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An introduction to

CRM

CRM - BEPP II

In this session
From
transaction-based
marketing
to
relationship marketing.
Identify and explain the four basic elements of
relationship mktg
Identify each of the three levels of the
relationship marketing continuum.
Define and understand Relationship Marketing
Define CRM
Define Consumer Behaviour and understand
its process of consumer decision making
How businesses are changing today
Responses and adjustments of companies
towards this change
CRM - BEPP II

The Shift from TransactionBased Marketing to


Relationship Marketing

Transaction-based marketing

Buyer and Seller exchanges characterized


by limited communications and little or no
ongoing relationship between the parties

Relationship marketing
Development and maintenance of longterm, cost-effective relationships with
individual
customers,
suppliers,
employees, and other partners for mutual
benefit
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Forms of
Buyer-Seller
Interactions
on a
Continuum
from Conflict
to
Cooperation

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Comparing Transaction-Based Marketing


and Relationship Marketing Strategies

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RELATIONSHIP
MARKETING
The 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

Consumer Behaviour
(CB)
DEFINITION
Consumer 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.
OR

Consumer 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.
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Consumer behaviour focuses on how individuals


make decisions to spend their available resources
(time, money, effort) on consumption related
items. That includes;
What they buy
Why they buy it
Where they buy it
How often they buy it,
How often they use it
How they evaluate it after the purchase
The 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.
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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.
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Marketing Management
Orientations

Development of the Marketing Concepts


Production Concept
Product Concept
Selling Concept
Marketing Concept
Customer Concept
Societal Concept
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Production concept; Is the idea that consumers


will favor products that are available or highly
affordable
Assumes that consumers are interested primarily
in product availability at low prices
Marketing objectives
Cheap, efficient production
Intensive distribution
Market expansion

Product concept; is the idea that consumers will


favor products that offer the most quality,
performance, and the most features.
Marketing objectives
Quality improvement
Addition of features
Caution: Tendency towardCRMMarketing
Myopia
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Selling Concept
Assumes 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 objectives
Sell, sell, sell
Caution: Lack of concern for customer needs and
satisfaction
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Marketing Concept
Assumes 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 objectives
What can you sell?
Focus on buyers needs
Profits through customer satisfaction
In a company practicing this concept, all
departments and every worker and
manager will think customer and act
customer.
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Starting
point

Focus

Means

Ends

Factory

Existing
products

Selling and
promotion

Profits through
sales volume

(a) The selling concept


Market

Customer
needs

Integrated
marketing

Profits through
customer
satisfaction

(b) The marketing concept


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Customer Concept
Today 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 value
This has been enabled as a result in advances in factory
customisation, computers, the internet and database
mktg software.
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Societal Concept
The 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 concept
The 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 practices
They must balance and juggle the often conflicting
criteria of the company profits, Cr want satisfaction and
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public interest

CONSUMER DECISIONMAKING PROCESS


Need
Need Recognition
Recognition
Information
Information Search
Search
Evaluation
Evaluation of
of Alternatives
Alternatives
Purchase
Purchase Decision
Decision
Postpurchase
Postpurchase Behavior
Behavior
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PROBLEM/NEED
RECOGNITION
buying process starts with need recognition-

The
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.
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Need
Need Recognition
Recognition

Difference
Difference between
between an
an actual
actual state
state and
and aa desired
desired state
state

Internal
Internal Stimuli
Stimuli

External
External Stimuli
Stimuli

Hunger
Hunger

TV
TV advertising
advertising

Thirst
Thirst

Magazine
Magazine ad
ad

A
A persons
persons normal
normal Radio
Radio slogan
slogan
needs
needs
Stimuli
Stimuli in
in the
the
environment
environment
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INFORMATION SEARCH
An 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 search
For 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.
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Consumers obtain information from two


sources;
Internal search
Retrieve information from long term
memory
External
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.
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Personal sources
Commercial
sources
Public sources
Experiential
sources

Family, friends, neighbors


Most influential source of
information

Advertising, salespeople
Receives most information
from these sources
Mass Media
Consumer-rating groups
Handling the product
Examining the product
Using the product

A 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
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importance
each
source.

