Customer Relationship Management Strategies: the Case of Apple and IBM - Research Paper Example

?Running head: CASE OF APPLE AND IBM Relationship Management Strategies: the Case of Apple and IBM 13th, June, Table of Contents Table of Contents 2 Abstract 3 Literature Review 4 Discussions 6 IBM’s CRM 7 Apple’s Case 8 Conclusion 11 Abstract Customer relations management is a business operation models that has gained significant application in modern businesses. CRM models define the relationship between a company and its customers in certain economic conditions. The success of a business depends on the quality of its customer relations. Thus, successful businesses have effective CRM. The CRM strategies define the relationship or the interface between a company and its customers. The levels of customers’ satisfaction in most companies have declined due to emphasis on products and brands. This paper will therefore analyze CRM strategies in relation to IBM and Apple Company. Introduction A sufficient customer base is the most significant asset of any organization. Sustaining a sufficient customer base requires business organizations to device strategies that enhance customer’s relationship with the business organization. Customer relation management CRM is the concise implementation of strategies that are aimed at enhancing customer’s loyalty, satisfaction and advocacy at a considerable cost to the business organization. Although building and sustaining customer relation has remained critical to businesses, the level of customer satisfaction in the American market has dropped constantly since 1994. This is according to the customer satisfaction index that was compiled by the University of Michigan. This decline indicates a fault in various organization strategies or a change of priorities among consumers. The dynamic nature of people’s culture also explains the deteriorating levels of customer satisfaction in American market. The modern market is experiencing a constant but steady evolution. Most business organizations are faced with challenges that are directly related to the changing nature of the market or the economy (Bergeron, 2002). In order to survive in the constantly shifting market, organizations constantly, review their business models to fit the current business environment (Anderson, 2004). In case of electronic goods or high tech equipments, the situation is more fixed due to advances in technology and changes in customer preferences. This has a direct implication on the Apple and IBM’s business. The interesting factor about these businesses in relation to their customers and market is the fact that the companies not only sell electronic products but solutions. Literature Review According to (Abu, 2006), customers in modern markets are more aware of their rights than customers in previous markets were. The author goes on to argue that in the modern market, customers not only buy a products but also the added benefits that come with making a certain purchasing decision. According to the author business have a role to play in order to ensure the satisfaction of their customers. Customer relation strategies define the basic methods that businesses can apply to enhance the value of their services or products. The author derives his results through a comparative case study on successful global businesses such as Toyota and Walmart. Bergion (2002) is also concerned with the significance of CRM strategies to the products and services of a company. The author is also concerned with the competitive advantage that results from edge cutting CRM strategies. In addition, the author acknowledges that current market is a shifting market and hence appropriate CRM should change constantly according to the market requirements. This indicates that CRM strategies are dependent on the company and the nature of the products that it produces. Anderson (2004) has similar views in his article “Machine-independent audit trail analysis – a tool for continuous audit assurance.” His studies involved the significance of regular audit trails to business sustainability. The authors main argument in relation to CRM strategies is that business should revise their CRM strategies to fit the current market. Customer relations depend on various factors or values that customers attach to the services or products offered by a company. According to Austen & messier, (2002) customers have their own interpretation of satisfaction. In addition, different customers achieve different levels of satisfaction resulting from certain products or services offered by a business. Companies have a role to establish the effectiveness of their strategies on achieving customer’s satisfaction. The authors construct their argument from examples and scenarios involving customers and different CRM strategies. Customers derive different forms of satisfaction from different CRM strategies. However, the authors acknowledge the existence of basic CRM strategies such as price, products, promotion and after sales service. On the other hand, Hirshleifer (2005) acknowledges that price and products are instrumental in enhancing consumer’s relation with the business. The author argues that the product or association with certain product is what attaches consumers to a given company. However, the author fails to consider the limits of a product as a factor that enhances customer relations. Whinston (2007) builds his analysis of product theory. According to the author customers, buy products with the anticipation of achieving positive results. This indicates that a purchase will be based on experience with the product. In such case, experiences with the products must not directly involve that particular customer. This indicates that companies require monitoring the effects of their products on the customers. Such process will enable companies to improve the quality of their products continuously. According to Bennett (2002) the appearance of a product is instrumental in enhancing customer satisfaction. This indicates that consumers are looking out or searching for new products in the market. Massey (2002) associates customer relation with the influence of a product on the customers of a company. For instance the influence of a new car on the society determines the satisfaction that a car owner derives