The Development of the Information Management Research Area - Case Study Example

The Development of the Information Management Research Area Abstract The current investigation looks into customer relationship management (CRM) as a business solution that is becoming increasingly widespread. Through using CRM, companies hope to build a better and more lasting foundation with the customer, based on listening to their needs. There are many examples of CRM in action, so the report limits itself to two real world examples, IKEA and Marriott. After describing and analyzing the existing theory on CRM, the report goes on to examine these examples in the context of this theory, before making conclusions. Table of Contents Introduction 3 Description 3 Analysis 5 Theory 6 Examples 7 Conclusion 10 Reference 11 Word count: 2520 Introduction Customer Relationship Management (CRM) is a business theory that focuses on the client or customer side of the relationship. The base assumption of the theory is that the customer hires a product to meet a set of needs, and looks for these needs to be fulfilled in the product or service. Therefore, the responsible company that uses CRM listens to the customer, rather than dictating terms to them. However, there are also conflicting definitions of CRM. “CRM has come to mean different things to different people. For some managers, CRM means sales force contact software like salesforce.com. For others, it means telephone call centers for contact management. Many attention focus their loyalties on software programs like Total Rewards” (Winer, 2007). For the companies IKEA and Marriott, CRM must mean all of these things and more for the marketing strategy to really work. Description The company needs to use Customer Relationship Management to its utmost advantage because of its core strategy o f being close to and relating to the customer in an atmosphere of positive communication in which trust is formed by the customer for the product and service. Many solutions must be foreseen. One solution is to use CRM to bolster the company internally. Another solution is to use Customer Relationship Management to market more effectively and reach the client better. “When customer relationship management CRM) came on the health scene approximately six years ago, some viewed it with skepticism and primarily saw it as a way to refine rather than reinvent marketing. More progressive marketers adopted the CRM techniques of compiling all consumer and market data into a centralized database and used data mining to more narrowly define target audiences based on characteristics rather than general demographics” (Paddison, 2004). Yet another solution could focus more on the management of the company than the client, and highlight management having a working knowledge of marketing and being able to work with marketers and consultants in a proactive manner that reflects the abovementioned external dynamism of the wireless communications market. “Work with someone from your marketing or planning department to develop a series of questions that will determine the baseline financial savvy of your department heads. Then conduct one or two focus groups with a representative cross section… A key goal of the focus group should be determining how well your managers understand the reports they receive” (Macevicuiate, 2001). These solutions can work in both long-term and short-term formats to help the company remain competitive. A company that is proactive about using CRM relationships shows an integration of database technology that is very important considering the parameters required, in terms of hem and haw firm examples which remain coded quantities. “Web-based, configurable CRM software suite, Sage CRM, is offered in ACCPAC edition that provides bi-directional front office/back office integration with ACCPAC Advantage Series accounting and operations management software. Supporting technology options include Outlook and Lotus[R] Notes integration as well as IBM[R] DB2[R], MS SQL, Oracle[R], and Sybase[R] database options. Software also offers support for wireless devices such as PDAs and cell phones” (CRM, 2005). This quotation shows the integration of the CRM to the hypothetical company’s databases. There are various ways to analyze the issue. Analysis This investigation is on CRM, or customer relationship management. It equates CRM with information technology more than as a business process that is held separate from the current environment. One main point in the existing literature, therefore, is the relationship that exists between IT and CRM, and how IT has increased the importance of customer relationship management. Another main point made is that CRM is a positive thing that has the capacity to greatly impact and help companies. It helps them through expanding on the way and changing the ways in which they can respond to customer needs and communicate. A third, and perhaps most important point of the use of CRM is that despite the inherent value of CRM, many companies don’t understand that they need to re-engineer IT structures and infrastructures to really successfully implement it; it is not just something that can be casually instated as a tech-only project; rather, CRM has to be integrated. CRM cultures in organizations which are universal and would require little adaptation, such as a positive and customer-centric attitude and a causal and laid back manner of calm and confidence. But when a group of managers gets too fascinated by their own authority to see that they are working within a community of individuals who may have equally valuable contributions to make regarding the decision-making process, there will be no employee motivation. Management is not the lone representative of a business; it is bigger than that- there are lessons to be learned and given from and by everyone involved. A cohesive business is a successful one, and a company