horizontal, with company focus on continuous improvement in all activities: understanding and serving customers, creating knowledge an information flow around customer needs, staff communication and empowerment, team process, and so forth. Performance measurement is ongoing, with improvement activity prioritized around customer retention, their intended market action, and proclivity to remain loyal. Since everyone in the company contributes to success through keeping customers, everyone receives incentives and recognition based the company’s level of customer loyalty, sales, and profits. 3. Elements of CRM It is not the technology but the business strategy which must lead or provide guidance. The manner in which we aim to achieve a lasting competitive advantage in our industry is the primary matter of importance. (Peelen:2005;7-10): The four cornerstones of CRM which must be mentioned first are: 1. Customer Knowledge: Knowledge of the individual customer is essential in order, ultimately, to develop a long-term relationship and to supply customization. Companies must develop the competency or capability to develop this type of individual customer knowledge for a large number of customers. Databases will have to be filled with correct and current data which will be transformed by analyses into individual customer information. Individual customer data will have to be supplemented by the outcomes of anonymous (qualitative) market research so that a more complete image of the customer may be created. The aim is still to develop long-term relationships that are mutually profitable. The information must result in companies being better able to help customers on time, in a more targeted manner, and with more appropriate solutions. Data that do not contribute to the achievement of this goal are not worth registering and storing.
  • 23. 23 2. Relationship Strategy: The individual customer information must be used to develop a long-lasting customer –supplier relationship. In other words, a marketing or other type of strategy must be implemented which truly differs from a strategy which merely focuses on the stimulation of transactions and thus requires other competencies. Companies have a certain means of communication, a short-term horizon and a number of completed transactions. Market share represents a very important criterion for success. On the other hand, organizations with a relationship strategy in place have a longer-term horizon, “tell” and “listen” more than they “sell”, and have a broader and deeper interest in the right customers. 3. Communication: In the communication between customer and supplier, the relationship strategy will have to prove itself to a great extent. Is the supplier capable of carrying on a dialogue with individual customers? Many companies have no experience in carrying on dialogue of any substance. The situation becomes even more complicated if we involve the role of information and communication channels, must be developed through which it is possible to communicate “anywhere, anytime, anyplace”. 4. The Individual Value Proposition: An organization that takes the initiative to get to know an individual customer, to develop a relationship with him or her, and to carry on a dialogue with him or her really cannot avoid also offering these customers an individual circumstances. Together with the customer, for example, the company may design his or her ideal product. Adopting the price to the value that the proposition represents for an individual customer at a certain time and at a certain location offers the supplier an interesting prospect for increasing sales and profits.
  • 24. 24 One of the pitfalls involved in the development of the customized propositions is that companies create a complexity which is too large. An attempt is made to combine this large-scale aspect with flexibility. Companies do not wish to sacrifice the benefits associated with economies of scale; the advantage of the low costs and the consistent and high level of quality are vital in order to rise above the competition in any way with standard products. The result is that, in many cases, a great deal of investment must be made in order to make the production machines flexible: to be able to switch from one product to the next and incur very few costs in the process. However, we have learned in practice that operating in this manner sometimes results in the creation of a great deal of complexity that is difficult to control. The development of these four competencies must occur in a step-by-step, balances manner. The unavoidable situation then arises in which too much is invested in one of the sub-elements; the expected yield -financial as well as in terms of activity -will fail to materialize and frustration will develop. The creation of the CRM strategy will be delayed and in this unfortunate scenario, top management’s commitment to the CRM strategy falls away and a modified strategy is likely to materialize. 4. The Dynamic in Relationships How do relationships begin and grow? Trust and commitment cannot be forced; they must grow. Marketers will have to gain insight into the pattern by which relationships develop and the manner in which they can influence this process. (Peelen:2005; 35,36): A relationship which is initially characterized by a discretionary aspect and a focus on transactions and cross-selling will have to develop into a long-term partnership in which the supplier functions as a “total solution provider” for the customer. A service provider who, for example, has the confidence to and is capable of creating an analysis of the transactions completed with the customer in the past can lay the foundation for a consultational relationship: what was the point of the purchase, what did you hope to achieve and how can you gain additional benefits from this supplier? The mutual respect (status) can continue to grow. The exchange of more personal and non-concrete resources can cause an increase in the value of the customer –supplier relationship for both parties.
  • 25. 25 In order to increase the level of intimacy, the personal exchange of resources, trust and commitment, both customer and supplier must have a capacity for empathy. Empathy is the ability to see the world trough someone else’s eyes, from moment to moment. A supplier can place itself within the frame of reference of the customer, and at the same time make the customer aware of the fact that it understands him or her. A condition necessary for this to occur is that both parties must supply information that is open and must dare to “expose” themselves. In terms of the negotiations to be conducted and transactions to be completed, empathy is a difficult aspect for marketers and salespeople. The marketer and salesperson benefit from showing their products and organization and in putting their vulnerable side, listening, and putting themselves in other person’s position. The development of the relationship may be detailed further on the basis of insights into relationships originating from the field of social psychology. Dwyer, Schurr and Oh identify five phases in a relationship. During the first phase, both parties become aware of each other. Both parties position themselves and take actions designed to demonstrate their appeal to the other party. The second phase begins that of exploration or sounding out. This phase begins with attraction. Attraction may develop because both parties think that they aspire to the same goals or it may originate from the perceived personality: he or she is honest or capable. The capacity for empathy plays a much larger role during this second phase. More interaction takes place and negotiations will be conducted. The future orientation is still limited and the cooperation is still easy enough to terminate at this stage. In the growth phase, the third phase, the interaction processes from the previous phase are continued. Both parties continue to attract the other, negotiations will continue to take place, norms and expectations will become specified in more detail, and the parties will also evaluate the situation every now then. However, in comparison with the previous phase, more risks are now taken; activities are performed to try and test out the relationship.
