MKT663: Relationship in Marketing

(Relationship Marketing Strategies in Food and Beverages Industry)

Prepared by: NURFATIN BINTI ABDUL NURSAZIRA IDAYU BT MOHD ZAINOL NURUL AIN BINTI MINHAD NURUL AISHA NOH NURUL FATEHA BINTI ABDUL MANAB NURUL NAQIBAH BT ABDUL RAHMAN SITI AMINAH BINTI MOHAMED SITI NASUHA BINTI RAMLI SUZANA BINTI AHMAD SYAHIDA BT ABD AZIZ WAN HALIMI B WAN MUSTAFFA 2010651494 2010276136 2010881722 2010511315 2010832052 2010821284 2010671416 2010893846 2010869826 2011253056 2010400686

Group: BMB5Ad

Prepared for: EN. KAMSOL B. MOHAMED KASSIM

TABLE OF CONTENT

NO

CONTENTS

PAGES

Introduction

Elements in Relationship Marketing

Implementation of Relationship Marketing Strategies

5-9

Conclusion

10

References

11

INTRODUCTION In this relationship marketing plan, we will focus more on the strategies implemented by a company in food industry which their goal is to build and maintain the relationship with customers. The revolution of consumer marketing was begun in the 1950s where marketing was focused more on consumer goods. After 10 years from the revolution start, the attentions of marketers start growing from consumer marketing into industrial marketing. It turn into a non-profit and societal marketing in 1970s and directed to service sector in 1980s. Finally, in 1990s the attentions toward relationship marketing start to increase. According to OMalley and Tynan, the purpose of relationship marketing is to integrate customers, suppliers and other partners into a companys marketing activities (2000). This relationship marketing plan is suitable for Small and Medium Enterprises which also known as SME. SME have three sectors that are primary agriculture, manufacturing and services. Food and beverages can be classified under manufacturing sector. The establishment and adoption of a standard definition for SMEs will facilitate better identification of SMEs across sectors. It not only allows SME policy to formulate and implement development programs but also to provide more effective technical and financial assistance. Besides, it will also allow better monitoring of the performance of SMEs and thus to contribute to the national economy. In this case, it shows that food and beverage industry is a very important sector. Without SMEs, the food and beverage market place would not be a whole lot less interesting.

ELEMENTS IN RELATIONSHIP MARKETING There are three elements of Relationship Marketing (RM) which being used as operational tools for implementing Relationship Marketing which are financial bonds, social bonds and structural bonds (Hellas, 2005). 1. Financial bonds This element is focuses on the financial incentives that the sellers provide to their buyers with regard to restraint them with the companys products. The financial incentives that sellers can provide to the buyers are price cut, discount price for regular customers and others that can be implemented for tying the buyers with the sellers. For instance, in industry of food and beverages like F&N did during Hari Raya Aidilfitri, the company reduced the price of their bottled carbonated drinks to increase their sales and to tackle the buyers.

2. Social bonds This second element of RM is concerning on building and sustaining the interpersonal relationship between partners which can give benefits to both sellers and buyers for long term period. Commitment and trust is the two main elements which important in building co-operative relationships (Andrew & Brian, 2000, p. 273). When customers put their trust in an organization, they will have good perception towards the company and do repurchase on the companys products or services. Marketers should be able to build trust in buyers so that the buyers will believe the company and do repurchase. Trust can be defined as the willingness of people to rely on their partners whom they have confidence with and believe the words which come from their partners is reliable (Wong & Sohal, 2006, p. 247). However, in the element of commitment, the marketers are providing their products to the customers at convenient place which it will give ease them.

3. Structural bonds A structural bond is about the needs for enhancing and establishing their structural activities with partners such as making investments in products. For example, KFC and Ayamas which deal with structural bonds are enjoying themselves as they have a cooperative working environment when they implementing relationship marketing plan.

IMPLEMENTATION OF RELATIONSHIP MARKETING STRATEGIES To develop long-term relationship with our customers the SME of foods and beverages industry need to use better strategies which consists of prospect, competence, categories, control cash collection process, cost profitability and value, customization, communication, customer measurements, customer care, and chain of relationship (Gordon, 1990). 1. Prospect Prospects means customer, consumer, patrons, and purchaser of our foods and beverages product which we want to build a relationship with. We have to question ourselves who is our prospects in foods and beverages industry? Besides that we should give a thought whether they can increase our sales force. By defining the prospects, we have to know their needs and wants in getting high quality foods and beverages. By knowing prospects well it would give ease to firm in dealing with them. We should also know how we would treat them. Supposedly customer expectation is very high when they want a high quality with the right customer service given to them. According to an article in Marketing Zone web site, it stated that to treat customer well firms should know their customers information, purchase history, and preference. By knowing their past purchase history firms can send an email to them to suggest about their new products.

