Strategy and Customer Relationship Management - Coursework Example

Strategy and Relationship Management (CRM) 03193 Introduction Information technology is the important aspect to change the competitive position of any business within global and local market. The rapid technological advancements have encouraged organisations to develop their technological strategies in collaboration with their core business strategies to follow the organisational missions (Rishi and Goyal, 2011). There are three major information system (IS) applications in any organisation that improve their competitive advantage within global market. These application of IS include the development of financial system, organisational operational procedure and customer relationship management procedure (CRM) (Viljoen et al., 2005). Technologically advanced and well-developed financial and operational systems are the crucial parts of organisational development. The integration of information system with the customer relationship management can also be considered as the most vital part of any organisation to sustain their business in a highly competitive market (Freedman, 2013). The customer relationship management (CRM) is the system to manage and maintain the interaction of any organisation with their existing as well as future potential customers (Wanninayake, and Chovancová, 2012). In the present time, a large number of organisations are utilising information system to improve their CRM strategies which enables them to attract and retain a huge database of consumers (Saeed et al., 2011). The further discussion will evaluate the role and importance of information system in the development of organisational CRM strategies to reduce the bargaining power of consumers. The study will also illustrate different way of utilizing the information system, such as value creation, multi-channel integration and extensive information management, to enhance organisational customer relationship management (CRM). Strategy in the context of information system Strategic information system can be defined as the process to support or enhance the different aspects of organisational strategies. It can also be said that the strategic information system is a process of managing information to assist the strategic decision making process of any organisation (Rishi and Goyal, 2011). The term strategic in the process of implementing information system points out a long-term customer mapping exercise and its advantages to the competitiveness and market reputation of any organisation (Ma and Turban, 2003). There are four major factors, such as initiation, development of goals, formulation of strategy and data collection, to develop strategic information system that can ensure long-term consumer loyalty to the organisation. These factors are essential to prioritize the proposed information systems to highlight the essential technological tools and strategies that can provide competitive advantage to the organisation. Therefore, organisations can initiate immediate development of those information system strategies to strengthen their reputation within the local and global market (Galliers and Leidner, 2014). Turban et al., (2008) have introduced a number of factors, such as innovative applications, change in process, cost reduction, relationship with customers and suppliers, competitive intelligence and product development, that elaborate the contribution of information system to the strategic management of any organisation. Information system assists organisations to generate innovative applications for their business operations. These applications of information system provide direct strategic advantages to different organisations. This process also allows various organisations to secure the leading position in their respective industry (Clarke, 2012). For instance, Federal Express can be considered as the first organisation to utilize information system in terms of tracking the locations of every package delivery. The organisation was the initiator to avail the facility to their consumers to check the package delivery services over internet (Hemmatfar and Salehi, 2010). Incorporation of information system allows organisations to change and upgrade their regular business processes to generate strategic advancement. This process also allows the management of any organisation to reduce the overall cost of business operations (Ma and Turban, 2003). As per example, the management of Berri, the largest fruit juice manufacturer and distributor of Australia, has successfully incorporated the unified business process with the help of information system to manage all their brunch-based businesses from a single point (Amrollahi, et al., 2013). This process has enabled the organisation to have better control over all the stores and offices by designing better communication tools and streamlining the production procedure. This process has assisted the management to save overall business operation costs. It has also encouraged the management to improve their customer relationship by providing competitive pricing (Hemmatfar and Salehi, 2010). The usage of information system in the strategic management also allows organisations to improve their communication with their suppliers and customers (Ma and Turban, 2003). This process enables them to initiate a two-way communication with their stakeholders that assists the organisation to design the product, price and delivery system as per their preference (Hemmatfar and Salehi, 2010). This procedure enhances the consumer loyalty. Therefore, it reduces the brand switching tendency of consumers (Verhoef et al., 2012). Strategic information system provides competitive intelligence to the marketers by simplifying the analysis and collection procedure of the information regarding market, competitor and product (Amrollahi, et al., 2013). This procedure also allows the marketers to wisely invest in the development procedure of new products or services as per the preference of the consumers (Ma and Turban, 2003). The development of consumer preferred new product and service range entitle the organisation to secure a competitive position within their operated market (Garrido-Moreno and Padilla-Meléndez, 2011). Description of CRM strategy Strategy in any organisation can be described as the chosen plans and methods to achieve the desired result or organisational goals. Organisational strategy can also be utilized to solve different operational problems and build-up relationship within the consumers (Freedman, 2013). Strategy can also be explained as the science and art of the resource utilization and communication with the end users to improve the competitive advantages of any organisation (Amrollahi, et al., 2013). The customer relationship management strategy is a useful tool for organisations to improve its customer base by pointing out the requirement of consumers. This process also allows organisations to maintain and retain consumers by improving the values delivered to them (Wanninayake, and Chovancová, 2012). A well-designed CRM strategy needs to consider all the technical, social and organisational factors. The success of CRM strategy is widely dependent on different technological aspects such as data warehousing and data mining (Wanninayake, and Chovancová, 2012). Enterprise data warehousing allow organisations to permanently store a huge amount of consumer data which can be utilized for reporting, analysis and other business functions (Chen, et al., 2012). Data warehousing assist organisation to improve the business intelligence by assisting the management to improve their market segmentation and sales procedure (Trninić, Đurković and Vuković, 2012). The data mining process allows the management to explore all the stored data to search for systematic pattern within different variables (Kantardzic, 2011). This process is essential to analyse the consumption and behavioural pattern of different segments of consumers. Therefore, it allows the marketers to efficiently design their product positioning strategies (Simons, 2013). The understanding of the technical factors in not enough until it is not properly implemented within the society. Therefore, the strategic information system of CRM needs to focus on the social factor of any organisation (Boonstra, 2013). According to researchers, the successful implementation of CRM system requires cross functional integration of people, process and marketing capabilities through application of appropriate technology and information (Frow and Payne, 2005). The successful implementation and execution of technologically enabled CRM procedure requires the proper guidance of top level management (Kim, Suh and Hwang, 2003). They need to communicate the importance and procedure of this system to all the level of the organisation to eliminate any ambiguity. They also need to arrange required resources to properly execute the CRM process (Wu, 2010). The management also need to provide adequate training to the workforce to update them regarding the implications of different information systems to communicate with the consumers and efficiently provide solutions to their problems (Simons, 2013). The analysis of strategic implementation of CRM has evaluated the importance of the usage of information system in three different processes to reduce the bargaining power of the consumers. These processes include creating value for consumers, multichannel integration and managing the information as well as two-way communication (Zeynep Ata and Toker, 2012). Application of five forces in the CRM strategy The Porter’s five force model is one of the well-known frameworks to analyze the competitiveness of organisation in the market. This framework allows understanding the effects of competitors, suppliers and substitutes on the effectiveness of the organisational strategies (Porter, 1997). The integration of CRM processes in the strategies of an organisation needs to analyse the competitive advantages through different aspects of Porter’s five force frameworks which include the bargaining power of consumer and suppliers, threat of competition from new and existing organisations and threat of substitute products (Porter, 1980). All the organisations are sharing marketplace with a number of competitors who are regularly devising new and efficient business processes to introduce innovative product and services to the consumers. This procedure is assisting organisations to develop their brands and eliminate the brand switching tendency of consumers (Frow and Payne, 2005). The proper usage of information system in the value addition process in the products or services as per consumer’s references will enable organisations to neutralize the effects of competition of the existing players (Wu, 2010). This process also increases the barrier for new entrants. The new player may require a high investment capital to accrue a competitive position within the market (Handzic et al., 2014). It is very essential for marketers to analyse whether the application of information system in value addition, multichannel integration and customer information management will eliminate the bargaining tendency of consumer or not (Chen and Popovich, 2003). The utilization of information system in the value creation process will ensure that marketers are enabled to gather all the minute details about the tastes and preferences of the consumers. Therefore, it will assist the marketers to serve individual consumers according to their product requirements (Chen and Popovich, 2003). The multichannel integration through information system will allow the marketers to reach to a wide range of