Final 1

MASTERS THESIS
THE IMPACT OF CUSTOMER RELATIONSHIP MARKETING IN THE LUXURY RETAIL MARKET OF KUWAIT: A THEMATIC ANALYSIS
Abdul Latif Sultan
abdulsultan@glos.ac.uk
Master of Business Administration Program

Department of Business Administration Advisor: Dr. John Laurence
A DISSERTATION SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION AT THE UNIVERSITY OF GLOUCESTERSHIRE
S.Id: S1010402
September 12, 2011
ACKNOWLEDGMENTS
Riches diminish by expenditure, while knowledge is increased by dissemination- Hadrat Ali Ibn Abi-Talib (R.A.). With every step forward we understand the sweetness of the endeavor to gain knowledge, to explore and to find facts, through which we learn to appreciate the beauty of the search for knowledge and the exploration of mysteries. I thank the almighty Lord to have bestowed such consciousness and the chance by disclosing this fact to me with the firm intention to continue forward with this endeavor. I acknowledge my thanks and appreciation for the esteemed people who have graciously helped me in this challenge despite their busy schedules. First of all, I extend my deepest gratitude to Professor Dr. John Laurence, who fulfilled his duties as a supervisor for this thesis with utmost sincerity by providing continuous support and guidance. He has truly been my mentor. I would also like to thank Professor Dr. Sarah Maddock for her useful advices with respect to conducting a good research. Finally I would like to give my deepest thanks to my family, close ones and friends who have played an important role in my success and findings. Again: Mr. Sultan, Dr. Laurence, Dr. Maddock, Miss Vasan, Mr. Hasware Mr. Chakraborty and Mr. Sange. Words are not enough to express my THANKS.
Abdul Latif Sultan
The Impact of Customer Relationship Marketing in the Luxury Retail Market of Kuwait
2011
A customer is the most important visitor on our premises. He is not depending on us. We are depending on him. He is not an interruption of our work but the purpose of it. He is not an outsider but a part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us the opportunity to do so. M.K. Gandhi
THE IMPACT OF CUSTOMER RELATIONSHIP MARKETING IN THE LUXURY RETAIL MARKET OF KUWAIT: A THEMATIC ANALYSIS
Abdul Latif Sultan, University of Gloucestershire, abdulsultan@glos.ac.uk
ABSTRACT Customer Relationship Marketing (CRM) is the new competitive weapon for organisations in the developed nations. The battle is not between nations or governments alone, it is amongst corporations and businesses, a consequence that can mainly be attributed to Globalization and the Internet. Many organizations are focusing on conquering the minds of consumers, making them loyal brand followers and satisfying their individual needs with the help of sophisticated CRM systems. Globalisation is the new era. Luxury Brands are the modern cults, each one of them seeking to gain the largest customer base. The aim of this dissertation is to carry out a qualitative thematic research on the impact of CRM in the luxury retail sector in Kuwait in terms of consumer buying behavior and organisational success. It also attempts to evaluate the awareness, presence, and actual implementation of CRM in Kuwait, the business environment, the beliefs, cultures, perceptions and behaviors of the customers in the Kuwaiti luxury retail segment. The research finds that CRM has a low impact on consumer buying behavior and there are other factors involved. The paper also attempts to examine the objectives of CRM, its assets, liabilities, frameworks and implementation. Global & Kuwaiti retailers can benefit from this study by better understanding the distinctive contingencies prevalent in the Kuwaiti business environment. Keywords: Customer Relationship Marketing, CRM, CRM Kuwait, CRM Middle East, Business Organisations Kuwait, Business Kuwait, Customer Relationship Management Kuwait, Marketing Kuwait, C3E, customer experience, expectation Word Count: 19,280
CONTENTS
Chapter 1 Introduction 1.1 Theoretical Motivation of the Study 1.2 Enquiry Overview 1.3 Research Aims and Objectives 1.4 Research Questions 1.5 Purpose Statement and the Research Problem Chapter 2 Background 2.1 An Insight to Kuwaits Business Environment using the PESTEL framework Chapter 3 Literature Review 3.1 Customer Relationship Marketing 3.2 Optimizing Marketing and Customer Relationship Marketing using Information Technology 3.3 CRM Frameworks for the Luxury Retail Sector 3.4 Customer Relationship Marketing: Deficiencies and Drawbacks 3.5 Distinctive Features of the Luxury Segment Chapter 4 Research Methodology 4.1 Research Design 4.2 Interviews 4.3 Background of the companies where research was carried out 4.4 Reflective Journal 4.5 Data Analysis 4.6 Pitfalls of the Methodology 4.7 Validation 4.8 Ethical Consideration Chapter 5 Data Analysis, Findings and Discussions 5.1 Kuwait Luxury Market 5.2 The Impact of the Internet on luxury marketing and consumer behavior in Kuwait 5.3 Insights to Luxury Marketing in Kuwait 5.4 Implementing CRM in Kuwait: problems and challenges for luxury retailers 5.5 The impact of CRM in the luxury retail sector of Kuwait Chapter 6 Recommendations and Improvement Strategies 6.1 Essentials of Digital Marketing in Kuwait 6.2 C3E: Customer Experience and Expectation Enhancement: The recipe for success 1 1 2 3 4 4 5 5
8 8 10 16 20 22 24 24 25 27 28 28 29 30 31 32 32 37 38 41 44
46 47 48
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CONTENTS
Chapter 7 Conclusion 7.1 Assessment of Findings 7.2 Authentication: Relation of Research Findings with Objectives 7.3 Recommendation 7.4 Further Research Direction Chapter 8 Reflective Learning 8.1 Reflective Journal References Exhibits 51 51 53 55 56 57 57 60 65
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1.0 INTRODUCTION
1.1 Theoretical Motivation of the Study Globalisation and the Internet have both redefined competition. The last two decades have witnessed remarkable changes in customer demand and loyalty, spearheaded by Customer Relationship Marketing (CRM) as a new weapon to leverage these changes. Managing customers, identifying their behaviors and retaining them have never been so complex. Customers have a variety of options to choose from also they are more demanding than ever. Their needs have become very complex and satisfying them has become equally difficult. This has led to an increased attention being paid to Customer Satisfaction. The emergence of the Internet has led to its wide scale application in businesses. Internet marketing helps firms establish interactive relationships with their customers and to satisfy them individually (Zineldin, 2000). Globalization, computers, Internet and e-commerce etc. have all impacted any organizations competitive scope and ability to build more sustained relationships (Payne, 2009). The concept of Customer is Key is very popular in the west. The past decade has also seen a rise of interest in CRM amongst executives, academics and the media. Success stories such as those of Mercedes Benz, Rolex, and Credit Suisses Loyalty Program have heightened this interest. Companies selling luxury products or services have to inevitably nurture good customer relationships and loyalty. Perceptions of luxury goods change over time and can differ from place to place or person to person. CRM has emerged significantly in the past few years globally, mainly because of changes in a number of vital trends that include: a shift in focus from transactional marketing to relationship marketing (Payne, 2009), a shift in focus from perceiving customers simply as an audience to seeing them as key assets, and technological developments in managing and maximizing the value of large chunks of data. Having a single-sales focus involves dealing with pre-mature information about the customer and winning the customer at every sales encounter, a less efficient and effective use of investment compared to one time acquisition and maintaining sustainable relationships with them. Some authors argue that there is a very weak (or in some research, even non-existent) relationship between customer satisfaction and retention (E.g. Bolton, 1995; LaBarbera and Mazursky, 1983; Newman and Werbel, 1973; Kordick, 1988).
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A strategy that doesnt speak explicitly about customers and the competitive environment will surely fail to generate and sustain a proper level of customer and competitive consciousness in your company, especially in the important nooks and crannies where the real work gets done (Levitt, 1990). According to McKenna, 1991 technology has transformed choice, and choice has transformed the marketplace, resulting in the emergence of a new marketing paradigm. Technology has become so pervasive that it is virtually meaningless to differentiate between technology and non-technology businesses. Even though these changes in customer demand and loyalty is by no means a modern development, the willingness to orientate businesses according to customer needs has gained a special dimension. 1.2 Enquiry Overview The main aim of the research is to investigate the impact of Customer Relationship Marketing on the consumer buying behavior in the luxury market of Kuwait. This paper focuses on identifying the scope of CRM and its impact on customer buying behavior in the Kuwaiti luxury retail sector. The next section describes the aims and objectives of the research. Further this chapter discusses the research background along with the research problems, research questions and the purpose of this study. This creates and outline for the topic and the theoretical areas that are discussed in this research. The chapter two provides a review of the literature, the theoretical frameworks and the conceptual models of CRM. In this chapter, firstly, the researcher has introduced CRM, its principles and objectives. This section also throws light on the importance of CRM processes as described by various authors and its impact on consumers. CRM helps organisations to know their existing customers by creating a database. It supposedly facilitates acquisition of new customers and retention of old ones by maintaining relationships with them. This chapter also talks about views on the relationship between CRM and customer satisfaction. Further the chapter talks about how technology is used to optimize CRM. Lastly, the chapter discusses the pitfalls of CRM. The chapter three provides an insight to the Kuwaiti external business environment using the PESTEL The framework. uses a The fourth chapter approach
2
describes to
the
research data and
methodology. information.
research
qualitative
collect
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The researcher has used in-depth semi-structured interviews to gather rich and valid data. This chapter explains about the entire research strategy. Data was collected from luxury customers as well as from the various managers. The data has been analysed using a thematic framework. The chapter discusses the strengths and limitations of the methodology, the validation strategy and the ethical guidelines followed. Chapter five provides recommendations for luxury businesses in Kuwait based on the collected and analysed data. The recommendations include marketing strategies that international brands and Kuwaiti retailers should use in order to improve customer loyalty, retention, frequency and to gain competitive advantage. The researcher has also develops a theoretical framework for effective marketing in Kuwait. Chapter six is the conclusion to the research. It summarizes the thematic findings, the impact of CRM in the luxury retail market of Kuwait and the recommendations made. 1.3 Research Aims and Objectives The main aim of this paper is to investigate the impact of CRM/eCRM1 on the consumer buying behavior in the luxury retail market of Kuwait. In order to fulfill its aim, the research needs other definite parameters. The other aims and objectives of this paper include 1. To critically evaluate the important features of the Kuwaiti luxury market, its distinctive features and consumer behavior. 2. To investigate the literature, theoretical models and frameworks related to retail CRM and its relevance for luxury businesses in Kuwait. 3. To evaluate the awareness, presence, perceptions and actual implementation of CRM in Kuwait. 4. To critically evaluate the need for Relationship Marketing in Kuwait, its assets and liabilities 5. Evaluate the marketing and CRM strategies of a few successful luxury retail organizations in Kuwait.
1
The term eCRM refers to the use of ecommerce tools or electronic channels in CRM. In this paper we do not make any distinction
between CRM and eCRM.
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1.4 Research Questions To guide this research in order to contribute in the field of CRM, consumer buying behavior and luxury marketing the research tries to answer a few questions based on the objectives discussed in the above section. 1. What are the particular features of marketing and CRM in the Kuwaiti luxury market? 2. To what extent does CRM influence consumer behavior in Kuwaits luxury market? 3. Is there a relationship between CRM and organisational success? 1.5 Purpose Statement and the Research Problem The main purpose of conducting this research work is to contribute to the inadequate literature and knowledge about the impact of CRM on consumer buying behavior especially in a distinctive luxury retail market like Kuwait. Kuwait is a highly rich but small country with distinctive values, perceptions, trends and consumer behaviors. The Kuwaiti people are very rich and high spenders on luxury products. Luxury products are very important for the people in Kuwait to distinguish between the social classes. Also, consumers in Kuwait are highly brand oriented but disloyal. In Kuwait, Many CRM projects have failed. The main purpose of this research is to study how CRM impacts the buying behavior of Luxury customers in Kuwait. Another purpose is to identify the reason for these CRM failures. Although globalisation and the Internet might have redefined the competitive platform and given rise to CRM on the other hand researchers have found many pitfalls and liabilities associated with the impact of CRM on consumer buying behavior. The luxury industry is sophisticated and needs high concentration to understand the consumers. There are various factors that influence the buying behaviors of people. A number of investigative studies have reported that the percentage of satisfied brand switchers exceeds the percentage of dissatisfied brand switchers (For e.g. Gierl, 1993; Reichheld and Sasser, 1990) and that there is no significant relationship between customer satisfaction and customer retention e.g. (Klee & Thurau, 1997). Many argue that that a 5% improvement in customer retention can result in an increase in profits of between 25 and 85 percent depending on the industry (Christopher, Payne, and Ballantyne, 1991; Reichheld and Sasser, 1990). Many researchers have declared that CRM is vital for success, but it is a contreversial matter since consumer behavior is affected by various social factors.
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2.0 BACKGROUND
This chapter provides an Insight to Kuwaits business environment using the PESTEL framework. There are many factors in the macro-environment that affect any organisation. Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change. To help understand and analyse these factors analysts can categories them using the PESTEL model (Political, Economical, Social, Technological, Environmental and Legal). 2.1 An Insight to Kuwaits Business Environment using the PESTEL framework Political features: The Iraqi invasion of Kuwait in the year 1990 was a serious setback for the nation, it was a year of complete chaos and destruction for Kuwait, but it did not stop them from rebuilding and catching up as soon as the country was liberated by the US led coalition forces in 1991. Twelve years later Kuwait played host to another massive military presence as thousands of soldiers massed on the Iraqi border for the US-led campaign in 2003 to disarm and oust the Iraqi leader Saddam Hussein. It remains an important transit route for forces and civilians moving in and out of Iraq (U.S. Department of State, 2011). Kuwait is a constitutional, hereditery emirate ruled by the princes belonging to the royal family (Al Sabah family). The head of the state is called The Amir followed by the crowned prince who succeeds the Amir upon his death. The national assembly has very limited role in the selection of the crown prince and the prime minister (again a member of the royal family). Other memebers of the national assembly and ministers are appointed thorugh formal elections, where only Kuwaiti citizens can vote. Kuwait has maintained good foreign relations with the rest of the world especially as a key ally of the United States of America. Economic features: The state of Kuwait is a geographically small but economically wealthy nation, with a high per capita income and GDP, estimated to be around $52,0002 and $131 billion3 respectively and is expected to grow over the years (CIA and IMF reports). It is an oil rich country and accounts for around 10 % of the worlds oil reserves. Petroleum accounts for more than half of the GDP, 95% of export revenues, and 80% of government income (CIA, 2011; IMF, 2011). Trade (2010 est.): Exports--$63.27 billion of which oil constitutes 93%. Imports--$21.61 billion f.o.b.: food, construction materials, vehicles and parts, clothing (U.S. Department of State, 2011).
2 3
This entry shows GDP on a purchasing power parity basis divided by population, as of 1 July for the year 2010 in U.S. Dollars . Approximate GDP based on IMF and CIA reports at the end of 2010 in U.S. dollars based on official exchange rate.
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Kuwait survived the economic crisis in 2008-2009 because of the oil prices and showed its 11th consecutive budget surplus. The government has been introducing economic reforms to boost participation of the private sector and foreign investment. Other important features includes no form of income tax on earnings, low foreign corporate tax (flat 15%), minimal import taxes (4%). Cyrille Fabre, partner and Head of Luxury and Retail practice for Bain and Co. in the Middle East argues that the Middle East, specifically Kuwait, is an increasingly lucrative market for expensive and luxury goods and the future is expected to bring glad-tidings in the form of about 8% growth in the global luxury goods sale in 2011 (Fabre, 2011). Social Features: It is the home to approximately 2.6 million people, including 1.3 million non-nationals (CIA, 2011; Ernst andYoung, 2001). Around 60% of the population is Arab. Arabic is the official language and english is widely used, mainly for business purposes. 20% of the population is resposible for 80% of the National Income and all of them are Kuwaiti Nationals (Central Bank of Kuwait). Over 90% of the population lives within a 500 sq. km. area surrounding Kuwait city and its harbor (BBC, 2011). Kuwait received independence in 1961 from the United Kingdom (CIA, 2011). 85% of the population follow Islam that includes 100% of the Kuwaiti nationals. The people have strong Islamic values attached to their culture and traditions. The other religions includes hinduism, christianity, buddhism, sikhism. Kuwaiti citizes receive benefits in the form of retirement income, marriage bonuses, housing loans, virtually guaranteed employment, free medical services, and education at all levels. The government also sponsors students who wish to study abroad. By Amiri decree, the government occasionally disburses a portion of its budget surplus as a grant to all Kuwaiti citizens. In 2007, the government implemented a debt forgiveness scheme for Kuwaiti citizens amounting to just over $1 billion. In February 2011, the government announced an Amiri grant of estimated 1.5 billion Kuwaiti dinars (approximately $5.3 billion), including 1,000 Kuwaiti dinars (approximately $3,500) to be paid to every citizen along with free monthly food baskets to each Kuwaiti family for 14 months. Foreign nationals residing in Kuwait do not have access to these welfare services. The right to own stock in publicly traded companies, real estate, and banks or a majority interest in a business is limited to Kuwaiti citizens and citizens of Gulf Cooperation Council (GCC) countries under limited circumstances (U.S. Department of State, 2011). Kuwait is the most literate amongst the other arab nations with a literacy rate of 93.5%.
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Technological features: Kuwait is technologically developing country. State-owned TV and radio operate alongside private broadcasters. Pan-Arab satellite stations are widely watched. Kuwait had 1.1 million Internet users by June 2010 (InternetWorldStats). A pervasive filtering system blocks content deemed immoral or politically-sensitive. Internet cafe owners must obtain the names, ID numbers of customers. Internet is still not widely used by the Kuwaiti nationals. Environmental features: Kuwait is a dry desert connected to the arabian sea and boasts long strips of beautiful beaches. The climatic conditions of Kuwait are extreme, which is marked by the intensley hot summers and short but cold winters. Sometime around March, Kuwait witnesses its pleasant warm spring season. The shamal, a northwesterly wind common during June and July, causes dramatic sandstorms. Legal features: Kuwait holds first place among Gulf states with regard to press freedom. Restraint is exercised when covering matters relating to the emir and senior royals. Newspaper publishers must have licences from the Ministry of Information. The ministry censors books, films, periodicals and other imported publications deemed morally offensive. Courts can prescribe prison sentences for defamation and "attacks" on religion. According to the commercial companies law No. 36 of 1964 amended by the commercial law No. 68 of 1980, all foreign companies wishing to establish an office, a business branch or a company in Kuwait, have to do it through a Kuwaiti agent or a citizen of one of the Cooperation Council of the Gulf country member. The total capital participation of the foreign company cannot exceed 49%. In certain sectors, such as banking, finance and insurance, this participation cannot exceed 40%. In order to establish a company in Kuwait, the Kuwaiti partner must request a commercial license issued by the Ministry of Commerce. The right to import goods into Kuwait on a commercial basis is restricted to Kuwaiti individuals and firms who are members of the Kuwait Chamber of Commerce and Industry (KCCI) and who have import licenses issued by the Ministry of Commerce and Industry (MCI). Exception: Kuwaits free trade zone allows 100% foreign ownership of business within the zone. There are no import duties and foreign corporate income is tax-free. Brands can only have one exclusive Kuwaiti/GCC agency representing them in Kuwait. Although the scenario looks painstaking, the opportunities are undemanding, especially in the luxury retail segment (Icon Group International Inc., 2000).
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3.0 LITERATURE REVIEW

