Professional Documents
Culture Documents
Marketing Management
Report on:
By:
Junaid Ali Khan
ID: I201322177
Table of Contents
1.1. Defining Corporate CRM..............................................3
1.2. The FMCG Leader: Procter & Gamble...........................3
2.1. Customer Relationship Management (CRM)..................3
Macro-Environmental Influences....................................6
Organization Driver CRM and Profitability.....................6
Emerging Needs and Issues of Corporate CRM................7
Difficulties Underlying Corporate CRM............................8
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order to win in this battle. (Marketing, 2006) All the
aforementioned together led the researcher to investigate P&G as a
case study object within the discipline of Corporate CRM, and its
related issues from various facets.
Bauer et al. (2002) supported the progress and addressed that with
the aid and incorporation of Internet and technologies, the
development of IT and IS enabled and simplified the boundaries and
systemized the complexities between companies and their
customers; moreover, it facilitated marketing executive and
knowledge management. Through a better understanding towards
the existing customer, companies were then able to augment
customer value, and thus enlarge the customer pool by retaining
current customers and acquiring new customers.
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the stages of establishment, development and maintenance of a
long-term relationship between customers and companies which
should benefit not only companies, but both sides. Likewise, Swift
(2001) defined CRM as an approach where companies try to
understand and influence customer behavior through particular and
meaningful communications in order to improve customer retention,
loyalty, and acquisition, to establish customer relationship and
finally to achieve the goal above all, customer profitability. Wilson et
al. (2002) also upheld the idea of a mutually beneficial relationship
is the key output that a successful CRM should provide, and defined
it as the processes and technologies that support the planning,
execution and monitoring of coordinated customer, distributor and
influencer interactions through all channels, resulting in mutually
rewarded relationships with customers.
Similarly to all aforementioned, combining both the viewpoints from
Bauer et al. and Swift, Paravariyar and Sheth (2001) defined CRM
as a comprehensive strategy and process of acquiring, retaining,
and partnering with selective customers to create superior value for
the company and the customer, together with the integration with
functions of marketing, sales, customer service, and supply chain,
CRM became a powerful tool to facilitate company in achieving
better efficiencies and effectiveness and to deliver greater customer
value.
All these definitions highlighted not only the importance of the
communications, maintenance and management of customer
relationships, but more importantly the incorporation of
technologies. In short, CRM can be seen as a set of strategies for
managing those relationships with customers that relate to the
overall process of marketing, sales, service, and support within the
organization; meanwhile, IT and IS should be included within the
operation so as to provide an effective use of customer information
and to integrate cross-functional CRM process; and all together CRM
shall assist the company to meet and satisfy the needs of the
customer and consequently deliver profit for the company. (Ngai,
2005)
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and secondly the CRM in software, tools, systems, data mining,
knowledge management, and e-commerce.
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management for Siemens Medical Solutions, Marketing Management
2005)
The problem Camaratta mentioned addressed not only the issue
facing Siemens but by many other large organizations as well. Along
with the continuously heating up CRM system installation in
organizations, related issues also started to float up the surface.
Companies started to realize that having different functions or
brandsoperating individual CRM programs based on each divisions
equity and objectives can cause serious internal problems e.g.
functional conflict, competition and inefficient usage of customer
information, and damage company profitability as a whole
significantly. (Camaratta, 2005)
Goldman (2004) too expressed the same opinion in Customer
Intelligence towards the collaboration problem of CRM, indicating
that many companies which adopted CRM in a rush or developed an
insufficient CRM program that did not link to the overall corporate
goals and objectives, eventually led to internal chaos or program
failure. Goldman suggested that a successful CRM program should
comprise an insight into customer demands and set it as the heart
of CRM agenda, a clear proposition and strategic approach that
copes with the company goals and on top of all, an enterprise-wide
management to coordinate customer relationships as organization
assets rather than divisional data. (Goldman, 2004)
Yu (2001) reinforces the notion that CRM has to be taken to the
upper organizational level instead of marketing and/or customerservice initiatives in order to succeed. A Corporate CRM can benefit
in a number of ways, including synthesize multiple channels and
marketing vehicles including e-mail, call centers, retail shops and
sales representatives to support and gather all sorts of customer
interactions and information, as well as to improve entire
organization operation e.g. customer-oriented product design, better
financial forecasts, and more effective supply-chain management. In
short, well-coordinated Corporate CRM, i.e. harmonization in
corporate culture, system process and technology improvement, is
the key to achieve program continuity and business profitability in
the long-term. (Yu, 2001) All the commentaries, from both
academics and practitioners, indicate that Corporate CRM can be
seen as the solution for CRM system/programs to succeed in the
long term and especially in multinationals or organizations that
possess multiple brands. Here refers Buttles (2004, p. 40) figure
of CRM value chain to depict a comprehensive framework of
Corporate CRM.
