INTRODUCTION TO THE CONSUMER BEHAVIOUR

Every marketing activity revolves round the customer he is the focal point. In the
early stages of economic evolution, the consumer had to accept what producer
had produced, but today the consumer dictates terms to the manufacturer the
product he wants, the consumer purchase a commodity as dictated by their
mental and economic forces. Mental force creates desires and wants and the
consumers feel that products offered by manufactures can satisfy their wants.
Hence, he has to choose between the wants and select the product according to
the priority of consumption. The producer has to consider these two consumer
forces before manufacturing the products. As consumption initiates roduction,
the producer should identify the motives, which promote consumer to purchase.
This helps him to offer a total product that can satisfy the consumer needs.
The consumer!s inner motives such as fear, vanity, pride, fashion, possession,
se" or romance, affection, comfort and economic motives such as purchasing
power are the ones, which decide the buying pattern. #ith the increase in the
productivity, capacity of many a nation which have far e"ceeded the minimum
level needed to satisfy the basic needs of the consumers, the consumers are
also in an enviable position to house a product from an alley of branch available
in the market. Today!s marketers have also reali$ed the discerning buying power
of the consumers and they are constantly trying to adopt their product to suite,
the ever%changing needs of the customers.
The field of consumer behavior studies how individual groups as
organi$ation select buy use and dispose of goods services ideas or e"periences
to satisfy their needs and desires. &mart companies research the buying decision
process involved in their product category and go through various stages of
buying decision process.
1.2.5. BUYING DECISION PROCESS
PROBLEM RECOGNITION
The buying process starts when the buyer recogni$es the problem or
need. The buyer senses a difference between his or her actual state and her
desired state. The need can be triggered by internal or e"ternal stimuli.
In the former case, one of the person!s normal needs%hunger, thirst, se"%rises to
a threshold level and become a drive. In the latter case, a need is aroused by
e"ternal stimuli. Marketers need to identify the circumstances that trigger a
particular need.
INFORMATION SEARCH
An aroused consumer will be inclined to search for more information.
They may be twelve!s of arouser.
Heighten attention ' The Milder search state
Active information search ' The actual search state
PURCHASE DECISION
In the evaluation stage, the consumer forms preferences among the
brands in the choice set. The consumer may also form an intention to buy the
most preferred brand. However, factors can intervene between the purchase
intention and purchase decision.
Attitude of others
(nanticipated situational factors
POST PURCHASE BEHAVIOUR
After purchasing the product, the consumer will e"perience some level of
satisfaction and dissatisfaction. The marketer!s )ob does end when the product
has brought but continues into the post purchase period. Marketer must monitor
post purchase satisfaction, post purchase action and post purchase product use
and disposal.
1.2.6. DEFINITION OF CONSUMER BEHAVIOUR
*onsumers! behavior is defined as +Those acts of individuals directly
involved in obtaining and using economic goods and service including decision
procure that and determined these acts. +It is the behavior e"hibited by people in
planning, purchasing and using goods and service. A series of decision will have
to be taken like, how much to spent, on what, where to buy, how to buy, whom to
buy etc. *onsumer behavior consists of both physical and mental behavior.
hysical activities includes, visiting a shop, e"amining the product, where as
mental activities involves behavior deliberation within, forming attitudes,
processing the communication and learning to prier a brand. &ome times
behavior is the sum total of the behavior of a number of people this makes the
study of consumer behavior comple". It is related to other fields like physiology,
sociology etc.
IMPORTANCE
The importance of studying consumer behavior is rooted in modern
marketing concept. ,usinesspersons can help consumers to solve their
consumption problems buy understanding them and trying to analy$e the buying
procure and factors influencing it. *onsumer behavior is dynamic- a continuous
study is re.uired to make effective marketing decision.