  • 26. 26 In fourth phase of the commitment or saturation, the relationship reaches its maximum level commitment, mutual dependency, trust and respect. Many resources are exchanged, including those of a personal and less concrete nature. The final phase is that of the decline. Directness and a focus on others may indicate that the continuity of the relationship is at issue. The causes of an eventual break may lie with differences in expectations and individual characteristics of the partners, such as differing needs for freedom or renewal. A relationship life cycle has been constructed which describes the pattern in which the purchases and the commitment in the relationship change over time under the influence of interactions. 5. New Dimensions of Customer Relationships Good customer relationship management creates customer delight. In turn, delighted customers remain loyal and talk favorably to others about the company and its products. Studies show big differences in the loyalty of customers who are less satisfied, somewhat satisfied, and completely satisfied. Even a slight drop from complete satisfaction can create an enormous drop in loyalty. Thus, the aim of customer relationship management is to create not only customer satisfaction cut also customer delight. (Kotler: 2012; 44): The recent economic recession put strong pressures on customer loyalty. It created a new consumer frugality that will last well into the feature. One recent study found that, even in an improved economy, 55 percent of consumers say they would rather get the best price than the best brand. Nearly two-thirds say they will now shop at a different store with lower prices even if it’s less convenient. It’s five times cheaper to keep an old customer than acquire a new one. Thus, companies today must shape their value propositions even more carefully and treat their profitable customers well.
  • 27. 27 We usually describe a product or service in terms of several dimensions or characteristics. For example, after receiving a service, we might describe the service provider as fast, always available when needed, and unpleasant. These descriptions represent three different aspects of the service: responsiveness, availability, and professionalism, respectively. These are a subset of all possible dimensions by which the service can be described. The composite of all possible dimensions describes the entire product or service. (Hayes:1992;6): We can regard customer requirements as those characteristics of the product or service which represent important dimensions. They are the dimensions on which customers base their opinion about the product or service. The purpose of determining customer requirements is to establish a comprehensive list of all the important quality dimensions that describe the service or product. It important to understand the quality dimensions so that will you know how customers define the quality of your service or product. Only by understanding the quality dimensions will you be able to develop measures to assess these quality dimensions. 5.1. Total Quality Management in Customer Relationships Although there may be some standard quality dimensions that generalize across many products or services, some dimensions will apply to specific types of products or services. Quality dimensions applicable to many service organizations include availability, responsiveness, convenience, and timeliness. These quality dimensions seem applicable to many service industries, such as the banking, hotel, and hospital industries. This list of quality dimensions, however, is not comprehensive for each of these industries. The hospital industry might include additional quality dimensions such as quality of food and quality of care. Similarly, other industries may possess quality dimensions that uniquely define their services and products. It is important that each company identify all quality dimensions to ensure understanding of the definition of quality for its products or services. (Hayes:1992;6):
  • 28. 28 Quality dimension development involves the people who provide the service or product. They should be in a good position to understand the purpose and function of the service or product. These people could range from individuals within a quality circle addressing a particular problem to individuals working independently to better understand their customers’ requirements. In either case, these people are closely involved with the business process. 5.2. Value Creation for Customer Companies wishing to create and sustain a customer commitment-based culture and infrastructure must also create and sustain real value for the customer. Value can be expressed in terms of tangibles (time, money, efficiency, quality, etc.) or intangibles (pride, and well-being). Customers have become increasingly selective and less strictly logical in their search for more attractive quality, service, price, and other equity elements. Like needs, problems, expectations, and complaints customer-perceived value is constantly changing. Value authority Robert B. Tucker has identified four key drivers in what he calls the “value revolution”. (Lowenstein: 1997;12,13,14,45,46) : 1. The New Consumer: “The new consumer demands to be more involved in what your products is how it functions, and how much you charge for it. The new consumer is better informed, more demanding, and has vastly greater choices in what and where he or she purchases”. The customer, whether consumer or business-to-business, is now considerably more concerned with the delivery of benefit –value– within the product or service. 2. Bypass Competition: Companies are offering new areas of competitive advantage. Traditional retailers, for example, used to be only source for certain kinds of goods. Time-pressed multi-career baby boomers and senior citizens can have their groceries selected and delivered by companies. The rapid proliferation of home computers, the Internet and the World Wide Web are also changing the competitive arena.
