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Week 18 customer relations management

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Week 18 customer relations management

  1. 1. Retail: Issues & Applications Customer relations management
  2. 2. Learning objectives <ul><li>At the end of this session students should be able to: </li></ul><ul><li>Comment on the importance to retailers of retaining customers. </li></ul><ul><li>Consider the application of marketing philosophy and, especially, relationship marketing, to retailing </li></ul><ul><li>Describe the evolution and relevance of relationship marketing as a way of carrying out retailing activities </li></ul><ul><li>Comment on the response of retailers to survey data indicating customer attitudes about the shopping process. </li></ul>
  3. 3. Marketing <ul><li>“ Marketing is to establish, maintain and enhance relationships with customers and other partners, at a profit, so that the objectives of the parties involved are met. This is achieved by a mutual exchange and fulfilment of promises.” (Gronroos 1994, J of Marketing Management) </li></ul><ul><li>“ Research into the marketing planning practices of many retail companies has shown it to be an area of major weakness.” (Retail Marketing Plans, McDonald and Tideman, (1993) </li></ul>
  4. 4. Major shifts in European channel power <ul><li>The major shifts are: </li></ul><ul><li>1950s Manufacturer is king – a fragmented distribution system with emphasis on production and supply </li></ul><ul><li>1960s Consumer is king – increasing competition brought a need to satisfy the consumer, who could take his custom elsewhere. Growth in manufacturing brands. </li></ul><ul><li>1970s Trade is king – the more powerful retailer industry takes over the role of marketing . </li></ul><ul><li>1980s Consolidation by major retailers </li></ul><ul><li>1990s Concentration, and further concentration, of retail trade </li></ul><ul><li>2000s Relationship marketing? </li></ul>
  5. 5. Customer relationship management <ul><li>‘ The concept of CRM focuses the organisation on the customer. It is an enterprise approach to understanding and influencing customer behaviour through meaningful communications in order to improve customer acquisition, customer retention, customer loyalty and customer profitability’ (Sturdy 2001 cited in Kent & Omar 2003) </li></ul>
  6. 6. The goal of CRM <ul><li>The goal is to increase sales opportunities by improving the process of communication with each customer with a targeted service, offer (product and price) and distribution channel whenever the customer wants it. </li></ul>
  7. 7. Critical success factors for successful CRM (a) <ul><li>Design the customer experience </li></ul><ul><li>Do not see the customer as ‘outside’ </li></ul><ul><li>Live by explicit values </li></ul><ul><li>Dare to be different; develop an innovative customer-centred culture that stands out from the competition </li></ul>
  8. 8. Critical success factors for successful CRM (b) <ul><li>Learn from customers and let them learn from each other </li></ul><ul><li>Treat work as ‘serious fun’ </li></ul><ul><li>Invert and flatten the organisational pyramid </li></ul><ul><li>Put customers second (or even third): satisfied customers lead on from satisfied suppliers and employees </li></ul><ul><li>(Customer Relationship Management, March 2001, p29-32) </li></ul>
  9. 9. Customer retention (a major preoccupation of retailers, McGoldrick) <ul><li>Loyal customers are: </li></ul><ul><li>Cheaper to retain </li></ul><ul><li>Less likely to switch </li></ul><ul><li>More likely to forgive the odd failure </li></ul><ul><li>More likely to spend more (20/80 rule?) </li></ul><ul><li>More predictable </li></ul><ul><li>Easier to communicate with </li></ul>
  10. 10. Loyalty: three possible measures <ul><li>The Ennis-Paul Index (1970) uses 3 behavioural components: </li></ul><ul><li>% of budget allocated to a store (budget ratio) </li></ul><ul><li>Amount of switching (switching ratio) </li></ul><ul><li>Number of alternatives explored (patronage ratio) </li></ul><ul><li>(McGoldrick, 2002,page 113) </li></ul><ul><li>Note: Attitudinal measures (state of mind intellectual and </li></ul><ul><li>emotional!) have also been researched </li></ul>
  11. 11. Possible causes of loyalty and disloyalty (Mintel 1999, in McGoldrick 2002) <ul><li>Loyalty </li></ul><ul><li>Laziness </li></ul><ul><li>Habit </li></ul><ul><li>Time saving </li></ul><ul><li>Switching costs </li></ul><ul><li>Risk avoidance </li></ul><ul><li>Convenience </li></ul><ul><li>Full satisfaction </li></ul><ul><li>No real choice </li></ul>
  12. 12. Possible causes of loyalty and disloyalty (Mintel 1999, in McGoldrick 2002) <ul><li>Disloyalty </li></ul><ul><li>Money saving </li></ul><ul><li>Cleverness </li></ul><ul><li>Dedication </li></ul><ul><li>Variety shopping </li></ul><ul><li>Curiosity </li></ul><ul><li>Time availability </li></ul><ul><li>Time killing </li></ul><ul><li>Distance </li></ul>
  13. 13. Seminar 1 <ul><li>This week’s seminar exercise is research based – find articles (minimum 6) and examples of retailers who have loyalty schemes but also offer discounts separately from these schemes. We will discuss this in next week’s forum. </li></ul><ul><li>There is no discussion forum this week – attendance marks will be gained by students who access Moodle at any time before next week’s lecture. </li></ul>
  14. 14. Seminar 2 – not for 2011 <ul><li>How might a retailer go about the task of building loyalty? </li></ul><ul><li>Compare and contrast the different approaches from: </li></ul><ul><li>Clothing sector </li></ul><ul><li>Electrical sector </li></ul><ul><li>Grocery sector </li></ul><ul><li>Online retail </li></ul><ul><li>Store retail </li></ul>