can only be cohesive when all levels of employees believe that they can speak up and make a difference. The more people who can get involved in the process, the more it will be an accurate reflection of the company and community’s true set of standards and complementary goals. “With a true CRM system, marketers no longer have to sift through client bases and their respective promotional histories to pinpoint which sales approaches produce the highest response, lowest cost-per-order and best net profit. CRM systems do it for them, in a more efficient manner” (Keys, 2002). Overall, this system is much more convenient, but it is no replacement for leadership and people skills in the work environment. The theory of CRM basically comes from theory of customer feedback, marketing, and brand loyalty. If customers report on what they don’t like, and like, about a product or service, it can serve a vital function to the company utilizing this information. Theory In terms of applying CRM to the current perceived instability and constraint in the economy in the given risk parameters, it is better to cull support from the more cautious side of CRM demonstrated, as one source states that “it should be applied only to processes vital to a company's competitiveness” (Rigby and Ledingham, 2004). This representation also gives cautionary examples of what can happen in CRM systems when mismanagement and other obstacles are presented to given an overall holistic application of CRM IT systems. In cases like these, workload is increased in a way that is inefficient to the company. In a competitive business environment, this does not help the customer in the long run in this case example. “If statistics can be believed, then customer relationship management, or CRM, is one large puzzle. It seems that for every position one can take on the effectiveness of CRM programs, there's a study to back it up. Business executives, CRM software companies, property and casualty insurers, and customers themselves are lining up to voice their opinions” (Windmer, 2002). CRM is a popular solution in many environments, but there are also potential drawbacks with change in any system. The proactive and dynamic company can make strides in functionality of CRM in terms of keeping up with and integrating with other companies in the IT environment to present more unified platforms for the applications. One example of this kind of partnership that could be engaged is that of the hypothetical company with software development, in terms of CRM applications being shared on a platform of service. “At Insights 2005, its third annual business partner conference, Sage Software (formerly Best Software) introduced Sage CRM, full suite configurable customer relationship management software for small and mid-sized businesses (SMBs) that is available both as a hosted service at SageCRM.com and for on-premises deployment. In addition, an ACCPAC edition provides bi-directional front office/back office integration” (CRM, 2005). CRM software is basically a marketing profile application that can help business expansion. Examples Marriott’s success has thus far mainly been due to profitable and well-timed expansion and the use of clearly-defined productivity market bases to which marketing strategies were applied with a high degree of innovation. Marriott established inroads into a frustrated customer base beginning with its expansion into moderately priced hotels, which many travelers found too small or otherwise unaccommodating. The company researched its customer base to find their biggest complaints and worked to serve them so that they would enjoy coming back to Marriott. The company focused on what the customers wanted rather than who they were in terms of status. The company concentrated their marketing efforts on the segment of these dissatisfied travelers and gave them what they wanted: bigger rooms and more luxurious accommodations. Marriott faces a lot of competition in its industry. “Firms compete and create value in differing ways: transforming inputs into outputs solving clients problems and mediating between customers in a value network, and there are implications for critical activities, drivers and strategy” (Marriott). Their strategy employed customer segmentation to identify those groups who were most likely to stay at a moderately-priced hotel and convince them that the main sources of their previous dissatisfaction at other chains would be remedied at Marriott. “The hotel chain also is planning upgrades to central reservations, revenue and property management, and CRM systems. For example, the property-management system is used around the world to manage everything from room inventory to kitchen supplies. Four years ago, franchisees were using 19 different systems” (Marriott, 2010). Marriott showed CRM definitively in their innovative and instant use of vital customer feedback. Marriott has taken advantage of the fact that the hotel sector went through a dynamic period of change in terms of client centered operations and revitalization that caused it to focus more on an unstable external environment and therefore offer service that is very customer-focused. This is why the company has capitalized on offering the products and services mentioned above, which focus both on travel and convenience solutions given to mostly commercial clients as a stage of development through which the corporation has expanded internationally in a customer-centered manner, through use of feedback strategies and marketing. After all, CRM is mainly defined as a marketing strategy. CRM possesses many advantages that make it a global player in the retail market. First of all, it offers an innovative and new system of shopping that is fast and convenient, and is also appealing to the hands-on consumer (but not difficult). From its impetus, IKEA was successful, “Because the ready-to-assemble ‘knockdown’ kits could be