Influence of Growing Adaptations of the Clicks and Mortar Model on the Consumer Relations in Retail Sector - Coursework Example

INFLUENCE OF GROWING ADAPTATIONS OF THE CLICKS AND MORTAR MODEL ON THE CONSUMER RELATIONS IN RETAIL SECTOR Table of Contents Table of Contents 2 Introduction: 3 Click and Mortar process: 3 Click and Mortar model in the retail sector: 5 Customer relationship building in retail sector: 8 Influence of clicks and mortar in consumer satisfaction: 10 Gaps in the clicks and mortar model: 12 Conclusion: 13 Reference List: 14 Introduction: The marketing strategies used in corporate sector in the existing scenario are evolving continuously with the changes in the need of the business firms. Saeed, Grover and Hwang (2003) mentioned that, the growth of technology has also influenced the marketing process and widened the scope of the marketing activities of the firms. Bernstein, Song and Zheng (2008) noted that, the changes in the marketing processes are mainly based on the changes in the consumer behavior and tastes. As customers have gained access to the market information with the growth of Information and Communications Technology (ICT), the brand loyalty is no longer a stable factor for competitive advantage for the business models (Huizingh, 2002). This study reflects on the growing acceptance of the clicks and mortar model by the business firms and its influence on their customer relationship building process. The study will be conducted in a literature review style that will aim to evaluate the changes in the marketing process of the firm with the growth of the technology. The objective of this study is to assess the influence of the clicks and mortar model on the customer relations. Click and Mortar process: Clicks and mortar or clicks and bricks are basically not a marketing concept but a business model. However, this business model is based on the concepts of marketing and customer relationship buildup. Srinivasan, Anderson, and Ponnavolu (2002) defined clicks and mortar as the process of integrating the online and offline trade of the business firms in order to create platforms for both offline and online trade. The click and mortar process is one of the widely used business models in the contemporary scenario in international business place. Most of the scholars such as Bahn (2006), Ashworth et al. (2006) and Niederman and Hu, (2003) have opined that, Pizza Hut was the first business to involve clicks and mortar business process as it tried to enhance its reach to the consumers and create a better platform for customer information. The business model included a physical store to process customer orders that were made with the help of online order portal of Pizza Hut (Bamber, 2008). In order to understand the process of clicks and mortars and its importance, the theme of this concept must be reflected. Kumar and Reinartz (2009) observed that the success of a marketing process depends primarily on the consumer knowledge regarding the brand and its offerings. This shows that, customers tend to gather information regarding the products and services before they conclude their purchase decision making process. Anderson and Kerr (2008) stated that, traditional business model of face-to-face selling and marketing had a very narrow scope for information sharing, as the customers are primarily focused on their preferred products and the business executives also had to manage their time among the customers present in the store. In the traditional business model, the scope of customer information and relationship build up was narrow which also influenced the future dealings of the firms. Gulati and Garino (2000) stated that, the click and mortar model of business emphasizes on the growth of communication, information gathering and sharing and relationship buildup among the stakeholders of the business. In the present situation, it is almost impossible to think of a firm that is operating in the market without an online presence or support. Kacen, Hess and Chiang (2002) mentioned that, initially the model for online business was promoted by firms such as eBay, Amazon, etc which created a larger product base for the customers to select from their offerings. This also brought into limelight the aspect of comparison of products and services in order to provide consumer convenience in making the purchase decisions. However, Steinfield, Bouwman and Adelaar (2002) argued that lack of physical evidence or existence often creates doubt in the consumers’ mind regarding the authenticity of the organizations. The customers did not have any place to refer to incase of any problems during the online service transactions. The implementation of the click and mortar model ensured better security for the customers and also helped the organizations in providing better information to their consumers via online and offline method. Porter (2001) noted that, although customers may hesitate in using online methods for purchasing products and services, but most of the time the purchase decisions are being influenced by the information they gathered from the internet sources. Thus, in order to accommodate both the needs of the consumer, the click and mortar model is an ideal marketing concept for the business houses. Saying