This chapter aims to accomplish the following purposes: 1. Critically analyse the literature related to CRM, including its impact, principles, objectives, implementation frameworks, assets and liabilities. This chapter also 2. Examine the various models that have been developed to understand the link between CRM and customer satisfaction. 3. Understand the literature related to the luxury segment and its features. 3.1 Customer Relationship Marketing Customer Satisfaction has been in the spotlight amongst marketing, behavioral writers and researchers for long. It is one of the most basic and inevitably a very significant business element that cannot be avoided by organisations in modern times. The last three decades have seen a number of reports and research work in the area of customer satisfaction (E.g. Bolton, 1995; Perkins, 1991; Wilkie, 1991; Klee and Thurau, 1997). The growing importance of customer satisfaction, customer retention, changes in market demand, and competitive intensity has led to a paradigm shift from transactional marketing to relationship marketing (Payne, 2009; Grnroos, 1994, Sheth and Parvatiyar, 1994). May researchers argue that CRM has a significant impact on customer insight, satisfaction, customer retention and loyalty e.g. (Ghavami & Olyaei, 2006), (Lee-Kelley, Gilbert, & Mannicom, 2003), (Samanta, 2010) etc. The 1950s saw the development of frameworks like the Marketing Mix4 in order to increase demand. Payne, 2009 suggests that the objective of such Transactional approaches to marketing was to develop strategies that would optimize expenditure on the marketing mix in order to maximise sales. With time, the markets matured, competition increased, customer demands and loyalty became complex. Customers have gradually become less responsive as choices have increased, facilitated by globalisation and new marketing channels such as the Internet. These challenges, technological developments in managing and maximizing the value of large chunks of data propelled businesses and researchers in developing the concept of Customer Relationship Marketing.
The shorthand of the 4Ps of product, price, promotion & place are used to describe the levers, that if pulled appropriately, would lead to increased demand for the companys offer.
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CRM can ideally be described as: a move from functionally based to cross functionally based marketing; a shift in focus from transactional marketing to relationship marketing; a shift from marketing activities which emphasize customer acquisition to marketing activities which emphasize customer retention as well as acquisition (Payne, 2009); a shift in focus from treating customers simply as an audience to treating them as key assets of the business. 3.1.1 Principles and Objectives of Customer Relationship Marketing McKenna, 1991 argues that the goal of marketing is to own the market, not just to sell the products. Having a single-sales focus involves dealing with pre-mature information about the customer and winning the customer at every sales encounter, a less efficient and effective use of investment compared to one time acquisition and maintaining sustainable relationships with them. Marketing is everything and everything is marketing (McKenna, 1991). He continues to argue that marketing in modern times is not simply a function; but it is a way of doing business. Marketing has to be all-pervasive, a part of everyones job description in order to integrate the customer into design of the product and a process for interaction. Payne, 2009 identifies the key principles of CRM as: emphasizing on retaining profitable customers, emphasizing on a cross functional approach to marketing and emphasizing on multiple stakeholders. The primary objective of CRM is to maximise the life time value of a customer. The life time value of a customer is the future flow of net profit, generated from a specific customer. This forces organisations to engineer strategies to enhance the profitability of those customers it seeks to target (Payne, 2009). Customers are vital assets of organisations and are mostly responsible for the goodwill earned by the brand. CRM seeks to treat customers as investments. By building on existing investment, in terms of product development and customer acquisition costs, firms can generate potentially higher revenue and profit at lower cost. Marketing on a transactional basis is proved to have greater financial outlay and risk (Payne, 2009). As mentioned earlier, marketing is not simply a function. Marketing strategies often do not take into account their organisation-wide implications. The problem is that they are functionally focused and not market focused. Rarely, do they consider the inter-relationship of different stakeholders (Payne, 2009). He adds, that they typically seek to optimize the use
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of inputs and hence are budget driven rather than seek to optimize around outputs and hence be market driven. CRM seeks to emphasize on a cross functional approach to marketing. CRM seeks to focus marketing action on multiple stakeholder markets. A market consists of a number of forces or elements like the government, suppliers, media agencies, unions, customers etc. CRM recognizes that multiple market domains can directly or indirectly affect a businesss ability to win and keep profitable customers (Payne, 2009). There is lack of clarity in the definition and description of Customer Relationship Management. They vary greatly amongst authors and authorities. It is many times used interchangeably with the terms Customer Management, Enterprise Relationship Marketing, Technology Enabled Relationship Marketing (TERM), Customer Relationship Management etc. Sometimes, it is used to refer to IT solutions with respect to campaign management or sales automation. CRM has often been misinterpreted simply as an ecommerce application (Khanna, 2001) or Data Driven Marketing (Kutner & Cripps, 1997). Payne, 2009 defines CRM as the business approach that seeks to create, develop and enhance customer relationships with carefully targeted customers in order to improve customer value and corporate profitability. If viewed from a strategic perspective CRM can be defined as creating increased shareholder value through developing superior and sustainable customer relationships over the life-time of the customer with the help of IT and relationship marketing. 3.2 Optimizing Marketing and Customer Relationship Marketing using Information Technology Marketing evolves as technology evolves (McKenna, 1991). Ecommerce has diminished loyalty. Customers can change their mind very fast at the click of a button, if they see a better offering from a competitor. Personalization or customization is vital in the luxury retail organisation. In order to satisfy their customers, businesses must have relevant information about their customers available at all times. It is essential that the Information is used proactively rather than reactively. Experience shows that proactive use of information can be much more effective and rewarding (Payne, 2009). A number of customers do not take the pain of contacting the organisation or lodging their complaints, they simply look for alternatives or at the competitors offerings. Customer relationships are propelled and nurtured mainly by exploiting customer information or data. CRM seeks to use customer information to increase profits by increasing marketing, sales, support and value added
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services. Corporations have begun to use sophisticated CRM softwares or systems for the same reasons and mainly to better respond to individual customer needs and reduce marketing related costs. The firms ability to maximise the value of the information is highly related to the existence of a supportive IT infrastructure. Luxury businesses must aim to enhance customer experience as much as possible. It is essential for any retail organisation to ensure that it has its retail basics in order; otherwise, CRM systems wouldnt bring any significant change (Chu & Pike, 2002). The retail basics refers to superior customer service and directed completely at enhancing customer experience. Payne, 2009 explains the two major components of an automated CRM. The data repository enables the organisation to collect all the relevant information of customers, and is used with analytical tools to understand the customers in terms of past and likely future behavior. Another set of applications allows value added interactions with customers, often across different channels, in order to meet their specific needs (e.g. clever screen prompts, which provide customer care representatives with all the relevant details of the customer- This can be used for cross selling or up selling provided the staff is well trained and motivated). By using information technology luxury retailers can exploit opportunities, and thereby increase their profitability and market share. On the other hand, a number of authorities and practitioners have raised the issues regarding the liabilities attached with CRM systems. A number of them have argued about the inflexibility of the system and the rigid database that constitutes severe challenges for front office manages, since they will need to keep the system constantly updated. Also, they argue about the high costs involved in training the employees in using these systems, but shouldnt that be seen as an investment by the luxury organisations? Broadly, the objectives of CRM in the luxury retail sector can be identified as: gather more and more information by using automated systems, to know more about the visitors, regular customers, buying behaviors etc.; market the right products to the right people; reduced cost of sales and marketing; making vital information available to the management for strategic planning and decision making.
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3.2.1 Optimising Marketing and Customer Relationship Marketing on the Internet Electronic Marketing (E-marketing) gives luxury retailers the opportunity to establish, maintain, preserve their glitzy image, market products/services globally and mainly enhance relationships with customers. E-marketing through the use of electronic communications technology such as Internet, e-mail, databases and mobile devices improves customer loyalty (Smith & Chaffey, 2001). Companies can better target communications that match the individual needs of the customers. The changes in business scenarios following the Internet (especially ecommerce and emarketing) required the development of new business models. Modifications in the marketing mix were eminent and necessary, since the scope of businesses had changed remarkably. The word shopping for customers has changed. The traditional Marketing Mix paradigm is incompatible with e-commerce (Constantinides, 2002).There was a need to identify the elements that would give customers the desired shopping experience online, similar to offline elements, for e.g. the shops atmosphere, staff friendliness, customer service, shop layout, presentation, and high class feeling. Constantinides, 2002 developed the web marketing mix model also referred to as the 4S marketing mix model. There was a huge difference in the features of CRM online as compared to offline. CRM strategy is a response to the changing dynamics of the marketplace and a systematic effort to enable companies to build long lasting relationships aiming at profit and maximizing the customer's lifetime value to the firms (Cataldo, 2006). The elements of the web marketing mix drawn from Samanta, 2010; Constantinides, 2002 are: Scope: This element calls for the identification of the organisations strategic objectives on the Internet, identifying the market potential, competitors, customers etc. It also involves identifying the strategic role of the web activities for the organisation. Luxury retailers either have transactional or promotional websites. Transactional sites are the ones which generally include features that allow users to purchase, view purchase history, manage their personal accounts etc. Promotional sites aim at simply publishing the content and information about the products without any transactional functionality. Site: The Web Site is the companycustomer interface, an important source of customer experience and therefore a vital communication element on the Internet. It is the virtual product display similar to a shop floor in traditional marketing. The website acts as the virtual sales force and virtual display platform. Other web objectives includes promoting the
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business, providing company information to all the relevant stakeholders, a privacy policy in order to gain customer confidence, promotional information if any, customer service functionality, collecting market data, customer data, direct sales, online payment facilities (transactional) etc. These objectives in some way or the other can be helpful in enhancing customer loyalty and retention. It is very important that the luxury brands create the sensorial experience of the brand online. System: This element provides an outline of technical factors, especially concerning the secure, safe, time-cost efficient, user friendly interface, market analysis reports and performance analysis. This element includes decisions to be made regarding the web-site administration, maintenance, service, availability of full time technical and service personnel. It also includes web server hosting, choice of Internet service provider, site construction, content management, managing website traffic etc. A number of authors argue that CRM can help in customer retention (e.g. Constantinides, 2002; Samanta, 2010, Payne 2009). Many argue that that a 5% improvement in customer retention can result in an increase in profits of between 25 and 85 percent depending on the industry (Christopher, Payne, and Ballantyne, 1991; Reichheld and Sasser, 1990). Relationship marketing takes over after the sale for existing customers by stimulating the intention to buy and sometimes after the sale through post-purchase reinforcement (Samanta, 2010). Many organisations draw on Gilbert and Powell-Perry, 2000 in order to maintain and market good customer relationships. The five steps have been drawn upon Gilbert and Powell-Perry, 2000 in a luxury retail organisational context: Identify more about the customer through database analysis. The web provides luxury organisations with the opportunity to know more about their customers and exploit this information in different ways. The organisations can know more about their customers individually by tracking their purchases, likes, dislikes, reactions, behaviors during promotions etc. Improve and make the product/service more attractive. By analyzing the collected information and through the feedback provided by regular customers, organisations can know more about the likes and dislikes of the customers and use this information to improve the functionality for the web or better meet the needs of the customers individually. Feedback can be gained through questionnaires or surveys targeted at regular buyers. This is an important feature of customer relationship marketing.
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Provide information to build the guests knowledge of the company. Important information about the company can all be provided on the website. This is essential in relationship marketing. The companys updates ethical stance, su stainability practice, outlet or agent locations, and information about new or existing products, special offers, e-newsletters etc. could all be used ro build the knowledge of the visitors and keep the loyal customers informed. Convince guests and loyal customers to purchase more regularly. Once a guest enters the website (eOultlet) organisations must convince them to buy a product or tempt them to at least know about it. Prospective and Loyal customers must be kept in the loop by keeping them well informed about new or upcoming products, special offers etc. This can be done with the help of enewsletter or direct emails etc. Retain the customer by developing different forms of loyalty schemes. Inspired by the success of a number of loyalty programs (Rolex, Land Rover, Mercedes Benz), other luxury retailers are beginning to follow the trend of having their own loyalty drives. Entry into the Web site could be restricted through the use of identification numbers and passwords for the exclusive use of loyal customers or customers with a registered product (eg. Tag Heuer, Vertu). The idea is to keep the customers engaged and loyal to the brand/firm. All these steps constitute to form an important part of customer relationship marketing.
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Stage
Strategic Guidelines
Operational Objectives Compile information on what an individual purchases or may want. Create a profile of the customer Improve aspects of the service that are not meeting or exceeding the expectations of customers Increase the knowledge of customers about the hotel and the loyalty scheme to enhance brand loyalty Persuade customers to try new services, product or sector Persuade customers to purchase more through personalized contact
Web Mechanism
(1) Identify
