Customer-Corporation Relationship - Case Study Example

RELATIONSHIP MARKETING By Introduction According to BISWAS 8), relationship marketing can be defined as activities aimed at managing and developing long term trust and relationships with a large number of customers. It maintains customer profile, history of contacts, and buying patterns in the sales database. By so doing, relationship marketing enhances good relations among all the parties involved. Relationship marketing attracts and also retains customers, it involves well organized strategies that attract and retain customer over a wide range of time. To attract customers through relationship marketing, advertising, promotion and branding methods are used. To retain customers’ relationship marketing employs tactics, which include right quantity and quality, competitive prices, customer satisfaction focus loyalty cards and employing excellent customer service (Egan and Harker, 2005:130). Relationship marketing monitors customer satisfaction, relationship marketing values and treats them as always right. To attract and retain them especially long-term periods continuous monitoring is needed. It monitors the feeling of the customers whether they are satisfied with the services delivered. It also values customer feedback and complaints, which are essential to know whether the customers are satisfied or not. Transaction marketing involves promotional strategies, which focus on the achievement of high sales at a quick rate. It is mostly concerned with quick sales without paying too much attention to long term relationships. It aims at maximizing the sales volume. It targets customers in making point of sales transactions. Relationship between relationship marketing and transactional marketing Relationship marketing is concerned about developing long term relationship with customers, which is opposed to transactional marketing which focuses making sales alone. Relationship marketing focuses on customer relationship to enable it in making future sales. It understands customer needs, which help in attracting, retaining and building long lasting relationship. Transactional marketing has one objective, which is making sales and not only sales but quick sales. Its goal is to make as many sales as possible (Godson, 2009:52). Relationship marketing employs social media, customer training, branding and media relation among others, for it to be effective, these are ways in which relationship marketing invests to enhance future sales. Transactional marketing employs advertising and promotions as the only method to influence sales. It does not take time to build relationships. Relationship marketing has the following advantages Relationship marketing creates a consistent customer experience, it involves gathering information about customers and sharing it among organisation that will help the organisation to know customer need, and whether these needs are well met or not, and they are addressed within the minimum time possible. It helps to identify the products customers are experiencing challenges, and resolving these challenges at a faster rate creates confidence and trust, this increases customer satisfaction. Customer feedback is enhanced through relationship marketing, in an organisation where open communication and cooperation is effective and encouraged; consumer complaints and concerns are addressed quickly. Through this complaints and concerns, organisation can use them to better their products and services, which can increase customer satisfaction (Czinkota & Ronkainen, 2007:201). Innovation is promoted; relationship marketing welcomes customers’ ideas and concerns. It allows customers to share, discuss and vote each one idea. The ideas shared help the organisation to identify their weak areas that need improvement, it also help them to know new products customers may need from them and also changes in preference and taste. Customer profitability, through relationship marketing customer profitability is realized. It is realized through motivating customers through offers and good product and services. Due to these factor customers becomes loyal and are willing to be customers for a long period of time. When customers are satisfied with company products, they are uphold the relationship hence remain associated with that company at all times. Relation marketing creates customer loyalty. The Loyal customer will help the organisation expand by introducing their friends and families to the companies, products and services, being in the front line to try new products the company introduces due to the trust built, they are likely to accept changes in prices that others and they are good in proving information that helps in improving the companys product. Although having many advantages, relationship marketing is faced with the following limitations as described below: High cost as compared to transactional marketing, relationship marketing is characterized by high cost due to the investment the company puts to ensure long term customer relations are maintained. It also involves the cost of training employees in excellent customer service and developing the plans. The cost involved in maintaining customer database also makes it more costly (Evans, Patterson & Omalley, 2004). Company overhaul is also a limitation of relationship marketing, this includes the overall review of the company, and this creates additional expense. For overhaul to be effective changes have to be made. Change is not always welcomed, many staff may resist it and additional cost must be incurred to educate the employees on the new change introduced. Transactional marketing has the following advantages and disadvantages Reduced costs, transaction marketing is involved with reduced costs. This is because transactional marketers are concerned with just making one quick sale. It spends a small amount of money because its campaign is less and is not involved in building customer relationships which spends a lot of money. This makes transactional marketing relatively inexpensive compared to relationship marketing (Bartels and Nelissen, 2002:195). Time spent is less, transactional marketing spends less time because their campaigns are only focused on one point sale. This is an advantage of transactional marketing over relationship marketing, which spends more time on building relationship with customers. This makes transactional marketing more effective where time is a limit. One disadvantage of transactional marketing is poor relationships, transactional marketing is not concerned with building relationship and it is all concerned with a quick sale. Its efforts are not concerned with getting long-term customers, it only finds people who can make a purchased at once, with no intention to build relationships that can help to make purchases in the future (Bearden and Haws, 2011:385). Good reputation is not enhanced; this is also another disadvantage of transactional marketing where good reputation is lost. Good reputation is created where relationship are build, in transaction marketing relationships are not a major factor this hinders creation of reputation. This hinders customers to become marketing advocates through telling friends and family members the good things