Overview Of: Relationship Marketing

OVERVIEW OF
Relationship Marketing
Paradigm Shift in Marketing

Market place has been evolving under the converging pressures of changing demographics, global politics, economics, technology and so on.
Prominent marketing scholars like Philip Kotler and Frederick Webster have expressed that there has been a shift from a transactions to a relationship focus.
Driving Forces Customer orientation focus on profitability rather than sales

volumes and emphasis on market segmentation are gaining importance. New trend in marketing has replaced products and services with value. Relationship Marketing concept requires specific resource resource commitments, key part of which is the use of marketing research
Paradigm Shift in Marketing

Themes for New Marketing
The 4Ps are also loosing credibility. They are more production than customer oriented and poses lot of flaws in its definition
A creative process to look at the market;
Understand potential customer needs and wants Consider the basic capabilities of the firm; Conceive potential product offerings based on the present and potential capabilities; Design and develop products and services for their customers
Relationship Management
Organisations Marketing activities: - Create customers(bringing buyers and sellers). - Firms success depends upon getting customers but keeping customers is crucial. Retaining customer is challenging than acquiring customer. Successful firms keep long term relationship with customers Relationship Management : Interaction with customers over a long time period. A Sale is not the end of marketing(courtship) process but beginning of relationship(marriage) with customer. Customer is satisfied : receives more than what it expects from organisation. Will repeat purchase when it has been treated well in past. Establishing relationship increases long term sales and reduce marketing costs. Marketers job use resources to create, interpret and maintain relationship with customers. Firm must focus on both getting and keeping customers.
Traditional Marketing vs RM
Traditional Marketing Goal: Expand customer base, increase market share by mass marketing. Gaining more and more new customers Product oriented view. Less attention to expectation, satisfaction etc. Does not focus long term perspective RM Goal: Establish a profitable, long-term, one-to-one relationship with customers; understanding their needs, preferences, expectations rather than isolated individual transactions Customer oriented view. Idea to develop loyal customer for the purpose of retaining them forever. Focuses long term perspective by retaining customers
Customer is viewed as an outsiders, Customer is insider to organisation, less attention to customer service aims to long term never ending and commitments relationship with them. Mass marketing / mass production Standardization of customer needs Mass customization, one-to-one marketing Customer-supplier relationship
Why Organisations Lose Customers ?

Price related reasons : mismatch in price and value Product related reasons : technology. New brand making entry will be capable of offering better performance and will induce brand switch. Service related reasons : not only the brand the accompanying services at pre, during and post sales. Benefit related reasons : appealing benefits offered by competitors Competitor related reasons : Personal reasons : Organisation should analyze periodically reasons and accordingly develop customer retention plan which should be the basis for building a strong and long term relationship with customer.
Strategies for building relationship

People : all should work towards satisfying customers. Process : need identification of customer till its fulfillment Product : offered must be constantly provide value addition Organisation : response must be faster than competitors Setting satisfactory service standard : pre, during and post services Concentration on competitors :competitor performance, Increase own strength and reduce weakness
Strategies for building relationship

Customer analysis : present consumers using products/service of the organosation and prospective customers who are using competitors. Cost analysis : without reducing quality Concentration on the paying ability of customers : fixation of price Knowledge on purchase behavior pattern : % of purchase decision Purchase, Rejection, Postponement, Search for substitute, Differentiation in price and quality standards Focus on reducing dissatisfaction : complaints must be well attended. Attention on changing requirements of customers : Concentration on Performance : in each stage of value chain Training to supply chain employees : Empowerment to service providers Augmenting Intangible Benefits : courtesy, effective listening made by service providers, point of purchase atmosphere, expertise services offered etc. Visit to point of usage of the product Develop partnership with customers : buyback arrangements, training employees, extending managerial support to customer organisation Organizing customer clubs : would focus mutual belonging, understanding, and sharing of common problems and emotions etc.
What Is CRM
CRM is a business strategy that aims to understand, anticipate and manage the needs of an organisations current and potential customers It is a comprehensive approach which provides seamless integration of every area of business that touches the customer- namely marketing, sales, customer services and field support through the integration of people, process and technology CRM is a shift from traditional marketing as it focuses on the retention of customers in addition to the acquisition of new customers The expression Customer Relationship Management (CRM) is becoming standard terminology, replacing what is widely perceived to be a misleadingly narrow term, relationship marketing (RM).
What Is CRM
CRM is concerned with the creation, development and enhancement of individualised customer relationships with carefully targeted customers and customer groups resulting in maximizing their total customer life-time value
CRM system brings together lots of pieces of information about customers, characteristics, sales transactions, market trends etc. An effective CRM describes customer relationship in sufficient detail so that all aspects of organisation can access information, match customer needs with satisfying product offerings, remind customers of service requirements, know what products a customer has purchased etc.
Purpose of CRM
The focus [of CRM] is on creating value for the customer and the company over the longer term. When customers value the customer service that they receive from suppliers, they are less likely to look to alternative suppliers for their needs. CRM enables organisations to gain competitive advantage over competitors that supply similar products or services.
Why is CRM important?
Todays businesses compete with multi-product offerings created and delivered by networks, alliances and partnerships of many kinds. Both retaining customers and building relationships with other value-adding allies is critical to corporate performance. The adoption of CRM is being fuelled by a recognition that long-term relationships with customers are one of the most important assets of an organisation.
Why did CRM develop?