Start with customers Exploit unique properties of the Internet technology Exploit unique properties of Internet technology Build relationships with customers Exploit unique properties of Internet technology Build Relationships with customers Leverage existing businesses Exploit Unique Properties of Internet technology Build Relationships with customers Leverage existing businesses Build a service, not a website Exploit Unique Properties of Internet technology Build Relationships with customers Leverage existing businesses Build a service, not a website. Think Radically
Incentivized online questionnaire
(2) Improve
Customized online questionnaire
(3) Inform
Direct e-mailing Electronic Newsletter Online notice boards and updates Online Information Centre Direct e-mailing Special electronic promotion leaflets Automated crossselling
(4) Tempt
(5) Retain
Develop new Loyalty building schemes aimed at retaining and reinforcing the link with customers
Exclusive website and services for loyalty scheme members Online members magazines Online members-only customer services
Table 3.1 Approaches to Customer Relationship Marketing using the Internet as drawn in Gilbert & Powell-Perry, 2000
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3.3 CRM Frameworks for the Luxury Retail Sector Chu and Pike, 2002 identify experience as the key driver of satisfaction in the retail sector. Apart from experience it is the feeling of esteem or belongingness to a particular class of society that drives customers in the luxury retail sector. Chu and Pike, 2002 argue that the marketing, communications, data integration, analysis etc should all be focused on customer satisfaction in order to successfully implement a CRM system. They developed a pyramid framework of a customer centric (CRM) strategy where the lower levels support the upper levels.
Customer Satisfaction
Customer Experience
Marketing & Communication
Data Integration & Analysis
CRM Strategy
Fig.3.1. the Pyramid framework Source: Adapted from Chu & Pike, 2002
of
CRM
The ultimate goal of CRM strategy in the luxury retail sector is to deliver the customers complete experience with the brand/product and satisfy them to the highest possible extent in order to retain them. This is dont with the help of effective data integration, analysis, marketing and communications. Data integration, marketing and communication arent the sole goals of CRM they simply act as a pillar for customers satisfaction. Kotler states that the key to customer retention is customer satisfaction (Kotler, 1994, p.20). A number of others authors share similar views and arguments (for e.g. Rust and Zahorik, 1993; Fornell, 1992, Fornell et. al., 1994 etc.). There are certain shortcomings associated with the representation of this pyramid framework. There is no guarantee that competitive advantage will be achieved and sustained once the top of the pyramid has been reached.
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3.3.1 The CRM Value Cycle Chu and Pike, 2002 say that CRM is about providing a one-to-one personalized service to each customer in order to enhance the customer experience. They proposed another framework that addressed certain shortcomings of the previous models and frameworks. This framework was specifically proposed as a generic solution for retailers. Actual case studies of retailers were used by them in the development of this framework.
Customer Experience Overarching goal is to create unique, strong customer experience
Customer Insights Application of advanced Analytics to customer data to generate insights that can be acted on
Strategic Capabilities Means of delivering value for customers & the company People across the organisation must be galvanized around customer imperatives Processes must be coordinated across the value chain to enhance customer experience Technology must be a customer focused asset
Refined Business Actions Specific improvements retailers make to adopt around strategic capabilities around customer insights.
Fig.3.2. the CRM Value Cycle Source: Adapted from Chu & Pike, 2002
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The darker half (Refined Business Actions and Customer Insights) of the cycle shows the role of CRM with the customer insights referring to the analysis of customer information also known as Analytical CRM and the refined business actions that involves t aking steps to improve their competencies in dealing with customers also called as operational CRM. The strategic capabilities are important in providing organisations with competitive advantage. These strategic capabilities can derive from architecture, people, processes, reputation, technology and innovation. The architecture derives from the relational contracts of the organisation which are hard to imitate by the competitors. Strategic capabilities are unique resources or competencies that the organisation needs to invest in and sustain for competitive advantage (Based on the resource based view, core competencies and strategic assets by Barney, 1991; Hamel and Prahalad, 1990; Amit and Schoemaker, 1993 respectively). CRM is a strategic business process that has proved to give many organisations the competitive advantage in their industry (e.g. Tesco, Rolex etc.). 3.3.2 CRM operating process cycle- IDIC Methodology The IDIC operating cycle by Peppers and Rogers Group and Microsoft Great Plains, 2001 is a blue print of CRM implementation and can be used to put into action the framework by Chu and Pike, 2002 in a number of situations. This blueprint views the problem from a CRM perspective from a retail point of view. It is also possible for retailers to customize their CRM approach to better meet their objectives. IDIC bridges the gap between the CRM strategies, frameworks as discussed earlier and the actual implementation of the project. IDIC stands for the acronyms: identify; differentiate; interact and customize. These are the sequence of stages a company must employ to realize the objectives it seeks from its CRM drive. Peppers and Rogers Group and Microsoft Great Plains, 2001 identify that the perfect CRM solution is implemented when a one-to-one relationship with each customer is realized. It may be very costly or complex, but anecdotal evidence from Peppers and Rogers Group suggests that a firm that changes the way they deal with the top 5% or bottom 20% of their customer base can realize payback on a CRM project.
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Identify
Customise
Differentiate
Interact
Fig.
3.3.
Peppers
&
Rogers
IDIC
blue
print
for
retailers.
Source: Adapted from (Peppers & Rogers Group & Microsoft Great Plains, 2001)
The stages of the IDIC blueprint in the retail context have been elaborated as follows: Identify customers: Information such as name, address, email, telephone number, purchase information and other details must be collected across the company and at all points of contact with the customer. The more information gathered about the customer helps in understanding their habits and preferences. Purchase information is of high importance in the luxury retail environment. A lot of information can be inferred about a persons income, attitudes and preferences from the purchase information. A number of retailers have used loyalty schemes like club memberships, loyalty cards and promotional offers in conjunction with the Internet to boost sales and collect more and more of customer data and buying patterns by tracking their purchase records and browsing patterns online as well as offline. Differentiate customers: Peppers and Rogers argue that customers represent different levels of value to a company and that they have varied needs (Peppers & Rogers Group & Microsoft Great Plains, 2001). Retailers must be able to differentiate between individual customers or customer segments. Once the Retailers successfully identify their customers then differentiation is relatively easy, since full information about the customers has been
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collected. With the information gained on the total spend of each customer it is very easy to work out their value to the company (e.g. top 10-20%). Customers can be differentiated based on the products they purchase (for e.g. categories such as vegetarian, parent and social class).These socio -economic categories are clearly independent of one another, so customers can be members of different combinations allowing a high degree of differentiation. This is extended further when combined with the custo mers value to the company. Interact with customers: Once the customers have been differentiated, luxury retailers can then choose to treat them differently and interact with them accordingly. Valuable customers can be given more benefits in order to keep them happy and retain them, since they are of significant value to the retailers. New customers can be given some benefits too in order to encourage them to try a product, with the motive of acquiring them. Customize Content: After analysis and interactions with the customers it is much clear to assess the value of each customer to the retailer, personality and attitudes. Based on this a one-to-one personalized service can be offered to each customer. Offers and products can be tailored or customized according to the differentiated customer groups. The research paper draws upon these frameworks especially the pyramid framework while analyzing and making recommendations because of its high relevance to the retail sector. 3.4 Customer Relationship Marketing: Deficiencies and Drawbacks So far, the assets and benefits of CRM have been highlighted and discussed thoroughly; CRM has its own set of deficiencies and drawbacks. A number of authorities criticize companies that spend large sums of money on implementing CRM strategies, systems and argue that there is no significant link between customer satisfaction and customer retention. Klee and Thurau, 1997 point out that the link between satisfaction and the long -term retention of customers is typically formulated by marketing practitioners and scholars in a rather categorical way, and is therefore treated as the starting point, rather than the core question of the analysis (for the practitioners e.g. Naumann and Giel, 1995; Quartapelle and Larsen, 1994, and for the academics, e.g., Kotler, 1994; Woodruff, 1993). LaBarbera and Mazursky, 1983 say that most of the research in this subject is based on the assumption that repurchasing behavior is highly influenced by customer satisfaction/dissatisfaction. Only, a
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few researchers have investigated and analysed the relation between customer satisfaction and customer retention (Bloemer and Poiesz, 1989). Klee and Thurau argue that most of the research works use monetary values like profits and revenues as dependent variables, thereby substituting the individual level of analysis with an aggregated company-wide level (Klee & Thurau, 1997). The validity of such research works for investigating the relation between customer satisfaction and retention is very limited since there is no analysis on the individual customer level. Profits and revenues are influenced by a number of contingencies (for eg. of such a work see Reichheld and Sasser, 1990). Some researchers use repurchase intentions of customers to identify and analyse the link between customer satisfaction and retention (for e.g. of such research works see Oliver and Swan, 1989; Bitner, 1990). Klee and Thurau point out the limitations of this approach by stating that the satisfaction and intention measures are obtained from the same source and the data is inherently correlated (Klee & Thurau, 1997). There is a high probability that it may lead to an overestimation in the strength of the relationship between the two also the research in the field of customer loyalty shows that the validity of intention measures varies depending on the time frame, respondents, measurement scale, products etc. (Bolton, 1995). Lastly, a few research works through light on the subject on an individual level by using real purchasing data to examine the relationship. This kind of study avoids the problems discussed above. These studies show a very weak or in many cases, a non-existent relationship between the two variables. No significant relationship between the transaction specific satisfaction appraisal and the length of the relationship was found (Bolton, 1995 also for similar works in the third group see Newman and Werbel, 1973; LaBarbera and Mazursky, 1983). A number of investigative studies have reported that the percentage of satisfied brand switchers exceeds the percentage of dissatisfied brand switchers (For e.g. Gierl, 1993; Reichheld and Sasser, 1990). Klee a nd Thurau comment that skepticism seems to be wellfounded as to the widespread conceptual view of a strong satisfaction retention relationship. Therefore, it is necessary to critically examine the sweeping postulate of a close relationship between customer satisfaction and customer retention and identify the causes for the existing divergence of both constructs (Klee & Thurau, 1997).
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There are dangers associated with not adapting CRM with a strategic perspective5. Payne highlights quotations from Insight Technology Group, the CRM institute, Giga and Gartner (Payne, 2009, P. 20): 69% of CRM projects have little or no impact on sales performance. Companies think that CRM projects are significantly less successful than their consultants. 60% of CRM projects end in failure.
CRM requires a recipe for success, to avoid the dangers. A successful CRM program is integrated, insightful and across the senior management (Shenger, 2001). By integrated the author means allowing the entire organisation to align around the common goal of exceeding customer expectation and experience. It must be paid attention to and supported by the entire organisation including the senior management. 3.5 Distinctive Features of the Luxury Segment Luxury goods are an important part of modern society. They played an equally important role in the ancient times as well. History has witnessed clear distinctions between social classes in earlier civilizations where luxuries were limited to the elite classes. The definition of luxury then was clear and concise. With changes in global politics (Democratization - Wong and Ahuvia, 1998), world economies and purchasing powers of people new types of luxury products were launched which were called as accessible luxuries or mass luxuries. Such types of luxury products target the so called middle class (the well to do class of people, neither very rich nor poor). As luxury has penetrated into the masses, luxury has become very difficult to define. There is no common definition for luxury products, since the perception of luxury goods has been changing very fast over time. The concept of luxury differs from place to place, person to person etc. Researchers define luxury products differently, some refer to it as the higher priced category of any offer in any product range (Prof. Dubois, Gilles, and Sandor, 2010).
As highlighted in the previous sections, strategic CRM involves developing an approach to CRM that starts with the business strategy of
the organisation and is concerned with the development of customer relationships that result in long term shareholder value creation (Payne, 2009).
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Similarly, some of them define luxury products as those that provide extra pleasure (Prof. Jean-Noel Kapferer). Several others argue that luxury goods are the ones that evoke a sense of belongingness to a certain esteemed or elite class of people. In Economics, a luxury good is a good for which demand increases more than proportionally as income increases, in contrast to a necessity good, for which demand increases less than proportionally as income increases. As people become wealthier they buy more and more of luxury products and with a decline in income its demand will drop. The perception of luxury goods may change with income for a person for e.g. an automobile collector stops buying more luxury cars because of increase in income and a shift of interest towards buying airplanes (at such an income level, the expensive luxury cars would simply become a necessity or a normal good). A lot of goods are perceived as luxury goods because they play an important role in fulfilling the esteem needs or status symbol needs of people as they signify the purchasing power of people (also known as conspicuous consumption). Many a times a number of goods attain the status of luxury goods due to their design, quality, durability, performance, remarkable superiority over substitutes, appearance etc. Some luxury products are examples of Veblen goods, which defy the law of demand 6, for e.g. an increase in price of a perfume can increase its perceived value as a luxury good and increase its sales rather than decrease it The luxury market has been growing since many years. The year 2010-2011 is expected to bring glad tidings for the luxury retail sector, especially in the middle-east (Fabre, 2011). Another important feature of the luxury segment is that it is highly sensitive to economic upturns and downturns. The future holds some unanswered questions like: Will Luxury still remain something that is not a necessity? Will the primary purpose of luxury products still be to display income or wealth? How much control will the luxury brands have over the lives of the people?
The law of demand is an economic law which states that consumers buy more of a good when its price decreases and less when its price increases (while all the other factors remain constant)
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4.0 RESEARCH METHODOLOGY