that, Terry and Israel (2004) also questioned the sustainability of the click and mortar model for the firms as the consumer transactions are being increasingly conducted all over the world. Click and Mortar model in the retail sector: The retail sector business process majorly revolves around the face-to-face business model. Factors such as customer interaction, product and service information, quality of the products and services, bargaining and comparison have major influence in the retail operations. Doong, Wang and Foxall (2011) stated that, the availability of alternative products and services in the retail sector increases the consumer concerns regarding the authenticity of the products and the quality aspects. According to Lim and OCass (2009), big retail firms such as Tesco, Wal-Mart, Sainsbury.etc have a huge product range along with their brand equity which allows them to hold on to their domestic consumers. However, in order to enhance their market operations and expand their business they have selected the click and mortar business model. According to a survey conducted by Yahoo, the 86% of the customer trading online or involved in use of internet facilities to make their purchase decisions seek for information (Youtube, 2012). The survey also reflected that 71% of the respondents are looking for discounts and brochures while another 70% of the respondents are searching for exclusive information about their desired brand, product or service. According to another survey conducted by Google, the customers who are purchasing online have shown a tendency to come back to the physical store or the online portal for future purchase (Youtube, 2012). It can be stated that online models are helping in enhancing the repeat footfalls in the stores. Adelaar, Bouwman and Steinfield (2004) opined that, when the number of transactions between a buyer and seller increases, the trust factor comes into play and ensures longevity of the buyer-seller relationship. Overall, it can be noticed that the click and mortar business model mainly focuses on building customer relationship by creating platforms for communication among the consumers and the organizations, both virtually and physically. Bahn and Fischer, (2003) highlighted the CAM model is a suitable method for selection of the operational methods of a firm. Mostly, the necessary products such as food items are not sold online, however firms have to mention them in their online portal to showcase their product offerings to the customers. Adelaar, Bouwman and Steinfield (2004) criticized that, balancing the focus of the firm between the online and offline customer service often creates gaps in the work process and reduces the efficacy of the marketing process of the retail companies. Figure 1: CAM Model for value assessing (Source: Saeed, Grover and Hwang, 2003, p - 209) The above given model reflects the necessary actions that are to be taken by the firm while following the click and mortar model for enhancing their customer relationship and customer service quality. The four quadrants of the model present different options for balancing the online and offline business activities of a retailer. For instance, the Low-High quadrants present a firm in an insecure situation where the products being offered to the customers should be readily available to them physically. The primary aim of following the LH quadrant is to develop physical presence in the local market and to provide the customers a better service. Biyalogorsky and Naik (2003) criticized that, most of the retail sector firms performing in a domestic markets do not have the financial stability to develop a physical presence. Gladwell (2001) stated that, retail firms operating online are trying to develop relations with third party agencies in order to promote their products and services in the offline segment. For instance, big supermarkets such as Tesco, Wal-Mart, etc include products of small retailers in their product base which also benefits the smaller brands to get highlighted to the customers (Glynn, 2012). Similarly, the other quadrants also reflect the balance between the online and offline trade activities. Customer relationship building in retail sector: Focusing on the aspect of customer relationship building in the retail sector, the influence of technology can be observed in the concerned process. Baker (2007) noted that begining of the 21st century has changed the customer communication process of the corporate sector. Instead of focusing on direct sales or using traditional marketing means for product and service endorsement, firms are trying to include more informative rather than attractive. Brown (2008) argued that, the contemporary scenario of customer relationships are mainly based on customer engagement in the marketing processes of a firm. As stated above, most of the customers try to collect relevant information regarding their business process. But customer engagement also plays a major role in ensuring the contribution of the marketing process. Bloemer and Kasper (2006) mentioned that, when customers can attach themselves or rather can feel a sense of belongingness within the marketing activities of a firm; it not only helps in building customer relationships but also develops