Improving and Developing Customer Relationships - Sainsbury - Case Study Example

Improving and developing relationships BY YOU WRITTEN FOR: HERE Improving and developing relationships Terms of reference In relationship to Sainsbury, the report focuses primarily on information collection processes to create better relationships with these markets, sources of information to improve knowledge about a key target market, and how to apply this information for superior relationship development. 2. Two critical customer segments Sainsbury has developed its own private label, stand-alone clothing brand called Tu, a line of trendy and affordable label of apparel and accessories. The business has also developed its own private label grocery brands that are provided at a more affordable price and is positioned according to quality in an effort to outperform national grocery brands. The first critical target market is the female demographic, youth market between the ages of 16 and 35 most likely to be attracted to the Tu clothing line. The majority of clothing in this diverse product line is priced well below many designer fashions available in the UK clothing market, however it is aligned with respected Paris fashion trends. This makes Tu products attractive to lower-resource female buyers. A secondary important target market for Sainsbury is the price-sensitive, lower-resource mass market audience that is attracted to private label, less-expensive food brands. Families, individuals and households that are struggling with food budgets are more viable for purchasing private label products. 3. Analysis of information collection needs Sainsbury needs to understand what drives social and cultural attitudes and preferences in order to better develop relationships with its two most important target markets. The Tu clothing line is aligned with current fashion trends and theory indicates that purchase decision-making related to fashion is strongly congruent with lifestyle and social positioning. Fashion brands are legitimate social signals that show society their social status, helps in building self-identity, and constructs of social conformity (Lewis and Hawksley 1990). Therefore, Sainsbury, in order to set-up better relationships, must understand the cultural factors that drive intention to purchase certain fashion choices. Sainsbury should be conducting market research, including surveys, questionnaires, and focus groups in order to identify with the cultural characteristics and psychological motivations in the market that is aligned with purchase intention. Muniz and O’Guinn (2001) identifies that when a brand is able to provide consumers with perceptions of self-expansion, they are more likely to develop loyalties and attachments. Sainsbury must understand what types of design, promotions, and integrated communications can provide this sense of self-expansion (which should be defined as growth in social status in this case). Quantitative and qualitative research will give Sainsbury an advantage in understanding how consumers view their clothing as an expression of self and how clothing improves self-esteem. This will give the business better opportunities to provide products that fill these psychological needs. For the private label brands market, Sainsbury needs to perform historical revenue analyses that show performance in private label sales. This will show which regions in the UK have top or low performance so that business can focus on certain regions where pricing is a major factor in what drives purchase intention. This is a qualitative research focus. The business should also be performing external analyses of major competition that provides private label products, such as Tesco that has witnessed a 100 percent sales increase in private products from 1982 to 2004 (Coriolis Research 2004). By understanding how competitors use promotion, communications, and pricing strategies, certain benchmarks that gain consumer attention can be built into the private label sales model. 4. Sources of information for knowledge improvement For the private label brand target market, which is price-sensitive, Sainsbury should be performing primary market research. The business should be assigning experts in marketing and psychology to moderate focus groups that help to better engage consumers about their feelings and attitudes about private label products. Henslin (2005) believes focus groups have advantages because consumers have opportunities to provide open-ended responses that are not limited by quantitative instrument structures. In these groups, there can be sampling of private products compared to major name brands to find out what features and tastes are desired. Secondary sources of data can include census-supported income distributions to identify the most important price-sensitive markets. 5. How focus groups and income distributions can assist in relationship development Trust is a major factor when a company wants brand loyalty (Chaudhuri and Holbrook 2001). Focus groups provide opportunities for shared decision-making, a reciprocal set of acts that helps build long-term relationships (Starnes, Truhon and McCarthy 2010). People that feel valued by being participative in product development are likely to trust in the brand and begin to develop attachments. This will help in developing promotional materials that are aligned with cultural and psychological needs. The income distributions will help the business to build localised pricing structures that satisfy security needs of consumers, showing that Sainsbury cares about budget constraints in households. References Chaudhuri, A. and Holbrook, M. (2001). The chain of effects from brand trust and brand affect to brand performance: the role of brand