Research is a systematic and scholarly investigation into the study of materials and sources in order to establish facts and to reach conclusions. This chapter systematically discusses the research paradigm and how research was actually conducted. This chapter discusses the various key issues related to the research study with the help of various research philosophies, various approaches to collect data and analyse it. The chapter also discusses about the ethical guidelines and the validation strategies used to make the study more rigorous and credible. 4.1 Research Design There are basically two approaches to research: quantitative and qualitative. A Quantitative approach to investigations generally requires numerical data to be collected and/or transforming what is collected or observed into numerical data. It involves measuring or counting attributes. In contrast to quantitative data, qualitative data does not simply count things, but is a way of recording people's attitudes, feelings and behaviors in greater depth. Quantitative not appropriate as an initial learning phase to develop creative ideas. Quantitative data is essentially evaluative, not generative. Qualitative research looks further than numerical evidence such as events, descriptions, comments, behaviors etc and identifies new and emerging categories. This study utilizes a qualitative approach for investigation because of its rich and explanatory nature. Qualitative data consists of words and observations and not necessarily numbers. As with all data, analysis and interpretation are required to bring order and understanding. In order to ensure an appropriate conceptual framework to work, an in-depth interview method was employed, to better direct the research towards its objectives. This approach was divided into two parts. The first part constituted of interviews with owners, marketing directors, managers and merchandising officers regarding marketing methods prevalent in Kuwait, trends in the luxury segment, the presence, awareness, practices, impact (potential), problems and actual implementation of CRM. The Second part constituted of interviews with the customers/users of luxury products. This was aimed at studying the behaviors, impact of different marketing methods, motivating factors, satisfying factors/dissatisfaction reasons, trends, perceptions, cultures, impact of relationship marketing on the buying behavior, Internet shopping and loyalty of the customers. The interest in choosing this method can
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mainly be attributed to the fact that interviews are particularly useful for getting the story behind a participants experiences. The interviewer can pursue in-depth information around the topic. Interviews may be useful as follow-up to certain respondents to questionnaires, e.g., to further investigate their responses (McNamara,1999). The qualitative research interview seeks to describe the meanings of central themes in the life/world of the subjects. (Kvale,1996). A qualitative research interview seeks to cover both a factual and a meaning level, though it is usually more difficult to interview on a meaning level. (Kvale,1996). Unlike surveys or questionnaires, interviews are more personal and direct, provide the opportunity for asking follow up questions and interviews are generally easier for respondents. 4.2 Interviews Two interview protocols were developed for this study, one was the organisational version (for managers, executives etc. at the luxury retail organisations) and the other was the customers version. There are three types of research interviews: structured, semi-structured and unstructured. Structured interviews require adherence to a particular set of questions and rules. In some cases the researcher is required to show consistency in behavior across all interviews including emotional affect, bodily posture etc. These are mainly used by quantitative researchers to look for very specific information. It keeps the data concise and reduces researcher bias. Semi-structured interviews are more relaxed than structured interviews. While researchers cover every question in the developed protocol, there is room for asking clarifications and additional information. These are beneficial for qualitative studies and helps in a deeper understanding of responses. Unstructured interviews are the most relaxed one amongst the three. The researcher only needs a checklist of topics to be discussed. These interviews are more like general conversations with no order or script. This approach uncovers additional information that might not have been collected by using the other two methods but unstructured interviews are very time consuming to transcribe and difficult to analyse. The interviews were semi-structured and open-ended. Very few close-ended questions were asked that were necessary for the research. This allowed for a high degree of flexibility for both the interviewer and the interviewee. Although semi-structured interviews are difficult to compare but they are fairly reliable and easy to analyse. Interviews were carried out in five
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Luxury retail companies which were chosen based on convenience and most easily available for the research study. Most of these companies are the local retail agents that exclusively represent many different international luxury brands. On average four to five interviews were conducted in each company. The interviews were conducted in english and arabic depending on the participants. Interviews in the local language seemed more insightful and a few arab interviewees seemed more comfortable in sharing their views. The second protocol of the interview (the customers version) involved using a quota sampling method to recruit luxury customers for conducting interviewes. The interviewees were recruited on the recommendations of friends and professional contacts. Quotas or segments were created on the basis of certain characteristics like age, nationality and gender. Four quotas were created. The four qoutas were Kuwaiti men, Kuwaiti women, expatriate men and expatriate women. Each one of these groups were furthere sub-divided into two, one included interviewees above the age of eighteen and below twenty-four years and the other sub-group included interviewees above the age of twenty-four years7. These interviews were also conducted in english and arabic based on the participants convenience. Around thirty such interviews were conducted. Both the versions of the interview lasted for around thirty minutes on an average. Participants in each of the version were asked twenty questions on an average. Questions were formulated of different types to include broad data like behaviors, opinions, feelings, knowledge, sensory and background/demographics of the person. The interviews were audio recorded. Also, during the interview important notes were taken. Participants were allowed to take breaks. They were informed that their identities as well as the organisationss identity (Organisational version) would be protected. Each participant was provided with a consent form in english and arabic and were told that they may choose to withdraw from the study at any time.
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4.3 Background of the companies where research was carried out The five companies have been briefly introduced below. Names of the companies have been changed to protect identity on account of ethical considerations. 1) Kuwait British Company (KBC): It is one of the Middle Easts leading retailers with operations in a number of different countries including European nations. It operates more than 50 international retail concepts which include a number of leading luxury fashion and footwear, health and beauty, optics, home and furnishing brands. The retail outlets of their brands can be found at most of the regions premier locations. 2) Al Jasim and Sons Automotive Co. W.L.L (AJAC): It is one of the most successful luxury automotive dealers in the middle-east. It owns the right to import and exclusively deal in five international luxury car brands. Most of their car brands are considered highly luxurious internationally. Supported by after sales facilities, all these products enjoy such levels of technical support, which many people argue is the main reason for the companys success. 3) Al Ruby Co. (ARC): It is one of Kuwaits most recognized medium sized luxury retailer with 12 specialized boutiques in Kuwait and over 30 years of operating expertise. It provides its customers the best in fine luxury watches, perfumes and couture. They are the dealing agents for a number of luxury watches, perfumes and couture brands in the middle- east. 4) La Moda: It is an internationally recognized and a very popular luxury retailer in Kuwait which is the house of extremely prestigious brands and deals s in jewels, watches and fashion accessories. 5) Al-Tronix: It is a prominent luxury electronics retailer in Kuwait. They are the authorized dealers an internationally prominent luxury electronic brand. They also sell different types of expensive electronic products, hardware, softwares and electronic accessories.
Assumption: It is assumed that people below the age of 25 years in Kuwait are dependent & do not have a direct source of income and
people above the age of 24 years are generally independent & have a direct source of income.
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4.4 Reflective Journal The last form of data was collected by keeping a reflective journal and field notes. The journal allows a researcher to describe his feelings about conducting research in any area of study. According to Morrow and Smith the use of a reflective journal adds rigor to qualitative inquiry as the investigator is able to record his/her reactions, assumptions, expectations, and biases about the research process (Morrow and Smith, 2000). The field notes were really helpful in providing additional data for the analysis. 4.5 Data Analysis Before the data was analysed, all the audio recorded interviews, reflective journal and notes were transcribed. The process of transcribing allows a researcher to become acquainted with the data (Reissman, 1993). The files were transcribed and typed in Microsoft word. The files have been password protected and saved on an external hard drive. The data was analysed through thematic analysis as explained by Miles and Huberman, 1994; Braun and Clarke, 2006. Thematic analysis is an approach that involves the creation and application of codes to the data. Coding refers to the creation of categories in relation to the data; the grouping together of different instances of datum under an umbrella term that can enable them to be regarded as of the same type. The idea was to develop themes and to work out how they were related to each other within the data. Data was not coded sentence by sentence or paragraph by paragraph, but coded for meaning. On the basis of the coding, themes were identified. There is no reason why researchers cannot give numerical indications of the incidence and prevalence of each theme in their data. For example, what percentages of participants mention things which refer to a particular theme? The research draws on the guidelines presented by Braun and Clarke, 2006 for effective thematic analysis. The phases of the analysis were drawn upon the guidelines suggested by Braun and Clarke, 2006. The phases of the research were: 1) Familiarized with the data: It involved transcribing the data where necessary, reading and re-reading the data at least two to three times and making notes of initial broad ideas. 2) Generated initial codes: It involved coding interesting features of the data in a systematic fashion across the entire data set and collating data relevant to each code. 3) Searched for themes using the codes: This phase involved grouping the codes into potential themes and gathering all data relevant to each potential theme.
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4) Reviewed the themes: This phase involves reviewing the themes and checking for validity and whether they work in relation to the coded extracts. 5) Defined and Named the themes: With analysis themes were beginning to get more specific. Once the themes were clear, they were defined and named. 6) Produced the report: This phase involved election of vivid, compelling extract examples, final analysis of selected extracts, relating back of the analysis to the research question and literature, producing a scholarly report of the analysis. Thematic analysis is flexible, easy to learn; it is useful to summarize key features, can generate unanticipated insights, allows for social as well as psychological interpretations of data and is also useful in highlighting similarities and differences across the data set (Braun and Clarke, 2006). 4.6 Pitfalls of the Methodology The entire research work was completed in a short time span of three months. The entire process was time consuming, especially the interviews and the process of transcribing. With a qualitative research comes the problem of biasness which is unavoidable. Qualitative research helps in expanding the list of possibilities but cannot identify the best possibility. Also, it makes it difficult to generalize and compare the data. Researchers must ensure that they do not bias their interpretations in anyway. Biasness from participants is unavoidable. Data Analysis was complex and time consuming. Coding method seeks to transform qualitative data into quantitative data, thereby draining the data of its variety, richness, and individual character. In Thematic analysis it is hard to analyse if one theme is same as the other for e.g. it becomes difficult to decide whether interviewee A said the same thing as interviewee B. There are some big issues in undertaking thematic analysis. One of the central positions associated with qualitative research pertains to the idea of interpretivism: that we are interpretive in our actions and in our understanding of the actions of others; that we impose meaning on the world; that we inhabit cultural worlds and engage in cultural practices that are defined by shared interpretations (i.e. that we do not operate as isolated individuals in our interpretive actions, but share with groups of people, certain interpretations).
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4.7 Validation Qualitative researchers utilize various validation strategies to make their studies rigorous and credible (Creswell and Miller, 2000). Assistance of two peer debriefers was sought including the research supervisor. Both of them are familiar with qualitative data analysis. This research relies on the 15 point checklist' provided by Braun and Clarke, 2006 to assess its quality. 1) The data have been transcribed to an appropriate level of detail, and the transcripts have been checked against the tapes for accuracy. 2) Each data item has been given equal attention in the coding process. 3) Themes have not been generated from a few vivid examples (an anecdotal approach), but instead the coding process has been thorough, inclusive and comprehensive. 4) All relevant extracts for all each theme have been collated. 5) Themes have been checked against each other and back to the original data set. 6) Themes are internally coherent, consistent, and distinctive. 7) Data have been analysed interpreted, made sense of - rather than just paraphrased or described. 8) Analysis and data match each other the extracts illustrate the analytic claims. 9) Analysis tells a convincing and well-organized story about the data and topic. 10) A good balance between analytic narrative and illustrative extracts is provided. 11) Enough time has been allocated to complete all phases of the analysis adequately, without rushing a phase or giving it a once-over-lightly. 12) The assumptions about, and specific approach to, thematic analysis are clearly explicated. 13) There is a good fit between what you claim you do and what you show you have done i.e., described method and reported analysis are consistent.
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14) The language and concepts used in the report are consistent with the epistemological position of the analysis. 15) The researcher is positioned as active in the research process; themes do not just emerge. 4.8 Ethical Considerations The entire research work was carried out in accordance to the ethical guidelines of the Market Research Society (MRS) and the University of Gloucestershire. Although, there were no identifiable risks for participating in this study, a few considerations were still kept in mind when dealing with participants. First of all, a lot of Kuwaitis are not comfortable in discussing about religion, income, families and culture. Secondly, some managers are not comfortable in sharing some information about their businesses which they presume to be vital. All these considerations will be incorporated during the research design stage. Every caution will be taken to ensure that the participants felt safe, comfortable, and had the freedom to withdraw from the study if they felt the need to. Interviewees were assured that their identities will be kept anonymous in the report and the same was mentioned in the consent form.
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5.0 DATA ANALYSIS, FINDINGS AND DISCUSSIONS