NECESSITY
The emerging consumer movement necessitates markets to understand
consumer behavior / their needs, aspiration, e"pectations and problems. It will
be easier in e"ploiting marketing opportunities meeting challenges of the
markets. Modern marketing is consumer oriented, customer is the king. Thus
marketers must try to offer the product wanted by the customers at the price he is
prepared to pay, through distribution channel, convenient to him with a right type
of promotion. To do this a study of consumer behavior is necessary. *onsumer
decides the e"istence or otherwise of a business concern. A consumer by nature
may be on e"trovert or on introvert. A study of consumer behavior helps to
formulate the marketing rogramme mi" and policies.
FACTORS
To understand consumer behavior on the eventual buying decisions, ma)or
factors have to clearly understood and analysed.
They are' %
Buyer characteristics.
Personal characteristics.
Psychological characteristics.
Product characteristics.
Seller characteristics.
Situational characteristics.
Buyer Characteristics: It deals with individuals, personal, psychological,
cultural and social characteristics.
Product Characteristics: 0eals with finding out probable type of the
customers who will buy the products. The knowledge personal characteristic of
customer points out who are the buyer, were they live and how they think.
However, the manufacturer wants to know also, why consumer buys a product
and their response or behaviours towards a product or brands. These may be
benefited, e"pected, usage response, loyalty response, brand loyalty and the
patronage.
Seller characteristics: Influences the buying decision factor lies in the image
of the manufacturing facilities offered in the retail outlets etc also affect the choice
of the buyer.
Situational characteristics: The situational characteristics also play an
important role in influencing the choice decision of the buyer. The aspects such
as time, day seasonal, weather etc, affect the choice decision of particular &trata
of buyer. Thus, purchase activity involves the recognition of the need to buy,
collection of information pertaining to the product, pre%purchase behavior, actual
purchase and the core areas. The modern marketing management is aimed at
consumer behaviors and application of .uantitative methods in problem solving.
The researchers have found out that a clear understanding of consumer
behaviors has contributed to positive and effective techni.ue oriented marketing.
As the consumer becomes more and more sophisticated at progressively higher
stages of economic development which is precisely the citation prevailing in India
presently, the need for consumer behavior and to make use of the findings of
such studies in making marketing decisions gain is of prime importance. The
need for proper understanding of consumer behavior is necessary by the growing
competition in the marketing environment. The advancement in the field of
technology and management and emerge of consumable has also contributed to
the need for the study of consumer behavior.
Personal characteristics: 0eals with how factor like age, se",
occupation, lifecycle, position and economic conditions or financial conditions
affect the consumer purchase behavior.
Psychological characteristics: Includes motivation, believes, perception,
attitudes and learning.
1.2.7. FACTORS WHICH INFLUENCES BUYER BEHAVIOR
The factors that influence the buyer behavior may be broadly classified as
shown below'%
1. Cultu!l F!"t#$% *ulture is defined as the symbol and artifacts created
1. Cultu!l F!"t#$ Cultu&' $u("ultu& !)* $#"+!l
"l!$$
2. S#"+!l F!"t#$ R&,&&)"& -#u.' ,!/+l0 !)* #l&$
!)* $t!tu$&$
1. P&$#)!l F!"t#$ A-& !)* l+,& "0"l& $t!-&'
#""u.!t+#)' &"#)#/+"
"+"u/$t!)"&$' l+,& $t0l&'
.&$#)!l+t0 !)* $&l, "#)"&.t
2. P$0"3#l#-+"!l F!"t#$ M#t+4!t+#)' .&"&.t+#)' l&!)+)-'
(&l+&,$ !)* !tt+tu*&$.
by people and handed down from generation to generation as determinants and
regulators of human behavior in a given society. Human beings are learned while
the lower creatures are governed by instinct. A growing child by getting into
contact with the family members and others around it, learns the basic set of
values, perceptions, preferences and behavior, products and marketers should
carefully read the shifts that take place in the culture so that the product can fit in
the new culture. 1or e"ample, people today want more leisure and so they are
trying to save time by using time saving e.uipment!s like washing machines, wet
grinders, mi"ies, micro%oven etc. &imilarly by being more conscious of health,
people by goods like shoes which are used for )ogging, consuming good diet
food, earning light food, doing more physical e"ercises by using cycles, doing
workouts in gym, etc. In order to look young, people spend on cosmetics, hair
dyes, footwear, fancy items, etc. eople prefer to be more informal and so they
choose causal clothing, use simple things for furnishing homes, etc.
