Relationship Marketing - Assignment Example

RELATIONSHIP MARKETING By Location Question underpinning conditions for CRM and recommendations To address the question of effective relationship marketing in Silverstone, it is first imperative to define marketing as the process that involves the organization of functions and processes that are meant to create, effectively communicate, and deliver value to the target consumers (Martensen & Mouritsen, 2014). Besides, marketing entails managing the customer relationships in a manner that benefits both the organization and the stakeholders. Therefore, the modern definition of marketing focuses more on the management of relationships as opposed to traditional marketing that focused on creating awareness about the particular product (Grönroos, 2011). Since the modern marketing is an intricate process owing to various challenges, modern organizations have realized the need to focus on their budgets, especially the size of the budgets, and also on the particular business sectors that they operate in as with the case of Silverstone. Marketing has evolved to utilize technology thus digital marketing is a phenomenon that is fast gaining ground in modern organizations. Digital marketing, as evident in the Silverstones case, is meant to develop the bands though companies are always constrained by complexity of developing the brands because the business areas are ever growing thus a company must respond with marketing structures that can enable it to cope with the complexity of digital media (Grönroos, 2011). In response to the market changes, the Silverstone management created the new position of the social media executive to manage the customer relationships. Therefore, it is imperative to highlight some of the conditions that are necessary for the company to successfully carry out relationship marketing. Customer Relationship Management (CRM) refers to the various strategies, practices and technologies that organizations apply when managing and analyzing interactions with the customers and provides data for the entire customer life cycle (Ernst, Hoyer, Krafft & Krieger, 2011). Therefore, the goal of CRM is to improve the business relationships especially with the customers, increase customer retention and also drive up the sales or increase the overall revenue. In the phase of changing business operations, CRM systems have been designed in a manner that they are capable of compiling information on various customers from different market segments and also act as point of contacts between the company and its esteemed customers (Ernst, Hoyer, Krafft & Krieger, 2011). In this case CRM systems or initiatives in the digital world takes place in such platforms like company website, live chat, telephone, direct mail, social media and other marketing materials. Nonetheless, CRM systems are capable of detailing personal information of the customers, buying preferences, concerns and purchasing history thus provides a fast hand tool in managing the relationships between them and the organization (Christopher, Payne & Ballantyne, 2013). Overall, CRM strategy seeks to fulfil some of the objectives like understanding the customers, retention through better experience, increasing profitability, decreasing costs of managing the customers and winning new contracts and clients (Ernst, Hoyer, Krafft & Krieger, 2011). However, technology is fast changing the way companies manage their relationships with the customers. The advent of technology especially the internet has changed the purchasing behaviours hence companies have found easy and convenient ways of communicating and collecting data about the clients. Therefore, many aspects of modern CRM rely mostly on technology as John from Silverstone confirm that internet is fast growing and is poised to change how organizations interact and communicate with their customers. Conditions necessary for Successful relationship marketing The IDIC model In the case of Silverstone, the executive management can apply some of the proposed models of managing customer relationships. For instance, the IDIC models suggest four stages or conditions that are necessary for the relationship management. Rogers and Peppers developed the model and proposed successful relationship management would only be possible if companies undertook various actions of identifying, differentiating, interacting, and customizing their target markets (Ibrahim, Ahmadi, Osmani & Nilashi, 2012). According to the model, relationship marketing can only be successful if the company identifies its target customers, and this also involves having a deep knowledge about the customers. The underpinning condition here is that a company should not only know about its target customers but also should have enough knowledge so that the marketing initiatives can serve their needs through proper product identification where the focus is also to ensure proper servicing of the target customers. The IDIC model also recommends that relationship management is possible if the company can differentiate its customers on two fronts; based on need and value (Ibrahim, Ahmadi, Osmani & Nilashi, 2012). Therefore, before undertaking the marketing initiatives, a company must differentiate the customers and identify the ones that generate the most value currently as well as the ones that have prospects for future improvement on the company’s company. Based on the need, relationship management is based achieved if the organization differentiates its customers according to their expectations or needs. The implication needs of customers vary thus serving them appropriately require prior knowledge of these needs. Interaction is another condition set forth by the IDIC model as an underpinning condition for the successful customer relationship management (Ibrahim, Ahmadi, Osmani & Nilashi, 2012). In this regard, the particular company must put measures that improve interactions with the customers because the move helps in understanding and knowing the expectations of the customers as well as the relationship they have with the brand. In this case, interaction with the customers must be based on their needs as well as the value they add to the organization. Besides, direct interaction with the customers is an indication that the company is fully concerned about its target consumers and that the particular organization is concerned with serving them individually. Moreover, the efforts to directly interact with the customers make them loyal thus helping the company in building long-term relationships. The last condition is that the model proposes as a prerequisite for successful customer relationship management is that the company must be in a position to customize its products and this is also based on their values and needs (Ibrahim, Ahmadi, Osmani & Nilashi, 2012). In this case, the particular company should customize the offers as