History of CRM • Enhancing Existing Relationships

– You enhance the relationship by

B&S – Buying & Selling
Late 80’s RM – Relationship Marketing
Early 90’s CIMS – Customer Information Management
Systems
Mid 90s CRM – Customer Relationship Management
2002- Future e-CRM- A subset of CRM that focuses on
enabling customer interactions via e-channels (The web,
email and wireless)
encouraging excellence in cross-selling
and up-selling, thereby deepening and
broadening the relationship.
• Retaining Customer Relationships
– Retention focuses on service
adaptability – delivering not what the
market wants but what customers
want.

Customer relationship management- “is a business Steps to improve CRM

strategy with outcomes
– that optimize profitability, revenue and
customer satisfaction
– by organizing around customer
segments,
– fostering customer-satisfying
behaviors and
– Implementing customer-centric
processes.”
• “is a strategy
– used to learn more about customers'
needs and behaviors
– In order to develop stronger
relationships with them.”
Underpinning Theory
• Customers have many points of contact with an
organisation
• Retaining customers is far most cost effective
than recruiting new ones
• Some customers are more profitable than others
– The “80/20” rule
– For most firms, 80 percent of profit
comes from 20 percent of customers
• Use of Technology
1. Build a database
2. Analyze, define types, profitability
3. Customer selection
4. Activities to delight selected customers
- discourage others
5. Analyze again to see how we’re doing
What should be in the database?
• Demographics
• History of contacts
• Transaction history or summary
• Response to marketing communications
Behavioral Patterns
• Behavioral patterns
• Consumption channel
• Benefit segments
• Degree of loyalty
• Permission
Analytically Derived Segments
• Analytically derived
• On-line analytical processing (OLAP)
• Customer lifetime value
• Intangible benefits

Potential Benefits of CRM Customer types

• Customer retention • Platinum Heavy- reliable users, not price-
• Share of customer or share of wallet sensitive, try new products, loyal
• Cross-selling • Gold Large users- who push for price breaks,
• Up-selling shop around and not so loyal
• Iron Low volume or intermittent users- cost to
Potential Costs of CRM serve them is quite high
• IT infrastructure • Lead Demanding- want special attention but
• Process change don’t buy much and show no loyalty