their company offers them (Moran and Hunt, 2006:288). In essence, comparing relational marketing and transaction marketing, relationship marketing is better off, because it is consistent with the long term objectives and future of an organisation. It builds good reputation and relationships are enhanced. International market -case study Huawei Telecommunication According to Lindgreen (2008:121), market can be defined as a place whereby the exchange of goods and services between individuals and organisation takes place. International market is therefore as a market, which is outside the borders of the country where the company is situated in. It can also be further explained as a market other than the domestic market. To give a better analysis, Huawei telecommunication will be used in as it is a good example of companies that are entering international market. Chinese companies are now tending to be global like other companies like APES, Coca-Cola, Toyota and Uniliver Company, which are already well established in the international market. International market has a wide of advantages which makes companies to enter them. The following are the reasons that make a company to enter into the international market. Saturation of domestic market, many companies in our case Chinese companies are entering in the global market due to saturation of their home market. Due to this factor, the companies work under going concern concept focus on long term, as the company achieves its short term goal it becomes ambitious to get more earnings. To increase this earning, it is advisable for the company to think of entering the international market to boost sales (Czinkota & Ronkainen, 2007:151). Domestic markets are small, due to meeting all the demand of their domestic market and supply being higher than demand forces a company to look for markets outside its bounders. This is one of the reasons why our case study company Huawei is turning to be global due to small market domestically (Lavin, Cohan, & Locke, 2011). Access advanced technologies are also a factor that is making Chinese firms to enter into the global market. Chinese firms are looking to get the world class technology in other countries like Europe and USA which will help them to offer better products than their domestic competitors in the home market. These help them to avoid decreased profits. Through access to this, advanced technology Chinese companies can be able to compete both locally and abroad with their competitors. Acquire established brands; one of the reasons why Chinese firms are entering to the local market is to acquire global recognized brands. These brands help Chinese firms to increase their competitiveness. A trust gap is bridged and also it makes it easier to use already recognized brands instead of developing new brands which can take a long period of time (Czinkota & Ronkainen, 2007:219). To become national champions, this is also a reason why Chinese companies want to enter into the international market with both business and government reasons. Most of these companies align their policy with their government policy of supporting overseas investment (Lavin, Cohan, & Locke, 2011:79). Due to support from their government, these companies are motivated to enter into international market. Through international market, Chinese government economy is boosted. Incorporate global management expertise, this is one of the crucial reasons for this companies entering international markets. Through international marketing, the companies will get experts in different fields who will help with creativity and innovation through coming up with new ideas and implementing them (Lindgreen, 2008:143). Lower cost of production, new markets are associated with low cost of production. Cost of production includes capital, labour, technology, land and entrepreneurship, where these factors of production are lower compared to domestic market makes Chinese company in our case Huawei to be motivated to enter into international market or go global. In new markets where these factors are a cheap company realizes high profits (Capela and Hartman, 2000:88). Expand market and increase sales, when a company goes international it expand and its sales increases. Increase in sales results to increased profits. When a company enters into new international markets, it gains new customers as markets have expanded. When sales increase it gives the firm’s management, motivation to exploit more (Lavin, Cohan, & Locke, 2011:117). International market helps in controlling expenses, one of the objectives of each and every company is to maximize profits through less expense incurred. Less expense minimizes cost. This company explores outside to look solutions to production and manufacturing problems they have. Where labour cost is low companies may move manufacturing plants in those areas. This helps to get raw materials at a cheaper price (Moon, 2000:377). Diversification, this is a crucial aspect and a wise decision as a reason why companies go global. Diversification enables the firm to reduce risk. Chinese companies in our case Huawei may enter into the global market to diversify risk, investing in different countries will enable it to be in a good position even if investment in one country are affected by security reasons. A recession in one country will not have a great impact on the investment in other countries. To withstand the competition in domestic market, due to saturation in domestic market and meeting the demand of domestic market, Chinese companies are entering the international market for defensive reasons and gain competitive advantage over their competitors. Therefore, international market plays a good role in withstanding competition. Short term and long term security, Chinese companies are now going global and especially to the west, this is because the markets there are not vulnerable to fluctuations. This motivates these companies to venture into these new markets, as the earnings will be persistent. Through this short term and long term, security of a firm is guaranteed (Anderson and Kerr, 2002:321). Economies of scale, these are cost advantages that firms are able to obtain due to size, scale of operation and output levels. Firms enter into international market to export their products and services throughout the world. Due to Chinese firms in our case Huawei, which is a telecommunication company want to enter in this market to export its output, which is one way of a company to expand. Also going global can help a company to achieve greater economies of scale. Education can also be a reason as to why companies turn global, this is whereby a company enters the global market to learn and not only business. Gaining information on competitive strategies, how to manage a company and the secrets of competitors is also a reason why a company can enter international markets. A company can enter a new international market to identify the need of the customer, and then coming up with new products that will meet their needs. Learning helps to get business idea, then putting it into practice (Czinkota & Ronkainen, 2007:241). The above points clearly demonstrate the need for international market and how useful it is, in our case the Chinese