This chapter is based on the thematic analysis of the primary data collected through the indepth interviews conducted with luxury customers and senior personnel at luxury retail organisations in Kuwait. The analysis also includes data from the reflective journal that was maintained by the researcher at all times. The data has been analysed most importantly to identify the impact of CRM in the luxury retail sector of Kuwait, develop frameworks and make recommendations. Also, it is analysed to identify and understand various issues with respect to CRM and the luxury retail sector in Kuwait. Firstly, the chapter discusses the Kuwaiti luxury market, the consumer behavior and perceptions towards luxury products and marketing. The paper then talks about the impact of technology on consumer behavior in Kuwait. The following section provides and insight to luxury marketing in Kuwait. The next section illustrates the problems and challenges associated with implementing CRM in Kuwait. Lastly, the chapter discusses the impact of CRM in the luxury market of Kuwait. 5.1 Kuwait Luxury Market The aim of this section is to make an in-depth analysis of the consumption features of the luxury market in Kuwait. This analysis will help in shedding light on the marketing activities for luxury retailers and brands in Kuwait. In recent years, luxury consumption has been enjoying a rapid increase. One of the marketing managers (M, Egyptian, La Moda) says that Kuwaitis are the most fashionable amongst other Arab nations, luxury consumption has increased tremendously in the last decade and we expect it to grow more. He also argues that this can mainly be attributed to the high disposable income of Kuwaitis and a growing influence of the western culture in Kuwait. A number of senior marketing executives in different organisations share a similar point of view. A marketing director (M, Kuwaiti, Al Jasim and Sons Automotive Co. W.L.L) points out that the Kuwaiti people have easy access to very high credit facilities. They receive huge monetary and non monetary benefits from the government and standard of living is cheaper compared to the west. According to a senior marketing manager (F, Lebanese, Al-Tronix) people have become very brand oriented, quality conscious, mainly because people have been travelling a lot to western countries and watching a lot of western television. A number of customers agree that travelling and western television has broadened their awareness of luxury brands. Mel (F, Kuwaiti, 25) a
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very frequent user of expensive luxury products explains that she keeps her self updated through magazines, television and travelling. What was noted is that all the expatriates that were interviewed said that they do not spend very heavily because they choose to save and invest in assets back in their own country. Ninety Percent of the interviewees, both customers and managers said shopping was one of the best forms of entertainment for families and individuals in Kuwait. Jabir (M, Kuwaiti, 30) and Aliya (F, Kuwaiti, 22) like most of the interviewees explained that there are strong Islamic values in people and shopping is their favorite past time especially during the extremely hot and humid summers. It was also noted that Kuwait is a small country with Islamic values. Alcohol, clubs, pubs, casinos etc. are strictly prohibited in Kuwait and a western party culture is still not appreciated by the older locals. People have few means of keeping themselves entertained. Also, their spending on basic necessities is relatively low, so this actually enhances their ability to spend more on luxury products and uplift their lifestyle. Kuwaits luxury market indeed has its distinct characteristics. The rapid expansion of Kuwaits luxury consumption has greatly stimulated the luxury companies desire to broaden their market. Competition in Kuwait is not actually amongst brands, it is between the retailers or the Kuwaiti agents who own the right to exclusively sell luxury products of particular brands. Brands with entry level luxury products like watches, perfumes etc. can be sold by more than one retailer in many cases. In order to enter foreign markets, these companies often adopt specific marketing strategies, but these companies have adjusted their strategy significantly in the Kuwaiti market. 5.1.1 Drawing the lines between Needs, Wants, Lifestyle and Luxuries As mentioned in the earlier chapter of this paper, luxury is very difficult to define. There is no common definition of luxury. The researcher here tries to identify the perceptions of luxury and also tries to differentiate between needs, wants and luxuries in Kuwait. It was observed that luxuries play a very important role in the daily lives of the people in Kuwait. What was also noted is that it was actually a part of the peoples lifestyle. What makes it complex is that richer the people are, the less they personally value or give importance to it. During one of the interviews it was observed and mentioned by the manager that their service centre had at least 7-8 highly expensive uncollected cars (roughly valued at 200,000 each). People bought these cars but did not collect it for a long period of time in some cases even 1 year so the people did not really care about their product but it was just bought because of its expensive nature, brand name and perceived experience (Service and spare Parts manager, Al Jasim and Sons Automotive Co. W.L.L).
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It was simply because of their orientation towards branded products, expensive goods and the bling nature of the products. For some it was important to be a part of the society, but for many it was of high personal interest since it s a part of the lifestyle. It was very difficult to differentiate between wants and luxuries. They were always interchangeable and over lapped with each other. Peoples attitudes towards a number of expensive branded luxury products were as if they were normal products. Most of them cared about the brand popularity, the price, the promotional deal and if it was sufficiently conspicuous. Quality and customer service play an important role in the top-end luxury sector. Apart from the mass luxuries, even the most expensive ones were highly consumed by the people. A very senior marketing executive and a frequent buyer of luxury products explained this by saying a lot of luxury products outside Kuwait have actually become the lifestyle of people in Kuwait. People are inclined towards the luxury lifestyle. Most of the middle range luxury products have become lifestyle goods for many people and they are actually a part of their wants now. The high end luxury products are specifically targeted at the top 10-12% of the rich Kuwaiti population. This segment specifically includes older people and higher up in the social status. Segmentation and differentiation has been discussed in a later part of this section.
Fig. 5.1 differentiating between needs wants and luxuries in Kuwait
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Fig. 5.1 identifies Lifestyle as the over lapping area between luxuries and wants. This signifies that there is hardly much difference between wants and luxuries. The Luxuries are becoming the wants, making it difficult to differentiate. The researcher chooses to refer to it as the lifestyle or the lifestyle goods. The overlapping area between wants and luxuries- the Lifestyle actually signifies the normal nature of many luxury products in Kuwait. The needs include the requirement indispensable for existence like basic food, clothing and shelter. Wants are simple desires or demands and luxuries are similar to wants but unlike wants, they are generally known for facilitating very high levels of comfort or enjoyment. Lifestyle goods in this context are actually luxury products that have actually evolved to become the wants of the people. The wants have actually moved towards the luxury products. The concept of lifestyle enhancement is a very important trend in Kuwait. Lifestyle goods are not simply wants because they facilitate self esteem, comfort and enjoyment but not necessarily a high social status. 5.1.2 The complex consumer features and the signs of differentiation in the Kuwaiti luxury market According to a Boston consultancy group study, Kuwait stood fourth in a world ranking of concentration of millionaire households (8.4%) in 2010. In terms of assets, the biggest proportion of the wealth is held in cash and deposits followed by equities and bonds. Vathje explains The concentration of wealth, cash hea viness of portfolios and a high share of offshore wealth in Kuwait are unique feature (Boston Consulting Group, 2011) . Kuwait is a rich country with rich households. This data actually shows that at present, a considerable number of people in Kuwait have already had the purchasing power of the worlds top luxury products. But, the luxury market in Kuwait has a distinctive phenomenon. During research in most of the companies, it was noted that for the lifestyle luxury goods the top richest class only contributed to a very low percentage of consumption. It was observed that in Kuwait the luxury consumers are divided into two groups: The first group includes only the 10-12% of the Kuwaitis. This consumer group has very strong economic strength, was relatively older in age and higher in social status. When choosing luxury products, they would give more consideration to the brands culture background, design and other factors. They tend to focus on purchasing more expensive products like jets,
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highly expensive cars, luxury yachts etc. They tend to pay more attention to the enjoyable experience obtained in the course of consumption, not just focus on the product itself. Specific high end luxury products are simply targeted at this group because of the high cost or perceived value of the product. This segment specifically includes royal family members, rich sheikhs, politicians, rich business families. The other group includes the new generation of luxury buyers, who were mostly born in the 1980s. This group constitutes a major group of luxury consumers in Kuwait. They are young and are extremely sensitive to luxury brands and information about the fashion industry across the world. They do not have very strong economic strength to support their consumption. Therefore, most of the products they buy are lifestyle products. This group is dependent on personal wealth or the cheaply available credit facilities. This group includes nouveaux riches, professionals, as well as the fashionable young people from rich families. Kuwaits luxury consumer group is a complex one that constitutes people from a range of income groups and social classes. Here, the people pay more attention to the style, on-going promotions and the brand image more than the quality or service. This analysis shows that presently Kuwait has clear signs of differentiation. Although the traditional cultural values are still very much existent, the Kuwaiti luxury consumers psychology is increasingly being influenced by the American culture. 5.1.3 Low Competitive features and retailer dictatorship in Kuwait In Kuwait it was observed that the consumers are largely treated as an audience and businesses have the upper hand. A luxury market analyst says businesses have more influence in Kuwait than the consumers (M, Kuwaiti, KBC). Also, globalisation has not significantly increased the competition in the luxury market in Kuwait, although it has broadened the luxury market and led to the introduction of new brands in Kuwait. Except for a few entry-level luxury products, almost all the luxury brands are represented by single retailers or agents. Also, most of the retailers represent multiple brands individually and exclusively. Consumers have no choice but to choose from the very few retailers or choose a particular brand from a sole retailer in the market. A small change was noticed here; travelling is opening boundaries, raising awareness and increasing the options for luxury buyers, but not in the case of high end luxuries e.g. luxury cars. A sales manager says the business in Kuwait is crazy, anything and everything sells (M, Kuwaiti, AJAC). Individual needs are perceived to be insignificant, except in the high-end luxury retail sector where the price and the perceived value of the products are very high. Luxury retailers depend on past patters and behave reactively.
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The way of doing business in Kuwait is debatable in the long run, especially when consumer awareness is increasing. On the other hand, the lack of competition forces the consumers to choose from the available options giving businesses the upper hand. Each luxury retailer is a dictator in his own domain of brand portfolios. The consumers are forced to remain loyal to the retailers in order to buy products of their favorite brands. 5.2 The impact of the Internet on luxury marketing & consumer behavior in Kuwait In the last decade the use of the Internet has grown tremendously in Kuwait from 150,000 users in the year 2000 to 1, 100,000 users in 2010 which was approximately 40% of the population then (Internet World Stats, 2010). The young people in Kuwait constitute both the highest concentration of the Internet users (estimated to be approximately 63% of all Internet users in Kuwait) and the largest consumers in the Kuwaiti society are very important for lifestyle product retailers. Also, their Internet practices are likely to stimulate the most significant changes in the Kuwaiti society (Wheeler, 2003). It was found that the Internet continues to liberate the Kuwaiti youth from the conservative social codes which also signifies the presence of social conservatism in Kuwait. The Internet has become a fascination and an important part of the lives of the Kuwaiti youth. Most of the users use the Internet simply for social networking, watching videos or educational purposes. It was also noticed that only a few users followed products online and a very few of them used the Internet to buy luxury products which were unavailable in Kuwait. The websites of most luxury retailers in Kuwait are very basic and do not have any transactional features. A marketing manager explains that people never buy products online that are available in Kuwait because they like to buy it directly from stores/outlets or showrooms rather than worry about deliveries (M, Indian, La Ruby). Similarly most luxury consumers shared similar views that they do not feel secure about carrying out transactions on the Internet. Also, shopping is convenient and a source of entertainment for most. The malls are the sacred havens for luxury consumers because they provide sanctuary from the harsh climatic conditions. Also, people do not appreciate sharing their personal details online. They are infophobic, which shall be discussed in a later section of this chapter. The Internet has a huge impact on the lives of the youth. It offers marketing opportunities for retailers but low ecommerce and CRM potential.
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5.3 Insights to luxury marketing in Kuwait 5.3.1 The use of traditional marketing methodologies in Kuwait It has been continuously observed that traditional marketing approaches are more prominent in Kuwait. Although luxury brands in Kuwait employ various traditional as well as few modern marketing practices like relationship marketing. It was also found that word of mouth was a very important feature of marketing in this small country. A marketing manager says Word spreads like wild fire in Kuwait; a small spark is enough to do the job, so advertisements and campaigns are less painstaking except during penetration periods (M, Kuwaiti, La Moda). Another says Marketing comes with the malls as well in Kuwait (M, Lebanese, Al Ruby). The location of the brands outlet/showroom/store r eally matters in Kuwait. The best malls attract the maximum number of shoppers, especially luxury consumers which helps in marketing automatically. Kuwaitis are the most valuable for luxury businesses. A luxury brands best collection of products can gener ally be found in the malls around the areas with high concentrations of rich Kuwaiti population or where Kuwaitis supposedly shop more. It was also noted that promotional offers and promotional gifts have a significant positive impact on the behaviors of luxury consumers in terms of marketing. Also it was noted that most of the luxury consumers looked for a good shopping experience in terms of hospitality, a feeling of self esteem, status complete shopping experience etc. It was noticed that all luxury retailers/brands employed traditional marketing methodologies such as the marketing mix and also relied on traditional marketing methods such as media channels like the magazines, television, word of mouth etc. Price is a major differentiator in this market and high prices help in increasing the perceived value of the goods and helps in facilitating word of mouth and marketing. Consumers in Kuwait are less vulnerable to prices especially in the top-end luxury market. 5.3.2 Customer service and digital marketing in Kuwait The rise in the use of the Internet and social networking websites has increased the potential for digital marketing. The Internet if exploited appropriately can prove to be a good marketing channel, especially in the lifestyle luxury goods which are targeted at the younger population who are also the main users of the Internet in Kuwait. Also it was found that most of the Kuwaiti lifestyle luxury consumers were happy with the customer service they received as they didnt care much about the post sale relationship or services.