&ubculture is a part of total culture that is reasonable Homogeneous with
regard to race, religion, nationality, geographic location or some other factor. 1or
instance in a society there may be people with distinct preferences and produce
the product which will match with the .uality of a particular group. &imilarly social
class is another determining factor, this is ma)or division of society based on
people!s status in their communities. 1or e"ample, people who are giving the
same status in their communities. 1or e"ample, people who are having the same
status will have homogeneous values, interests and behavior- they show distinct
product and brand preferences mostly in areas like clothing, home furnishings,
leisure activity and automobiles.
2. S#"+!l ,!"t#$% &ocial factors include reference groups, family, roles
and statuses. A reference group may be of different types. Membership
group influences the members directly, while the primary group is the one
with which a person will be of continuous interaction with family,
neighbors, friends, etc. &econdary group is more formal in which a person
will have lesser interaction. This includes the religious groups,
professional associations of trade unions. Aspiration group is one in which
the persons would be interested in belonging to a particular group,
whereas the dissociate group is one whose values or behavior an
individual re)ects. The producers should identify the group to which, each
consumer belongs, especially in the target market. 2ormally these
reference groups are the opinion leaders of the community. Marketers
should identify the personal characteristics of the opinion leaders,
determine the media read by these leaders, and direct all their messages
to the opinion leaders.
1amily is an important factor influencing the buyer behavior. #e can classify
family into two types'
3. 1amily of orientation and
4. 1amily of procreation
The former includes one!s parents and the parental influence
determines one!s orientation towards religion, policies, etc. for the rest of
the life of a person. The latter includes the husband, wife and children.
These members in a family influence the buyer behavior. Mostly the
husband and wife influence the decision, through sometimes the children
also influence. 2ormally the purchase of costly products and services will
be decided through )oint decisions and the cheap items are bought with
little influence.
The person!s participation in many groups will determine the role he is
to play and the status that he en)oys. 1or e"ample, with the parents,
a person may play the role of a child, while in this family he may be the
head of the family whereas in his office he may be the marketing manager.
In each group, the person will be influenced by his role. &imilarly, the
status of the person in each group will also determine the buyer behavior.
1or instance, a marketing manager should always be well dressed and the
person has to buy only good dresses.
1. P&$#)!l F!"t#$% These are personal characteristics of the buyer like
his age, and life cycle stage, occupation, economic circumstances, life style and
personality. The age of a person is a basic factor determining the buyer behavior.
5ife cycle refers to the different stages through which one passes in his life and
the varied buyer behavior associated with it.
The life cycle stages include bachelor stage, newly married couples and
full nest 3, the family with a child under si", full nest 4, the family with a child
above si", full nest 6, consisting of older married couples with dependent
children. Empty nest 3 in which the older married couples with no children living
with them, empty nest 4 in which the older married couple with no children and
the head with no )ob, solitary survivor in labour force and solitary survivor retired.
In each one of these stages, the buyer behavior is different. A person!s
occupation also influences his buyer behavior, a man working as a president of a
company will have a different type of preference as compared to lower level staff
and workers. &imilarly, the economic circumstance of a person will also be an
important factor. A man with large savings can buy costly goods. Marketers of
goods giving elastic demand pay continuous attention to trends in personal
income, savings and interest rates. &imilarly, the life style of a person is another
factor. 5ife style is the person!s pattern of living in the world as e"pressed in his
or her activities, interests and opinions. The techni.ue of measuring life styles is
known as psychographics. It involves measuring the ma)or dimensions like
activities, interests, opinions and demographics. ersonality and self%concept
also influence buyer behavior.
ersonality is a person!s distinguishing psychological characteristic that
leads to relatively consistent and enduring responses to his or her own
environment. ersonality can be used as a variable for analy$ing consumer
behavior. Each person has his own concept of image and the image, which the
others would have about him. This is the basis on which the behavior of the
consumer would differ.