brand loyalty among the customers. Hall and Rosenberg (2009) focused on the importance of creating a sustainable relationship for reducing the chances of customer brand switching. Relating the CAM model with the process of customer relationship buildup, Bendoly et al. (2007) emphasised that, CAM improves the scope of repeat footfalls of the customers. For instance, firms such as Tesco or Sainsbury provide full information regarding their products and services to their customers in their online portal. Furthermore, their huge offline presence allows the consumers to contact them directly in case of any confusion or problems. Hogg, Bruce and Hill, (2007) noted that, having click and mortar business model helps in designing direct marketing campaigns. Bloemer and Kasper (2006) stated that, the key objective in marketing is to make the customers feel special, direct marketing is the most effective process of customer engagement. However, the cost of implementing direct marketing for an offline business model is huge and the process also creates complexities in the operational process. This brings in the concept of CAM that allows the firms to communicate to their customers in an individual manner with the help of instant messages or other online models and is also a cheaper process of customer relationship building. Relating the customer relationship process of retail firms with the elements of the marketing mix will help in developing a clear understanding of its importance. Considering the price of a product, the online portals of the retail companies present a lower price of the products to their customers in comparison to the price offered in the store. Dholakia and Uusitalo (2007) emphasized that price is always a part of the decision making process of a consumer and creating an affordable price range by reducing the cost of the firm via online portal helps in consumer relationship process. On the other hand, in order to engage the customers with the marketing process, firms need to identify and develop their products and services based on customer expectations and needs. The key contributor in developing sustainable customer relationship is the promotional activities of a business. In the contemporary scenario, different methods and strategies are being used to generate consumer brand awareness, influence consumer brand perception and ensure appropriate brand positioning (Bhattacharya and Korschun, 2008). The contribution of CAM can also be assessed in the promotional activities of the firms with online communication means such as social media, SEO marketing, etc. For instance, during London Olympics 2012, the opening ceremony alone generated 9.66 million tweets in one night which is higher than the overall tweets of the Beijing Olympics 2008 (Youtube, 2012). The promotional activities have to interactive in order to help the customers relate themselves to the business activities and also gather information regarding their queries. The final element of the marketing mix is place which filters the target consumers for a business house, building customer relationship for a specific geographical region or cultural group are processed by identifying the expectations of the concerned target group. Also, Cook (2011) mentioned that the existence of a firm highlights the security factors that motivate the customers to move forward with the transactions with any retailer in the online portals. Thus, physical evidence element of the extended marketing mix also plays a role in the customer relationship buildup process in the retail sector. Influence of clicks and mortar in consumer satisfaction: Clicks and mortar model of business helps in creating a bigger platform for the consumers in order to share information and make the desired purchase decisions. In the case of retail sector, the rapid entry of new entrants in the industry and the density of sellers are high in the industry. This also increases the confusions for the customers in order to make their purchase decision and hence, providing a suitable platform for the information sharing in a quick manner enhances customer satisfaction level. Hall and Rosenberg (2009) stated that, various models for customer satisfaction can be implemented in the retail sector scenario as most of the consumer needs can be grouped on the basis of their primary needs. Brodie, Brookes and Little (2009) argued that customers often make decisions that are being influenced by the promotional activities of firms and are not intentional. Although, the needs of the customers can be same, but the process of achieving them differs which also segregates the satisfaction factors for each consumer group. Carpenter and Fairhurst (2009) opined that, use of service-satisfaction model for extension reflects the process of consumer engagement in the online business portals. Figure 2: Service Satisfaction Model for Extension (Source: Gulati and Garino, 2000, p - 113) The service satisfaction model for extension presents a process through which customer satisfaction can be achieved. The model connects the various online service providing aspects with the consumer needs and expectations. Ulaga and Eggert (2008) stated that, organizations operating in click and mortar model need to ensure that the online