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Expatriate interviewees who used lifestyle luxury goods complained about the bad customer service or situations where their complaints werent addressed as expected by them. Kuwaiti luxury customers have expectations but have adapted by lowering their expectations, since their choices are few when they are brand loyal. Luxury consumers were neither satisfied nor dissatisfied about the customer service they received, they are also less brand loyal. The main reason a lot of them shop when travelling to other countries is because of the availability of more options and the better shopping experience they receive in terms of treatment, esteem and status. The next section analyses the views of personnel and luxury consumers with respect to CRM in Kuwait. The researcher also investigates the impact of CRM by analyzing various factors like perceptions, business environment as well as the companies that have already implemented CRM systems. 5.3.3 CRM is not CRM in Kuwait Out of the five companies where research was carried out, all the companies have certain CRM strategies in place but specialized CRM systems are implemented at AJAC and KBC and is in the process of being implemented at Al-Tronix. At AJAC there were different CRM systems for each of its luxury car brands. At KBC the CRM systems were implemented only for a few of their brands. A marketing director at AJAC explained that the parent car brands/companies enforced CRM systems as a standard. They are the retailers for some of the top-end luxury car brands. He also explained about how the application was beneficial for them in their industry for managing the data of their customers for keeping in touch with the car owners regarding their cars maintenance, new product launches, customer inquiries, etc. For most of them CRM is just a data driven application that helps in engaging with customers and eases communication. He also pointed that the systems were aimed at retaining customers and increasing brand loyalty. Initially, the systems provided a positive impact on customer insight, retention, frequency and loyalty but with time they lost its effectiveness. The systems did not help much in providing consumer insight. With time, there was no significant positive impact on repeat purchase or customer loyalty. The customers themselves behave as an audience. Although the CRM systems improved customer experience but they did not fulfill customer expectations.
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The marketing executives at KBC explained about how CRM systems proved to be very expensive with low returns. CRM systems were implemented by few of the brand divisions at KBC. No significant increase in sales was noticed post-implementation by any of the brands. Their CRM systems failed to provide insights. Many marketing managers and executives pointed out that CRM is not being accepted by the Kuwaiti lifestyle luxury consumers because they are Info -phobic. It was also found that lifestyle luxury consumers did actually experience info-phobia and they do not appreciate providing personal details or getting contacted. This forces these retailers to choose a reactive approach. At Al-Tronix the marketing executives said that CRM was beginning to become vital in their industry and their products were luxury consumer electronics. This system would help them in providing insight and targeting customers effectively. He mentioned that although they arent expecting any significant increase in sales post-implementation, itll help them in data gathering and reducing costs. Customers in Kuwait choose to maintain a direct personal relationship with the sales staff or the store managers for communications and therefore the stores team works o n identifying and recognizing their frequent and loyal customers. The store manager for a very reputed American fashion brand under the management of KBC (M, Kuwaiti, KBC) said we have good specialized CRM systems in place and we have very high sales too, but then as per the CRM systems we have a very low customer base because none of the customers choose to get registered with us for communications or as part of our loyalty programs making the systems less useful. The managing director at La Ruby (M, Ind ian, La Ruby) says these systems are expensive to implement, they have high maintenance and training costs involved, they have minimal returns in our industry. Creating the perfect experience is vital, so our sales team is trained to understand the customers well and maintain direct personal relationships with them. These companies choose to use a more traditional approach to relationship marketing. In the lifestyle luxury retail sector CRM was important but they failed. It was found that there were other various factors that played an important role in retaining customers and enhancing their loyalty or selling them more such as hospitality, feeling of belongingness to a particular class of the society, style, brand image and popularity, place, price, promotions, the product itself and lack of competition that facilitated word of mouth and helped in increasing sales.
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5.4 Implementing CRM in Kuwait: problems and challenges for luxury retailers 5.4.1 Low data quality and insignificant insights CRM and data management personnel at most of the retailers mentioned about the scattered nature of the data. Retailers generally differentiate between Kuwaitis and non-Kuwaitis to differentiate between genuine buyers and potential buyers or onlookers because Kuwaitis obviously spend more. Kuwaitis are handled with care (F, Kuwaiti, La Moda). Consumers do not like to register themselves for any communications or loyalty schemes. CRM systems are like cattle without fodder especially in the lifestyle luxury market where people just shop out of boredom. Gathering data is easier for the top-end luxury segment but difficult for the lifestyle luxury retailers and the quality of the data gathered is of no significance to the lifestyle luxury retailers. Data gathered has no clarity of fixed patterns and it is dangerous to rely on this data. Retailers must adopt strategies to collect good quality of data. Since e-commerce is not used in Kuwait, gathering good quality customer data becomes even more difficult. Also, consumers in Kuwait dislike marketing communications via e-mails and sms from retailers. Also, it was found that continuous marketing communications from the brands made them look desperate and less valuable in the minds of the Kuwaiti consumers. E-mail marketing was found to have very little or no impact presently. Consumers seldom sign up for any enewsletters or marketing communications from the companies online. 5.4.2 Foreign vendors and consultants control the CRM industry Kuwait lacks local CRM vendors and consultants. Most projects are always won by foreign vendors. Kuwaiti firms are rich, but implementing CRM is very expensive because foreign vendors and consultants control this niche market. Seeking CRM expertise from these foreign vendors also becomes very expensive for luxury retailers in Kuwait. These consultants and vendors are not equipped with the right knowledge of the local market as well. Local vendors and consultants lack the expertise or are too weak to compete with foreign vendors or consultants. There is room for expert local vendors with unique local experiences and relationships.
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5.4.3 Wrong Perceptions of CRM in Kuwait The failures of CRM systems have manipulated the perception of CRM in Kuwait. It is merely perceived and used as a database application that facilitates communication. Just as people often make a mistake in perceiving that only advertising builds a brand, quite a large portion of people still think CRM means software or even a call center. So what are the natural results? The truth is no brand could be built successfully if you focus only on advertising, and no successful CRM can be done if you focus only on software or the call center (Lee, 2006). This perception is too strong to change any time soon. It can only be expected to change once the competition increases, economic liberalisation takes place and consumers become mature. 5.4.4 Customers in Kuwait are info-phobic and the lifestyle consumers show least interest towards relationship marketing Lifestyle luxury consumers in Kuwait are info -phobic. They are uncomfortable in providing any personal information unnecessarily to these retailers, making it even more difficult for lifestyle luxury retailers. Also, most of them thought it was simply irrelevant. Lifestyle consumers do not look forward to hearing from retailers and show very low level of interest in maintaining relationships with them. Consumers in the top-end luxury retail sector are different; they look forward to hearing from the retailers and showed a higher level of interest in their retailers maintaining a closer relationship with them. These consumers look forward to new products entering the markets and read less on the Internet. This segment is a low user of the Internet, so the best way to contact them is through direct mails or telephones. Telephones are more useful in facilitating CRM in Kuwait than the Internet. On an average every person in Kuwait has direct access to at least one cell phone (The World Bank, 2011). Comparatively the Internet users in Kuwait are much less when compared to the mobile phone users in Kuwait. 5.4.5 Conflict of interest between the luxury brands and the retailers There is a conflict of interest between the retailers and the luxury brands in Kuwait. The international brands aim at increasing the customers loyalty towards their brand and on the other hand the retailers aim at increasing the customers loyalty and frequency towards their company and any of their brands. The Kuwaiti retailers care less about customers moving to different brands as far as they are moving around the companys brands.
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The retailers care about selling more from any brands and the brands care about selling more of their own products. The retailers and the brands must work towards mutually beneficial common goals. CRM even becomes more difficult to implement in such a scenario where the top management of the company is least interested. 5.4.6 CRM in the Kuwaiti luxury market has not provided luxury retailers with any competitive advantage Identifying customer needs and fulfilling by building successful relationships individually is not enough to gain competitive advantage anymore. Luxury customers look for experience and expectation enhancement from brands and not mere delivery or service. People in Kuwait are very used to telephones or cell-phones for communication. The Internet as discussed has very low impact on facilitating CRM in Kuwait in the top-end luxury sector and a potential in the lifestyle market. Although the companies have spent tremendous amounts of money on planning and implementing CRM strategies, the CRM systems have failed to generate significant benefits or give the brands competitive advantage. Both the companies have implemented a number of CRM e-business suites but it has failed to increase customer frequency or loyalty. Luxury Marketing in Kuwait isnt about offering customers what they think they want, it is about offering them beyond what they expected or something they didnt expect. The competition in Kuwait is low. The existing luxury retailers started early and became very powerful. These retailers compete amongst themselves for becoming the brands official retailers in Kuwait. It is difficult for new entrants to compete with these large retail giants. Also, the consumption features suggests that consumers are less mature in Kuwait. Implementing sophisticated CRM systems in Kuwait will not provide any competitive advantage.
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5.5 The impact of CRM in the luxury retail sector of Kuwait It is clear that CRM is as important to businesses as water is to plants. Some plants live longer without water for years and many of them die but eventually the plant needs water. Although water isnt the only source of life for plants, it is essential. Kuwaiti business are realizing that they cannot go very long by ignoring CRM as this is beginning to have an impact. CRM currently has a low impact in the luxury retail sector of Kuwait but at the same time it is essential for maintaining the experience and expectations of the customers. 5.5.1 The failures The consumer behavior is still immature and the CRM systems have failed to gain the loyalty of the buyers. There are issues with data collection and consumers need more than CRM to increase their loyalty and frequency. These rich and dominant luxury brands and retailers in Kuwait need something way beyond CRM to tackle the issues with respect to acquiring customers, retaining them and enhancing their loyalty. The luxury consumers in Kuwait are rich, powerful and look for lifestyle enhancement. Luxury businesses in Kuwait can only gain competitive advantage when they use CRM as an important ingredient but not the recipe for success. Luxury businesses have to look beyond the paradigms of traditional marketing, relationship marketing and customer satisfaction. This paper does not criticize CRM but instead makes a point that in order to increase the loyalty of luxury consumers, a business cannot rely on satisfying their needs. These consumers are rich and well satisfied. If another brand or retailer offers them something that uplifts their lifestyle or enhances their experience or expectation, they will not care about their brand loyalty as far the brand is highly reputed. The CRM systems have helped in reducing costs but are failing in providing brands with any competitive advantage. It is failing to increase the brand loyalty, frequency amongst the customers and the profitability of the businesses. The link between CRM and income, loyalty, frequency and sales is decreasing and becoming less effective. This clearly says that consumers in the Kuwaiti luxury market cannot simply be tamed using CRM. ACRM aims to attract new customers and retain them it. In the Kuwaiti luxury market it is not helping in preventing the customers from being attracted by other brands or retailers. Most Consumers & retailers said that CRM does not enhance customer behavior significantly.
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5.5.2 The positive impacts Many interviewees agreed that CRM improves their perception towards the brand and its goodwill but disagreed that it does not facilitate loyalty necessarily. Luxury businesses need to think beyond CRM. CRM has uplifted the image of the luxury brands and the retailers. A CRM process should be effective and fastest to solve customers queries and provides them best services. Telephonic and sms based solutions are the best and effective to interact with the customer because it save time and cost and consumer can use CRM services at any place at any time. These factors have increased and now maintain the good will of the luxury brands and the retailers but not necessarily its sales and customer loyalty. 5.5.3 CRM cannot alone contribute to customer satisfaction and success Luxury brands for long have been built on building and maintaining strong relationships with their consumers. It does not give them the competitive edge over their competitors. CRM alone cannot help in marketing of the firm or facilitating word of mouth. One persons need may not necessar ily another persons need. Word of mouth in the luxury sector facilitates when businesses exceed consumer expectations, enhance consumer experience and esteem. Consumers are also ambassadors for brands and retailers. Firms cannot simply count on relationships marketing to facilitate word of mouth. The important point is that only a single factor cannot contribute in the success of firms. With high brand name, goodwill or quality of products, it is necessary to concentrate on all the determinants that shape the behaviors of consumer to become loyal and frequent. CRM aims to enhance experience through better customer interaction strategies.
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6.0 RECOMMENDATIONS AND IMPROVEMENT STRATEGIES