consumers (Handzic et al., 2014). Finally, the information management process will encourage the marketers to efficiently communicate with the consumers. This process will increase the consumer involvement and loyalty. Therefore, it will reduce their bargaining power (Wu, 2010). The usage of information system in the multichannel integration will allow the organisation to reduce the bargaining tendency of suppliers as well. The increased demand of products within the consumers will enable the organisation to eliminate the bargaining tendency of suppliers (Handzic et al., 2014). The proper usage of technology in the information management system will also help the organisation to gather knowledge about the substitute products and their demand within the consumers. Therefore, it will enable the organisation to eliminate the threats of substitute by introducing different product and service replacement (Kumar and Reinartz, 2012). Competitive advantages of firms The utilization of information system in the CRM strategy has assisted the organisations to improve their competitive advantages by ensuring product leadership, customer intimacy and operational excellence (Sulaiman et al., 2014). The operational excellence enable organisation to combine the product quality, price and purchasing procedure to create ease for their consumers. The integration of technological tools in this combination process provides added advantages to the organisation that cannot be matched by their competitors (Kim, Suh and Hwang, 2003). The usage of technology in the value addition assists organisations to guarantee individual consumer focused products within a low price structure (Basu, 2004). The multichannel availability of products and services also enable marketers to attract a huge traffic of consumers during product purchasing activity (Sulaiman et al., 2014). The leadership in any product or service category influence the organisation to continuously work towards the implementation of innovation as well as renewal. The product leadership encourage organisations to introduce new and innovative products to eliminate the threats of substitutes (Cooper, 2005). The usage of strategic information system to communicate with consumers as well as managing their information will assist the marketers to generate consumer awareness and loyalty (Langerak and Verhoef, 2003). This usage of information system in the management of consumer communication and information will enable the organisation to secure a product leadership position (Sulaiman et al., 2014). Organisations are also competing by increasing consumer intimacy. The proper knowledge about life style, preference and buying behaviour of population allows the organisations to efficiently promote their customized product to different segments of consumers (Sirdeshmukh, Singh and Sabol, 2002). The frequent and effective communication has enhanced the relationship of organisation with the consumers (Sulaiman et al., 2014). The usage of information system enhances the accuracy of the information and the speed of serving individual consumers. Therefore, it increases the intimacy of the organisation with their desired consumers (Sulaiman et al., 2014). Analysis of consumers and their bargaining power The analysis of consumers and their bargaining power involves four different steps such as customer identification, customer attraction, retention and customer development (Choi and Triantis, 2012). The identification of consumers includes the segmentation of potential market. Each of the segmentation possesses relatively similar consumers in terms of their income, occupation, social class and product preferences (Choi and Ahluwalia, 2013). The bargaining power consumers from different segments vary due to the product availability, demand and purchasing power (Stenbacka and Tombak, 2012). The bargaining power of each segment of consumers is relatively high in this stage (Shim, Choi and Suh, 2012). The process of attracting the consumers from different segments needs to motivate them to purchase products through different channels. This step involves the promotional and advertisement procedure (Dertwinkel-Kalt, Haucap and Wey, 2015). The usage of different channels of information system can enable marketers to effectively attract the potential consumers (Stenbacka and Tombak, 2012). Therefore, this process allows the organisation to reduce the bargaining power of consumers by elevating the demand of their product (Shim, Choi and Suh, 2012). After attracting the consumers, retaining them is equally important. Usage of information system in one-to-one marketing, loyalty program and complaints management will encourage the organisations to eliminate the brand switching tendency of consumers (Choi and Ahluwalia, 2013). The customer development process helps the organisation to increase their revenue generation by improving their communication and relationship with the consumers. This process increases the chances of up-selling and cross-selling with the potential consumers (Stenbacka and Tombak, 2012). Different CRM system and their relationship with strategy Organisations generally include different types of CRM systems and software solutions that include operational CRM, campaign management, automation of sales force, collaborative and analytical systems (Raab et al., 2012). The operational CRM system is focused on using different software application to incorporate various sets of consumer information. This system generally brings together the client contact details, purchasing history, previous communication details etc. This system can be used for the assistance of sales and marketing (Raab et al., 2012). The sales force automation system is responsible to keep the record of each step of sales process. This process assists marketers to initiate automated activities