service features mentioned in their web portals needs to be exercised in the offline physical locations for enhancing consumer satisfaction level. McDonald (2007) focused on the practicality of developing consumer satisfaction by developing consumer brand loyalty. McDonald (2007) mentioned that firms need to create a suitable brand position in the consumers’ perception for creating consumer satisfaction. For instance, when it comes to the supermarkets, the positioning of Tesco is directed towards the variety of products and services available in their stores (Bowman and Gatignon, 2010). This also influences the consumer decision making process and helps the firms to connect with the consumers and also engage consumers with the business promotional activities. The service satisfaction model is more or less related to click and mortar business process and helps in balancing the online and offline service structures of a firm. Most of the retail sector companies prefer to promote their products and services online by adding them in third party comparison sites which allows the consumers to decide upon their preferred products (Sirdeshmukh, Singh and Sabol, 2008). However, this also reduces the influence of the promotional activities of the firms on their target consumers. Considering the influence of click and mortar model on consumer satisfaction, it can be observed that firms opting to provide both offline and online models are automatically creating a communicative platform for their consumers. According to Greenley and Bayus (2007), consumers are looking for information and transparency in the business operations. In case of the retail sector where the competition level is high, it is confusing for the customers to make their purchase decisions. Implementing the click and mortal model allows the retail firms to add an intangible service in their consumer offerings and hence, develop consumer satisfaction. Gaps in the clicks and mortar model: The click and mortar model is all about sharing the business aspects of the firm and create a better process of reaching the consumers. It allows the consumers to gather information regarding their expected products and services. However, operating both online and offline process can hamper the business reputation and can reduce the efficacy of their service providing nature. Brodie, Brookes and Little (2009) noted that, operating in the internet is a risky affair because as customer activities cannot be controlled. This can also result in criticisms being highlighted to a larger consumer base and may hamper the brand image of the firm. Eggert and Ulaga (2006) also criticized the click and mortar model because, as online operations in the contemporary scenario have enhanced the information provided to the customers. The primary gap in the click and mortar model is that, it reduces control of a firm over their consumer activities, but in order to utilize growing influence of online means in the marketing, this risk have to be accepted by the business firms. Conclusion: The marketing aspects of the business factors are focused on creating a long-term sustainable relationship with their stakeholders. The analysis of the clicks and mortar model has been conducted in the above study in context of the retail industry. Considering the level of competition in the retail sector, most of the firms are trying to enhance their communication with their consumers. The clicks and mortar model has allowed the businesses firms to develop their virtual existence with the help of online mediums. Creating online profiles for information gathering and sharing with their customers is a suitable process of enhancing consumer communication. Also the physical layout of the companies is creating secure feeling among the customers in regards to conduct online transactions. However, maintaining the balance between the online and offline activities of a business can be complex and can also hamper the customer relations. Overall, it can be concluded that applying an inherent business model such as the clicks and mortar helps in strengthening the marketing activities of a firm from its core. Reference List: Adelaar, T., Bouwman, H., and Steinfield, C. 2004. Enhancing customer value through click-and-mortar e-commerce: implications for geographical market reach and customer type. Telematics and Informatics.21, pp.167-182. Anderson, K. and Kerr, C. 2008. Customer satisfaction: tools, techniques, and formulas for success. 5th ed. London: Chapman and Hall. Ashworth, C. J., Schmidt, R. Ä., Pioch, E. A., and Hallsworth, A., 2006. An approach to sustainable ‘fashion’e-retail: A five-stage evolutionary strategy for ‘Clicks-and-Mortar’and ‘Pure-Play’enterprises. Journal of Retailing and Consumer Services, 13(4), pp.289-299. Bahn, D. L., 2006. Clicks and Mortar. Encyclopedia of E-commerce, E-government, and Mobile Commerce, 103. Bahn, D. L., and Fischer, P. P., 2003. Clicks and mortar: balancing brick and mortar business strategy and operations with auxiliary electronic commerce. Information Technology and Management, 4(2-3), pp.319-334. Baker, M., 2007. Marketing strategy and management. 6th ed. Basingstoke: Palgrave Macmillan. Bamber, J., 2008. Emotions, advertising and consumer choice. 