  • 29. 29 3. Value Innovators: Companies are increasingly finding that they have to create (or recreate) value for customers that goes beyond statements of need or expectation. For example, recognizing that they are known for service, but still vulnerable to other forms of retailing, have staff in many stores who give advice, help customers shop for the right gift holiday time, and even accompany them from department to department (something that has been done in Japan for decades). Motorola will virtually customize cellular phone features according to individual customer specifications. Ikea has dramatically changed the furniture buying landscape by creating a new value equation for furniture customers. 4. Buyer Information Power: Customers now have more information about the products and services they purchase than at any time in the past. Periodicals, books, newspapers, databases, and newsletters evaluate, rate, or describe the features of hundreds of products. These drivers mean that having high quality, low prices, excellent service, and customer satisfaction do not ensure customer loyalty. Lowering price, without creating commensurate value, is a perception for probable failure. Finally, the belief that customer satisfaction and customer loyalty are an identical, or even a closely related, concept must change. Over the years, millions have been spent measuring customer satisfaction has relatively little to do with bottom line performance. Satisfaction is a passive state. Loyalty is proactive and more complex. It involves the customer’s own criteria for value. At best, the relationship between customer satisfaction and customer loyalty is unreliable and inconsistent. At worst, it is a false prophet, leading companies to invest resources in satisfaction- producing efforts in that belief that customers will reward them for it. The long-term value strategy is built on creating strong relationships with customers and anticipating their requirements. A significant new challenge is emerging with regard to value. Companies must now strategize with respect to both the physical product and “virtual” product, such as information. Overlaps in physical and virtual product occur in many industries, particularly those where a tangible product, such as information support, coexist.
  • 30. 30 Executives must pay attention to how their companies create value in both the physical world and virtual world. But the processes for creating value are not the same in the two worlds. By understanding the difference and the interplay between the value-adding processes of physical world and those of the information world, senior management can see more clearly and comprehensively the strategic issues facing their organization. (Harvard Business:1997) The world of business increasingly demands a shift from supply-side to demand-side thinking. As companies gather, select, synthesize, and distribute information in the marketplace while managing raw and manufactured goods in the marketplace, they have the opportunity to “sense and respond” to customers’ desires rather than simply to make and sell products and services. Senior managers must evaluate their business –its opportunities and risks– along the value chains of both worlds, virtual and physical. Today events in either con make or break a business. 5.3. Customer Lifetime Value CRM vendors are now providing the ability to calculate a customer lifetime value of a customer based on various criteria. One of the models determines the customer lifetime value on a formula based on the recency, frequency, and monetary values for a customer:  Recency –amount of recent purchases by the customer.  Frequency –the frequency of purchases by a customer.  Monetary values –the monetary values of purchases by a customer. The ability to track customer lifetime value and to segment customers more precisely for eventual offering of unique services and products depending on their current and products perceived value. (Goldenburg:2002;42) The lifetime value is the net present value of the feature contribution by a customer to the overhead and the profit of a company. The customer makes a contribution to the result if the income from transactions exceeds the expenses incurred in completing them and maintaining the relationship. (Peelen:2005;275,276):
  • 31. 31 From a theoretical viewpoint, the most accurate calculation of the contribution is obtained when all of the customer-specific incomes and expenses are allocated to each customer. Not only the expenses incurred in completing a transaction, but also those involved in acquisition and relationship management are allocated so that the most complete insight possible may be gained into the customer’s profit contribution. However, this is not practicable in most situations. Incomes may generally be attributed to a certain customer, but this is more difficult when it comes to expenses. Companies usually have no insight into the actual expenses that are incurred for a specific customer. Calculations of standard costs should give an indication of the expenses that are incurred when efficient methods are used to acquire, serve and manage the relationship, etc. Depending upon the degree to which reliable cost estimate may be prepared or to choose to categorize them under the overhead costs. If insight into the costs of relationship management are lacking, it may be wise to include only the transaction costs in the lifetime value calculation. In this regard, reliability is more important than thoroughness. In order to arrive at the actual calculation of the financial customer value, the customer will have to be identified. This can be more difficult in practice than it seems, perhaps as a result of working with intermediaries, direct customer contact is lacking or perhaps because there is no central registration of customer identification data. In principle, someone is a customer as soon as the first transaction has been completed. The customer value calculation will then have to incorporate all of the transactions performed during the time the person is officially a customer. The expenses will have to be determines during the period from acquisition up to and including the departure. This can involve actual realized cash flows (person is already a customer) as well as results to be obtained in the future which will have to be predicted. 5.4. The Changing Nature of Customer Relationships Significant changes are occurring in the ways in which companies are relating to their customers. Yesterday’s big companies focused on mass marketing to all customers at arm’s length. Today’s companies are building deeper, more direct, and lasting relationships with more carefully selected customers. Here are some important trends in the way companies and customers are relating to one another. (Kotler:2012;40,41):
  • 32. 32 Relating with More Carefully Selected Customers: Few firms today still practice true mass marketing –selling in a standardized way to any customer who comes along. Today, most marketers realize that they do not want relationships with every customer. Instead, they target fewer, more profitable customers. “Not all customers are worth your marketing efforts”, states one analyst. “Some are more costly to serve than to lose.” Adds another marketing expert, “If you cannot say who your customers are not, you probably cannot say who your customers are.” Many companies now use customer profitability analysis to pass up or weed out losing customers and target winning ones for pampering. One approach is to preemptively screen out potentially unprofitable customers. Progressive Insurance does this effectively. It asks prospective customers a series of screening questions to determine if they are right for the firm. If they are not, Progressive will likely tell them, “You might want to go to Allstate.” A marketing consultant explains: “they did rather send business to a competitor than take on unprofitable customers.” Screening out unprofitable customers lets Progressive provide even better service to potentially more profitable ones. Relating More Deeply and Interactively: Beyond choosing customers more selectively, companies are now relating with chosen customers in deeper, more meaningful ways. Rather than relying on one-way, mass- media messages only, today’s marketers are incorporating new, more interactive approaches that help build targeted, two-way customer relationships. Two-Way Customer Relationships: New technologies have profoundly changed the ways in which people relate to one another. New tools for relating include everything from e-mail, Web sites, blogs, cell phones, and video sharing to online communities and social networks, such as Facebook, YouTube, and Twitter.