This chapter presents recommendations and improvement strategies for the luxury businesses operating in Kuwait with respect to increasing the impact of CRM, digital marketing and increasing customer loyalty and retention. These recommendations are realistic and valid for the luxury market of Kuwait. CRM might have its impact in the retail business but it does not have a significant impact on the customer behavior in the luxury. Although CRM might be essential to maintain certain standards of customer service and relations but its relationship with profitability, revenue, competitive advantage, customer loyalty etc. is very weak and insignificant. The Kuwaiti luxury market requires a different approach to enhance customer loyalty and frequency. Here the consumers look for experience enhancement not in terms of interactions but in-terms of deeper personal relationships, lifestyle upliftment and esteem enhancement. Competitive advantage here can be gained by enhancing the expectations of the customer from time to time. Their needs must be fulfilled in manners they never expected. If you ask the customers what they want, they would probably ask for faster horses. This chapter provides recommendations to resolve the issues with respect to CRM in the in an optimum way. 6.0.1 The particularity of the Kuwaiti luxury market indicates that international brands have potential advantages in marketing luxury goods in Kuwait. They do not have much competition from local luxury brands that lag behind in philosophy, brand development and marketing model. Although many international brands have their own designing and marketing system, they still face great obstacles when dealing with foreign customers. The Kuwaiti retail enterprises that represent these brands play an important role since they have developed in the local social and cultural environment that facilitates a better understanding of Kuwaiti consumers unique internal demand for luxury products. It is essential that they both work mutually towards their success. 6.0.2 Luxury firms in Kuwait must accurately orient luxury consumers according to their status. Kuwaiti luxury consumers can be divided into two categories. One group mainly consists of high-end consumers who have strong economic powers. The main purpose of their consumption is to fling their success and enhance their experience. Therefore the product design, high prices and distinctive logos should be emphasized when making sales to this group. The second group is mainly constituted by the young lifestyle consumers. They buy luxury products mainly because they want to keep abreast with consumption behavior of their
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social group. Besides, they also intend to display their fashionable life-style to the others. Therefore, it is essential to promote the idea that the luxury product symbolizes life style and social upliftment. Customers need to be given a feeling of being privileged for successful marketing. 6.0.3 The marketing of luxury products should highlight the value of the product. As has been mentioned above, the main purpose of Kuwaiti luxury consumers is to show their superiority in the social class. Therefore, companies should be able to launch marketing activities that can reflect social class, using prominent logos to fill their products with more symbolic value of wealth and to meet the psychological needs of luxury consumers. Companies should employ an effective marketing mix strategy and distinguish them from ordinary products. 6.0.4 During the marketing of luxury goods, the brands should be able to integrate cultural as well as western elements into the product design and branding, giving luxury products a unique significance. This is of great importance not only to enhance the brand value of luxury products, but also to better Kuwaiti consumers understanding of luxury products. 6.1 Essentials of Digital Marketing in Kuwait Internet can be a good advertising tool but it isnt great for CRM. Retailers generally do not have their own websites because they think it doesnt make sense for them. But brands must ensure that they create a perfect experience for Kuwait customers visiting their website and must direct Kuwaiti customers to their Kuwait page that should be managed by the brand along with the retailers. Websites can be promotional. But gathering customer data and information for CRM through the Internet is painstaking but possible, it just need a push. The ultimate goal is to get them to log-in and register at least. Top-end customers (seldom use the Internet) can be persuaded to register their products online but it is not so important because data collection is easier here. Lifestyle customers who are the mostly the regular Internet users can be motivated to register themselves by offering them special promotions which supposedly facilitates positive impact. This way more clear data can be gathered, customer profiling and monitoring customer behavior will become easier. Other web strategies could include using viral marketing campaigns and social media marketing to target the young lifestyle customers. When you do a promotion using social media, create and store campaign meta-data about that promotion, just as you would with a direct mail promotion. Save the date, time and details about the specific promotion and the
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targeted audience. Having done this, you can then start to analyze the effects of that promotion on store traffic and sales. Websites must be mostly promotional with minimal transactional features and should create a very high level online experience. 6.2
C3E: Customer Experience
and
Expectation Enhancement:
The recipe for
success Given the benefits and issues with CRM in the luxury retail sector of Kuwait the researcher suggests a strategy that does not simply aim at satisfying consumers through interactions. The businesses need to carry extensive study in order to determine the importance and significance of CRM in their industry before implementing it. Brands and retailers must together use strategies that aim to enhance the experience and expectations of their customers regularly. Simply working hard at the existing approaches even though they are excellent is not sufficient to create demand. Luxury retail requires continuous innovation in terms of customer expectations and experience enhancement. Product and service features are becoming easier to copy. Luxury businesses require an unrelenting focus on identifying and delivering additional, differentiating and enhanced value for customers. The retailers and the sales team capture the actual trends in real time. CRM implies using technology to enhance customer value, whereas technology should be used only where it adds customer value. This will also create a competitive behavior in the market and help businesses focus on securing competitive advantage. A luxury consumer will only be loyal to the brand and the retailer if it enhances his lifestyle, self-esteem, social image. After a point these consumers tend to get bored and look for a better experience, this is where C3E plays an important role. If the brands and retailers enhance the overall experience and expectations of customers regularly, this will help in customer acquisition and retention including enhanced loyalty and frequency. This way the brands and retailers will both work together to achieve competitive advantage. The success of a brand is also the success of its retailer in terms of sales. Either the name CRM should be changed in the luxury retail sector to avoid misinterpretation or CRM needs to be redefined, or broadened to encapsulate other marketing elements with special focus on experience and expectation enhancement. Traditional marketing might have its set of drawbacks and costs, but CRM cannot replace the benefits of traditional marketing.
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In the Kuwaiti luxury market both these paradigms go hand in hand. Both are essential for marketing. In the earlier chapter, the researcher provides a pyramid framework by Chu and Pike (Fig. 1.1) for CRM in the retail sector. The framework does not illustrate continuous improvement and assumes that competitive advantage has been achieved. This paper provides a framework as a recommendation for luxury retailers. The framework has been drawn upon the idea presented by Chu and Pike to broaden the concept and include various other factors. The paper also discusses the goal and benefits of C3E. C3E as a recipe requires luxury retailers to choose the ingredients carefully after a thorough assessment of the industry and their strategy.
Fig 5.1 C3E strategy framework Figure 6.1 presents the C3E framework as recommended by the researcher. The researcher believes that success in the luxury retail sector can be achieved my managing and enhancing customer expectations and experience. The illustration has been briefly explained below:
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C3E strategy: The researcher uses this name to avoid any misinterpretations and to emphasize on the need to enhance customer experience and expectations to create demand for the products. Identify and Understand Customer expectations: C3E requires businesses to identify and understand customer expectations. This can be done through effective customer interactions, sales team feedback, CRM, data integration, market research, surveys, analysis, Customer behavior patterns etc. It is important to understand what the customer desires not just in terms of products and services but in terms of overall experience and expectations. This phase includes closely studying the psychology and mentality of the consumers. Effective Customer Interactions and Marketing: Effective interactions are vital to understand the customer, enhance their experience, deliver their expectations, and inform them about the goods. CRM is essential here for two way interactions, but in Kuwait luxury customers demand deeper and personal relationships. Kuwait is a small country and maintaining direct relationships for high-end luxury brands is not so difficult. Branding, marketing, advertising, web, customer care, Point of sales service, Call centers, corporate communications, public relations etc are all essential in interacting with customers, marketing, enhancing and managing customer experience and expectations. Depending on the contingencies of their respected business environment, luxury retailers need to use the best ingredients. For e.g. sometimes technological CRM might look beneficial or only call centers may be beneficial and sometimes not. The main goal of C3E is to enhance customer satisfaction by surpassing and enhancing their overall expectations and experience from time to time and better than the competitors. It requires providing differentiating value for customers. This way luxury businesses can proactively avoid failures like missed customer expectations before they occur. Luxury customers are satisfied customers by all means, what they need is enhanced satisfaction and brands that are able to enhance their lifestyle, esteem, social status and surpass redefine their expectations and experience. C3E will help in generating and increasing a high degree of customer value, customer loyalty, frequency, retention, organisations reputation and goodwill. This way the organisations can increase their market share by increasing their customer base and increase the profit per customer by extending the customer-life cycle duration. C3E needs to be the governing paradigm for customer-facing processes.
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7.0 CONCLUSION
This chapter provides a conclusion to the entire research work by highlighting the important observations and thematic findings. This chapter aims to establish the relation between the findings and the research questions. Additionally, this chapter provides a section that highlights the recommendations briefly as well as the future research opportunities. 7.1 Assessment of findings It is a highly accepted fact that organisational success lies in remaining customer focused. Unfortunately, many companies do this the wrong way by asking customers what they think they want. Consumers describe their want in terms of products and services based on their own experience from the products and services of the company. Companies develop complex systems to meet their requirements and measure customer value. Meanwhile the competitors are beating them at their own game. Customer behavior in Kuwait is immature. Luxury products are very important to Kuwaiti consumers. Customers care about experience enhancement in terms of self-esteem, social status, lifestyle, customer service and how the product or service has made their life easier and better. Primarily Customers are brand, price, promotion, image and lifestyle conscious. Customer service and quality are important but secondary factors. Customers in Kuwait look for lifestyle enhancement and ways to flaunt their success. Although traditional cultural values are deep rooted the western culture has a remarkable influence on the Kuwaiti mentality. The paper has differentiated between the needs, wants and luxuries in the findings. The luxury market has been divided into two: The lifestyle luxury and the top-end luxury. Luxuries are an important part of the Kuwait lifestyle. The top-end luxury market consists of the richest and highest in the social status. This group is relatively older. The lifestyle market targets the younger internet using generation, also the highest contributors in this industry. They depend on cheap credit facilities or personal wealth. They mainly focus on the brands perception, price and lifestyle enhancement. In a small but highly profitable luxury market like Kuwait CRM is not very effective in terms of giving organisations any form of competitive advantage. It only shows a weak impact on consumer behavior. CRM is not a fancy contact management or communication tool. It should help the entire is organisation complex,
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In a market like Kuwait where customer perceptions, needs, buying power, mentality are unique and the markets are less liberalized, competitive, customers are info-phobic and ecommerce is not developed at all. Shopping is highly about experience, it becomes even more difficult to implement CRM. CRM implementation in the luxury market of Kuwait has shown few positive signs like helping the brands in knowing their customers and to meet their minimum expectations, but they arent enough for overall success of organisations and to enhance customer value. Managing customers in Kuwait is much more about deeper and personal relationships. Writing down details of customers when businesses are capable of knowing them directly in many situations does not make sense. Luxury businesses require more than CRM to include various other factors that enhance customer retention loyalty, and frequency. Luxury customers in Kuwait are disloyal because they look for brands and products that enhance their experience and their expectation. CRM alone cannot be of much significance in such a scenario clearly. Success for Kuwaiti luxury businesses in terms of customer loyalty, frequency, retention, profitability and competitive advantage revolves around gauging, identifying, maintaining and enhancing customer expectations, leading to superior customer satisfaction. CRM plays an important role in gauging and identifying customer requirements but these requirements and expectations are in terms of products and services. There are various other factors in the luxury retail that are important. Expectations are based on hidden needs, goodwill, perceptions about the company. CRM is important for businesses to maintain their relationships but it does not significantly, directly or solely help in customer retention, satisfaction, loyalty, competitive advantage in the luxury market of Kuwait. Companies need to identify the various variables that enhance their expectations and experience by carrying out sophisticated research to understand customers rather than relying on CRM.
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7.2 Authentication: Relation of Research Findings with Objectives This section tries to determine the extent to which this study has been able to resolve the research problem by trying to link the analysis and findings with the research aims and objectives. 7.2.1 To critically evaluate the important features of the Kuwaiti luxury market, its distinctive features and consumer behavior In the second chapter of this paper the researcher tries to provide a brief but concise overview of the Kuwaits business environment using the PESTEL framework. Additionally the fifth chapter (findings & analysis) sheds light on the distinctive features of the market and the consumer mentality, behavior in Kuwait. To achieve this objective, the researcher relied on personal knowledge, experience (The researcher was born and bought up in Kuwait) and reliable sources such as journal articles, web articles, governmental websites and databases. Further the thematic analysis of the in-depth interviews highlighted significant features of the Kuwait luxury market and the consumer behavior. The Kuwait luxury market is sophisticated with distinctive business & consumption features. Consumer behavior is immature and there are various complex factors that influence consumer behavior. 7.2.2 To investigate literature, theoretical models and frameworks related to retail CRM and its relevance for luxury businesses in Kuwait In the first chapter the researcher provides a brief section describing the theoretical motivations for this paper, the second chapter discusses the literature, theoretical models and various frameworks of CRM. In the sixth and seventh chapter the researcher analysis and highlights its relevance for luxury businesses in Kuwait. Although the seventh chapter mainly provides recommendations it does highlight a few points about the relevance of certain CRM frameworks. In this market many of the discussed CRM theories and frameworks were less relevant alone. The market is not liberalized; the market is controlled by the few retailers, and consumption features are very different and sophisticated.
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7.2.3 To evaluate the awareness, presence, perceptions and actual implementation of CRM in Kuwait The accomplishment of this objective is well prompted through the qualitative thematic analysis. The interviews conducted with managers and customers are responsible for the accomplishment of this objective. The thematic analysis has highlighted the awareness, presence, perceptions as well as the actual implementation of CRM in the luxury organisations of Kuwait. The analysis also included evaluating the perceptions of consumers towards CRM and its approaches to study the impact of CRM. CRM systems have been implemented in two luxury organisations out of the five where interviews were conducted, although the theoretical ideologies are present in almost all of them. CRM is perceived incorrectly in most cases. Consumers experience info-phobia and it is difficult to gather high quality data. CRM has a weak influence on this market. 7.2.4 Evaluate the marketing and CRM strategies of a few successful luxury retail organizations in Kuwait The paper in chapter six talks about the marketing methodologies and CRM approach of a few luxury firms in Kuwait. Consumers in Kuwait also react significantly to certain traditional marketing approaches and the businesses relied on traditional methods for marketing. Word of mouth and the marketing mix have a huge impact on product marketing in Kuwait. CRM is not CRM in Kuwait- The lack of impact and wrong perceptions has simply made CRM nothing less than a contact management or communication tool. 7.2.5 To critically evaluate the significance or impact of customer relationship marketing on consumer behavior, profitability and competitive advantage in the Kuwaiti luxury retail market, its assets and liabilities In order to achieve this objective, the researcher has evaluated various determinants and factors such as perceptions towards different marketing methods, satisfying factors, values, family background, income levels etc. to understand consumer behavior. Data was also collected from organisations to study the impact of CRM on consumer behavior and the organisations sale and profitability. The competition is low; consumers are complex, disloyal and require luxury products to fulfill various psychological needs. The impact of CRM on consumer behavior & organisational success in the Kuwaiti luxury market is weak.
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7.3 Recommendations The Paper has recommended various strategies that Kuwaiti luxury retailers can employ to successfully market themselves and gather clean data to facilitate CRM & C3E. The important recommendations made include the following: 7.3.1 The main purpose of Kuwaiti luxury consumers is to show their superiority in the social class and display their lifestyle. Therefore, companies should be able to launch marketing activities that can reflect social class, using prominent logos to fill their products with more symbolic value of wealth and to meet the psychological needs of luxury consumers. The Companies should also be able to employ an effective marketing mix strategy. 7.3.2 Brands should be able to integrate western and cultural elements in the products design and marketing to enhance customers understanding about the products. 7.3.3 Digital marketing in the lifestyle luxury sector such as promotional well designed websites, marketing using social media websites, viral campaigning can all prove to be important marketing tools if exploited effectively. Customers should be able to avail special discounts if they register themselves on the companys website. This will help in collecting data and reach out to the respective audience. 7.3.4 Retailers and brands have to go beyond the CRM paradigm in the luxury market. CRM tell them what the customers expect in terms of products and services. The paper recommends a strategy that aims to enhance customer satisfaction levels by enhancing their expectations and overall experience. The customer experience and expectation enhancement model (C3E) aims to help in continuously delivering beyond what the consumers have experienced and expected before, not just in terms of products or services but also by paying close attention to various other hidden factors such as the brand image, lifestyle enhancement, esteem enhancement, the marketing mix, sales team feedback, psychological factors etc.
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7.4 Further Research Direction This research has comprised several important aspects that are associated with the importance and impact of CRM in the luxury retail sector of Kuwait to influence buying behavior of customers. Due to some limitations of this study various other issues have aroused. These issues provide the scope for further research to reduce the impact of these limitations. There are many hidden factors like the smell, high waiting time, communication, perceptions etc. that have a psychological influences on consumer behavior. It is essential for luxury companies to consider all these factors which provide scope for further investigation. Also, the effectiveness and applicability of C3E and the other recommendations made provide scope for further research. Further research can be carried out on the effectiveness of CRM in other luxury markets.
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8.0 REFLECTIVE LEARNING