well as the marketing communication since this helps in meeting the expectations of the customers. The implication is that proper interaction with the customers will lead to the identification of their needs thus they will have the belief that the company is committed to coping with their particular needs. Therefore, failure to interact with the customers implies that the organization will not be able to customize its marketing communication to the target market. Recommendations For Silverstone Company, the senior management should first adopt Gummesson’s definition of CRM since the management expert defined the concept as the strategies and values of relationship marketing that puts emphasis on the particular customer relationships and eventually turned into practice (Ernst, Hoyer, Krafft & Krieger, 2011). In this case, the company should ensure that the set strategies help in tailoring good communications between the company and the customers without any bias (Ibrahim, Ahmadi, Osmani & Nilashi, 2012). The first strategic recommendation is that the company should first identify its target audience or the customers since it will use the relevant information to design products that meet their needs and expectations (Ibrahim, Ahmadi, Osmani & Nilashi, 2012). In the Silverstones case, there are various target audiences including the middle income and upper-class customers who would spend their luxury time watching the motorsports. Therefore, identification of customers is one of the initial steps in building a CRM strategy as the company is lacking one. Silverstone has already adopted the digital media that will help it easily identify the target markets because the move to social media relationship marketing is actually going to earn the company some loyal customers. Nonetheless, differentiation of the customers is also a necessary step towards successful relationship marketing (Ibrahim, Ahmadi, Osmani & Nilashi, 2012). In this regard, customers are differentiated based on their needs as well as values. In this case, Silverstone can differentiate its customers based on their needs on motorsports as a product. On the other hand, the company can differentiate them based on the value they add to the entire firm. If particular target customers add more values to the company then CRM efforts must be focused on satisfying such needs because they bring a lot of value to the brand and also the company in general (Grönroos, 2011). Most importantly, CRM is most successful when there are interactive networks that the company can use to communicate with the customers (Ernst, Hoyer, Krafft & Krieger, 2011). In this case, Silverstone has already created the social media executive position and also plans to integrate the customer service centre and the social media department. Moreover, the company should capitalize on its digital media, Silverstone’s website in this case, and adopt the mobile web as opposed to mobile apps that are more expensive. Besides, the company can adopt both offline and online media as a means of saving costs while exhausting all the media or platforms to disseminate the customer relationship marketing messages. Finally, product customization is very crucial part of the CRM strategy since the customers have different tastes and preferences (Ernst, Hoyer, Krafft & Krieger, 2011). However, product customization is only possible through the digital media strategy since the executive management of Silverstone Company is already confident that the strategy will help in identifying the customer needs. On the other hand, the company needs to customize the relationship marketing messages to the specific customers because despite the growth, the sales force has been lower than the expected levels and but the digital media strategy is poised to increase the company’s influence and expand its growth. Question 2 how customer portfolio analysis could be applied to the case Customer Portfolio analysis Customer portfolio analysis is a tool that helps business entities to segment their customers based on their contributions to the sales and profit margins (Holmbom, Eklund & Back, 2011). On the other hand, the analysis is a readily available tool for segmenting customers based on the length of their relationships with the organization and also the type of the relationship they have with the particular organization. Therefore, concepts like loyal, new, defector as well as non-customers shows how buyers can be segmented based on their relationship with the organization (Hsu, Lu & Lin, 2012). Nonetheless, many organizations focus on serving various customers yet they barely have incentives for analyzing customer information so that they can produce goods and services to meet their expectations that should also be based on the value they add to the organization. The portfolio is this context refers to customer information available in the organization’s database including their purchases including the frequency of doing such purchases (Holmbom, Eklund & Back, 2011). Most importantly, organizations like Silverstone should bear in mind that using information from the customer records requires proper analysis so that the organization can resort to meeting the customer needs and expectations in a meaningful manner. In the Silverstone’s scenario, the move to appoint a social media executive shows the organization’s commitment to using digital media to gain more knowledge of the customers. Nonetheless, the company had been depending on a media partner to provide the much-needed background data to help in making crucial decisions about the customers. On the other hand, the need for customer portfolio analysis stems from the fact that customer relationship management depends on the size of the particular marketing budget and also depends on the sector that a business is operating in (Holmbom, Eklund & Back, 2011). However, digital marketing is increasingly becoming complex there is there is need for proper control and coordination of the marketing activities but such incentives cannot be met if the organization is unable carry out a proper analysis of the available customer information or data from the digital databases (Taken, 2012). The need for proper customer portfolio analysis in Silverstone Company is driven by the fact that the customer care service and other people in the organization have no training on how to use social media. In this case, there is the need to create social media awareness first before training the social media marketing personnel on how to carry out proper analysis of customer information based on the available data in the company’s digital media databases. In addition, the need for proper marketing data analysis is the fact that Justin, having a prior experience in sales and marketing, believes that the emphasis on marketing data can help the team to generate as well as use marketing analytics so as to be