  • 33. 33 This changing communications environment also affects how companies an brands relate to customers. The new communications approaches let marketers create deeper customer involvement and a sense of community surrounding a brand –to make the brand a meaningful part of consumers’ conversations and lives. “Becoming part of the conversation between consumers is infinitely more powerful than handing down information via traditional advertising,” says one marketing expert. Says another, “People today want a voice and a role in their brand experiences. They want co- creation.” However, at the same time that the new technologies create relationship –building opportunities for marketers, they also create challenges. They give consumers greater power and control. Today’s consumers have more information about brands than ever before, and they have a wealth of platforms for airing and sharing their brand views with other consumers. Thus, the marketing world is now embracing not only customer relationship management, but also customer-managed relationships. Greater consumer control means that, in building customer relationships, companies can no longer rely on marketing by intrusion. Instead, marketers must practice marketing by attraction –creating market offerings and messages that involve consumers rather than interrupt them. Hence, most marketers now augment their mass-media marketing efforts with a rich mix of direct marketing approaches that promote brand-consumer interaction. For example, many brands are creating dialogues with consumers via their own or existing online social networks. To supplement their marketing campaigns, companies now routinely post their latest ads and made-for-the-Web videos on video-sharing sites. They join social networks. Or they launch their own blogs, online communities, or consumer-generated review systems, all with the aim of engaging customers on a more personal, interactive level.
  • 34. 34 6. Communication with Customers The relationship between two people, also known as the dyad, is considered the most elementary form of social relationship. However, in reality, we find more complex relationships between groups of people and the position that each individual occupies with respect to others. This position is defined within sociology as that individual’s social position. A social position may be defined as the position which a person occupies in a complex of people interacting with one another. Some positions are reserved for only one person within society (queen, prime minister). Other positions may be held by several people simultaneously (police officer, teacher, and nurse). (Peelen:2005;38-41): Recently, the attention given to these types of social structure has grown substantially. The possibility of forming communities on the Internet is chiefly to blame for this. The Internet bridges distances and time and brings people together and thus also customers and suppliers. The term “communities” is used rather loosely in practice to refer to a group of users or customers and suppliers who interact with one another, without the need to analyze what the connection is within the social structure. The supplier may be one of them; he might even stand outside of the community and have very little influence on it. Certain behavior will probably even be punished because it does not fit within the norms and value patterns or the goals of the community. Formulating and implementing a CRM strategy without stopping and giving careful thought to the meaning of a relationship between a customer and supplier is unwise. Attention is required for issues which are far removed from the task at hand: attracting and keeping customers, developing a new communication infrastructure and individual customer knowledge. Issues such as empathy, trust, mutual commitment, relationship development and communities would have been interpreted in a company-specific manner.
  • 35. 35 6.1. Communication Models and Elements First of all, we can construct a continuum that runs from “one-to-many” to “one-to-one” communication; websites, e-mail and telephone may then be placed in the middle. These channels, supported by IT, make it possible to interact with a large group of people at relatively low cost. These channels are fairly independent of time and place; they may be utilized at the most varied locations and at any given time. (Peelen:2005;120) Noise Message Message FEEDBACK Table 2: General Communication Model (Odabaşı:2010;69) As a result of technological developments, we have seen the communication power of the channels grow both independently of one another and in connection with one another. Owing to the emergence of technologies such as and force-based technology, it has become possible to create the illusion of a reality for users by simulating nearly all of the human senses. This contrasts sharply with channels in in which exclusively static information is still being used and only a small number of senses are being simulated. An example of the latter would be a newspaper. (Peelen:2005;121,123): Although the channels supported by IT do very well, the mass media and personal contacts continue to play a vital role. The fact remains that mass media may be used to convey a certain message to a large group of people at a low cost, whereas in terms of the social dimension, face-to-face conversations continue to score higher than contact in which machines function as the interface between two people. CHANNELSOURCE RECEIVER
  • 36. 36 The use of multiple channels contributes to the construction of a network of touch points equipped with sufficient sensory aspects, interactivity, accessibility, reality and efficiency. The quality and efficiency of the contact are distributed along the three dimensions: the limitations of the individual channels are overcome by the coherent application of different channels. Consumer an supplier are connected. In the situation most worth striving for, the successive contacts fit together seamlessly so that an uninterrupted dialogue can arise. The initiative originates from both parties, and both react promptly to one another’s communication. They listen and respond to one another. In terms of substance, there is no unnecessary repetition, and diverse subjects are raised for discussion. The conversation is captivating and binding. 6.2. Forms of Communication with Customers In technical and creative terms, the IT-supported channels offer good opportunities to conduct a dialogue and create an experience, if so desired. However, before the use of multichannel can grow to become a success, it will have to be ascertained whether customers are actually using these channels. And this is not limited to whether or not they are surfing the Internet from time to time, but specifically concerns the application of these media by a variety of customers to certain purchase and use situations. Customers differ from one another in the manner in which they use the different channels. Having knowledge of this behavior and these preferences is essential to being able to create a dialogue and/or the desired effect. (Peelen:2005;127,128):