Benefits of CRM For Customers Advantage of CRM

• Continuity • While company is quickly growing, customers
• A contact point are more satisfied as well
• Personalization • Service provided in a better way, and a quicker
way
Three phases of CRM • Sales force automated
• Acquiring New Relationships • Integrated customer information
– You acquire new customers by • Certain processes eliminated
promoting your company’s product • Operation cost cut, and time efficient
and service leadership. • Brand names more quickly established
 • A central database so that everyone in your
company can keep track of customer contacts
• Sales and marketing teams can benefit from
having all this inside knowledge about customers
• Lets you set up rules for distributing work
throughout your company
• Lets you pick and choose the functionality that
you want
Disadvantage of CRM
-Organizational wise change of priority to customers.
-Significant investment of time and money
-Threatens management’s control/power struggle
-Heightens people’s resistance to change
-Inappropriate integration leads to disaster
1. Benjamin Franklin- First to establish an
insurance cooperative in the 18th century
2. Robert Owen- The father of cooperation.
3. Rochdale Equitable Pioneer Society- Founded by
28 workers in England during 1843.
4. Friedrich Wilhelm Raiffeisen- Initiated the first
cooperative lending bank or credit cooperative.
5. 7,290,848- Total number of cooperative
members in the Philippines based on 2011.
6. Dr. Jose Rizal- Organized the agricultural
marketing cooperative in 1896
7. Cooperative Marketing Law- This gave the
Bureau of Commerce and Industry the
responsibility of organizing farmers into
marketing cooperative
Cooperative- is an autonomous association of persons
united voluntarily to meet their common economic, social
and cultural needs and aspirations through a jointly owned
and democratically controlled enterprise.
CRM- is a business strategy with outcomes that optimize
profitability, revenue and customer satisfaction by
organizing around customer segments, fostering
customer-satisfying behaviors and implementing
customer-centric processes.
Reality check- an occasion that causes you to consider the
facts about a situation and not your opinions, ideals, or
beliefs.
Economies of scale- When more unit of goods or a service
can be produced with fewer costs.
Up sell- It means you offer your customers a deluxe, more
expensive, complimentary just before your customer will
order.
Back-end- Means it is a product that you sell to customers
after the initial sale.
Types of Cooperative marketing:
Direct mail co-ops- They allow businesses to share the
cost of letter design, printing and bulk mail pricing.
Print advertising co-ops – It can be used for advertising in
magazines and newspapers.
Door Hanger co-ops – it is a direct form of advertising
placed on consumer’s doors.
Online advertising co-ops – It can be used to spread out
the cost of advertising on large and popular sites.
Advantages of Cooperative Marketing:
1. Purchasing power – It is by pooling resources at
purchasing time, the cooperative can receive
volume discounts. Suppliers are in a better
position to offer discounts if they can counter
the lower profit margin with higher sales.
2. Sharing pricing with competition – You and your
competitors share the same pricing and
products. You don’t have an edge over your
competitor if you join the same cooperative
together.
3. Marketing power – You share a marketing
budget that is attractive to advertising sellers.
This can get reduced rates and exposure to
larger advertising outlets than having your own.
4. Generic marketing - a market consisting of
buyers with similar needs that are satisfied by
sellers in many different ways.
Importance of Marketing:
Cooperative Marketing society – basically a trading firm.
All the members sell their products through the society.
1. Proper reward of production – Bargaining
power of the society is greater than the single
farmer.
2. Storage facility – it will provide the facility of
storage to its members.
No middlemen – the farmer will save himself from the
middlemen so the income of the farmer will increase and
his economic condition will improve.
4. Elimination of speculation – it eliminates the
speculation and wastage of products.
Problems of Co-operative marketing:
1. Lack of Finance – The member of the society
advances the money to the society to increase
the volume of business. The co-operative society
does have adequate resources to meet this
requirement.
2. Small Scale – the cooperative marketing society
operates on a small scale, because the volume is
small, it cannot meet the needs of the members.
3. Ineffective Administration – The qualified
managers cannot be employed by the society
and the performance of the administration
remains poor.
4. Delay in marketing decision – It would take some time
to call a meeting and consulting the members.
5. Lack of Storage and Transport facilities
6. Poor performance of shops – they do not pay the
money to the farmers on time.
7. No co-operation
 Solutions to the problem:
1. Credit Facility – In order to increase the volume
of the society, the government should provide
the finance facility to the society.
2. Services of qualified people - The co-operative
marketing society should hire the services of
managers to improve the performance of the
society.
3. Transport Facility – the government should
provide transport facilities like roads to link the
rural areas with
4. 4. Spirit of co-operation – The co-operative
marketing society should increase the spirit of
cooperation among them.
5. 5. Standardization – the cooperative societies
should pay special attention to the grading and
standardization of the crops.
6. 6. Improvement in storage facility – the
cooperative marketing society should provide
maximum storage facilities to the farmers to
save the wastage of crops.
COOPERATIVE PRICING STRATEGY:
- Involves the collaboration of two or more
market suppliers that collectively decide a
product’s sale price.
- The manufacturer, wholesaler and retailer may
work together to determine the pricing at each
stage of distribution.
- What determines pricing?
- The main factor that drives price is cost.
- Variable cost rise and fall with production.
- The manager must determine how much income
the firm needs to sustain business and make a
profit.
Benefits of cooperative pricing strategy:
1. Lower Costs
2. Increased sales
Direct marketing- it is a form of advertising in which
companies provide physical marketing materials to
consumers to communicate information about a product
or service.
-removes the “middle men” from the promotion process,
as a company provides a message directly to a potential
customer
Permission Marketing – limiting the mailing of companies
to customers who are willing to receive it.
Direct Mail – It is posted mail that advertises your
business and its products and services.
Telemarketing – It involves contacting potential customers