7. P$0"3#l#-+"!l F!"t#$%This factor can be discussed in terms of
motivation, perception, learning, beliefs and attitudes. A person will have
several types of needs like physiological needs, safety needs, social
needs, esteem needs and self%actuali$ation needs. The marketers should
identify the needs of the consumers and produce the product to match
these needs of the customers. erception is the process by which an
individual selects, organi$es and interprets information inputs to create a
meaningful picture of the world. Therefore, once a person is motivated, he
would act depending upon his perception.
The three perceptual factors vi$. selective e"posure, distortion and
retention will influence the rate at which the communication from the producers
will influence the buyer behavior. The producers, therefore, have to carefully
design their message. Human behavior is also sub)ect to the influence of learning
which means that a person learns out of e"periences. ,ased on the personal
e"perience, people!s beliefs and attitude about a product will depend. 8nce the
people develop faith in the product and a re favorably disposed towards it, the
product will be bought. Hence, all these factors influence buyer behavior.
Market Segmentation
Market segmentation is the identification of portions of the market that are
different from one another. &egmentation allows the firm to better satisfy the
needs of its potential customers.
T3& N&&* ,# M!5&t S&-/&)t!t+#)
The marketing concept calls for understanding customers and satisfying their
needs better than the competition. ,ut different customers have different needs,
and it rarely is possible to satisfy all customers by treating them alike.
M!$$ /!5&t+)- refers to treatment of the market as a homogenous group and
offering the same marketing mi" to all customers. Mass marketing allows
economies of scale to be reali$ed through mass production, mass distribution,
and mass communication. The drawback of mass marketing is that customer
needs and preferences differ and the same offering is unlikely to be viewed as
optimal by all customers. If firms ignored the differing customer needs, another
firm likely would enter the market with a product that serves a specific group, and
the incumbant firms would lose those customers.
T!-&t /!5&t+)- on the other hand recogni$es the diversity of customers and
does not try to please all of them with the same offering. The first step in target
marketing is to identify different market segments and their needs.
R&6u+&/&)t$ #, M!5&t S&-/&)t$
In addition to having different needs, for segments to be practical they should be
evaluated against the following criteria'
Identifiable' the differentiating attributes of the segments must be
measurable so that they can be identified.
Accessible' the segments must be reachable through communication and
distribution channels.
&ubstantial' the segments should be sufficiently large to )ustify the
resources re.uired to target them.
(ni.ue needs' to )ustify separate offerings, the segments must respond
differently to the different marketing mi"es.
0urable' the segments should be relatively stable to minimi$e the cost of
fre.uent changes.
A good market segmentation will result in segment members that are internally
homogenous and e"ternally heterogeneous- that is, as similar as possible within
the segment, and as different as possible between segments.
B!$&$ ,# S&-/&)t!t+#) +) C#)$u/& M!5&t$
*onsumer markets can be segmented on the following customer characteristics.
9eographic
0emographic
sychographic
,ehavioralistic
G&#-!.3+" S&-/&)t!t+#)
The following are some e"amples of geographic variables often used in
segmentation.
:egion' by continent, country, state, or even neighborhood
&i$e of metropolitan area' segmented according to si$e of population
opulation density' often classified as urban, suburban, or rural
*limate' according to weather patterns common to certain geographic
regions
D&/#-!.3+" S&-/&)t!t+#)
&ome demographic segmentation variables include'
Age
9ender
1amily si$e
1amily lifecycle
9eneration' baby%boomers, 9eneration ;, etc.