company Huawei Telecommunication has a good reason as to why it needs to enter new international markets because, international markets is associated with many benefits. Both micro and macro factors have been well discussed above. Micro deals with individual variables like factors of production while macro deals with aggregates that are many variables; these include inflation, competition among others. Customer Relationship Customer relations can be defined as the process by which firms enhance and promote customer satisfaction, give feedback and also promote customer loyalty (Cunningham, 2002:21). It is all about managing communication between the company and the customers through ensuring effective channels of communication are in place. It involves acting on customers’ complaints and questions raised. The main goal of customer relations is to maintain long term relationship with customers. For the companies to realize this they must have and maintain good reputation and strong one that gives customer special services discount among other benefits. Customer relations evolved from the corporate complaint department, this is the department that was set aside to deal with negative client comments and other concerns. Over the years the companies developed a strategy that customer is always the best, it is good to make a small loss and maintain a good customer. Customer awareness has grown in the 20th century, which has enlightened customer of their rights. It has also enabled firms to be customer oriented from the main goal of profit maximization (Peelen, 2005:58). Basic strategies and objectives of customer relationship management include the following: Customer identification, companies can only identify customers through marketing channels and interactions. This channels help to provide value to customers ‘serving and meeting customers’ needs at the right with the right product. Customer differentiation, this involves identifying each customer needs, this is because each customer has different demands and needs. The companies should understand that customers have their own lifetime. This strategy helps to understand individual customer needs and help to make products that will be marketable. Customer interaction, this is a crucial strategy that helps companies to keep and tract customers’ needs and behaviours over time. This should be a continuous process to learn more about the customers. This is because customers are long term profitability of a company and this is only enhanced through building relationships. Personalization, this can be defined as a process whereby different customers are treated differently. This enables the company to know the needs and demand of each and every customer and acting on them, this increase customer loyalty. Types of customer relationships Personal assistance, this is whereby the customers can communicate with the company representatives during the sales period or after the sale process. It is based on human interactions; customers may communicate with the company through emails, through call centres or in person. Personal assistance is a crucial thing that helps the organisation to build long term relationships. For our company entering new market it should make sure assistance given to customers are excellent to build long-term relations. Self service, this is where a company does not maintain relationships that are direct to its customers. It provides all the ways the customer can help themselves. These kinds of services are what the customers can make to themselves easily. In our case the company should put in place self service as a part of customer relationship building. Use of communities, this is one of the important types of building customer relations through the use of communities. This can be direct interaction with the communities they live or through online forums, to exchange information and knowledge and solve problems. Communities’ interactions bring customers closer to companies. Automated services, it links self services with automated services, automated services help to identify individual customer with individual features. This helps to serve customers in a better way, which can lead to their retention. Our case company should automate its services to improve customer satisfaction. Benefits of customer relations in relation to companies in international market Higher customer retention and loyalty, whether a company is operating on the domestic market or international market it needs to build customer relations to enable it to flourish. Relationship enables customer to build trust, which makes them become loyal. This enhances customer retention and loyalty (Robert, 2004). Reduced cost of sales, this is true because existing customers are responsive, this makes the cost associated with selling to decrease. Companies that have better knowledge about the channels, customer relationship and distributors, they are more effective and this makes the cost associated with campaigns to decrease. This relationship is crucial to our company entering the international market (Russell, 2002:399). Evaluation of customer profitability, it is good for a company to get to know which kinds of customers are profitable, the ones that help the company makes more sales. These customers are the ones a company cannot afford to lose, and which they have long-term or they want to build long term relationship (SCHUMANN, 2009:90). This is also vital to our company entering a new international market, it should value them highly. Customer relations enable effective marketing, effective marketing is enabled through the company having detailed customer satisfaction. This enables the company to forecast the likely products customers may purchase (Fjermestad and Romano, 2006:77). More targeted campaigns are enhanced and information of customers is analysed from multiple angles to determine the effective marketing campaign that has great impact on sales. This will also help our company entering global market (CZINKOTA & RONKAINEN, 2007:246). Improved customer service and support, customer service is one of the key things emphasized in relationship marketing; it tries to employ excellent customer services to meet their satisfaction, and build trust with company. It involves acting immediately on customer demands and complaints and solving them effectively. This will also help our company venturing international market to succeed (Raab, 2012:188). Through the above discussed categories and benefits of relationships with regard to customers are key and crucial to a company entering international markets. This is because every customer tries to build good relation with customers, for its future expansion and growth. References ANDERSON, K., & KERR, C. (2002). Customer relationship management. New York, McGraw-Hill. http://site.ebrary.com/id/5003094. BARTELS, G. C., & NELISSEN, W. (2002). Marketing for sustainability towards transactional policy-making. Amsterdam, IOS. http://site.ebrary.com/id/10116460 BEARDEN, W. O., NETEMEYER, R. G., & HAWS, K. L. (2011). Handbook of marketing scales: multi-item measures for marketing and consumer behavior research. Thousand Oaks, Calif, SAGE. BISWAS, S. (2014). 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