2. Competence The competence is what we a marketer can provide value which our customers want. According to Kotler, competencies are the characteristics an individual needs to perform a job properly (2010). It may consist of skills, knowledge, experience, behaviours, attitudes, and ways of doing business, which will lead to business success. To build good relationship with customer, marketers need to have knowledge, skills and good attitude to gain and retain the customers. So the marketers need to learn and do some research about taste and preference of customer in food and beverage industry before they can target and segment the market. Nowadays, many people who are involving in food and beverages industry are not successful because of lack of knowledge and skills in managing their marketing strategies. It is crucial for an organization to provide training to their employees regarding the needed skills for an employee. There is an assumption that all employees will benefit from training which is based on national standards and that, once competencies are acquired, employees can become more effective and businesses more successful (Smith et al, 1995).

3. Categories This element defines the scope of product and services which firm offer to the customers. Category of food and beverages should have different value from their competitors products so that the brand of this product will always be in their customers mind (Chester & Montgomer, 2007). Thus, the company can improve their cost effectiveness by bringing their unique and different products into the market. Other than that, raw materials that the company used should be in a variable states and types so that they will produce numerous products from just one raw material. The company can extend its product line by introducing a new product but still using the same raw material. By extending the product line and still remain in the selected scope of product and services, the customers would feel that your company is capable in fulfilling the customer preferences differently. For example, the company can use potatoes as their raw material and they should be creative to create a product so that company will enhance their competitive advantage. If this industry is aimed to the children, so they should develop a strategy to prevent obesity and diabetes diseases among children. So that problem of overweight that affects the children can be solved.

4. Control Cash Collection Process In food and beverages industry, they need to manage and control the processes associated with contacts efficiently to ensure that the cash is collected on time. Control of the contact in term of cash process is one of the control actions taken by a firm. As noted by Roukhkian, retailer can be divided into three parts which are grocery stores, supermarket, and convenient stores (2011). The company must observe the time taken by their companies to deliver the product to their retailers as well as to their final users. The shorter the time taken for marketers to deliver the products to their customer the better is it. This is because their customers do not need to wait in a long period of time just to get hold with the products and this will cause them to be reluctant in switching product brand. When the customers went to supermarkets and the products needed is not there, so the potential for them to switch to the other product is high. Besides, marketer should make sure that the firm provide enough amount of product on the shelves in supermarkets so that products out of stock will not happen. The good management and logistics can ensure their good performance. For example, Nestle, they always stock up their product at retailer. Delivery of the products can be well managed when they have good transportation.

5. Cost Profitability and Value The company should focus more on customer profitability. The firms should not only focus on their product line and divisional profitability, but also on customer costs and value perception. Even a company had introduced new product but the product still not giving fully satisfaction towards customers, it will be useless. Company should be able to create product that has its own value and give the benefits to customers. In industry of food and beverages, they need to create foods based on customers preferences with high quality and they gain profitability. Nowadays, customers are more aware on their health where they always seek for healthy foods. Thus, companies can produce new product with fully nutrients needed by human bodies. SME companies should use intelligence information in order to penetrate, develop, and diversified the market. In addition, they also need to add value to their product flavour such as flavour from fruits or plants. They can take opportunity to produce canned and frozen foods product which make customers more convenience especially in this decade which they are prefer something that can make their life easier and better than before. Besides, companies can maximize their profit when they can satisfy their customers needs and wants. The quality of the product also plays important roles in the customers preferences. When the companies produce products that give their customer value, they will gain loyalty from their customers and this will finally increase companys profit.

6. Customization In this element of customization, the production and delivery of products and services need to be customized differently. In the food and beverages industry, we should create a product which based on customers need and want. Mean that, we must understand what aspects of product or service development in the companys products and services that can satisfy customers. Thus, in customization the marketers will do some research and seeking additional information regarding the target market before they can segment their target market. According to Anderson, the two type of customization are transparent customization and adaptive customization (2010). In transparent customization, firm is providing unique products to its customers without telling them that the products are different such as by providing standard content in different packages. In contrast, in the adaptive customization, firms produce a standardized and same product but the users themselves will customize and alter the products once they have the product with them (Pine, 1992).

7. Communication It is all about two way communications that is make to order by us and take an action of the customer. Marketers need to facilitate information with customers. The marketers make contact with the customers not just because of promotion activities but because of the meaningful interactive communication between them (Gordon, 2012). The marketers need to often interact with customers when the customers visit the firms premises. As noted by Yi-Ming Tai, firms is using information sharing with their supply chains to increase their customer value and to encourage the intention of customer relationship (2011). Customers tend to invest more in firms which can provide them more perceived value in their products or services than the other firms offering. Marketers need to have long time horizon for building relationship with customers. Sales that a company get from existing customers are more cost effective than getting sales from a new customer. This is because when they want to attract new customers they need to spend a large amount of money such as by doing promotion and advertisement so that the customers will know about their products or services. Companies which listen to their customers preferences and adapt to their new and current products will have high percentage in retaining them and making them loyal to the company (Osarenkhoe & Bennani, 2007, p. 149).