  • 37. 37 On the basis of the stable personality traits consumers were divided into eight types: 1. Conservative/Passive/Social 2. Conservative/Passive/Instrumental 3. Conservative/Active/Social 4. Conservative/Active/Instrumental 5. Open/Passive/Social 6. Open/Passive/Instrumental 7. Open/Active/Social 8. Open/ Active/Instrumental There are many different conservative and open consumers. First, some of them are passive and have a strong tendency to focus on judgement cast upon them by others or to attach a great deal of importance to these opinions. They are more likely to trust others and very relationship oriented. Others, however, are active and have a need for control, prefer to follow their own lead and ignore “true” advice from others. Second, consumers may be instrumentally or socially oriented. With the instrumentals, it is the result that counts; they are efficient and purposeful and more individually oriented. They do not derive security from a “good feeling”, but from more “objective aspects”. Social consumers “just” find contact with others pleasant, they prefer face-to- face contact to the telephone, and most certainly prefer it to the Internet. Efficiency is not the highest goal; it is considered important to get a “good feeling” from the things that are done. The eight types of consumer differ from one another in the degree to which they would like to have and are prepared to make use of IT-support channels. Consumer type 1 is the least open to new channels and is not after control; type 8 is the opposite in this regard.
  • 38. 38 7. Customer Service Consumers usually face a broad array of products and services that might satisfy a given need. How do they choose among these many market offerings? Customers form expectations about the value and satisfaction that various market offerings will deliver and buy accordingly. Satisfied customers often buy again and tell others about their good experiences. Dissatisfied customers often switch to competitors and disparage the product to others. (Kotler:2012;31): Marketers must be careful to set the right level of expectations. If they set expectations too low, they may satisfy those who buy but fail to attract enough buyers. If they set expectations too high, Buyers will be disappointed. Customer value and customer satisfaction are key building blocks for developing and managing customer relationships. 7.1. The Quality of Customer Service Quality control principles and practices that we uncovered, while pertinent to evaluating and ensuring goods quality, were inadequate for understanding service quality. This inadequacy stems from the three fundamental ways services differ from goods in terms of how they are produced, consumed, and evaluated. (Zeithaml, Parasuraman and Berry:1990;15,16): First, services are basically intangible. Because they are performances and experiences rather than objects, precise manufacturing specifications concerning uniform quality can rarely be set. Unlike automobiles and audiocassettes, airline transportation and aerobic exercises cannot be measured tested, and verified in advance of sale to assure quality. Moreover, when what is being sold is purely a performance, the criteria customers use to evaluate it may be complex and difficult to capture precisely. Second, services –especially those with a high labor content – are heterogeneous: their performance often varies from producer to producer, from customer to customer, and from day to day. The quality of the interactions that bank tellers, flight attendants, and insurance agents have with customers can rarely be standardized to ensure uniformity the way quality of goods produced in a manufacturing plant can.
  • 39. 39 Third, production and consumption of many services are inseparable. Quality in services often occurs during service delivery, usually in an interaction between the customer and the provider, rather than being engineered at the manufacturing plant and delivered intact to the customer. Unlike goods producers, service providers do not have the benefit of a factory serving as a buffer between production and consumption. Service customers are often in the service factory, observing and evaluating the production process as they experience the service. While the literature on quality has been predominantly goods-oriented, a few contributions have focused on service quality. From these writings emerge the following themes:  Service quality is more difficult for customers to evaluate than goods quality. Therefore, the criteria customers use to evaluate service quality may be more difficult for the marketer to comprehend. How customers evaluate investment services offered by a stockbroker is more complicated and varied than how they evaluate insulation materials. Customers’ assessment of the quality of health-care services is more complex and difficult than their assessment of the quality of automobiles.  Customers do not evaluate service quality solely on the outcome of a service (e.g., how a customer’s hair looks after a haircut); they also consider the process of service delivery (e.g., how involved, responsive, and friendly the hair stylist is during the haircut).  The only criteria that count in evaluating service quality are defined by customers. Only customers judge quality; all other judgments are essentially irrelevant. Specifically, service quality perceptions stem from how well a provider performs vis-à-vis customers’ expectations about how the provider should perform.
  • 40. 40 7.2. The System of Customer Service The foundation of the customer data is formed by the dat7.2. The System of Customer Service which may be used to identify customers. It is the description, expressed in administrative characteristics with which the customers may be picked out in a crowd, as it were. The quality of these data must be controlled: are they current, complete, correct, and unique? Various methods and (intelligent) systems can be employed and organizational measures can be implemented to manage the quality. (Peelen:2005;187,188): Relationship data used to identify a customer include:  The basic data consisting of name, address, gender and company name;  Supplementary data on the date of birth or incorporation date, nationality or industry, telephone number, legal form, company registration number. Typical of these customer data is that they are used by the entire organization and therefore form part of the infrastructure of company. The exchange of customer data takes place between nearly every one of the processes in the value chain. Data many develop in a process or change when:  The service department determines that the customer has moved;  The accounts department announces that the customer is on stop and may not receive any further shipments;  The distribution department receives a returned package due to correct yet improper address;  The marketing department receives mailing a returned with the notification “person no longer works here” ;  The invoice does not arrive;  A customer is also a supplier.