over the phone to sell products or services.
Email Marketing – It is simple and cost- effective
marketing. It can include e-newsletters, promotional
emails.
Text (SMS) Marketing – It is by using short SMS messaging
to send customers sales alerts, links to website updates.
CUSTOMER DATABASE – Is the collection of information
that is gathered from each person.
-It may include the person’s name, address, phone
number, and e-mail address.
Social Media Marketing –It is by developing a profile of
the company which allows promoting its products and
services while also encouraging customers to provide
feedback by leaving comments.
Direct Selling – It involves an independent salesperson
selling products or services directly to customers, often at
a customer’s home or workplace.
Market- is composed of individuals or organizations with
the ability and willingness to make purchases to fulfill their
needs or wants.
Market Segmentation – Involves grouping various
customers into segments that have common needs or will
respond similarly to a marketing action. It is finding out
what kind of consumers with different needs exist.
Bases for segmenting consumer market:
1. Geographic Segmentation – means segregating markets
by region of the country or the world, market size, market
density or climate.
Market density – is the number of people within a unit of
land like census tract.
Climate – customer’s needs and purchasing behaviour.
2. Demographic Segmentation – Is market segmentation
according to age, race, religion, gender, family size,
ethnicity, income, and education.
A. School-age-children – this exert substantial influence
over family purchases specially in food.
B. Generation Y/Millenials – Members of this generation
were born between 1982 and 2003. They desire to be kids
but also wanted the fun of being teenagers.
C. Generation X – Members of this generation were born
between 1981 – 1965. This group is very family oriented,
well-educated and optimistic. They are also comfortable
with the internet.
D. Baby Boomers – Members of this generation were born
between 1946 and 1964, a popular target of marketers
because of their numbers and income levels. Boomers
tend to value health and quality of life.
E. Seniors- Members of this generation were born beyond
1946. Mostly retirees on modest incomes like pensions.
3. Psychographic Segmentation – divides buyers into
different segments based on personality characteristics,
motives, lifestyles and geodemographics.
4. Behavioral Segmentation – divides the buyers into
segments based on their knowledge, attitudes, uses, or
responses to a product.
A. Occasions – some holidays such as Mother’s Day, were
originally promoted partly to increase the sales of cakes,
candy, flowers, cards, and other gifts.
B. Benefits Sought – grouping buyers according to the
different benefits they seek to the product.
C. User status – segmenting into nonusers, ex-users,
potential users, first time users and regular users.
D. Usage rate – according to light, medium, and heavy
product users.
E. Loyalty Status – according to consumer loyalty.
Consumers are completely loyal when they buy only one
brand all the time.
New product development (NPD) – is the process of
bringing a new product to the marketplace. Your business
may need to engage in this process due to changes in
consumer preferences, increasing competition and
advances in technology or to capitalise on a new
opportunity.
Step 1: Generating
Utilizing basic internal and external SWOT analyses, as well
as current marketing trends, one can distance themselves
from the competition by generating ideologies which take
affordability, ROI, and widespread distribution costs into
account.
Step 2: Screening the Idea
Set specific criteria for ideas that should be continued or
dropped. Stick to the agreed upon criteria so poor projects
can be sent back to the idea-hopper early on.
Step 3: Testing the Concept
As Gaurav Akrani has said, “Concept testing is done after
idea screening.” And it is important to note, it is different
from test marketing.
Aside from patent research, design due diligence, and
other legalities involved with new product development;
Step 4: Business Analytics
During the New Product Development process, build a
system of metrics to monitor progress. Include input
metrics, such as average time in each stage, as well as
output metrics that measure the value of launched
products, percentage of new product sales and other
figures that provide valuable feedback. It is important for
an organization to be in agreement for these criteria and
metrics.
Step 5: Beta / Marketability Tests
Arranging private tests groups, launching beta versions,
and then forming test panels after the product or products
have been tested will provide you with valuable
information allowing last minute improvements and
tweaks.
Step 6: Technicalities + Product Development
Akrani, in this step, “The production department will make
plans to produce the product. The marketing department
will make plans to distribute the product. The finance
department will provide the finance for introducing the
new product”.
Step 7: Commercialize
At this stage, your new product developments have gone
mainstream, consumers are purchasing your good or
service, and technical support is consistently monitoring
progress. Keeping your distribution pipelines loaded with
products is an integral part of this process too, as one
prefers not to give physical (or perpetual) shelf space to
competition. Refreshing advertisements during this stage
will keep your product’s name firmly supplanted into the
minds of those in the contemplation stages of purchase.
Step 8: Post Launch Review and Perfect Pricing
Most new products are introduced with introductory
pricing, in which final prices are nailed down after
consumers have ‘gotten in’. In this final stage, you’ll gauge
overall value relevant to COGS (cost of goods sold), making
sure internal costs aren’t overshadowing new product
profits. You continuously differentiate consumer needs as
your products age, forecast profits and improve delivery
process whether physical, or digital, products are being
perpetuated.
Marketing strategy- It is a long term, forward-looking
approach to planning with the fundamental goal achieving
a sustainable competitive advantage.
Paid advertising- This includes multiple approaches for
marketing. It includes traditional approaches like TVCs and
print media advertising. Also, one of the most well-known
marketing approach is internet marketing. It includes
various methods like PPC (Pay per click) and paid
advertising.
Cause marketing- Cause marketing links the services and
products of a company to a social cause or issue. It is also
well known as cause related marketing.
Relationship marketing- This type of marketing is
basically focused on customer building. Enhancing existing
relationships with customers and improving customer
loyalty.
Undercover marketing- This type of marketing strategy