loyalty, Journal of Marketing, 65(2), pp.81-92. Coriolis Research. (2004). Tesco: A case study in supermarket excellence. [online] Available at: http://www.coriolisresearch.com/pdfs/coriolis_tesco_study_in_excellence.pdf (accessed 18 February 2013). Henslin, J. (2005). Sociology: A down to earth approach, 7th ed. A&B Publishing. Lewis, B.R. and Hawksley, A. (1990). Gaining a competitive advantage in fashion, International Journal of Retail and Distribution Management, 18(4), pp.37-43. Muniz, A. and O’Guinn, T. (2001). Brand community, Journal of Consumer Research, 27(4), pp.412-432. Shannon, S. (2011). Sainsbury sales slow more than anticipated on fuel, Bloomberg. [online] Available at: http://www.bloomberg.com/news/2011-03-23/sainsbury-sales-slow-more-than-anticipated-amid-fuel-cost-rise.html (accessed 19 February 2013). Starnes, B., Truhon, S. and McCarthy, V. (2010). A primer on organisational trust, ASQ Human Development and Leadership. [online] Available at: http://rube.asq.org/hdl/2010/06/a-primer-on-organizational-trust.pdf (accessed 17 February 2013). Discussion Paper: Sainsbury BY YOU YOUR SCHOOL INFO HERE DATE HERE Discussion Paper: Sainsbury Identification of critical target group The Tu clothing line target market is the most crucial, since there are many psycho-social factors involved in what drives their purchasing intentions that must be considered. Promotion is a significant means of selling the product if the messages and advertisements are considered relevant to lifestyle and emotional needs of markets. Therefore, the purpose is to develop integrated promotional communications strategies that will strike a chord with social needs and motivational needs to give the Tu clothing line more competitive advantage. Tools available to develop effective promotional messages Guerrilla marketing is one effective method of gaining market attention and providing relevant promotional communications. This type of marketing is low-cost and also can take the product into the actual environments where the target markets live and work. Sainsbury can recruit local models or existing customers willing to participate that share similar physical characteristics of the target market (in this case female) to illustrate the benefits of self-esteem development for the market. Guerrilla marketing can be taken to the streets or as a structured PR event, allowing potential buyers to interact with the models and staff of Sainsbury, using scripts of humorous or outrageous social and lifestyle situations (Levinson and Godin 1994). Feedback can be gleaned from these events by offering post-PR surveys and questionnaires to identify with perceptions of style, performance, or lifestyle relevance so that future advertising can be developed with these characteristics in mind discovered through research. The only disadvantage of this type of promotion is that those recruited must be trained significantly to ensure they follow the script and guidelines established by the company, which can be labour and cost-intensive. Low-cost promotional products such as shoelaces or lapel pins that carry the Sainsbury logo and slogan for Tu clothing can also be effective. It improves brand recognition and recall (Boone and Kurtz 2008). This type of promotion allows the business to customise messages, such as stating, Tu is about you, thus making psychological connections to the brand. The advantage is that consumers do not have to pay for this merchandise, which is important for this price-sensitive target market that will lead to more trust in the brand to provide value. The only limitation is distribution, determining how to get this product to relevant target markets without absorbing costs for distributing these to markets not likely to make clothing purchases. Recommending a direct marketing campaign Fortunately, Sainsbury is not attempting to position its Tu clothing line as a premium product, therefore discounting and incentives can be applied without cheapening the brand. Using data from consumers that have signed up for the Sainsbury loyalty program and other demographic data, Sainsbury has a tremendous opportunity to deliver direct mailing materials to target consumers that provide coupons for purchasing Tu clothing. Sainsbury should benchmark the success of Whole Foods that has developed its Whole Deal Value guide, a small-scale catalogue promoting new clothing introductions and coupons (Whole Foods 2012). This is a duplicitous promotional method that allows for spotlighting of pricing and new fashion designs with incentives to visit the online store or bricks-and-mortar stores for price reductions. Secondly, the company can promote in-store and in its new catalogue opportunities to visit Facebook or Twitter (or other relevant social media forums) to receive information and more discounts. Consumers that sign up for these discounts will provide valuable demographic information in the corporate database. Furthermore, Sainsbury can recruit sales agents to visit market-relevant locations, such as hair salons that cater to young women, to be interactive in learning about Tu clothing and accessories. Carrying samples of merchandise, along with entry certifications for sweepstakes, would provide the type of motivation and knowledge-sharing about new Tu innovations and pricing structures. Direct sales strategies allow customers to feel fabrics and witness design characteristics in the convenience of their lifestyle or professional environments. Measuring success of the campaign The first metric for evaluating return on investment for the recommended strategies is assigning the marketing division to track the volume of returned coupons distributed online or in the direct mail catalogues. This analysis will show