  • 41. 41 Data are input into the system from a coupon that comes in as a result of direct response advertisement, a mailing or telephone call from a customer to the call canter or via the Internet. Transactions take place and the data are used for commercial purposes (mailing, call center, by account managers, analyses), service (the service engineer) and in production systems (insurance policy documents, account statements, order confirmations, invoices, etc.). Different departments and different people use the database in their own way and with their own goal in mind. In this type of environment, the quality of the customer data must be monitored to prevent deterioration thereby lowering the company’s profitability. For these reasons, it is advisable to set up a central database. From the outset, the priority may lie with the preservation and monitoring of quality. People will not be able to make changes on their own initiative and time will be reserved to update the identification data. One person or a number of people within the organization will be dedicated to managing the quality of this data in a professional way. Using access codes and other facilities, others will only experience the advantages of this system. 8. Customer Retention Retention, in a market sense, means holding on to customers. If a company becomes aware in time of those customers who demonstrate an increased likelihood of ending the relationship, then it may take action to prevent this. (Peelen:2005;239): In order to be able to determine this likelihood or profitability, companies must arrive at definitions of former and current customers. Does someone become a departing customer at the moment who or she no longer buys a certain product; a consumer, for example, does not buy fresh meat any more et the particular supermarket but keeps on shopping for all sorts of packaged goods? Or is another level of aggregation used whereby a customer is referred to as having left he or she does not execute any transactions with the supplier involved over a period of year, for example? The choice for the product or organizational level is dependent upon the size of the outflow and the position of the responsible manager within the company: is he or she responsible for the product or for the customer?
  • 42. 42 8.1. Model of Customer Retention For many companies, ensuring that they have available the sorts of data that will be reliable predictors of the possible defection of a customer is a challenge. If the customer and the organization do not interact intensively and the company only has static customer information on names, address, lifestyle, etc. available in the database it becomes harder to find data that trigger the potential customer defection. During the relationship it soon becomes important to think about the collection of data that will predict churn. (Peelen:2005:240,241): Not only is the data’s availability of crucial importance, their quality also plays a role. Feeding all of the available data into the models without sufficient preparation offers little hope of obtaining a stable model with good predictive power. Within the scope of retention analysis, an investment company will introduce the amount of the capital invested as a variable. It will focus on the different ways in which this information may be measured. This level may be gauged at the moment that someone becomes a customer, at the time the level reached its peak, on the last day of the year, on the last day of the previous month, and so forth. Apart from the amount itself, the changes in the amount may also be measured. The differences may be expressed in absolute terms or as percentages. The difference between the current amount invested may also be expressed in absolute terms, but an index number is likely to have batter powers of prediction when used in a model. In addition to the rise and fall, the spend with which positive or negative developments have occurred may also be measured.
  • 43. 43 Up until now, companies have focused solely on the ways in which the level of investment may be measured, and all sorts of other variables which influence customer retention have fallen by the wayside. These include:  Investment behavior: How often does an investor modify his or her portfolio?  The number of different products that the customer purchases;  The financial climate;  The earned rate of return;  Customer satisfaction;  The customer’s investment objectives; and  The communication behavior. These variables may also be measured in a variety of ways. 8.2. Development of Customer Retention Programs’ One of the challenges involved in performing a retention analysis is the compilation of a qualitatively good data set. The share of former customers as a percentage of the sample must be determined. If a random sample is taken from the current customer database, the share represented by former customers will probably be relatively small. Very title relevant empirical material is taken available for the development of the model. If, on the other hand, a data set of exclusively former customers is created, it remains uncertain in what sense former customers differ from customers who have decided to continue the relationship. (Peelen:2005;242-252): In order to be able to evaluate the power of prediction of the model to be developed, it is advisable to split the data set into a training and a validation set. The first is used to develop the model and the second to test it for reliability. The developed model will be filled in for the customers in the validation set; the prediction obtained in the process regarding “staying” or “leaving” will be compared with the actual behavior that has been recorded in the validation set.
  • 44. 44 The decision may also be made to develop more than one prediction model. Customers from different segments do vary. For the one investor, for example, a disappointing return may be reason enough to accept his losses and seek refuge in savings, whereas for another investor this may provide him with a reason to invest even more. Furthermore, there are considerable differences between active and non-active customers. Both may be loyal or disloyal, yet the chance of departure for customers from the active group will have to be deduced from other characteristics than those used for the less active customers. There are no behavior variables available for this last group and, as such, dynamic data are lacking and the model will have to be based on static characteristics. The analysis capacity within companies is scarce. In order to achieve a maximum return from this resource, only the most crucial questions should be researched. Within the scope of making selections –that is, who should be selected for a certain offer –two main points deserve attention: a) The retention analysis designed to identify customers with an increased profitability of ending the relationship. Approaching these customers must lead to a reduction in the probability of their departure. b) The cross-sell analysis designed to determine the probability of the purchase of another product from a different product category. Knowledge of these probabilities gives the agent in the contact center the opportunity to determine whether a calling customer will be offered another product or not. The marketer can use this knowledge to determine which customers will be approached for a cross-sell effort. The success of this can be crucial to maintenance and development of the relationship during the growth phase.
