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Customer relationship

management 

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History of CRM

B&S CIMS CRMRM

B&S – Buying & Selling

RM – Relationship MarketingCIMS – Customer Information Management Systems

CRM – Customer Relationship Management

e-CRM- A subset of CRM that focuses on enabling customerinteractions via e-channels (The web, email and wireless)

Time line

e-CRM

Late 80’s Mid 90’s 2002 - FutureEarly 90’s

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Customer Relationship Management What is a customer?

 A person who buys…

 What is a relationship?

The state of being connected…

 What is management?

The science of controlling…

 So CRM should mean controlling the relationshipwith a customer.

How do you control a relationship?

Isn’t a relationship a two-way thing?

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Customer Relationship

Management (CRM)

Traditional Marketing CRM

Goal: Expand customer base,

increase market share by mass

marketing

Goal: Establish a profitable, long-

term, one-to-one relationship with

customers; understanding their needs,

 preferences, expectations

Product oriented view Customer oriented view

Mass marketing / mass production Mass customization, one-to-one

marketingStandardization of customer needs Customer-supplier relationship

Transactional relationship Relational approach

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Customer Relationship Management Customer Relationship Management (CRM) is a

strategy   that focuses on  building strong relationshipswith customers and potential customers for creating andmaintaining a loyal customer base.

 CRM   works across all departments   to harmonizecustomer-centric thinking.

 It   reduces costs,   increases efficiency and improvescustomer satisfaction.

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 Process of creating and maintainingrelationships with business customers or consumers”

 “A holistic process of identifying, attracting,differentiating, and retaining customers”

 CRM is basically for developing long lastingrelationship with a customer.

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Definition of Customer Relationship Management (CRM)?

CRM is “the development and maintenance of mutually beneficial

long-term relationships with strategically significant customers”

(Buttle, 2000)

CRM is “an IT enhanced value process, which identifies, develops,

integrates and focuses the various competencies of the firm to the

‘voice’ of the customer in order to deliver long-term superior

customer value, at a profit to well identified existing and potentialcustomers”.

(Plakoyiannaki and Tzokas, 2001)

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Information Technology and CRM

 Technology plays a pivotal role in CRM

 Technological approaches involving the use of databases,data mining and   one-to-one marketing   can assistorganisations to increase customer value and their own

profitability This type of technology can be used to keep a record of 

customers names and contact details in addition to their history of buying products or using services

 This information can be used to target customers in apersonalised way and offer them services to meet their specific needs

 This personalised communication provides value for thecustomer  and increases customers loyalty to the provider 

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 Advantages of CRM over traditional mass-

media marketting

 Reduces advertisement cost

 Focus on customer needs

 Easier to track the effectiveness of a given

campaign Compete for customers based on services not

prices

 Prevents overspending on low-value clients

 Speed the time to develop and market the

product

 Improves the use of customer channel

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Types of CRM

 Strategic CRM

 Operational CRM

 Analytical CRM

 Collaborative CRM

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Operational CRM

 Operational CRM is mainly focused on   automation,

improvement and enhancement of business processes

which are based on   customer-facing or customer 

supporting.

 The main importance of a CRM system lies on how the

selling, marketing and service   oriented processes are

automated

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Operational CRM

 Marketing automation

 Sales-force Automation

 Service Automation

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Marketing automation- Basically focused on automating marketing processes

 campaign management   involves marketers to use

customer specific information to  determine, evaluate and

develop communications that are targeted to customers in

individual as well as multilevel or multichannel

environment. Campaigns developed to communicate

customers individually are easy and involves unique and

direct communications. For multichannel environment the

implementation of marketing strategies and campaign

management is quite difficult and challenging.

  For handling this, a CRM marketing strategy called event-

based marketing is inherited. Using event based

marketing communication and offers are presented to

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Sales-force Automation A CRM system is not only used to deal with the existing

customers but is also useful in acquiring new customers.

 Sales cycle

 The process first starts with   identifying a customer  and

maintaining  all the corresponding details into the CRM

system. This process can be distributed into many stages

which includes generation of   lead and then qualifying

those leads as prospects.

 Automation of selling process is efficiently handled bySales-force automation which   automates all the

methodologies or sales cycle and above described process

sophisticatedly.