focuses on marketing the product while customers remain
unaware of the marketing strategy. It is also known as
stealth marketing.
Word of mouth- It totally relies on what impression you
leave on people. It is traditionally the most important type
of marketing strategy. Being heard is important in business
world. When you give quality services to customers, it is
likely that they’d promote you.
Internet marketing- It is also known as cloud marketing. It
usually happens over the internet. All the marketing items
are shared on the internet and promoted on various
platforms via multiple approaches.
Transactional marketing- Sales is particularly the most
challenging work. Even for the largest retailers, selling is
always tough especially when there are high volume
targets. However with the new marketing strategies,
selling isn’t as difficult as it was. In transactional marketing
the retailers encourage customers to buy with shopping
coupons, discounts and huge events. It enhances the
chances of sales and motivates the target audience to buy
the promoted products.
Diversity marketing- It caters diverse audience by
customizing and integrating different marketing strategies.
It covers different aspects like cultural, beliefs, attitudes,
views and other specific need
Wholesale Market – The market for the sale of goods to
the retailer. The wholesaler receives large quantities of
goods from the manufacturer and distributes them to
stores, where they are sold to consumers.
 Types of wholesale markets:
 Primary wholesale markets – are located in
larger developing countries where they are
located in district and regional cities, taking the
bulk of their produce from rural assembly
markets that are located in production areas.
 Secondary wholesale markets- they are in
permanent operation rather than being seasonal
in nature or dealing in specialized produce.
Cooperative strategy- is a strategy in which firms work
together to achieve a shared objective.
Collusive strategy- is a cooperative strategy through
which two or more firms cooperate to raise prices above
the fully competitive level.
Strategic alliance - is a partnership between firms whereby
their resources and capabilities are combined to create a
competitive advantage.
Three Types of Strategic Alliances
Joint venture- is an alliance where a new, independent
firm is formed from two or more partners, with each
partner firm contributing some of their resources and
capabilities.
Equity strategic alliance- is an alliance where partner firms
own unequal shares of equity in a venture formed by
combining some of their resources and capabilities to
create a competitive advantage
Non- equity strategic alliance- is an alliance where two or
more firms contract to share some of their resources and
capabilities to create a competitive advantage
Outsourcing- is the purchase of a value-creating primary
or support activity from another firm.
Slow-cycle markets- often use strategic alliances to enter
restricted markets or to establish franchises in new
markets (especially global markets).
Fast-cycle markets- are entrepreneurial and dynamic, with
new products or services imitated rapidly.
Standard-cycle markets -(which are often large and
oriented toward economies of scale), alliances are more
likely to be between partners with complementary
resources and capabilities. Companies also may cooperate
in standard-cycle markets to gain market power.
Business-level cooperative strategy- is used to help the
firm improve its performance in individual product
markets. There are four business-level cooperative
strategies.
The four general business level cooperative strategies
 Complementary strategic alliances (vertical and
horizontal)
 Competition response strategy
 Uncertainty reducing strategy
 Competition reducing strategy
Complementary strategic alliances- are partnerships that
are designed to take advantage of market opportunities by
combining partner firms’ resources and capabilities in
complementary ways so that new value is created.
Vertical complementary strategic alliance- is formed
between firms that agree to use their resources and
capabilities in different stages of the value chain to create
value.
Vertical complementary strategic alliance- links suppliers,
manufacturers, and/or distributors and represents
linkages between different segments of each partner’s
value chain.
Horizontal complementary strategic alliance- is an
arrangement that links similar segments of competing
firms’ value chains, such as linking R&D or new product
development activities.
Horizontal complementary strategic alliances - are
partnerships that link similar activities of firms. Horizontal
complementary alliances are used to increase each firm’s
competitive advantage and often focus on the long-term
development of product and service technology
Cooperative strategic alliances- also may be established to
enable partner firms to respond to major strategic actions
initiated by competitors
Explicit collusion- exists when firms get together to
negotiate production output and pricing agreements with
the goal of reducing competition
Tacit collusion- which exist when several firms in an
industry observe others’ competitive actions and respond
to reduce industry output below the potential competitive
level to maintain higher-than-competitive prices
Mutual forbearance- by which firms avoid competitive
attacks against rivals they meet in multiple markets.
Corporate-level cooperative strategies- are designed to
facilitate product and market diversification through a
means other than a merger or an acquisition
Three corporate level strategies are:
Diversifying strategic alliance- is a corporate-level
cooperative strategy in which firms share some of their
resources and capabilities to diversify into new product or
market areas.
Synergistic strategic alliances- allow firms to combine
some of their resources and capabilities to create joint
economies of scope between partner firms.
Franchising- is a corporate-level cooperative strategy used
by a franchisor to describe and control the sharing of its
resources and capabilities.

Cross-border strategic alliance- is an international

cooperative strategy in which firms with headquarters in
different nations combine some of their resources and
capabilities to create a competitive advantage
Network cooperative strategy- Rather than cooperative
alliances between two or very few firms, alliances can also
be expanded to include a larger number (or network) of
partners as a complement to other forms of cooperative
strategy
Stable alliance networks- often appear in mature
industries with predictable market cycles and demand.
Dynamic alliance networks- often are used in industries
with frequent technological innovation and short product
life cycles.
Cost-minimization approach- the firm develops formal
contracts with its partners
Opportunity-maximization approach- focuses on a
partnership’s value-creation opportunities