  • 45. 45 8.3. Handling of Customer Complaints A lot of customers like the idea of sending their favorite suggestions to the president of a company. Many companies have therefore established a system whereby customers are invited to use the postage-free suggestion blanks that are provided and that are usually addressed to the president, as chairman of the suggestion committee. The customer receivers an acknowledgement of the receipt of the suggestion and is told what action will be taken on it. This kind of response builds confidence in the company. Even if a suggestion is not accepted the customer likes to feel it has been given an honest hearing. This program also gives the company an opportunity to explain its position and make a friend. (Moseley:1972;147-163): The positive attitude of a complaining customer who has been converted into a booster can be multiplied two to ten or more times because it is usual for each customer to have at least that many friends who are influenced by her point of view. For some twenty years now, long before customer protection became a concern of the President and member of Congress, a major food store chain has felt that its best guarantee of continuing is business is the goodwill of its customers. It undertook to see to it that the customer got a fair shake every time she patronized one of the stores. A dialogue was established and is still in operation. In each store there is a customer suggestion corner which contains postpaid letter forms addressed to the president along with a ballpoint pen. Customers are invited to write their suggestions or criticisms. Complaints by telephone are as important as written complaints. They deserve, and usually get, as much attention. The thing to bear in mind in handling these complaints is that the caller usually expects immediate action. The person receiving such complaints should follow these guidelines to make certain that satisfactory action is taken. A son soon to be on leave from the service wrote to his mother requesting roast turkey with stuffing and lots of gravy for his homecoming meal. Friends and relatives were invited for dinner to help celebrate his return. The serviceman remembered his mother’s artistry in the kitchen. He had promised his best girl the meal of her life on that very special day.
  • 46. 46 When a company gives a guarantee, it may be willing to refund the money, pleasantly, but a refund is not enough. When a customer finds it necessary to return merchandise and ask for a refund, much of her/him goodwill has already been lost. She may never feel quite the same about the store again. The unsatisfactory merchandise may have embarrassed her/him in the presence of her/him family or friends. It has forced her/him to make another trip to the store to get her money back. The extra trip may be an inconvenience cannot be undone. There is often a feeling of resentment against the store for having sold her a product that did not live up to its billing. The manager is not only a planner, coordinator, and leader, he is also a teacher. He must reinforce the training given to employees by company and professional schools. His role as a teacher never ends. Besides training employees in the technical side of running a store, the best managers also give through orientation in how to handle customer complaints –or what might be called sensitivity training. Most simple complaints can be dealt with by the employee, who sees to it that the customer receives what she/he wants. The manager should emphasize the importance of handling complaints so that the customer leaves the store as a friend and not with a residue of bitterness. When training employees, the manager should also give special force to the value of taking immediate action on promises made to the customer. 9. Benefits of CRM The most frequently stated benefits resulting from CRM include:  Better Sales/Marketing Information –For example, customer names, customer background, customer needs, competitive positioning, etc. are just some of information collected as a result of inputting a CRM system.  Improved Productivity –For example effective target market identification, reduction in the number of cold leads, and the ability to provide accurate and on-the-spot quotations, look up inventory availability quickly, enter orders directly from the field, etc., all of which help shorten the sale cycle.
  • 47. 47  Enhanced Customer Care –For example, more time to spend with customers due to a reduction in the sales administrative workload, an ability to monitor customer service levels, and ability to highlight existing or potential customer service problems and to react more quickly to customer needs, etc. (Goldenburg:2002;60,61): An increasingly important objective, and area that is related to each of the aforementioned benefits, is improved customer retention/loyalty. Corporations in the U.S. lose approximately half of their customers within five years. If the CRM system really focuses on the customer and above benefits are realized, a company can expect to retain more customers over time. It has been shown that longer a customer is retained, the greater the profitability will be for the retained customer. The good news is that there are a growing number of detailed tangible and intangible benefits associated with CRM, and there are ways to measure these benefits. For each of the following measurements, we have assumed that similar and valid measurement information is available today in some format within your company, or that similar and valid measurement information will be available by the start of any CRM project within your company. 9.1. Tangible Benefits Increase in spent by sales personnel with existing customers per day. To determine this benefit, consider measuring the number of service calls made per day by sales personnel or the number of hours spent by sales personnel in face-to-face contact with existing customers. (Goldenburg:2002;61-63): Increase in the number of new customer prospects persuade by sales representatives. Remember that most representatives prefer to call on their existing customers, with whom they have ongoing relationship. To determine this benefit, consider measuring the number of the number of new prospects versus existing customers contacted by the sales representative per day, per week, per month, or per quarter.