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systematic and organizational issues that underlie Corporate CRM
system.
Besides coping with the customer relationship and its continuity as
mentioned above, companies still have to consider the associated
issues from various phases. For instance, for a multinational with
multiple brands, the main problem is to create synergy for all brands
instead of letting each brand works on its own. However, Corporate
CRM has its difficulties to overcome. Problems might occur from the
process of integration, for instance while collaborating all the brands
in one organization, the work of cannibalization, or from keeping
individual brands CRMwhile establishing a coherent Corporate CRM
at the same time. On the other hand, despite the internal operation,
customer reaction should also be considered, for example how to
collect data and explain the new system without confusing
customers from their original understanding of each brand.
The supporting condition in Buttles (2004) CRM value chain
demonstrated the perspectives Corporate CRM needs to include in
accordance with company strategy and lead to final profitability,
namely the leadership and organizational culture, customer data
and IT installation, human resource and the actual execution
process. A diplomatic implementation is built upon an adherent
cooperation between all the supporting conditions and the core CRM
strategy. Each condition stands a crucial position and can influence
the primary stages of the CRM value chain significantly. Further
elaboration of each element is presented as following. (Buttle,
2004, p.42)
Leadership and Organizational Culture
Leadership and organizational culture can affect the outcome of
CRM strategies profoundly in many aspects. Leadership is relatively
crucial in Corporate CRM given its initiative position on government
and examination of CRM process, and decision making for strategic
goals and objectives. As to organizational culture in terms of
Corporate CRM, is to extensively engage with organizational-wide
value and reflect it on formal company system norms, as well as
informal internal symbols, rituals, business patterns and employee
behaviours. (Buttle, 2004, p. 45)
Mack et al. (2005) indicated three major reasons that can cause a
CRM project to fail. Firstly would be the lack of objective targets,
which can lead to false measure and lose of central control. It is
essential to set out the quantification and definition of measurement
categories in the beginning of CRM implementation. Failing to
establish a clear goal, definition and according quantification before
launching a CRM project can be a major source of problems in the
long-run. In addition, it is also important to avoid a too technical
project focus on the CRM project. While the project in progress, it is
equally crucial for other departments to participate, e.g. sales
department for customer information updates, finance department
for budget update. A customer-oriented alignment between
functions covering by a corporate synergy should be built as an
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enterprise-wide mindset to ensure a successful CRM. The last critical
success factor proposed by Mack et al. is the commitment of top
management, i.e. the enforcement of CRM project under cohort
corporate strategy. (Mack et al., 2005) Buttle (2004) summarized
the general considerations among leadership, formal organizational
system, and internal relationships for organizations to initial an
inspection on Corporate CRM.
IT System and Database Management
IT system and Database management in Corporate CRM comprises
the acquisition, storage, maintenance, enhancement, and most
importantly the distribution and sharing of data across the
enterprise. Specific data capture and organizing activities include:
- Identify of existing and potential customer and targeted
market segments individually.
- Establish a financial system of historical costs and revenue
link to each segments or individuals.
- Analyse existing customer data to predict future value and
costs of this particular data pool, and apply the same action
on analyses of potential customer data.