8. Customer Measurements Customer measurement means the time dimension of customer that we should care of. Marketers in a firm need to get a regular feedback from the relationship that they had build with the customers. The feedback will be measured by the firm regarding the relationship built with its customers. The aspect that we must have is time measureable in making customer arrangement. The time to make an agreement should be suitable enough, so that it will give enough time for customers to think. It is important to know the time laps needed by the customer to make a decision for pre-transaction, transaction and post-transaction. This can make us understand the buying behaviour of the customer and finally we can act immediately from it. The customer measurements also help us built a last long relationship. As stated by Simpson, the marketers need to determine the products and services that the customers had purchased and their attitudes toward the firms sales interaction and also the customers expectation toward the firms products (2010).

9. Customer Care Customer care refers to customer service that allocates customers before the purchase, during the purchase, and after a purchase. It is a process of ensuring customer satisfaction with product which extremely important on maintaining relationship with customers. Customer care service begins once a customer enters the premise and it was developed while doing transaction with the customer. The representatives of the company should interact directly or indirectly with customers. The interaction form customers perception of the company as a whole that will be benchmark for customer satisfaction. In customer care, the marketers are providing customers with up-to-date information, training them and providing feedback (Gordon, 2011). In order to provide the highest level of satisfaction to the customers, companies in the industry of food and beverages need to stress on customer care strategies. This can be done by focusing on three areas which are pre-transaction, transaction, and post-transaction (Christopher, Payne & Ballantyne, 2002).

10. Chain in Relationship Chain of relationship is about managing the stakeholders, suppliers and the firms distribution channels. Stakeholders are the one who are responsible to create the value that customers want. According to Riley, stakeholders are referring to individuals or groups which have interests toward operation in business and the objective of the business (2012). In order to manage the stakeholders effectively, a good stakeholders management is needed. Successful stakeholder management can help the company to give support and improves the value created for customers. In addition, communicating with the suppliers and distribution channels frequently also can help the company to deliver products successfully in sufficient amount. The company can share information regarding the customers preferences flavour towards their food product to their suppliers and retailers. Thus, the suppliers can provide the suitable flavour which being preferred by the customers in current and their retailers can place sufficient amount of the firms food products on shelves in their supermarkets. By managing the stakeholders successfully, the company can ensure that the employee relationships align with customer relationships. By identify and satisfy the needs of customers lead to more sales. Communication with staffs increases their understanding about the business, next their efficiency.

CONCLUSION As conclusion, the relationship marketing plan is very important to marketers. Relationship Marketing is important because with relationship marketing, marketers will know how to getting and keeping their customer. The revolution of from transactional marketing to customer relationship marketing had given great opportunities to the firm to get a large number of loyal customers. In addition, there are several elements needed by marketers in implementing the relationship marketing plan in an organization. These elements are financial bonds, social bonds and structural bonds. These elements will help and show the marketers the right way in building relationship with their customers. If marketers want their companies to stay longer in the food and beverages industry they need to fully utilize these strategies and implement it in their firms. The strategies that the company of food and beverages industry can be used in their firms are prospect, competence, categories, control cash collection process, cost profitability and value, customization, communication, customer measurements, customer care, and chain of relationship. This strategy can be use by marketers to know who their actual customers are and how they can evaluate and retain their customers within their firms.

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Riley, J. (2012, October 24). Business Strategy: Stakeholders. Retrieved from Tutor2u Web site: http://www.tutor2u.net/business/strategy/stakeholders-introduction.html Roukhkian, G. (2011, February). Market Entry: Swiss Business Hub Canada. Retrieved from Swiss Business Hub Canada Web site: http://www.osec.ch/sites/default/files/bbf_Canada_FoodRetail_Feb2011.pdf Simpson, K. (2012, August 25). Top 5 Ways To Measure Customer Satisfaction. Retrieved from Return Customer Web site: http://www.returncustomer.com/2010/08/25/5-waysto-measure-customer-satisfaction/ SMEcort IT Division.(2005, June 9).Retrieved from SME Corporation Web site: http://smeinternational.org/wpcontent/uploads/2011/01/sme_definitions_ENGLISH.pdf Smith, A., Whittaker, J., Clark, J. L., & Boocock, G. (1999). Competence based management development provision to SMEs and the providers' perspective. Journal of Management Development, 18(6), 557 572. Tai, Y.-M. (2011). Perceived value for customers in information sharing. Industrial Management & Data Systems, 551-569. doi:10.1108/02635571111133542 Wong, A., & Sohal, A. S. (2006). Understanding the quality of relationships in consumer services. International Journal of Quality & Reliability Management, 23(3), 244-264. doi:10.1108/02656710610648215