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Service Automation Service automation deals with   managing organization’s

service. The actual interactions with customers such as

contact, direct sales, direct mail, call centers, data

aggregation systems, web sites and blogs etc. are examples

of operational CRM.

 Any one in the organization can have   access to this

information about customer   which gives a clear view of 

customers needs and important information on the customer 

such as products owned, prior support calls etc

 The   customer can easily be contacted at right time at

the right place.

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Analytical CRM

 Analytical CRM is designed to   analyze deeply the

customer’s information   and   data   and   unwrap(remove) or 

disclose the essential convention and intension of behavior 

of customers on which capitalization can be done by the

organization.

 Primary goal of analytical CRM is to develop, support and

enhance the work and decision making capability of an

organization by determining strong patterns and predictions

in customer data and information which are gathered from

different operational CRM systems.

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key features of analytical

CRM:   Seizing all the relevant and essential   information of customers from

various channels and sources and collaboratively integrating andinheriting all this data into a central repository knowledge base with aoverall organization view.

  Determining, developing and analyzing inclusive set of rules and

analytical methods to scale and optimize relationship with customers byanalyzing and resolving all the questions which are suitable for business.

  Implementing or deploying   the results to   enhance the efficiency of CRM system and processes, improve relationship and interaction withcustomers and the actual business planning with customers.

 Combine and integrate the values of customers with strategic business

management of organization and the value of stakeholders.

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 Advantages of implementing and using

an analytical CRM are described below.

 Leads in   making more profitable customer   base by

providing high value services.

 Helps in   retaining profitable customers   through

sophisticated analysis  and making new customers that

are clones of best of the customers.

 Helps in  addressing individual customer’s needs  and

efficiently improving the relationships with new and existing

customers.

 Improves customer satisfaction and loyalty.

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business

  Customer Analytics-   This is the base analytic used to   analyze customer 

knowledge base. It provides a better view of customer behavior and by modeling,assessing customer values and assessing customer’s portfolio or profiles and

creates an exact understanding of all the customers.

  Marketing Analytics-   This helps  discovering new market   opportunities and

seeks their potential values. It also helps in managing marketing strategies and

scale and plan marketing performance at district, regional and national levels.

Marketing analytics also focus on campaign management and planning, productanalysis and branding.

 Sales Analytics- Sales analytic provides essential environment to plan, simulate

and predict sales  volumes and profits by constantly analyzing organizational

sales behavior. It helps in pipelining all the selling opportunities in an efficient

way by indulging and improving the sales cycle.

 Service Analytics-  Analytical CRM has major role in enhancing the serviceswhich answering all the questions regarding customer satisfaction, quality and

cost of products, complaint management etc. It even helps in improving and

optimizing the services by sophistically analyzing the service revenue and cost.

  Channel Analytics-   This type of analysis helps to   determine the customer 

behavior on channel   preferences, like web channel, personal interaction,

tele hone channel etc. This information is efficientl inte rated in customers’

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Collaborative CRM

 Collaborative CRM deals withsynchronization(organization) and integration

of    customer interaction and channels of 

communications  like phone, email, fax, web etc.

with the intent of referencing the customers aconsistent and systematic way.

 The idea is not only enhancing the interactions

but also to   increase and improve customer 

retention and liberty ( Freedom).

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Collaborative CRM can be broadly

identified by two aspects:

 Interaction Management

 This management process deals with   designing

the communication or interaction channel

process within an organization which is specific to

customer interaction   and   finally enhancing   theextent of  communication between both the parties.

 Channel Management

 After analyzing and implementing the interaction

medium it’s important to   enhance the power of channels   through which the customers are

interacted.

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Advantages of Collaborative

CRM:

 Enables  valued customer interaction across the

channels.

 Entangles( catch up) web or online collaboration

to cut down service cost of customers. Integrates customer interaction with call centers

to enable   multi-channel interaction with

customers and helps them make understand the

overall process vales.

 Describes a view of integrated customer’s details

during interaction to server them in a better way.

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Strategic CRM

 Maintain Long Term Relationship with Customers

 The aim of strategic CRM is to concentrate and

enhance the knowledge about customers and use

this knowledge to   improve and customize theinteractions with customers   to maintain a long-

term relationship with them.

