An introduction to CRMCRM - BEPP II*

CRM - BEPP II

In this sessionFrom transaction-based marketing to relationship marketing.Identify and explain the four basic elements of relationship mktgIdentify each of the three levels of the relationship marketing continuum.Define and understand Relationship MarketingDefine CRMDefine Consumer Behaviour and understand its process of consumer decision makingHow businesses are changing todayResponses and adjustments of companies towards this changeCRM - BEPP II*

CRM - BEPP II

The Shift from Transaction-Based Marketing to Relationship Marketing Transaction-based marketingBuyer and Seller exchanges characterized by limited communications and little or no ongoing relationship between the partiesRelationship marketingDevelopment and maintenance of long-term, cost-effective relationships with individual customers, suppliers, employees, and other partners for mutual benefitCRM - BEPP II

CRM - BEPP II

10-*Forms of Buyer-Seller Interactions on a Continuum from Conflict to CooperationCRM - BEPP II

CRM - BEPP II

Comparing Transaction-Based Marketing and Relationship Marketing StrategiesCRM - BEPP II

CRM - BEPP II

RELATIONSHIP MARKETINGThe hallmark of developing and maintaining effective customer relationships is today called relationship marketing, linking the organization to its individual customers, employees, suppliers, and other partners for their long term benefit.

CRM - BEPP II*

CRM - BEPP II

Consumer Behaviour (CB)DEFINITIONConsumer Behaviour is the behaviour that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs.ORConsumer Behavior is the Process Involved When Individuals or Groups Select, Use, or Dispose of Products, Services, Ideas or Experiences (Exchange) to Satisfy Needs and Desires.CRM - BEPP II*

CRM - BEPP II

Consumer behaviour focuses on how individuals make decisions to spend their available resources (time, money, effort) on consumption related items. That includes;What they buyWhy they buy itWhere they buy itHow often they buy it,How often they use itHow they evaluate it after the purchaseThe impact of such evaluations on future purchases How they dispose of it. So in Consumer Behaviour we not only learn what the behaviour of the consumer is when he buys a prdt but also before the consumption, during the consumption and after the consumption.2CRM - BEPP II*

CRM - BEPP II

THE MARKETING CONCEPT In marketing concept the firms analyse the needs of their customers and then make decisions to satisfy those needs, better than the competition.To better understand the marketing concept, it is worthwhile to put it in perspective by reviewing other concepts that once were predominant.While these alternative concepts prevailed during different historical time frames, they are not restricted to those periods and are still practiced by some firms today.2CRM - BEPP II*

CRM - BEPP II

Marketing Management Orientations

CRM - BEPP II

Development of the Marketing Concepts

4Production ConceptProduct ConceptSelling ConceptMarketing ConceptCRM - BEPP IISocietal Concept*Customer Concept

CRM - BEPP II

Production concept; Is the idea that consumers will favor products that are available or highly affordableAssumes that consumers are interested primarily in product availability at low pricesMarketing objectivesCheap, efficient productionIntensive distributionMarket expansionProduct concept; is the idea that consumers will favor products that offer the most quality, performance, and the most features. Marketing objectivesQuality improvementAddition of featuresCaution: Tendency toward Marketing Myopia5CRM - BEPP II*

CRM - BEPP II

Selling ConceptAssumes that consumers are unlikely to buy a product unless they are aggressively persuaded to do so.It can not expect its products to be picked up automatically by the Crs thus heavy advertising, high power personal selling, large scale sales promotion, heavy price discounts and strong publicity and public relations are the normal tools used by organisations that rely on this concept.

Marketing objectivesSell, sell, sell

Caution: Lack of concern for customer needs and satisfaction

6CRM - BEPP II*

CRM - BEPP II

Marketing ConceptAssumes that to be successful, a company must determine the needs and wants of specific target markets and deliver the desired satisfactions better than the competition.Marketing objectivesWhat can you sell?Focus on buyers needsProfits through customer satisfactionIn a company practicing this concept, all departments and every worker and manager will think customer and act customer.