CRM developed for a number of reasons:

The 1980s onwards saw rapid shifts in business that changed customer power. Supply exceeded demands for most products. Sellers had little pricing power. The only protection available to suppliers of goods and services was in their relationships with customers.
CRM Process as a hub of applied learning

Cultivate & develop interest, Trust, desire
Recognize Needs/wants of defined segments
Acquire Customer & Establish a relationship
Customize Channel Outlets, locations
Collect, warehouse and analyze data
Customize Promotion, Information, interaction
Customize Offers, Products and Services
Potential Returns of CRM Systems

Customers are different : bring different level of profit to the organization Successful organisations : best customers ROI in acquiring customer : comparison of revenue and costs
Benefits
Customer focus Customer retention Share of customer Long term profitability Costs InfrastructureInvestments Reactions to process
Organisation
Lifetime value of the relationship
Costs
Privacy Opportunity
Benefits
Continuity Contact touch points Personalized service Enhanced satisfaction Safety
Customer
Potential Costs and Benefits of CRM Systems
Potential Returns of CRM Systems

Benefits to the Organisation
Customer Focus : learn enough about the customer Retention : firm satisfies customer and offer variety such that customer repeats transactions. It cost six times more to get a new customer than to retain one. Higher retaintion rates increases revenue and reduces costs. Share of customer/wallet : -Cross selling : marketing complementary products to existing customers -Bundling : -Up-selling : higher value customers to existing/new customers Long Term profitability : customer focus, retention of loyal customers and greater share of customer implies long term profit.
Potential Returns of CRM Systems Potential Costs to the Organisation

IT Infrastructure : Process Change : It is the people who implement and customers must appreciate, use them with ease, and feel safe in the process.
Potential Benefits for Customers

Continuity : Firm has to consistently meet customers need over time Contact Point : customer communicate and explain their need, enabling the organisation to learn more about each customers need Personalization : one-to-one marketing tailor made offerings to individuals(increased customization of goods and personalisation of services.
Potential Costs for Customers

Privacy : Opportunity costs :
Relationship : Lifetime Value

Customer is a member of household or organisation(suppliers, retail stores, wholesalers). Relationship focuses on net gain to each party in an exchange over time when interaction occurs. CRM may be expensive to implement, the long term benefit will be apparent as time progresses, repeat purchase occurs and customer loyalty deepens.

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OVERVIEW OF

Paradigm Shift in Marketing

Driving Forces Customer orientation focus on profitability rather than sales

Paradigm Shift in Marketing

A creative process to look at the market;

Why Organisations Lose Customers ?

Strategies for building relationship

Strategies for building relationship

Why is CRM important?

Why did CRM develop?

CRM Process as a hub of applied learning

Recognize Needs/wants of defined segments

Acquire Customer & Establish a relationship

Customize Channel Outlets, locations

Collect, warehouse and analyze data

Customize Promotion, Information, interaction

Customize Offers, Products and Services

Potential Returns of CRM Systems

Potential Costs and Benefits of CRM Systems

Potential Returns of CRM Systems

Potential Returns of CRM Systems Potential Costs to the Organisation

Potential Benefits for Customers

Potential Costs for Customers

Relationship : Lifetime Value

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