- Distribute a thorough estimation on entire customer data on
gross margin, sales, and revenue. (Mack et al., 2005 and
Buttle, 2004, p.47)
Moreover, of concern to internal relationships, data ownership is
another notable problem in large organizations. It can be observed
from the attitude of stating our data or your data between
departments in one organization, when customer data should
actually be seen as companys data. It is understandable that
between different functions and brands, in order to keep their own
scores and credits, data sharing and management can be very tricky
and difficult, and sometimes even become more of a battle but less
of a synergy within the one organization that they all serve. It is
crucial for top management to establish the notion of enterprisewide data and to straighten the strategic priority amongst all
employees to achieve efficient and effective CRM and greater
profitability for the entire organization. (Reid and OBrien, 2005)
Employee Competences
Human resources, or employee competences, are also an essential
factor to successful Corporate CRM. In order to smoothly implement
and maintain CRM programme, especially considering the nature of
CRM is IT related, updated training on respective skills and
knowledge are required to keep CRM programme perform under the
up-to-date market trend and information technology. Well-trained
skills and knowledge can provide more accurate customer
segmentation, data interpretation, as well as on-time system
redesign and adjustment. (Buttle, 2004, p. 51)
System Procedure
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Procedure is the last supporting condition for Corporate CRM. A
desirable CRM process should be efficient on the cost and effective
on customer value creation. Buttle divided CRM process into two
categories, vertical and horizontal processes. Vertical process is the
activities located within individual business function while horizontal
process represents the cross-functional activities involving e.g.
sales, finance, marketing, and product development divisions, which
is also the highlight of Corporate CRM. (Buttle, 2004, p.52)
Among all the aforementioned essentials of Corporate CRM in terms
of the supporting conditions, to succeed from all the associate
issues, discipline and integration are the key notice points of
Corporate CRM. Likewise, Shaw and Reed (1999) summarized four
key requirements an organization needs to accomplish in order to
successfully build up a CRM system:
- Acquisition and continuous knowledge updates regarding
customer needs, motivations, and behaviors over the lifetime
of the relationship.
- Applying and learning from customer knowledge to
continuously improve business performance.
- Implementation of appropriate systems to facilitate customer
knowledge acquisition, information sharing, and the
measurement of CRM effectiveness and business
performance.
- Integration of multiple functions, e.g. sales, marketing, and
service executives and activities to synergize and achieve a
mutual and beneficial goal between the company and
customers.
Companies that manage customer relationships effectively and
successfully are most likely the ones that took integrated
management approaches between multiple functions, e.g.
marketing, market research, information technology, and financial
accounting. (Morris, 1994)
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advertising on respective brands would reach a wider profile of
consumers more effectively than promotion a single corporation.
(Keynote Report, 2001)
Besides the marketers and manufacturers of FMCG, such commodity
is related with a variety of markets and industries, for instance
retail/wholesale and the supply of raw materials. According to ISIC
(International Standard Industrial Classification), the retail market of
FMCGs (except motor vehicles and motorcycles) includes businesses
in pharmaceutical and medical goods, cosmetic, toilet articles, food,
beverages and tobacco in the form of either specialized or nonspecialized stores, as well as the form of sales via kiosk or mail
order. (UN Statistic Division, 2007) The suppliers of raw material
for FMCG involve even a wider rage of sectors e.g. meat, fish, fruit
and vegetables, dairy products, grain mill products, starches,
alcohols etc. and all the related or processed products.
Apart from diversity and variety, another attribute of FMCG is the
insensitiveness to economic fluctuation, given the nature of the
products that are used on a daily basis to satisfy fundamental
needs, also the price differences are less dramatic thus are more
acceptable to consumers. Multinationals and conglomerates such as
food and beverage giants Mars, Coca-Cola, Pepsi, Carlsberg, Nestl
and Sara Lee, as well as Kleenex, Unilever, Procter & Gamble,
Kimberly-Clark, Colgate-Palmolive and General Mills are the key
players in this particular industry. (Datamonitor, 2007)
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15
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- The Interests of the Company and the Individual Are
Inseparable
-
Product Innovation
Innovation is P&Gs lifeblood, quoted from the companys
2007 annual report. The statement is backed up by its wellknown laboratory in new product innovation and development
in its divers segments, e.g. beauty segment including
cosmetics, deodorants, feminine care products, hair care,
personal cleansing and skin care products. The company gets
greater productivity from its investment on R&D through
continuously refining the system and process with the idea of
innovation so as to make sure the result is robust, reliable.
Innovating how we innovate explicitly express the spirit of
innovation defined in P&G. The continual improvement
enables P&G to enhance its company capability and to deliver
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organic growth consistently. (P&G Annual Report, 2007
and Datamonitor, 2007)
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15% market share in the hair care market, with brands that include
Garnier Fructis and LOreal Professional. (Keynote Report, 2003)
Apart from the hair care market, skin care products are another
highly competitive segment of Procter & Gamble. Amongst all skin
care brands, Olay is the bestselling facial skin care brand in the nonmedicated market, but closely followed by Plenitude, Ambre Solaire
and Beiersdorf's Nivea Sun from L'Oral. Moreover, P&G and LOreal
also struggled in the prestige skin care product market, e.g. SKII
against Lancome and Shu Uemura.