7CRM - BEPP II*

CRM - BEPP II

CRM - BEPP II*

CRM - BEPP II

Customer ConceptToday many companies are moving from the Mktg concept to the Cr concept.Whereas companies practicing the Mktg concept work at the level of the Cr segments, a growing no. of todays companies are now shaping separate offers, services and even messages to individual Crs.These companies collect information on each Crs past transactions, demographics, psychographics and media and distributional preferences.They hope to achieve profitable growth thru capturing a larger share of each Crs expenditures by building high Cr loyalty and focusing on Cr lifetime valueThis has been enabled as a result in advances in factory customisation, computers, the internet and database mktg software.CRM - BEPP II*

CRM - BEPP II

Societal ConceptThe Mktg concepts sidesteps the potential conflicts among Cr wants, Cr interests and long run societal welfare.Situations like these call for a new term that enlarges the Mktg concept including; Humanistic Mktg, and Ecological Mktg or Societal Mktg conceptThe Societal Mktg concept hold that an organisations task is to determine the needs, wants and interests of targeted markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances Crs and societys well being.The Societal Mktg concept calls upon Mkters to build social and ethical considerations into their mktg practicesThey must balance and juggle the often conflicting criteria of the company profits, Cr want satisfaction and public interest7CRM - BEPP II*

CRM - BEPP II

Need RecognitionInformation SearchEvaluation of AlternativesPurchase Decision Postpurchase BehaviorCONSUMER DECISION-MAKING PROCESSCRM - BEPP II*

CRM - BEPP II

PROBLEM/NEED RECOGNITIONThe buying process starts with need recognition- the buyer recognises a problem or need. Consumer recognizes a gap or discrepancy between his/her current state and his/her desired state.The need can be triggered by internal stimuli when one of the persons normal needs such as hunger, thirst, sex etc rises to a level high enough to become a drive. Or may also be triggered by external stimuli E.g. an ad with friends, may get you thinking about a friend of yours. At this stage the mkter should research consumers to find out what kinds of needs or problems arise, what brought them about and how they led the consumer to this particular product.CRM - BEPP II*

CRM - BEPP II

External Stimuli

TV advertising

Magazine ad

Radio slogan

Stimuli in the environment

Internal Stimuli

Hunger

Thirst

A persons normal needs

Need RecognitionDifference between an actual state and a desired stateCRM - BEPP II*

CRM - BEPP II

INFORMATION SEARCHAn interested consumer may or may not search for more information. If the consumers drive is strong and a satisfying prdt is near at hand, the consumer is likely to buy the prdt, if not then he may store the need in memory or undertake an information searchFor example; Once you have decided you need a car, at the least, you will probably pay more attention to car ads, car owners/friends and car conversations.CRM - BEPP II*

CRM - BEPP II

Consumers obtain information from two sources;Internal searchRetrieve information from long term memoryExternal search (personal, commercial & experiential sources)Gather information from various sources E.g. ads, mass media, friends, store displays, sales people, dealer websites, packaging, internet searches, consumer related organisations, prdt handling, prdt examination, prdt use etc.CRM - BEPP II*

CRM - BEPP II

Family, friends, neighborsMost influential source of informationAdvertising, salespeopleReceives most information from these sourcesMass MediaConsumer-rating groupsHandling the productExamining the productUsing the product

Public sourcesPersonal sourcesCommercial sourcesExperiential sourcesA company must design its mktg mix to make prospects aware of and knowledgeable about its brand. It should carefully identify consumers sources of infor and the importance of each source.

CRM - BEPP II*

CRM - BEPP II

EVALUATION OF ALTERNATIVESOccurs either separately or in conjunction with information search.The mkter needs to know about alternative evaluation i.e. how consumers process infor to arrive at brand choices. Consumers use several evaluation processesConsumers rely on internal processes to help them organize the evaluation process.Consideration (evoked set)Decision rulesCRM - BEPP II*

CRM - BEPP II

Consideration SetCRM - BEPP II*

CRM - BEPP II

Product AttributesEvaluation of Quality, Price, & Features Degree of ImportanceWhich attributes matter most to me?Brand BeliefsWhat do I believe about each available brand?Total Product SatisfactionBased on what Im looking for, how satisfiedwould I be with each product?Evaluation ProceduresChoosing a product (and brand) based on one or more attributes.CRM - BEPP II*

CRM - BEPP II

Decision RulesAre strategies used by consumers to guide decision making. Some decision rules use product characteristics to guide decisions.CompensatoryNon-compensatory (Conjunctive, Disjunctive, & Lexicographic, affective rule etc)Some decision rules rely on stored information in consumers memories to guide decisions.Compensatory Decision RuleSelect the best overall brand; here the consumer evaluates brand options in terms of each relevant attribute and computes a weighted or summated score for each brand. The consumer chooses the brand with the highest score.CRM - BEPP II*

CRM - BEPP II

A compensatory model because a positive score on one attribute can outweigh a negative score on another attribute.Non-compensatory Decision RulesConjunctive Decision Rule; Here consumer sets a minimum standard for each attribute and if a brand fails to pass any standard, it is dropped from consideration.Reduces a large consideration set to a manageable size.CRM - BEPP II*