The entire research work provided the researcher with various learning opportunities and benefits. During the entire process the researcher also faced a number of challenges. This chapter gives a personal account on the important challenges encountered and how the researcher overcame these. It also gives an account of the knowledge and skills that the researcher has acquired during the entire research work. 8.1 Reflective Journal This research work has helped me in the different spheres of my life. I have not only benefitted as a student but also developed as a person and as a professional. The process of gathering data and conducting interviews has developed my interpersonal skill sets and also my ability to create and maintain good personal and professional relationships with people. I have gained the ability to better manage time and other scarce resources. Managing time was challenging but not impossible. It all requires sheer will and dedication. I have learnt that the construction of an appropriate time frame is very essential for a projects success. I was able to complete my research work on time because of the carefully planned time frame. During the research I studied CRM, marketing techniques and consumer behavior quite extensively which has significantly helped me broaden my understanding towards these topics and issues associated with each one of them. I also understood various frameworks to gauge customer satisfaction. More importantly I studied CRM practices of many different retail organisations in the western countries and its importance in particular markets such as the retail market. CRM is more successful in the western retail markets because these markets are typically characterized by very high competition, liberal markets and mature consumption patterns. Defining and choosing a good research methodology can be a difficult and complicated. It requires strict understanding and careful assessment of various factors like studying previous research works, assessing the value of the outcomes, understanding various research methodology and philosophies, studying their assets and liabilities etc. With the help of various books, research articles and guidance of my supervisor I was able to develop an appropriate research strategy. Understanding a research methodology also includes exploring, carefully understanding and assessing various methods of collecting and analyzing the data and choosing the method(s) most suitable and ideal for the research work. This research work
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has broadened my understanding regarding the importance of choosing an appropriate method of collecting and analyzing data to complete a research. The thematic approach chosen for this research work has significantly contributed in developing my analytical skills. I also followed certain ethical guidelines and this helped me in understanding the ethical approach to conducting research. With the help of this research, I learned about how to conduct professional interviews and its importance in collecting data to complete research. For this research, I have conducted semi structured interviews with managers as well as luxury consumers. This has developed my communication and adaptability skills. It is because I had managed the respondents according to the topic of my study. I also learned extensively about the thematic framework, which I used to find and analyze data. I also widely learned about identifying codes, themes, patterns and evidence in order to produce a valid, clear and scrupulous report. Throughout the process I learned to observe and understand the various factors influencing customer behavior such as cultural, economical, social, competitive, geographical etc. The Luxury market demands organizations to carefully outline their marketing strategies. CRM alone will not suffice to create demand and achieve competitive advantage. It is therefore essential that companies establish appropriate strategies keeping in mind all these factors. Also throughout the entire research I learned a lot about the Kuwaiti market including the consumer mentality and the Kuwaiti way of doing business. Technology is important in modern times but technology should be only applied where required. Sometimes technology can prove to be insignificant and highly expensive as well. The research also enlightened me about different concepts and motivated me to go beyond what was expected from this research paper. I was nervous while preparing the recommendation chapter based on the literature review, the findings and analysis. At the same time I was excited. With time my excitement grew and I started feeling more confident about my recommendations. I continuously read and re-read my transcripts and the thematic analysis. With the help of suggestions from the interviewees and my analysis I was able to provide some recommendations and develop a theory that I feel can be a good model for creating demand, gaining customer loyalty, facilitating word of mouth, increasing customer frequency, retaining customers, increasing the profitability and the competitive advantage of luxury organisations in Kuwait. In the future I would like to conduct research on the applicability of the C3E model on other luxury markets.
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Writing a conclusion to a paper sounds easy but it can sometimes be a difficult task. You need to sum up your entire research right from the introduction to the data analysis and the recommendations in very few and limited number of words. It also included me to learn how to authenticate the work by linking the findings and analysis with the research objectives In all when I started this work I told myself How am I going to do this? Although it was highly challenging but things worked out well. All it needs is some motivation and passion. My advisor told me if this works out well, I could probably publish my wo rk. I really dont know if thats even going to be possible, but it motivated me to give it my best shot.
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9.0 REFERENCES
Al-Alawi, A. (2004). Customer Relationship in the Kingdom of Bahrain. Issues in Information Systems , 380-386. Amit, R., & Schoemaker, P. (1993). Strategic organizations and organizational rents. Strategic Management Journal , 33-46. Barney, J. (1991). Firm Resources and sustained competitive advantage. Journal of Management , 99-120. Baxter, P., & Jack, S. (2008). Qualitative Case Study Methodology: Study Design and Implementation for Novice Researchers. Ontario: The Qualitative Report. BBC. (2011, March). Kuwait Country Profile. Retrieved August 1, 2011, from BBC News Website: http://news.bbc.co.uk/2/hi/middle_east/country_profiles/791053.stm#overview Bitner, M. J. (1990). Evaluating service encounters: The effect of physical surroundings and employee responses. Journal of Marketing , 69-82. Bloemer, J. M., & Poiesz, T. B. (1989). The illusion of customer satisfaction. . Journal of Customer Satisfaction, Dissatisfaction and Complaining Behavior , 43-48. Bolton, R. N. (1995). Linking customer satisfaction to the duration of customer-provider relationships and to revenues. Unpublished Working Paper . Boston Consulting Group. (2011). Shaping a New Tomorrow: How to Capitalize on the Momentum of Change (Eleventh annual Global Wealth report). New York: Boston Consulting Group. Braun, V., & Victoria, C. (2006). Using thematic analysis in psychology. Qualitative Research in Psychology , 77-101. Cataldo, G. (2006). A new way to understand marketing the CRM. Szczecin University Publisher. Christopher, M., Payne, A., & Ballantyne, D. (1991). Relationship Marketing. London: Heinemann.
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Chu, J., & Pike, T. (2002). Bringing the Customer Experience full circle. IBM Institute for Business Value. Chu, J., & Pike, T. (2002). What top-performing retailers know about satisfying customers: Experience is key. New York: IBM Institute for Business Value. CIA. (2011). The World Factbook. Retrieved August 1, 2011, from Central Intellegence Agency Website: https://www.cia.gov/library/publications/the-worldfactbook/geos/ku.html#top Constantinides, E. (2002). The 4S Web-Marketing Mix model. Electronic Commerce Research and Applications , 57-76. Constantinides, E., & Geurts, P. (2005). The impact of web experience on Virtual Buying Behaviour: An empirical study. Journal of Customer Behaviour , 307-336. Dubois, B., Gilles, L., & Sandor, C. (2010). CONSUMER RAPPORT TO LUXURY ANALYZING COMPLEX AND AMBIVALENT ATTITUDES. Retrieved 2011, from HEC School of Management: http://www.hec.edu/var/fre/storage/original/application/5ecca063454eb4ef8227d08506a8673 b.pdf Fabre, C. (2011). Luxury Goods: Worldwide Market study: Sprong 2011 Update. Milan: Bain & Company. Fornell, C. (1992). A national customer satisfaction barometer: The Swedish experience. Journal of Marketing , 6-21. Fornell, C., Johnson, M. D., Anderson, E. W., Cha, J., & Bryant, B. E. (1996). The American customer satisfaction index: Nature, purpose and ndings. Journal of Marketing , 7-18. Ghavami, A., & Olyaei, A. (2006). The impact of CRM on customer retention. Sweden: Lulea University of Technology. Gierl, H. (1993). Zufriedene Kunden als Markenwechsler (Satised customer as brand switchesr). Absatzwirtschaft , 90-94.
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Gilbert, D., & Powell-Perry, J. (2000). A current overview of Web based marketing within the hotel industry. Tourism in Southeast Asia and Indo-China Forth International Conference. Changmai. Grnroos, C. (1994). From marketing mix to relationship marketing: Towards a paradigm shift in marketing. Management Decision , 4-20. Icon Group International Inc. (2000). Marketing & distribution in Kuwait. Kuwait Economic Studies , 52. Retrieved from Ebscohost. Internet World Stats. (2010). Internet usage and population statistics of Kuwait. Retrieved August 2011, from INTERNET WORLD STATS: Usage and population statsitics: http://www.internetworldstats.com/me/kw.htm Khanna, S. (2001). Measuring the CRM ROI: show them benefits. Retrieved November 2011, from CRM Forum: crm-forum.com Klee, A., & Thurau, T. H. (1997). The Impact of Customer Satisfaction & Relationship Quality on Customer Retention: A critical Reassessment and Model Development. Journal of Psychology & Marketing , 737-764. Kordick, J. (1988). Doing well by doing good. Internal documentation of the Ford Motor Company of a presentation . Detroit: Automotive News World Congress. Kotler, P. (2004). Marketing management. Analysis, planning, implementation, and control. Englewood Cliffs, New Jersey: Prentice-Hall. Kutner, S., & Cripps, J. (1997). Managing the customer portfolio of healthcare enterprises. The Healthcare forum Journal 4(5) , 52-54. Kvale, S. (1996). Interviews An Introduction to Qualitative Research Interviewing. Sage Publications. LaBarbera, P., & Mazursky, D. (1983). A longitudinal assessment of consumer satisfaction/dissatisfaction: The dynamic aspect of the cognitive process. Journal of Marketing Research , 393-404. Lee, S. (2006, January 1). CRM Is Not CRM in China: Five Challenges for the Industry in 2006 and Beyond. Retrieved August 2011, from CRMGURU:
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http://crmguru.custhelp.com/app/answers/detail/a_id/1658/~/crm-is-not-crm-in-china%3Afive-challenges-for-the-industry-in-2006-and-beyond Lee-Kelley, L., Gilbert, D., & Mannicom, R. (2003). How E-CRM can enhance customer loyalty. Marketing Intelligence & Planning , 239-248. Levitt, T. (1990). Thinking about Management. New York: Free Press. McKenna, R. (1991, January-February). Marketing Is Everything. Harvard Business Review . McNamara, C. (1999). General Guidelines for Conducting Interviews. Minnesota. Miles, M., & Huberman, M. (1994). Qualitative Data Analysis: an expanded sourcebook. London: Beverley Hills. Morrow, S., & Smith, M. (2000). Qualitative research methods in counseling psychology. New York: Wiley. Naumann, E. &. (1995). Customer satisfaction measurement and management. Cincinnati: Thompson. Newman, J. W. (1973). Multivariate analysis of brand loyalty for major household appliances. Journal of Marketing , 404-409. Oliver, R. L., & & Swan, J. E. (1989). Consumer perceptions of interpersonal equity and satisfaction in transactions: A eld survey approach. Journal of Marketing , 21-35. Payne, A. (2009). Handbook of CRM: Achieving Excellence in Customer Management. Oxford: Butterworth-Heinemann. Peppers & Rogers Group & Microsoft Great Plains. (2001). A CRM Blueprint: Maximising ROI from your Customer-Based Strategy. Insight Report. Perkins, D. (1991). A consumer satisfaction, dissatisfaction and complaining behavior bibliography. Journal of Satisfaction, Dissatisfaction and Complaining Behavior , 194-228. Prahalad, C., & Hamel, G. (1994). Competing for the future. New York: Harvard Business School Press. Prahalad, C., & Hamel, G. (1990). The Core Competence of the Corporation. Harvard Business Review .
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Quartapelle, A. Q. (1994). Customer Satisfaction. Berlin : Springer. Reichheld, F., & Sasser, W. (1990). Zero defects: quality comes to services. Harvard Business Review , 105-111. Riessman, C. (1993). Narrative Analysis (Qualitative Research Methods). Sage Publications. Rust, R., & Zahorik, A. J. (1993). Customer satisfaction, customer retention, and market share. Journal of Retailing , 193-215. Samanta, I. (2010). The Impact of e-Customer Relationship Marketing in Hotel Industry. Berlin: Springer. Sheth, J. N. (1994). Relationship marketing: Theory,. Atlanta: Emory University. Smith, P., & Chaffey, D. (2001). E-Marketing eXcellence: at the heart of eBusiness. Oxford: Butterworth . The World Bank. (2011). Mobile Cellular Subscriptions. Retrieved August 2011, from The World Bank Web site: www.worldbak.org U.S. Department of State. (2011, March). Background Note: Kuwait. Retrieved August 2, 2011, from US Department of State Website: http://www.state.gov/r/pa/ei/bgn/35876.htm Wheeler, D. (2003). The Internet and Youth Subculture in Kuwait. Journal of ComputerMediated Communication . Wilkie, W. (1991). Consumer behavior (2nd ed.). New York: Wiley. Wong, N. Y., & Ahuvia, A. C. (1998). Personal taste and family face: Luxury consumption in Confucian and Western societies. Journal of Psychology & Marketing , 423-441. Woodruff, R. B. (1993). Developing and applying consumer satisfaction knowledge: : Implications for future research. Journal of Consumer Satisfaction, Dissatisfaction and Complaining Behavior , 1-11. Zineldin, M. (2000). Beyond Relationship Marketing: Technologicalship Marketing. Marketing. Sweden: MCB UP LTD.
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EXHIBITS
Exhibit A: Interview Questions for the Executives at the luxury retail organisations. (Questions asked might differ from organisation to organisation but all these questions form a skeleton for the interviews. Not every member from the same organisation was asked the same questions necessarily. Follow up questions were asked almost all the times)
1) Can you please give me a brief overview about your organisation? How luxurious are your products perceived by your customers? 2) What are the general marketing trends and business conditions in Kuwait? How is it different from the past? 3) What are the changes in the trends in the luxury retail sector over the years? What do you think about these changes? 4) What do you think about Customer Loyalty in Kuwait and who has more influence- the customers or the businesses? Why? 5) What type of customers are the most valuable to your organisation in terms of demographics. Why? 6) How are luxury goods perceived by the people in Kuwait? How do they define it? 7) Are customers very brand oriented when it comes to luxury goods? Why? 8) Do people have very high expectations from luxury businesses in terms of service? Are they very particular about things? If no, why not? If yes, what do they generally expect apart from the delivery of the product? 9) How important is it for your firm to nurture and manage Customer Relationships and know more about your customers personally, in order to satisfy their preferences individually and successfully. a. If NOT MUCH: Why is it not so significant? Does it have anything to do with the culture, beliefs, faith, values or past experiences? Do you have any plans to employ any CRM methods? If yes, Why? If no, why not?
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b. If YES: How does your organisation manage relationships with customers? How have you developed on it or how do you plan to develop it in the future. If you dont, why, so?
10) What kind of Marketing is prevalent and works best in the luxury retail sector in Kuwait and why? 11) A number of Luxury businesses in the West have realized the importance of building relationships with their customers and employed high end sophisticated ERP/CRM systems, which have proven to be really successful. How do you market your products to the right Customers? Do you choose to manage relationships or do you choose to have a single time sales focus? Why? 12) What are the distinctive features of the luxury retail sector in the Middle East and/or Kuwait? 13) The luxury market in Kuwait has seen significant growth in the past few years and is expected to grow significantly this year. With transactional marketing still used widely. What do you think is the main reason for this growth? 14) What is the general attitude and trend amongst the Luxury customers in Kuwait? Does their faith, beliefs, values, cultures or any other factor have anything to do with their attitude and perceptions? 15) What do you think of loyalty schemes, club cards, and memberships as a method of CRM and to manage customer database more effectively? 16) Which of these words would you use best to describe CRM, a) Cost, b) Data Driven Marketing, c) E-mail & SMS Marketing, d) Sustainable and long term cost effective Marketing, e) a way to engage with customers. Why? 17) Is there anything else you would like me to take a note of with respect to the area of research.-
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Exhibit B: Qualitative Interview Questions for Customers/Users of luxury products in Kuwait. (Questions asked might differ from person to person but these questions form a skeleton for the interviews. Not every interviewee was asked the same questions necessarily. Follow up questions were asked almost all the times) 1) How do differentiate and perceive luxury products than other products. How important are luxury products in your life. If less, why? 2) Why are luxury goods important to you? Is it the quality, the brand orientation? 3) Do luxury products give you a feeling of eliteness, self esteem? Or are they simply a necessity to be to be a part of a particular class of people or society or just a hobby of collecting/using expensive things. 4) What influences your buying decision the most, Value for money, brand, or certain valuable added services. 5) What age range do you fit in? below 20, 21-25, 26-30, 31-35, 36-40, 41-45, 46-50 Above 50. What is your average annual family income range? Are you a local of Kuwait or an expatriate? 6) What generally motivates you the most to choose a particular luxury product in terms of marketing of the goods. 7) Do you look forward to new products entering the market? And how do you keep yourself informed about it or how are you informed about it? 8) Do you expect retailers to keep in touch with you about your last sale & new products that you would like? If yes, how? If no, Why not? 9) Do you expect the retailer to maintain a more close and personal relationship with you and understand your needs in much better ways? If no, why not? 10) How do you keep yourself updated about new luxury products of your interest. 11) Do Marketing E-mails and sms annoy you? 12) Are you a member of any luxury organisation club, or a loyalty card holder of any particular retail company?
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13) Do you value your luxury belongings very much? If not, why? 14) How much has Kuwait changed over the last few years? And what are the changes in the business and markets? What about the growth in the no. of malls. Why do you think this is happening? 15) The western culture has a very strong influence on the lives of people in the Middle East. Does western culture have a strong influence on you? If yes, Why? 16) How often do you get contacted by your luxury product retailers? 17) Have there been any instances where youve not been happy about the product or service from the retailer and your complaint wasnt addressed properly. 18) On an average how would you rate the customer service of Luxury organisations from 1 to 10 in Kuwait. 1 being very low and 10 being very high. Is it better than any other country you have shopped from? 19) Are you satisfied with the relationship you share with your luxury good seller or company? Can you rate it on a scale from 1 to 10, where 1 being very low and 10 being very high. Is it better than any other country you have been to? Why?
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MASTERS THESIS

Master of Business Administration Program

September 12, 2011

Abdul Latif Sultan

research data and

between CRM and eCRM.

3.0 LITERATURE REVIEW

Incentivized online questionnaire

Customized online questionnaire

Data Integration & Analysis

Customer Experience Overarching goal is to create unique, strong customer experience

4.0 RESEARCH METHODOLOGY

5.0 DATA ANALYSIS, FINDINGS AND DISCUSSIONS

Fig. 5.1 differentiating between needs wants and luxuries in Kuwait

6.0 RECOMMENDATIONS AND IMPROVEMENT STRATEGIES

C3E: Customer Experience

The recipe for

8.0 REFLECTIVE LEARNING

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