geographic regions with more interest to help focus promotions. If there is little volume, then the business can consider new strategies other than short-term discounts. Secondly, the business can set up an online customer satisfaction survey with a set of structured questions to assist Sainsbury and the Tu clothing line to understand the impact of their promotional messages and experiences with Tu products. Questions asking for socio-economic data can also help Sainsbury to understand what regions maintain the most consumer dedication and what specific demographics are most interested in the Tu product and service concepts. References Boone, L. and Kurtz, D. (2008). Contemporary Marketing, 13th ed. United Kingdom: Thompson South-Western. Levinson, J.C. and Godin, S. (1994). Handbook of Guerrilla Marketing. Dearborn Financial Publishing. Whole Foods. (2011). Whole Foods Annual Report. [online] Available at: http://www.wholefoodsmarket.com/sites/default/files/media/Global/Company%20Info/PDFs/ar11.pdf (accessed 17 February 2013). Customer service and relationship maintenance BY YOU YOUR SCHOOL INFO HERE DATE HERE Customer service and relationship maintenance 1. Terms of reference Customer service is one of the most fundamental aspects of a business model that will bring long-term customer loyalty and give a business competitive edge. When a product or service is able to provide consumers with sufficient satisfaction, they are less willing to risk switching to other brands (Kalyanaram and Gurumurthy 2008). The focus of this report is to highlight the relationship between positive customer service and relationship development, how to collect important service-related feedback from consumers, and to recommend a viable customer care programme. 2. Customer service and its ability to improve relationships A fundamental method of improving a brand’s reputation is establishing a brand personality. Aaker (1996) identifies dimensions that must be present for personality development. These include sincerity and competence. Establishing quality customer service provides opportunities to show important target markets that they are sincere about satisfying customers and maintain the internal human capital competencies necessary to achieve this. Again, as identified previously, trust is a fundamental aspect that will determine future purchasing intention for a brand and likelihood of long-term brand loyalty. Sainsbury developed a steering group as part of its corporate governance strategies designed to improve customer service, in response to feedback from customers (Sainsbury 2011). For example, some consumers will choose the Tu clothing line because it is available in a convenient sales forum, in this case the Internet. Sainsbury can allocate financial and human capital toward improving the exchange process, such as offering free shipping for return of unwanted merchandise, illustrating to consumers that the business cares about making sure they have made the appropriate product selections. Customer service excellence is related to the psychological characteristics that drive consumers to select one brand over another. It can build trust in the organisation. Positive customer service can also let consumers know that the business will be flexible to their needs, giving them perceptions of having more buying power to build their confidence in the brand and their role as interactive change agents for the business model. Showing consumers that they are valued through service development has many fundamental motivational outcomes that are recognised by respected psychological models of social belonging and self-esteem development. 3. Collecting feedback about service excellence or failures The most viable method of gaining feedback is by using quantitative and qualitative research instruments such as the survey or questionnaire. Whether online or in-store, consumers can give their real-time opinion about how Tu clothing enhances their experiences or fails to meet their demands for such criteria as convenience or competence of staff. This approach helps to align a broader market perspective to find correlations that allow Sainsbury to change certain dimensions of service that are currently present in the company’s customer service model. Another method is through direct intervention with sales agents that are assigned to promote and assist customers with clothing selections in-store. After having engagement with consumers, they can use qualitative methods (small-scale personal interviews) to find out about how the consumer perceives the service model. The sales agent in-store is one of the most interactive staff members in the business model that has ideal opportunities to speak with consumers and develop trusting sociological relationships. When the customer trusts the advice and support of sales agents, they are more likely to provide meaningful and legitimate responses to this type of interview format without even knowing they are contributing to a market research effort. 