EVALUATION OF
ALTERNATIVES
either
separately or in conjunction

Occurs
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 processes
Consumers rely on internal processes to
help them organize the evaluation process.
Consideration (evoked set)
Decision rules
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Consideration Set

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Product
Product Attributes
Attributes

aluation of
valuation
of Quality,
Quality, Price,
Price, &
& Features
Features
Degree
Degree of
of Importance
Importance

Which
Which attributes
attributes matter
matter most
most to
to me?
me?
Brand
Brand Beliefs
Beliefs

What
What do
do II believe
believe about
about each
each available
available brand?
brand?
Total
Total Product
Product Satisfaction
Satisfaction

Based
Based on
on what
what Im
Im looking
looking for,
for, how
how satisfied
satisfied
would
would II be
be with
with each
each product?
product?
Evaluation
Evaluation Procedures
Procedures

Choosing
Choosing aa product
product (and
(and brand)
brand) based
based on
on on
on
or
or more
more attributes.
attributes.
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Decision Rules
Are strategies used by consumers to guide
decision making. Some decision rules use product
characteristics to guide decisions.
1. Compensatory
2. Non-compensatory (Conjunctive, Disjunctive,
& Lexicographic, affective rule etc)
Some decision rules rely on stored information in
consumers memories to guide decisions.
Compensatory Decision Rule
Select 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.
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A compensatory model because a


positive score on one attribute can
outweigh a negative score on another
attribute.
Non-compensatory Decision Rules
Conjunctive
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.
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PURCHASE DECISION
In 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 decision
1.Attitudes 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.
2.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. 29
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Types of Purchases

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POST-PURCHASE
EVALUATION
The 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 Dissatisfaction
Almost 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.
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Outcomes
Actual

product

performance

purchase expectations
Actual

product

matches

pre-

= NEUTRAL FEELING

performance

exceeds

pre-

purchase expectations = SATISFACTION


(Positive disconfirmation of expectations)
Actual

product

performance

is

below

pre-

purchase expectations = DISSATISFACTION


(Negative disconfirmation of expectations)
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IF DISSATISFIED.
Alternative actions
Do nothing
Avoid seller/brand in the future
Negative WOM to friends
Seek redress of problem from
seller
Complain to outside agency
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IF SATISFIED.
Self study..

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CUSTOMER
RELATIONSHIP
MANAGEMENT
(CRM)

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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)
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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 superior
customer 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.
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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
customers
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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 systemwide 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.
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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 relationships
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Determinants of CRM
Trust ; 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); and
Have a passionate interest in establishing and retaining a longterm relationship (e.g., have long-term perspective).
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Stages in the development of


a Customer Relationship
The Pre-relationship Stage
The event that triggers a buyer to seek a new business
partner.
The Early Stage
Experience is accumulated between the buyer and seller
although a great degree of uncertainty and distance exists.
The Development Stage
Increased levels of transactions lead to a higher degree of
commitment and the distance is reduced to a social exchange.
The Long-term Stage
Characterised by the companies mutual importance to each
other.
The Final Stage
The
interaction
between
the
companies
becomes
institutionalized.
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Functions of CRM
Direct functions (are the basic requirements of a
company that are necessary to survive in the
competitive marketplace)
Profit
Volume
Safeguard
Indirect functions (are the actions necessary to
convince the customer to participate in various
marketing activities).
Innovation
Market
Scout
Access
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The role of salespeople as


relationship builders and
promoters
Salespeople by:
1.Identifying potential customers and their needs
2.Approaching key decision makers in the buying firm
3.Negotiating and advancing dialogue and mutual trust
4.Coordinating the cooperation between the customers
and their company
5.Encouraging the inter-organisational learning process
6.Contributing to constructive resolution of existing
conflicts
7.Leading the customer relationship development team
Salespeople are the individuals in any organisation who act
both as relationship builders and as relationship promoters.

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Managing Customer
SalespeopleRelationships
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 relationship
Engage in strategic prospecting and qualifying
Gather and study pre-call information
Identify buying influences
Plan the initial sales call
Demonstrate an understanding of the customers
needs
Identify opportunities to build a relationship
Illustrate the value of a relationship with the
customer
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Developing the relationship


Select an appropriate offering
Customise the relationship
Link the solutions with the customers needs
Discuss customer concerns
Summarize the solution to confirm benefits
Secure commitment
Enhancing the relationship
Assess customer satisfaction
Take action to ensure satisfaction
Maintain open, two-way communication
Work to add value and enhance mutual
opportunities
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RELATIONSHIP
NETWORKS
The 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 value
Act as customer advocate
Enhance customer loyalty and build a health and
profitable network of relationships
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Thank you!!!!!

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