Despite the competition and a few unsuccessful investments, P&G
generally performed well in the past decade, with a growth of sales
from $39 billion to $76 billion, 23 billion-dollar brands in their
portfolio and many other outstanding performances, it is now one of
the 10 most valuable companies in the U.S. (P&G Annual Report,
2007 and Datamonitor, 2007) Given the success in product
innovation, brand management and customer understanding, the
actions of P&G are always under scrutiny by researchers and
competitors alike. The strategy of customer relationship
management is no exception; P&Gs successful pioneered Corporate
CRM programs in the U.S and Mexico have become one of the key
contests with its rivals.
4.Conclusion
The ability of companies to create and maintain mutually valuable
relationships can create an important, sustainable competitive
advantage. (Mack et al., 2005) In the case of Corporate CRM, a
cross-category strategy demands synergy between all brands and
functions within the company, is exactly the ability a company can
leverage to retain existing customers, acquire new customers, and
provide a continuous stream of profits over the lifetime of a
customer. The success of Corporate CRM lies in the harmonization of
cross-functional cooperation.
The contingent character of Corporate CRM requires a higher level
of organizational skill than reliance on tactics that manipulate
product attributes, price or promotion to create loyal customers.
(Mack et al., 2005) Moreover, CRM activities must contribute to
the company or business units performance, e.g. better response
rate in media of higher sales result, to eventually deliver tangible
numbers on ROI and total profits; otherwise the waste would not
only be from investments but also from the cost of deployment and
changing of organizational structures. (Meyer and Kolbe, 2005)
These viewpoints thereon supported by the case study of P&G
through in-depth interview with IT, Marketing and Sales Managers.
The case study analysis proved that the factors summarized from
previous studies and researches are actual issues that modern
organizations are facing today. Further evaluation of CRM process
examined the Corporate CRM program of P&G from four main
elements, the continuous customer knowledge acquirement, the
application and non-stop learning of customer knowledge for
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business improvement, the appropriate system implementation in
assisting customer knowledge acquisition, information sharing, and
performance measurement, and finally the integration of multiple
functions.
The operation of CRM involves several key ingredients; it is the
strategic use of multiple elements of information, processes,
technology, and people, to manage the customers relationship with
the company across the whole customer life cycle. (Kincaid,
2003) In the case of P&G, people, or employees can be the key
factors amongst all others for the company to succeed. As seen
from the interview, the lack of common view on Corporate CRM in
various aspects can cause serious damage to the company in the
long run. In order to achieve synergy at full capacity, and establish a
solid groundwork for long-term CRM, employee training and
expertise fostering should be the priority to deploy Corporate CRM
program so all the related functions would know what, why, how the
program works and when they should act. The major benefit is the
clear definition of CRM to all employees, the first step of integrated
CRM, so that unclear or conflict objectives will not happen to
jeopardize the process. Besides, if the company goal of Corporate
CRM is aligned, there will not be leadership and data management
issues occurring, since every party knows which function will be the
leader of the program and understand that the data should be an
enterprise-wide asset instead of individual function property. In
addition, training, in relation to the concerns the IT manager
mentioned in system process barriers, if the responsible Marketing
Manager does not possess the required knowledge to utilize
customer data, it will then create a situation of having a handful of
data and no actual effect and improvement in market
communication. Marketing managers should also be trained to
understand how the system operates and all the rational behind so
as to execute the programme accommodating actual market
condition. In short, expertise and cross-functional training can
create coherent understanding and motivation for employees to
stride forward in the same pace.
P&G is famous for its effective Brand Management for its wide range
of product portfolio, and its continuous improvement in consumer
research, where the company attempted to gain the most
understanding of consumers, and further anticipate and respond to
consumer needs and wants as accurate as possible. Based on the
insights of consumers and market needs the company can design
marketing plans and create advertising innovations that will
approach consumers more effectively and efficiently than the rest.
(Datamonitor, 2007) It is only reasonable for P&G to go further by
designing a well-cooperated Corporate CRM throughout the
company to make the most of the splendid consumer data, is the
task top management needs to figure out.