4. Recommending a customer care programme First, Sainsbury can develop an email program that follows up on their engagements with the organisation. For example, when a customer signs up for a loyalty program that offers discounts based on volume purchases, the email system can show gratitude for their involvement and participation to show that the business values their patronage and interest. Recurring emails of this fashion will build trust and illustrate the company’s focus on satisfying the consumer. Secondly, the business can work toward internal improvements, by establishing a service-oriented organisational culture. By aligning human resources with service imperatives, the business can develop better training so that engagements with consumers are more productive and that the staff understands the business’ expectations for their service delivery competency. If the organisation is aligned with service vision and mission, using a transformational type of leadership model, one that involves role modelling desired behaviours (Fairholm 2009), individuals are more likely to model these same behaviours and remain dedicated to service excellence. The business should open communications lines for shared decision-making, again showing value to the internal staff, to help develop new innovations in the service delivery model. References Aaker, D.A. (1996). Measuring brand equity across products and markets, California Management Review, 38(Spring), pp.102-120. Fairholm, M. (2009). Leadership and organisational strategy, The Public Sector Innovation Journal, 14(1), pp.26-27. Kalyanaram, G. and Gurumurthy, R. (2008). Market entry strategies: Pioneers versus late arrivals. [online] Available at: http://www.wright.edu/~tdung/entry.pdf (accessed 18 February 2013). Sainsbury. (2011). J Sainsbury plc annual report and financial statements 2011. [online] Available at: http://www.j-sainsbury.co.uk/media/171813/ar2011_report.pdf (accessed 17 February 2013). Notes on Sainsbury Findings BY YOU YOUR SCHOOL INFO HERE DATE HERE Notes on Sainsbury Findings The importance of internal communications quality Establishing trust between subordinate staff members and management is critical to avoiding change resistance and gaining commitment to meeting strategic goals. Farrell and Knight (2003) believe that trust is founded by the relationships by which organisational members seek to gain acceptance by others. Therefore, managers must be highly visible in the organisation and address the legitimate psychological or work-related needs of employees so that they will be more willing to follow the rules and regulations associated with strategic intention. When workers in the organisation feel that they are valued contributors, there is less risk of resistance when new practices are introduced into the business model. For companies like Sainsbury where change and innovation in service and product are constantly present, communications provide a forum by which members can discuss their frustrations or improvement ideas that builds more motivation. Schlosberg (2006) describes a leadership style that fosters inter-group collaboration where having an open door policy for honest communications builds more team effectiveness. Sainsbury requires a decentralised organisational structure in order to develop new product and service innovations and outperform competition like Tesco. In order to provide this basket of ideas and ideologies, there must be effective lines of communication opened. Therefore, verbal and face-to-face communications are absolutely critical to team performance. How to improve internal communications Technology is a major enhancement to internal communications improvements. Businesses should be utilising, as a means of supplementing verbal discussions: Email systems Regular telephone discussions Videoconferencing All of the aforementioned technological advancements in communications provide opportunities to stay in constant contact when organisational constraints and responsibilities forbid formal meetings. One advantage of technology is, as modelled against the AIDA model of communications, that the organisation is able to remove noise from the communications process. Noise is defined as any barrier that prevents proper decoding of information that can conflict comprehension or prevent motivation to continue listening to the message. Noise can often occur when managers show bias against certain workers that conflicts positive communications exchanges. Technology does not allow these problems in the real-world organisational environment to enter into the process, thereby providing a quality solution for improving communication quality for the receiving audience. Improving face-to-face discussions Non-verbal cues are critical in the face-to-face communications process. Many people are equipped to pick up on gesturing or facial expressions that can conflict what is actually being spoken. For example, a manager might be informing a worker that they are very competent and the business appreciates their efforts. However, if the manager seems distracted or is restless, this too serves as a type of noise that conflicts the process of proper decoding of the message. There could be trust issues developed between these members simply because body language was not considered by the manager, which breaks down team performance and the social condition within the organisation. Face-to-face discussions must also consider culture as a factor. Some internal cultures believe that aggressive and decisive managers are worthy of followership and gain dedication. At the same time, other cultures believe more empathetic and sensitive leaders are appropriate. Managers must use culturally relevant discussion to lay the framework of their approach toward communications that are aligned with preferences in the organisational culture. If there is emotional intelligence in this direction, there is going to be more positive responses by those who are receiving the message. This is highly important for ensuring that the method by which communications are approached are accepted and appreciated by those who are in follower positions of the management team. References Farrell, H. and Knight, J. (2003). Trust, institutions and institutional change: industrial districts and the social capital hypothesis, Politics & Society, 31(4), pp.537-566. Schlosberg, P.B. (2006). Transformational Leadership: A holistic view of organisational change. MagPro Publishing. Read More