stacked conveniently on racks, inventory was always large, and instead of waiting for the store to deliver the furniture, IKEA’s customers could pick it up for themselves” (IKEA, 2008). This added up to value that was passed down to the consumer. The company also used forward integration to its distinct advantage, setting up exclusive supply-chains as it expanded into Europe and then across the Atlantic and into Asia as well. The company also modified and tailored its advertising and products to deal with new challenges in new markets, rather than trying to foist them on consumers there “strategically.” For example, IKEA wasn’t selling a lot of beds in the U.S., and when it found the reason (European beds did not match American mattresses sheet-sizes), it modified its product and translated this into better sales. Overall, IKEA’s main advantages that are specific to this organization are its innovative approach to warehouse- selling (offering a sort of racetrack of tagged floor-demos connected to a warehouse directly), the pricing bargains that this innovative approach brings to consumers, smart advertising, and forward integration. IKEA seems to be on a roll. Many people enjoy shopping there because it offers a fresh new approach to buying furniture and appliances: there are no salespeople lurking around, it is completely customer-centered, and it provides stylish and presentable furniture and accessories to a wide variety of consumers in the U.S., Europe, Asia, and, potentially, elsewhere. Its advertising within the U.S. is also brilliant, and it does have a sort of dedicated cult following that includes mention in popular songs, among other things. From the facts provided in the case and those available on the company’s website, unless the company is losing a lot of money, which doesn’t seem likely, it should expand more to the west coast of the U.S. and also open up new markets elsewhere in its traditional way. IKEA has been able to streamline its advertising and keep its traditional uniqueness, and should expand further if it continues to use CRM principles as a base for expansion. In other words, marketing research leads to effective marketing. Conclusion CRM is about customers and marketing, and is highly praised in many articles. However, there are also existent examples of companies that have resisted CRM processes and remained powerful industry contenders. Depending on the case example, CRM can be effective, or not. “At heart, CRM is a smart marketing tool supported by technology that allows users to manage all of their customer interactions. CRM systems go an important step beyond data warehouses. They marry information across a company's product lines - magazines, newsletters, conferences and events - to eliminate "data silos” (Keys, 2002). Many supporters of the practice of CRM state that the company needs to use Customer Relationship Management to its utmost advantage because of its core strategy of being close to and relating to the customer in an atmosphere of positive communication in which trust is formed by the customer for the product and service. Pricing control is also important to the international company, so that individuals cannot take advantage of currency fluctuations and operate on a paradigm of gray trading. Therefore, a certain degree of centralization is doubly important to the company operating internationally, since it allows the company to fix prices within certain corridors and keep them there to discourage gray trading. This allows companies to have more direct control over pricing. There are many ways in which companies can deal with the issue of gray trading, most of which have to do with price control that is centrally determined. In the future IKEA and Marriott also need to assess the relationship between taxation and profit within the international company, stating that local tax and regulation authorities should be satisfied and operations be kept running smoothly, rather than having profits immediately rescinded and shifted. This is especially important in the current environment of watchfulness over corporate behavior, which makes sound financial operations all the more important. “It's clear that CRM is a large, important slice of business success. Experts agree that following through on a CRM program is often the missing link in business operations. Customer relationship management programs fail for many reasons. One is costs” (Rigby and Ledingham, 2004). After all, customers are stakeholders, and must be included in the business relationship, rather than excluded. CRM can be seen in many successful examples from international companies, such as IKEA and Marriott. It is generally regarded as an effective technique, because in a competitive business environment, the customer is considered to be central, in terms of their needs. If these needs are not met by the organization in a competitive environment, the customer may feel free to go elsewhere for the product or service, where they feel more appreciated. REFERENCE Maceviciute, E., and T.D. Wilson (2002). The development of the information management research area. Information Research 7(3). Padisson, N. (2004). CRM grows up: CRM can transform the role and financial impact of organizations' marketing initiatives. Health Management Technology.   Rigby and Ledingham (2004). CRM Done Right. Harvard Business Review. Volker, M. (2000). Marketing: The 4 Ps. http://www.sfu.ca/~mvolker/biz/mktintro.htm. Windmer, L (2002). CRM: a risky bridge to the customer. Risk and Insurance. Winer, R. (2007). Marketing Management. Upper Saddle River, NJ: Pearson Prentice Hall. CRM Software is deployed on-premesis or as hosted service (2005). Product News Network. Keys To Implementing A CRM System (2002). Circulation Management. IKEA—Overview (2008). http://www.hoovers.com Marriott uses CRM (2010). http://www.informationweek.com/news/showArticle.jhtml?articleID=6506964 Read More