from a given make or model of a car. The author bases his analysis on the outward perspective of the product. Thus, fashions and trends are significant source of customer relations. Discussions Customer relation strategies are efforts that businesses take to enhance their relationship with their customers. There is no any absolute definition or interpretation of CRM strategies. This is because customers and businesses have different interpretation of CRM strategies. However, customer relation is more significant to business than customers are. Effective customer relations enhance the customer base of a certain business and hence its existence. On the other hand, customers are concerned with the credibility and performance of the product. Due to lack of sufficient knowledge on the creation of different products, customers rely on their consumer relation to ensure that they purchase quality product. This is of particular interest to consumers of electronic gadgets. An ordinary customer is unable to tell the quality of products such as a phone from the first encounter. Such customers will require knowledge on the performance or quality of the products. The customer can acquire such knowledge from personal experience or from a third party. Thus customers also benefits from customer relations strategies maintained by their respective companies. Lack of a concise interpretation of customer relations implies that companies and customers have the responsibility of defining their relationship based on their business values. Customer relations would therefore be dependent on customer or company’s value. IBM’s CRM The IBM business has acknowledged the needs to review its customer management strategies in order to compete favourably in the modern competitive market. IBM has experienced different phases of the electronic and high tech gadget market. These phases have been characterized by the level of competition in the market. IBM has maintained a successful global business through the implementation of its reviewed CRM strategies. The main factor that characterizes IBM's modern business is its alliance with different businesses across the globe. Creating customer satisfaction requires concise understanding of the customer’s needs and preferences. On the case of electronic and high tech gadget, the issue is more complicated due to the current competition facilitated by advances in technology. IBM management has acknowledged the variance in customer’s needs and requirements across the globe. Its alliance with different organization is aimed at achieving customer’s satisfaction in all aspects of their products (Austen, and Messier, 2005). For instance, IBM has an alliance with Toshiba for the manufacture of colour screens. In addition, IBM relies on Intel for the production of memory chips for all of its products. The company is also looking forward for business collaboration with Apple for the production of memory chips. The significance of the Chinese technology in the modern market has also attracted the interest of IBM. Currently IBM has hired a Chinese manufacturer Lenovo to manufacture its laptops. The main factor that promoted IBM to enter into partnership with the different global companies is their abilities to produce different commodities at a considerable price. Price is a significant factor that determines customer satisfaction index (Chance, 2008). In addition, the partners are able to produce quality products at considerably low price. Producing goods that are of competitive quality at a considerable price is the main strategy that IBM uses to build its customer relations. Apple’s Case Unlike IBM, Apple has entered the high tech gadget market through a different approach. Its effective customer relation strategies that makes it stand out from the rest of the manufactures has facilitated this progress. The first strategy that Apple has applied to enhance satisfaction among its customers was creation of Apple stores. These stores contain or stock a variety of products under Apples logo. In addition, Apple produce, most of the different components required to manufacture its product. These components range from microchips to colour screens. This has made Apple to become a successful brand in the highly competitive high tech device market. The success attached to Apple brand is the first customer’s satisfaction strategy that the company relies on. Apple has been able to create successful brands by producing high quality products (Hirshleifer, and Hirshleife, 2008). The next competitive factor applied by Apple is the provision of complete solutions. Apple products are complete solutions; this is achieved from the fact that Apple products compliment each other. For instance, an iPod customer can download music from iTunes, which is under Apple’s brand. On the other hand, a Mac user has a variety of Apple hardware and software from which to choose. Availability of a complete set of Apple products has enhanced customer loyalty among Apples customers. The next customer relation strategy applied by Apple is the creation of variety products. Apple manufactures a variety of products that ranges from simple devices such as iPods to complicated devices such as laptops. It is evident that each of these products has its own set of customers depending on their varying priorities and needs. It was also established that different customer purchase different Apple products with anticipations of good performance (Whinston, 2007). In addition, customers of different products constantly evaluate the effectiveness of their products through a constant analysis of their performance. In addition, customers base their next purchase plans on experiences. Apple customers are more likely to buy other Apple products due to their experiences with similar products. For instance, an iPod user is likely to purchase an Apple laptop when he/ she decide to own one. The nature of the products is the next significant factor that determines customer’s satisfaction and their relationship with the business organization. The appearance of the product is of great interest to customers. Customers of electronic and high tech gadget have great concerns on the attractiveness of the product. The attractiveness of such products varies with time and situations. For instance, a phone that