CRM - BEPP II

PURCHASE DECISIONIn the evaluation stage, the consumer ranks brands and forms purchase intentions.Generally, the consumers purchase decision will be to buy the most preferred but two factors can come between the purchase intention and the purchase decisionAttitudes of others; if someone important thinks that you should buy the lowest priced prdt, then chances of you buying a more expensive car are reduced.Unexpected situation factors; the consumer may form a purchase intention based on factors such as expected income, expected price, and expected prdt benefits. However unexpected events may change the purchase intention. CRM - BEPP II*

CRM - BEPP II

Types of PurchasesCRM - BEPP II*

CRM - BEPP II

POST-PURCHASE EVALUATIONThe mkters job does not end when the prdt is bought. After the prdt is bought, the consumer evaluates purchases during consumption process.There are three possible outcomes- Neutral feeling, Satisfaction or DissatisfactionAlmost all purchases however result in post-purchase cognitive dissonance or discomfort caused by post purchase conflict.After the purchase, consumers are satisfied with the benefits of the chosen brand and are glad to avoid drawbacks of brands not bought. However every purchase involves a compromise.So consumers feel uneasy about acquiring the drawbacks of the chosen brand and about losing the benefits of brands not bought.At this stage, a lot of consumer complaining behavior arises.CRM - BEPP II*

CRM - BEPP II

OutcomesActual product performance matches pre-purchase expectations = NEUTRAL FEELING

Actual product performance exceeds pre-purchase expectations = SATISFACTION (Positive disconfirmation of expectations)

Actual product performance is below pre-purchase expectations = DISSATISFACTION (Negative disconfirmation of expectations)

CRM - BEPP II*

CRM - BEPP II

IF DISSATISFIED.Alternative actions Do nothingAvoid seller/brand in the futureNegative WOM to friendsSeek redress of problem from sellerComplain to outside agencyCRM - BEPP II*

CRM - BEPP II

IF SATISFIED.Self study..CRM - BEPP II*

CRM - BEPP II

CUSTOMER RELATIONSHIP MANAGEMENT (CRM)CRM - BEPP II*

CRM - BEPP II

CUSTOMER RELATIONSHIP MANAGEMENT (CRM)Customer Relationship Management is rapidly becoming an important new initiative for most companies when trying to improve their relationship marketing programs.

CRM is the development and maintenance of mutually beneficial long-term relationships with strategically significant customers (Buttle, 2000)

CRM - BEPP II*

CRM - BEPP II

CRM is an IT enhanced value process, which identifies, develops, integrates and focuses the various competencies of the firm to the voice of the customer in order to deliver long-term superiorcustomer value, at a profit to well identified existing and potential customers. (Plakoyiannaki and Tzokas, 2001)

CRM is the process of identifying prospective buyers, understanding them intimately, and developing long-term perceptions of the organization and its offering so that buyers will choose them in the marketplace.CRM - BEPP II*

CRM - BEPP II

Customer Relationship Management (CRM) can be described as a comprehensive set of processes and technologies for managing the relationships with potential and current customers and business partners across marketing, sales, and service areas regardless of the channel of distribution. CRM is the combination of strategies and tools that drive relationship programs, re-orientating the entire organization to a concentrated focus on satisfying customersCRM - BEPP II*

CRM - BEPP II

Instead of adopting the traditional adversarial stance against customers and suppliers, many leading companies are now developing close relationships with them. They realize the power of systematically building the customer's business as a means to adding value for end-customers, and lowering system-wide costs in the supply chain. These are done through a variety of relationship marketing programs, including customer partnering, supplier partnering, alliances and internal partnering. Also, new technologies, including the Internet and CRM software tools, are providing exciting opportunities to the firm to develop and manage one-to-one relationship with its customers.CRM - BEPP II*

CRM - BEPP II

Understanding Customer Relationship Management (CRM)?CRM is a business philosophy based on upon individual customers and customised products and services supported by open lines of communication and feedback from the participating firms that mutually benefit both buying and selling organisations.The buying and selling firms enter into a learning relationship, with the customer being willing to collaborate with the seller and grow as a loyal customer. In return,, the seller works to maximize the value of the relationship for the customers benefit.In short, CRM provides selling organisations with the platform to obtain a competitive advantage by embracing customer needs and building value-driven long-term relationshipsCRM - BEPP II*

CRM - BEPP II

Determinants of CRMTrust ; The willingness to rely on the ability, integrity, and motivation of one company to serve the needs of the other company as agreed upon implicitly and explicitly. Value; The ability of a selling organisation to satisfy the needs of the customer at a comparatively lower cost or higher benefit than that offered by competitors and measured in monetary, temporal, functional and psychological terms.In addition to trust and value, salespeople must:Understand customer needs and problems;Meet their commitments;Provide superior after sales support;Make sure that the customer is always told the truth (must be honest); andHave a passionate interest in establishing and retaining a long-term relationship (e.g., have long-term perspective).