able to determine whether the spending on advertisement is working to the advantage of the company in terms of driving up sales and increasing the revenue. The company is already able to evaluate reactions of the customers based on the 160, 000 contacts. However, the company lacks CRM systems to support the customer portfolio analysis thus Silverstone has been engaging in mass customer targeting implying that there is no market segmentation. On the other hand, the data that the company has is not arranged in a manner that will make it easy to drive the digital marketing strategy. Therefore, it is imperative to recommend how the organization can use customer portfolio analysis to enhance value propositions for each segment or group of customers (Holmbom, Eklund & Back, 2011). The target customers Customer portfolio analysis paints the picture of the possible customer segments that the company should address (Holmbom, Eklund & Back, 2011). For instance, the company can segment the market based on the demographic characteristics of the customers. In this regard, Silverstone can segment the customers based on their age, gender, background, or places of origin. In this case, the analysis can possibly reveal that the youth and the middle age are the most sports enthusiasts thus they spend more in buying race tickets, events, product exhibitions and banquets. Therefore, the company must ensure that much attention is given to the particular group because they have the potential of adding value to the brand. Gender is also a significant factor because male definitely loves sporting activities more than their female counterparts thus they add a good value to the Silverstone as a digital brand. Moreover, segmentation can be based on demographics, and this involves such elements like social trends (Hsu, Lu & Lin, 2012). The modern society is tech savvy and has a strong preference for digital brands. Besides, there is also the conservative segment of the customers who would prefer watching the events on live stream media like Television and offline media like radio though the particular segment might have least value to the digital brand because the focus is now on digital marketing. In fact, the reports show that the company has 160,000 email contacts as compared to the 35, 000 of the radio listeners. Enhancing the value proposition for each segment Mechanisms of enhancing value proposition are based on the fact that value proposition is an approach that business entities use to define the benefits that the target customers enjoys by purchasing the particular product (Stank, Esper, Crook & Autry, 2012). Therefore, in the Silverstone’s case, the mechanisms will be aiming at describing the benefits of products to each customer segments. In this case, the seven steps of value proposition will be applied all on each segment. Timeframe is one of the mechanisms for creating value for each of the segments because the digital world is ever changing thus there is the need to add new features that also calls for developing new prices (Stank, Esper, Crook & Autry, 2012). In this case, Silverstone can create value for all the target customers by creating new products that never existed. In this case, the company can introduce new racing events. The loyal and highly valued customers like the middle-aged, the company is already expanding its digital brands to launch new ventures like car insurance and breakdown services. Therefore, such are the benefits of purchasing the Silverstone brand and acts as an appreciation of staying loyal to the organization. The customer portfolio analysis helps organizations to create value propositions by targeting the intended user of the particular product (Saarijärvi, Grönroos & Kuusela, 2014). The implication is that value proposition can be created if Silverstone understands the intended users of the particular products. In this case, it is imperative to add value to products such as driving experiences, racing events, car insurance after the analysis of how the individual customer segments use these products. The bottom line is that Silverstone should create value for the products based on the frequency of purchases by the customers where the highly valued customers are given more advantages or benefits of using the products (Frow & Payne, 2011). A positive aspect of the customer value proposition is the focus on the best alternatives (Stank, Esper, Crook & Autry, 2012). In this case, value proposition should be created based on the alternatives of the products. In this case, the best alternative is the one that offers more benefits to the customers. Therefore, there are many alternatives to motor sports and also rival firms come up with better products. However, Silverstone has already differentiated itself as a digital brand thus value should be added to digital customers through quality and reliable services. Value experience is another useful mechanism for creating value proposition for the target customers (Stank, Esper, Crook & Autry, 2012). In this case, Silverstone’s marketing executives must ensure that the esteemed customers get real value for their purchases, an approach that also calls for quality in customer service and high product benefits. Besides, value quantification can be a useful tool in creating and adding value but this rather calls for measurements of the experiences (Stank, Esper, Crook & Autry, 2012). Since it is impossible to measure customer experiences, the company can rely on important information like customer responses upon purchasing of a particular product. Pricing strategy is also another important approach to creating value for the customers since the consumers must pay fair value for the goods and services that they purchase (Lacey, 2015). As with the case of Silverstone, prices can be harnessed for each market segments since they are from different backgrounds in terms of economic status that translates into their purchasing behaviours. The focus is to ensure that the particular adopted pricing strategy should give customers value for their money. Recommendations and Conclusion In summary, it is vital for the Silverstone’s marketing team to segment its target customers since the case study shows that the organization is already implementing a marketing strategy without identification of the target customers. The company can use various rationales for segmenting customers including demographic, psychographic, and socio-cultural characteristics of the entire target audience. Nonetheless, successful evaluation of customer portfolio analysis will enable the company to create value propositions for each segment. From the analysis, it is clear that Silverstone can use the seven steps of creating value proposition including timeframe, price, next alternatives, value quantification, intended customer, and value experiences. 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