was considered attractive in the year 2000 cannot be considered attractive under the 2010 measures of attractiveness. Apple has been able to capture and utilize this factor by creating products that are of aesthetic designs. Bright colours, slick looking hardware, smiling icons are some of the user interface future demonstrated by Apple products. Apple is constantly gathering information from the field concerning customer’s requirement for design of its products. This has enabled the company to improve appearance of its products according to customer demands continuously (Bennett, 2002). In addition to product appearance and facial interface, Apple products have a fundamental structure. Due to this consistency Apple, customers are able to differentiate experiences with Apple products in relation to other competitive products. According to Bergeron, Apple not only created high-tech gadgets that transforms life, but also changes the lifestyles of its customers through these gadgets (2002). This is because Apple has created gadgets that fit the life of their customers in all aspects. These products are found in the people’s offices, living rooms, kitchens, and pockets. The ability to transform the lifestyles of its customers has not only enhanced the loyalty of Apple’s customers towards the company’s products but it creates complete satisfaction among its customers. Finally, Apple products are designed with a factor of the changing technology and the increasing significance of communication in the modern world. Chance acknowledges that Apple products have become popular due to their compatibility with the social media. The need to interact is a significant factor of modern day customers in gadgets and electronic devices. Unlike IBM, Apple has considered this as a CRM strategy. Unlike other products, Apple products are created with features that support social media interactions and networking. Apple is continuously releasing a series of products with more enhanced features. According to Anderson, current fear among Apple marketers is the release of new series before they complete their old stocks (2004). This is of particular interest to media frenzy that looks upon Apple for their technology needs. The need to upgrade into new models has also made owners of Apple gadgets such as iPods to dispose them by selling them to friends for the new arrivals. This in turn creates a pool of new customers for Apple products (Massey, 2002). Creation of a series of products through a succession of quality has enabled Apple to attract and retain a pool of satisfied customers. Technology companies have a challenging task to play in relation to customer satisfaction. Although Apple has succeeded in producing products that are in line with the aesthetic and performance requirements of their customers, there is a lot that Steve Jobs can learn from IBM. The decline of IBM from the Big Blue or the giant technology company in the world is a significant lesson for Apple’s CEO. The main difference between the two technology companies is their approach to customer satisfaction. According to Grgurich, Apple has become a market leader in the technology market by raising the bar for technology products through creation of high quality products. The main difference between the two companies is that while IBM created its products by looking at people’s needs, Apple created its products by anticipating their needs. This makes Apple to remain relevant among its customers. Conclusion Customer relation strategies are the different methods or approaches that businesses apply to enhance the relationship between business and their customers. Customer satisfaction is instrumental in enhancing customer relations. There are different factors that enhance customer’s satisfaction and each of these factors determines the different interpretation of customer relations. Products and price are the main factors that determine the degree of customer relation in a market. Customers in the modern market attach considerable value to the extra service that they receive after making a certain purchase. Customers relations strategise are critical to both the customers and businesses. To the businesses, customer satisfaction enhances continuity of business while customers depend on their customer relations to for quality assurance. Although Apple and IBM a market leaders in marketing of technology products, the two companies have different approaches towards the satisfaction of their customers. The different customer satisfaction strategies are the main factor that differentiates them. IBM CRM strategies are based on the current needs of their customers while Apple’s CRM are based on anticipation of future needs of the customers. To enhance customer satisfaction, IBM relies on alliances with major producers for various components of its products. On the other hand, Apple relies on its market research findings for its CRM strategies. References Abu, L. (2002). The difference engine in digital time: Tools and strategies for selling content on the internet, Washington Association of American Publishers. Anderson, B. (2004). Machine-independent audit trail analysis – a tool for continuous audit assurance, Intelligent systems an accounting, finance and management, 2, 85- 102. Austen, E & Messier, W. (2005). Auditor detected misstatements and the effect of information technology, International Journal of Auditing 8 (November), 223-235. Bennett, J. (2002). Multinational corporation, social Responsibility, and conflict. Journal of International affairs. 2, 198-207. Bergeron, B. (2002). Essentials Of CRM – A Guide To Customer Relationship Management. New York, John Wiley & Sons. Grgurich, H. (1993). Apple’s lessons for IBM. London: Harvester Wheatsheaf. Chance, D. (2008). Essays in derivatives: Risk-transfer tools and topics made easy, New Jersey: John Wiley & sons, Hirshleifer, G. (2008). Price theory and applications: Decisions, markets, and information. London: Cambridge University Press. Massey, M. (2002). Re-engineering the customer relationship: Leveraging knowledge assets at IBM, Decision Support Systems, 32:2 155-177. Whinston, B. (2007). Efficient selection of suppliers over the internet, working paper of the centre for information systems management. Austin, Graduate School of Business. Read More