Income
8ccupation
Education
Ethnicity
2ationality
:eligion
&ocial class
Many of these variables have standard categories for their values. 1or e"ample,
family lifecycle often is e"pressed as bachelor, married with no children <0I2=&'
0ouble Income, 2o =ids>, full%nest, empty%nest, or solitary survivor. &ome of
these categories have several stages, for e"ample, full%nest I, II, or III depending
on the age of the children.
P$0"3#-!.3+" S&-/&)t!t+#)
sychographic segmentation groups customers according to their lifestyle.
Activities, interests, and opinions <AI8> surveys are one tool for measuring
lifestyle. &ome psychographic variables include'
Activities
Interests
8pinions
Attitudes
?alues
B&3!4+#!l+$t+" S&-/&)t!t+#)
,ehavioral segmentation is based on actual customer behavior toward products.
&ome behavioralistic variables include'
,enefits sought
(sage rate
,rand loyalty
(ser status' potential, first%time, regular, etc.
:eadiness to buy
8ccasions' holidays and events that stimulate purchases
,ehavioral segmentation has the advantage of using variables that are closely
related to the product itself. It is a fairly direct starting point for market
segmentation.
B!$&$ ,# S&-/&)t!t+#) +) I)*u$t+!l M!5&t$
In contrast to consumers, industrial customers tend to be fewer in number and
purchase larger .uantities. They evaluate offerings in more detail, and the
decision process usually involves more than one person. These characteristics
apply to organi$ations such as manufacturers and service providers, as well as
resellers, governments, and institutions.
Many of the consumer market segmentation variables can be applied to industrial
markets. Industrial markets might be segmented on characteristics such as'
5ocation
*ompany type
,ehavioral characteristics
L#"!t+#)
In industrial markets, customer location may be important in some cases.
&hipping costs may be a purchase factor for vendor selection for products having
a high bulk to value ratio, so distance from the vendor may be critical. In some
industries firms tend to cluster together geographically and therefore may have
similar needs within a region.
C#/.!)0 T0.&
,usiness customers can be classified according to type as follows'
*ompany si$e
Industry
0ecision making unit
urchase *riteria
B&3!4+#!l C3!!"t&+$t+"$
In industrial markets, patterns of purchase behavior can be a basis for
segmentation. &uch behavioral characteristics may include'
(sage rate
,uying status' potential, first%time, regular, etc.
urchase procedure' sealed bids, negotiations, etc.
CRM 7Cu$t#/& R&l!t+#)$3+. M!)!-&/&)t 8
Customer Relationship Management (CRM) refers to the methodologies and tools that help
businesses manage customer relationships in an organized way.
For small businesses, customer relationship management includes:
CRM processes that help identify and target their best customers, generate !uality sales leads,
and plan and implement mar"eting campaigns with clear goals and ob#ecti$es%
CRM processes that help form indi$idualized relationships with customers (to impro$e customer
satisfaction) and pro$ide the highest le$el of customer ser$ice to the most profitable customers%
CRM processes that pro$ide employees with the information they need to "now their customers&
wants and needs, and build relationships between the company and its customers.
Customer relationship management tools include software and browserbased applications that
collect and organize information about customers.
IMPORTANCE OF CRM%999
Looking at some broader perspectives given as below we can easily determine why a CRM
System is always important for an organization.
'. ( CRM system consists of a historical $iew and analysis of all the ac!uired or to be
ac!uired customers. )his helps in reduced searching and correlating customers and to
foresee customer needs effecti$ely and increase business.
*. CRM contains each and e$ery bit of details of a customer, hence it is $ery easy for trac" a
customer accordingly and can be used to determine which customer can be profitable and
which not.
+. ,n CRM system, customers are grouped according to different aspects according to the
type of business they do or according to physical location and are allocated to different
customer managers often called as account managers. )his helps in focusing and
concentrating on each and e$ery customer separately.