CRM - BEPP II*

CRM - BEPP II

Stages in the development of a Customer RelationshipThe Pre-relationship StageThe event that triggers a buyer to seek a new business partner.The Early StageExperience is accumulated between the buyer and seller although a great degree of uncertainty and distance exists.The Development StageIncreased levels of transactions lead to a higher degree of commitment and the distance is reduced to a social exchange.The Long-term StageCharacterised by the companies mutual importance to each other.The Final StageThe interaction between the companies becomes institutionalized.

CRM - BEPP II*

CRM - BEPP II

Functions of CRMDirect functions (are the basic requirements of a company that are necessary to survive in the competitive marketplace)Profit Volume SafeguardIndirect functions (are the actions necessary to convince the customer to participate in various marketing activities).InnovationMarketScout Access

CRM - BEPP II*

CRM - BEPP II

The role of salespeople as relationship builders and promotersSalespeople by:Identifying potential customers and their needsApproaching key decision makers in the buying firmNegotiating and advancing dialogue and mutual trustCoordinating the cooperation between the customers and their companyEncouraging the inter-organisational learning processContributing to constructive resolution of existing conflictsLeading the customer relationship development teamSalespeople are the individuals in any organisation who act both as relationship builders and as relationship promoters.

CRM - BEPP II*

CRM - BEPP II

Managing Customer RelationshipsSalespeople must be involved in the following activities in order to initiate, develop and enhance the process that is aimed at building trust and commitment with the customer.Initiating the relationshipEngage in strategic prospecting and qualifyingGather and study pre-call informationIdentify buying influencesPlan the initial sales callDemonstrate an understanding of the customers needsIdentify opportunities to build a relationshipIllustrate the value of a relationship with the customer

CRM - BEPP II*

CRM - BEPP II

Developing the relationshipSelect an appropriate offeringCustomise the relationshipLink the solutions with the customers needsDiscuss customer concernsSummarize the solution to confirm benefitsSecure commitmentEnhancing the relationshipAssess customer satisfactionTake action to ensure satisfactionMaintain open, two-way communicationWork to add value and enhance mutual opportunitiesCRM - BEPP II*

CRM - BEPP II

RELATIONSHIP NETWORKSThe ultimate outcome of a successful CRM strategy is the creation of a unique company asset known as a relationship network.A relationship network consists of the company and its major customers with whom the company has established long and enduring business relationships.The additional aspects of a global salespersons job are to:Manage customer valueAct as customer advocateEnhance customer loyalty and build a health and profitable network of relationships

CRM - BEPP II*

CRM - BEPP II

Thank you!!!!!CRM - BEPP II*

CRM - BEPP II

***WEEK 1WEEK 1**Selling philosophy focuses on the need of the seller; marketing on the need of the buyer. Selling is preoccupied with the sellers need to convert his product into cash; marketing with the idea of satisfying needs of the customer by means of the product and the whole cluster of things associated with creating delivering and finally consuming it. The Buyer Decision Making ProcessThis CTR corresponds to Figure 5-6 on p. 153 and relates to the material on pp. 152-156.Teaching Tip: Consider asking students to describe some of their purchases decisions made at the beginning of the term and link them to steps in the process. Stages in the Buyer Decision ProcessNeed Recognition. Problems are recognized when people sense a difference between an actual state and some desired state. Problem recognition can be triggered by either internal or external stimuli.Information Search. Consumers vary in the amount of information search they conduct. Information search may be a survey of information stored in memory or may be based upon information available externally. Search effort varies from heightened awareness corresponding to increased receptivity for relevant information to active information search modes where the person expends some energy to obtain information that is desired. External information vary in their informational and legitimizing characteristics. Riskier decisions usually elicit more search behavior than non-risky decisions.Evaluation of Alternatives. Following information search, the person compares decisional alternatives available. Criterion for evaluation compares product attributes of the alternatives against degrees of importance each attribute has in meeting needs, beliefs about the product or brand's ability and utility, and an evaluation procedure that ranks the alternatives by preference that forms an intention to buy.Purchase Decision. - The individual buys a product. Purchasing other than the intended product may be due to attitudes of others exerted after the evaluation of alternatives is completed or unexpected situational factors such as point of purchases promotions that affect the alternatives' ranking.Post-purchase Behavior. This involves comparing the expected performance of the product against the perceived performance received. Cognitive dissonance describes the tendency to accentuate benefits and downplay shortcomings.