  • 48. 48 Increase in time spent by sales managers in contacting customers and working with sales representative on customer issues. “Coaching” sales personnel is critical, and managers never seem to have enough time for this. To determine this benefit, consider measuring the number of hours per day which sales mangers spend in contact with customers and prospects, and with sales representatives discussing customer issues. Increase in customer service efficiency. Customer service may be the key differentiator between those companies that lead and those companies that wonder what happened! To determine this benefit, consider measuring the turnaround time for customer service issues, as well as the number of customer service errors made as a result of misinformation. Increase in timeliness of follow-up corresponding to customers/prospects. To determine this benefit, consider measuring the number of days between the date the customer/prospect was contacted and the date that the customer/prospect follow-up information is sent. Increase in revenue per month per sales representative. This is an important benefit of CRM, though careful management is required to ensure that time saved as a result of automation is used productively to deliver more sales. To determine this benefit, consider measuring the increase in base revenue generated per month per sales representative. Increase in frequency that your company’s name is in front of your customers and prospects. The “out-of-sight, out-of-mind” syndrome can be quite harmful to your sales efforts. To determine this benefit, consider measuring the number of pieces of correspondence sent to customers and prospects by sales and marketing personnel. Increase customer satisfaction. To determine this benefit, consider using a customer satisfaction survey rating and hanging these ratings in a location for all personnel to review. Improve communications within your company. As more and more personnel spend time in the field with customers and prospects, there is a growing need to secure effective communications between personnel. To determine this benefit, consider measuring the time spent giving and getting information between the field and regional or headquarters offices.
  • 49. 49 9.2. Intangible Benefits Overall smoother functioning within your company. To determine this benefit, consider measuring the time spent time looking for needed information be versus time spent utilizing information and getting on with your job. It can be shocking to learn how much time is spent by sales personnel on unnecessary administrative matters, or amount of time a new salesperson spends getting up to spend in a new territory! Increased employee motivation and satisfaction. While this may be difficult to measure, consider measuring feedback from those employees who use CRM. A n alternative measurement is employee turnover rate for those personnel who use the CRM system.
  • 50. 50 PART 3: SURVEY OF CUSTOMER RELATIONSHIPS MANAGEMENT IN THE SHOPPING CENTERS The Results of the Research 150 people participated the survey that I have made in about Customer Satisfaction in the Shopping Centers. These are 89 women and 61 men.149 people go to Shopping Center from these participants. The survey is attached at the end of this study. The results are given in the following the tables: Graphic 1: Group of Age 16-24 25-33 34-42 43-51 52-59 60-68 68-… 73 32 25 14 4 2 0 GROUP OFAGE NUMBER OF PERSON
  • 51. 51 Graphic 2: Distribution of Location Graphic 3: Distribution of Income 11 2 6 11 6 4 1 10 13 5 1 3 3 2 23 3 9 8 1 8 8 7 5 1.Ataşehir 2.Bahçelievler 3.Bostancı 4.Beşiktaş 5.Fatih 6.Göztepe 7.Içerenköy 8.Kadıköy 9.Kartal 10.Kağıthane 11.Kasımpaşa 12.Kurtköy 13.Levent 14.Maslak 15.Maltepe 16.Ortaköy 17.Pendik 18.Sarıyer 19.Sancakte… 20.Şişli 21.Ümraniye 22.Üsküdar 23.Zeytinbu… DISTRIBUTION OF LOCATION Series1 6 36 32 57 19 0-999 1000-1999 2000-2999 3000-4999 5000-ve üstü DISTRIBUTION OF INCOME NUMBER OF PERSON
  • 52. 52 Graphic 3: Education of People Graphic 4: Distribution of Jobs’ 1 4 30 115 Literate Elementary School High School University EDUCATION NUMBER OF PERSON 0 3 5 1 1 0 18 0 2 8 3 11 73 13 12 DISTRIBUTION OF JOBS' NUMBER OF PERSON
  • 53. 53 Graphic 5: Preferred Mall 22 52 65 41 32 61 15 39 17 40 8 23 11 20 17 17 PREFERRED MALL CHOOSE THE NUMBER OF PEOPLE
  • 54. 54 Graphic 6: Reasons for Choosing Shopping Centers 25% 19% 17% 11% 15% 2% 6% 2% 2% 1% REASONS FOR CHOOSING SHOPPING CENTERS NEARLY THE HOUSE THERE ARE EVERY BRANDS' STORES CINEMAS ARE GOOD THERE ARE I AM LOOKING FOR EVERYTHING I CAN SPEND TO TIME WITH MY FRIENDS STORES' PRICES ARE VERY CHEAP RESTAURANTS AND CAFES ARE QUALITY THERE ARE GAME AREAS FOR CHILDREN THERE ARE FACILITIES MANY SINGER'S AND ARTIST'S OTHER…
  • 55. 55 Graphic 7: Mall Visit Frequency Graphic 8: Why do people prefer the Shopping Centers? 2 85 47 16 0 0 0 10 20 30 40 50 60 70 80 90 EVERY DAY SEVERAL TIMES A MONTH ONCE A MONTH SEVERAL TIMES A YEAR ONCE A YEAR NEVER MALL VISIT FREQUENCY NUMBER OF PEOPLE 95 83 80 29 33 14 7 FOR FINDING EVERY STORES TOGETHER FOR SHOPPING EVERY SEASON FOR SPENDING TIME FOR FOOD THEY ARE SAFER THAN ROADS AND STREETS THEIR CHILDREN CAN SPEND TIME FOR ENTERTAINING OTHER… WHY DO PEOPLE PREFER TO SHOPPING CENTERS? NUMBER OF PEOPLE