-. ( CRM system is not only used to deal with the e.isting customers but is also useful in
ac!uiring new customers. )he process first starts with identifying a customer and
maintaining all the corresponding details into the CRM system which is also called an
/0pportunity of 1usiness2. )he 3ales and Field representati$es then try getting business
out of these customers by sophistically following up with them and con$erting them into a
winning deal. (ll this is $ery easily and efficiently done by an integrated CRM system.
4. )he strongest aspect of Customer Relationship Management is that it is $ery cost
effecti$e. )he ad$antage of decently implemented CRM system is that there is $ery less
need of paper and manual wor" which re!uires lesser staff to manage and lesser
resources to deal with. )he technologies used in implementing a CRM system are also
$ery cheap and smooth as compared to the traditional way of business.
5. (ll the details in CRM system is "ept centralized which is a$ailable anytime on fingertips.
)his reduces the process time and increases producti$ity.
6. 7fficiently dealing with all the customers and pro$iding them what they actually need
increases the customer satisfaction. )his increases the chance of getting more business
which ultimately enhances turno$er and profit.
8. ,f the customer is satisfied they will always be loyal to you and will remain in business
fore$er resulting in increasing customer base and ultimately enhancing net growth of
business.
Features of CRM
Customer Relationship Management is a strategy which is customized by an organization to
manage and administrate its customers and $endors in an efficient manner for achie$ing
e.cellence in business. ,t is primarily entangled with following features:
'. Customers Needs (n organization can ne$er assume what actually a customer needs.
9ence it is e.tremely important to inter$iew a customer about all the li"es and disli"es so
that the actual needs can be ascertained and prioritized. :ithout modulating the actual
needs it is arduous to ser$e the customer effecti$ely and maintain a longterm deal.
*. Customers Response Customer response is the reaction by the organization to the
!ueries and acti$ities of the customer. ;ealing with these !ueries intelligently is $ery
important as small misunderstandings could con$ey unali"e perceptions. 3uccess totally
depends on the understanding and interpreting these !ueries and then wor"ing out to
pro$ide the best solution. ;uring this situation if the supplier wins to satisfy the customer
by properly answering to his !ueries, he succeeds in e.plicating a professional and
emotional relationship with him.
+. Customer Satisfaction Customer satisfaction is the measure of how the needs and
responses are collaborated and deli$ered to e.cel customer e.pectation. ,n today2s
competiti$e business mar"etplace, customer satisfaction is an important performance
e.ponent and basic differentiator of business strategies. 9ence, the more is customer
satisfaction% more is the business and the bonding with customer.
-. Customer Loyalty Customer loyalty is the tendency of the customer to remain in
business with a particular supplier and buy the products regularly. )his is usually seen
when a customer is $ery much satisfied by the supplier and re$isits the organization for
business deals, or when he is tended towards rebuying a particular product or brand o$er
times by that supplier. )o continue the customer loyalty the most important aspect an
organization should focus on is customer satisfaction. 9ence, customer loyalty is an
influencing aspect of CRM and is always crucial for business success.
4. Customer Retention Customer retention is a strategic process to "eep or retain the
e.isting customers and not letting them to di$erge or defect to other suppliers or
organization for business. <sually a loyal customer is tended towards stic"ing to a
particular brand or product as far as his basic needs continue to be properly fulfilled. 9e
does not opt for ta"ing a ris" in going for a new product. More is the possibility to retain
customers the more is the probability of net growth of business.
5. Customer Complaints (lways there e.ists a challenge for suppliers to deal with
complaints raised by customers. =ormally raising a complaint indicates the act of
dissatisfaction of the customer. )here can be se$eral reasons for a customer to launch a
complaint. ( genuine reason can also e.ist due to which the customer is dissatisfied but
sometimes complaints are launched due to some sort of misunderstanding in analyzing
and interpreting the conditions of the deal pro$ided by the supplier regarding any product
or ser$ice
6. Customer Service ,n an organization Customer 3er$ice is the process of deli$ering
information and ser$ices regarding all the products and brands. Customer satisfaction
depends on !uality of ser$ice pro$ided to him by the supplier. )he organization has not
only to elaborate and clarify the details of the ser$ices to be pro$ided to the customer but
also to abide with the conditions as well. ,f the !uality and trend of ser$ice go beyond
customer2s e.pectation, the organization is supposed to ha$e a good business with
customers.