5th ed. London: Prentice Hall. Bendoly, E., Blocher, D., Bretthauer, K. M., and Venkataramanan, M. A., 2007. Service and cost benefits through clicks-and-mortar integration: Implications for the centralization/decentralization debate. European Journal of Operational Research, 180(1), pp.426-442. Bernstein, F., Song, J., and Zheng, X 2008. ‘‘Bricks-and-mortar’’ vs. ‘‘clicks-and-mortar’’: An equilibrium analysis, European Journal of Operational Research, 187, pp.671-690. Bhattacharya, C. B. and Korschun, D., 2008. Stakeholder marketing: Beyond the four Ps and the customer, Journal of Public Policy & Marketing, 27(1), pp.113–116 Biyalogorsky, E. and Naik, P. 2003. Clicks and Mortar: The Effect of On-line Activities on Off-line Sales. Marketing Letters. 14(1), pp.21-32. Bloemer, J. M. M. and Kasper, H. D. P. 2006. “The Complex Relationship Between Consumer Satisfaction and Brand Loyalty,” Journal of Economic Psychology, 16, pp.311-29. Bowman, D. and Gatignon, H., 2010. Market Response and Marketing Models, 4th ed. London: Routledge. Brodie, R J, Brookes R .W. and Little, V., 2009. ‘Towards a paradigm shift in marketing; an examination of current marketing practices’. Journal of Marketing Management, 13(5), pp.383-406 Brown, S, A., 2008. Customer relationship management: a strategic imperative in the world of e-business. 3rd ed. London: Thomson. Carpenter, J. M. and Fairhurst, A., 2009. Consumer shopping value, satisfaction and loyalty for retail apparel brands. Journal of Fashion Marketing and Management, 9 (3), pp.256-269. Cook, S., 2011. Customer Care Excellence: How to Create Effective Customer Focus. 6th ed. Oxford: Blackwell Publishing. Dholakia, R. R. and Uusitalo, O., 2007. Switching to electronic stores: Consumer characteristics and the perception of shopping benefits. International Journal of Retail and Distribution Management, 30 (10), pp.459-469. Doong, H., Wang, H., and Foxall, G.R., 2011. An investigation of consumers’ webstore shopping: A view of click-and-mortar company, International Journal of Information Management, 31(3), pp.210-216. Eggert, A. and Ulaga, W., 2006. “Customer-perceived value: a substitute for satisfaction in business markets?”, Journal of Business & Industrial Marketing, 17, pp. 107-125. Gladwell, M., 2001. Clicks & Mortar. The Price of Everything: an Anthology of Business. New York: The New Yorker. Glynn, M. S., 2012. Business-to-business Marketing Management: Strategies, Cases and Solutions - Page 21, 4th ed. Bingley, UK: Emerald Group Publishing Greenley, G.E. and Bayus, B.L., 2007. Marketing planning decision making in UK and US companies: an empirical study, Journal of Marketing Management, 9, 155-72. Gulati, R. and Garino, J. 2000. Get the right mix of bricks and clicks. Harvard Business Review, June, pp.107-114. Hall, S. and Rosenberg, C., 2009. Get Connected: The Social Networking Toolkit for Business. . 7th ed. New York: Kaplan Publishing. Hogg, M. K., Bruce, M. and Hill, A. J., 2007. Fashion brand preferences among young consumers. International Journal of Retail & Distribution Management, 26 (8), pp.293-300. Huizingh, E.K.R.E., 2002. Towards successful e-business strategies: a hierarchy of three management models. Journal of Marketing Management 18 (7/8), pp.721–748. Kacen, J.J., Hess, J.D., and Chiang, W.K., 2002. Bricks or Clicks? Consumer Attitudes toward Traditional Stores and Online Stores. Working paper. University of Illinois. Kumar, V. and Reinartz, W, J. 2009. Customer relationship management: A database approach. 4th ed. New York: Physica-Verlag. Lim, K. and OCass, A., 2009. Consumer brand classifications: An assessment of culture-of-origin versus country-of-origin. Journal of Product & Brand Management, 10 (2), pp.120-136. McDonald, M. H. B., 2007. Strategic Marketing: A State-of-the-Art Review, Marketing Intelligence & Planning, 10 (4), pp.4-22. Niederman, F., and Hu, X., 2003. Electronic commerce personnel in the age of clicks and mortar: toward a framework of individual and project level skills. In Proceedings of the 2003 SIGMIS conference on Computer personnel research: Freedom in Philadelphia--leveraging differences and diversity in the IT workforce (pp. 104-110). ACM. Porter, M.E., 2001. Strategy and the Internet. Harvard Business Review 79 (3), pp.62–78. Saeed, K.J., Grover, V., and Hwang, Y. 2003. Creating Synergy with a Clicks and Mortar Approach, Communication of the ACM, 46.2, pp.206-211. Sirdeshmukh, D., Singh, J. and Sabol, B., 2008. Consumer trust, value, and loyalty in relational exchanges. Journal of Marketing, 66, pp.15–37. Srinivasan, S.S., Anderson, R., and Ponnavolu, K., 2002. Customer loyalty in e-commerce: an exploration of its antecedents and consequences. Journal of Retailing, 78 (1), pp.41–50. Steinfield, C., Bouwman, H., Adelaar, T., 2002. The dynamics of click and mortar e-commerce: Opportunities and management strategies. International Journal of Electronic Commerce, 7 (1), pp.93–120. Terry, B.D. and Israel, G.D. 2004. Agent Performance and Customer Satisfaction. Journal of Extension, 42(6). Ulaga, W. and Eggert, A., 2008. “Relationship value in business markets: the construct and its dimensions”, Journal of Business-to-Business Marketing, 12(1), 73-99. Youtube 2012. Introduction to Clicks and Mortar Series. Available at [Accessed 26/10/2014]. Read More