in sales call scheduling, reporting and mailing (Kumar, Sunder and Ramaseshan, 2011). The analytical system is responsible to evaluate the consumer data from an analytical point of view that can influence the future sales and marketing strategies. This system tends to analyse all the data from different database. Therefore, this process utilizes various tools such as data mining to determine different patterns and trends (Wang and Feng, 2012). On the other hand, the collaborative system concentrates on the integration of different external contacts such as, vendors and distributors, within their organisational operations. This process assist organisations to provide improved services to the consumers in terms of support centres, instant messaging system and different other tools (Rababah, Mohd and Ibrahim, 2011). The campaign management system is a combination of operational and analytical CRM system. This process allows organisations to track, store and analyze various data of organisational campaigns (Wang and Feng, 2012). This process enable organisation to target specific type of consumers by sending emails, special offers and marketing mails to them. The relationship of these CRM systems with the three major strategies and their proper usage can reduce the bargaining tendency as well as brand switching intensity of consumers. The three major ways of using these CRM systems are creating values and trust within the potential consumers, incorporating various channels to fulfil the consumer’s demands and managing the information delivery through two-way communication with the consumers. The process of value and trust generation within the potential consumers is totally dependent on the proper utilization of different CRM systems. The operational and analytical system assists the management to gather and analyze the consumer data to understand the purchasing decision making pattern, product selection criteria and payment capacity of consumers (Trninić, Đurković and Vuković, 2012). This process encourages the management to indulge in the innovation of new product and services that properly matches the requirement of potential consumers. This analysis also eliminates the chances of product defects and customer dissatisfactions. This process certainly allows the marketers to enhance the value of their products within the targeted consumers (Verhoef and Lemon, 2013). This process also allows the organisation to gain the trust of the consumers. Hence, the utilization of CRM systems in value and trust creation enables the marketers to neutralize the bargaining power of the potential consumers (Blocker et al., 2012). The multichannel integration includes pre-sales communication, sales interaction, after sales services and supports to the consumers. The usage of multi-channel integration through different CRM system allows the organisations to introduce a superior and effective sales and marketing procedure (Awasthi and Sangle, 2012). The sales force automation and campaign management system of CRM can be utilize for the multi-channel integration (Kim, Suh and Hwang, 2003). Due to the advancement of technologies, consumers are selecting numerous channels to gather organisational details and communicate with the marketers. These channels include email, social media, search engine and mobile application (Langerak and Verhoef, 2003). The record of data regarding previous sales channel utilization and sales communication with consumers assist organisations to analyze the usage of different channels of marketing. Therefore, the proper integration of these channels enables the organisations to promptly fulfil the demand of consumers. This process encourages the organisation to focus on long-term retention of the potential consumers (Verhoef, et al., 2012). The information management is another important strategy of organisation that utilizes the CRM system to reduce the brand switching tendency of consumers. The information management procedure influences the usage of different CRM system to indulge in a two-way communication with the consumers (Verhoef, et al., 2012). This process generally uses the collaborative system of CRM to impart information and knowledge to the consumers. Organisations also utilize this process to gather feedbacks and suggestions from the consumers (Nguyen and Mutum, 2012). The integration of vendors and distributors increases the chances of gathering valid and authentic information from consumers. The CRM system usage in this strategy enable the marketers to reduce ambiguity and confusion regarding their offering and future actions (Kim, Suh and Hwang, 2003). This process also enhances the possibilities of fulfilling the demand of potential consumers. Therefore, this strategy allows the management to secure a competitive position in the market by retaining a strong database of consumers (Khodakarami and Chan, 2014). Conclusion The discussion of the study has evaluated different usage of CRM system in the development of marketer-consumer relationship. The analysis has evaluated the importance of CRM process of the competitiveness of any organisation by allowing them to enhance the operational excellence, product leadership and consumer intimacy. The study has also elaborated the importance of the CRM processes in the different levels of market competitiveness such as reducing bargaining power of customers and suppliers and restricting the competition of new and existing organisations. Hence, the discussion has illustrated the application of CRM system in three different strategies, such as consumer value creation, multi-channel integration, and information management, to eliminate the bargaining power of their potential consumers. Reference List Amrollahi, A., Ghapanchi, A. H. and Talaei-Khoei, A., 2013. 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