E:!/.l&$ #, H#; CRM W#5$<
)o ma"e sure that all of your customers recei$e the most personal attention possible, we at
3traight Mar"eting ma"e the process and implementation of CRM easy and professional. 3uppose
you were bombarded with a customer2s telephone calls e$ery day, wanting to "now the status and
progress of the ser$ices you are pro$iding. )o spend time on the phone would not be $ery
producti$e and would in fact be $ery time consuming and ineffectual. ,nstead of spending time
ma"ing endless telephone calls, 3traight Mar"eting can implement a CRM system where your
customers can log into their account $ia the web and $iew all the details of the ser$ice being
pro$ided. ,magine all the time you can sa$e without ha$ing to respond to unnecessary phone calls>
:hen this occurs, you are happy, your customers are happy and e$eryone is satisfied. 1ut this is
only one small sampling of CRM. )here are many others to choose from.
Types of CRM
#hen it comes to application of *:M, three broad classifications are possible. They
are'
8perational *:M
Analytical *:M
*ollaborative *:M
Operational CRM
The operational application of *:M enables effective interaction with customers. 1or
this purpose various tools are used. Thesecontact management tools aim to reduce
costs by improved process efficiency and use of media based communication
channels. These are also aimed to provide customers with a consistent interface
across all communication channels. To achieve this relevant customer data is
collected and also displayed at all customer touch points. This is the customer master
data. Another set of data where employees@ contact with customers is also logged.
This has information like topics discussed, customer re.uirements, soft customer
data like hobbies, preferences, interests, details about children and other minor stuffs.
,anks are an e"emplary implementation of *:M as customer contact
management. Channel management tools aim to understand how customer
interacts with the company. It aims to deliver products and services across multiple
channels in effective, efficient, and consistent manner. Content management
tools enable the company to manage what is visible to the customers i.e. what the
customers are able to see when they interact with the company. The various
processes undertaken are' campaign management, sales management, service
management, and complaint management.
Analytical CRM
The data collected in operational management is analy$ed to segment customers. The
valuable information thus obtained is used to satisfy customers. Analytical *:M is
composed of'
3. attern discovery component
4. roduct and customer analysis component
6. Multitude component
7. &orting and customer fractionation component
A. *ustomer value evaluation component
Analytical solutions provided for most companies are integrated view of customer across
all channels and applications, campaign performance analysis, customer profitability
analysis, cross%selling and up selling. The analytical solutions help answer .uestions like'
3. #ho are their best customersB
4. #hom they are likely to looseB
6. How to retain themB
7. How to attract new customersB
A. How to improve profitability of customersB
E"amples are data warehousing, online analytical processing <85A>, and data mining
systems.
2ote ' *oncept of "u$t#/& $&-/&)t!t+#) ' the value of customer is )udged based
on RFM analysis i.e. focusing on R&"&)"0' F&6u&)"0'and M#)&t!0 value from
customer purchasing data in retail business. Accordingly the customers are divided
into various levels. The four main segments of customers are'
At the top is the ?I customer whose e"penditure is most and form 3C of all
customers in a certain period.
Then the main customer forming AC.
2e"t the ordinary customer forming 4DC.
And at the bottom is the scattered customer an overwhelming EDC.
The first three categories create more than EDC of all profits for the company and as a
result they are differentiated as the best customers. They are the real targets
of Cu$t#/& C&)t!l+=!t+#).
Collaboratie CRM
The various departments of company like the sales, technical support, and marketing,
share the information they collect about customers. The ob)ective is to improve the
.uality of customer service and increase customer loyalty.
It allows the company to synchroni$e and manage efficient, productive interaction with
customers, prospects, partners, and internal associates across all communication
channels. The customers@ viewpoint is taken care of at every transaction level thus
enabling better service to the customer. *ollaborative *:M also reduces web service
costs by enabling web collaboration.
2ew product development
The process
'. !dea "eneration is often called the ?fuzzy front end? of the =@; process
,deas for new products can be obtained from basic research using
a 3:0) analysis (3trengths, :ea"nesses, 0pportunities A )hreats),
Mar"et and consumer trends, company&s RA; department, competitors,
focus groups, employees, salespeople, corporate spies, trade shows, or
7thnographic disco$ery methods (searching for user patterns and habits)
may also be used to get an insight into new product lines or product
features.
Bots of ideas are being generated about the new product. 0ut of these
ideas many ideas are being implemented. )he ideas use to generate in
many forms and their generating places are also $arious. Many reasons
are responsible for generation of an idea.
,dea Ceneration or 1rainstorming of new product, ser$ice, or store
concepts idea generation techni!ues can begin when you ha$e done
your 0@@0R)<=,)D (=(BD3,3 to support your ideas in the !dea
Screening #hase (shown in the ne.t de$elopment step).
$. !dea Screening
)he ob#ect is to eliminate unsound concepts prior to de$oting
resources to them.
)he screeners should as" se$eral !uestions:
:ill the customer in the target mar"et benefit from the product>
:hat is the size and growth forecasts of the mar"et
segmentEtarget mar"et>
:hat is the current or e.pected competiti$e pressure for the
product idea>
:hat are the industry sales and mar"et trends the product idea
is based on>
,s it technically feasible to manufacture the product>
:ill the product be profitable when manufactured and deli$ered
to the customer at the target price>
%. Concept &evelopment and 'esting
'. ;e$elop the mar"eting and engineering details
*. ,n$estigate intellectual property issues and search patent data bases
+. :ho is the target mar"et and who is the decision ma"er in the purchasing
process>
-. :hat product features must the product incorporate>
4. :hat benefits will the product pro$ide>
5. 9ow will consumers react to the product>
6. 9ow will the product be produced most cost effecti$ely>
8. @ro$e feasibility through $irtual computer aided rendering, and rapid
prototyping
F. :hat will it cost to produce it>
'G. )esting the Concept by as"ing a sample of prospecti$e customers what they
thin" of the idea. <sually $ia Choice Modelling.
(. )usiness *nalysis
7stimate li"ely selling price based upon competition and customer
feedbac"
7stimate sales $olume based upon size of mar"et and such tools as
the Fourt:oodloc" e!uation
7stimate profitability and brea"e$en point
+. )eta 'esting and Market 'esting
@roduce a physical prototype or moc"up
)est the product (and its pac"aging) in typical usage situations
Conduct focus group customer inter$iews or introduce at trade show
Ma"e ad#ustments where necessary
@roduce an initial run of the product and sell it in a test mar"et area to
determine customer acceptance
,. 'echnical !mplementation
=ew program initiation
Finalize Huality management system
Resource estimation
Re!uirement publication
@ublish technical communications such as data sheets
7ngineering operations planning
;epartment scheduling
3upplier collaboration
Bogistics plan
Resource plan publication
@rogram re$iew and monitoring
Contingencies whatif planning
6. Commercialization (often considered post=@;)
Baunch the product
@roduce and place ad$ertisements and other promotions
Fill the distribution pipeline with product
Critical path analysis is most useful at this stage
-. New #roduct #ricing
,mpact of new product on the entire product portfolio
Ialue (nalysis (internal A e.ternal)
Competition and alternati$e competiti$e technologies
;iffering $alue segments (price, $alue, and need)
@roduct Costs (fi.ed A $ariable)
Forecast of unit $olumes, re$enue, and profit