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e erm n ng an eve opmen o

strategies

 Amplify(increase) Commitment For this  each and every department should be kept informed

about all the developments and implementation of processes

carried out or performed

 Building valuable project team-

 Each and every member of this team should be experiences anddedicated professional as these members will be the key decision

makers   in the whole process. They will be   responsible to

communicate all the related details   and benefits of the CRM

strategies to all the members of the organization. These members

should be from following work groups Management, Technical, Sales and Marketing, Financial,

External Experts

 Requirement Analysis

 This process involves a series surveys and questionnaires with

top level sales, marketing and financial managers to gather the

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CRM Business strategy

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CRM strategy should be aligned to the organization's mission and purpose in order to harness(bind) the power of CRM software and

 bring about a sustained (continuous) achievement of business

objectives and profitable customer relationships.

Three key phases:

• 1. Customer Acquisition.

• 2. Customer Retention.

• 3. Customer Extension.

Three contextual factors:

• 4. Marketing Orientation.

• 5. Value Creation.

• 6. Innovative IT.

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 1. Customer Acquisition - This is the process of  attractingour customer   for the first   their first purchase. We have

acquired our customer.

 Growth   - Through market orientation, innovative IT and

value creation we aim to   increase the number of 

customers that purchase from us for  the first time.  2. Customer Retention  - Our customer returns to us and

buys for a second time. We keep them as a customer. This is

most likely to be the purchase of  a similar product or service,

or the next level of product or service.

 Growth   - Through market orientation, innovative IT and

value creation we aim to   increase the number of 

customers that purchase from us regularly.

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 3. Customer Extension   - Our customers are   regularlyreturning to purchase from us. We introduce products and

services to our  loyal customers that may not wholly relate to

their original purchase. These are additional, supplementary

purchases. Of course once our loyal customers have

purchased them, our goal is to retain them as customers for the extended products or services.

 Growth - Through market orientation, innovative IT and value

creation we aim to  increase the number of customers  that

purchase   additional or supplementary products and

services.

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4.   Marketing Orientation   - means that the whole

organization is focused upon   the needs of customers.

Customer needs are addressed by the  Three Levels of aProduct   whereby the organizations not only supplies the

actual,

tangible product, but also

the core product and its benefit, and also

the augmented product   such as a warranty andcustomer service.

Marketing orientation will focus upon the needs of consumers

for all three levels of a product. (N.B. 'market'

orientation(decision making process) and 'marketing'

orientation (customer or product)are not the same).

5.Value Creation - centres on the generation of shareholder 

value based upon the satisfaction of customer needs (as

with marketing orientation and the delivery of a sustainable

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6. Innovative IT  - is exactly that - Information Technology

must be up-to-date.

  It should be efficient, speedy and focus upon the needsof customers.

  Whilst(at the same time) IT and/or software are not the

entire story for CRM, it is vital to its success.

  CRM software collects data on consumers  and   their transactions.  Huge databases  store data on individuals

and groups of individuals.

  In some ways, CRM means that an organization is

dealing with a segment of one person, since every

consumer displays different   purchasing habits andpreferences.

  Organizations will  track individuals, and try to  market

products and services to them based upon similar buyer 

behavior seen in other individuals (e.g.  When Amazon

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Three phases of CRM Acquiring New Relationships

 You acquire new customers by promoting

your company’s product and service

leadership.

 Enhancing Existing Relationships You enhance the relationship by encouraging

excellence in cross-selling and up-selling,

thereby deepening and broadening the

relationship.

 Retaining Customer Relationships Retention focuses on service adaptability –

delivering not what the market wants but

what customers want.

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Customer Types

 Platinum Heavy, reliable users, not price-

sensitive, try new products, loyal

 Gold  Large users who push for price breaks,

shop around and not so loyal

 Iron Low volume or intermittent(Irregular) users;

cost to serve them is quite high

 Lead  Demanding, want special attention but

don’t buy much and show no loyalty

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 -Organizational wise change of priority to

customers.

- Significant investment of time and money

- Threatens management’s control/powerstruggle

- Heightens people’s resistance(fight) to change

- Inappropriate integration leads to

disaster(failure)

Disadvantages:

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Customer Strategy

 You have a clearer idea of what your customers arelikely to think, feel and spend (and perhaps even how

that may change).

 How do you translate this into a viable customer 

strategy? single view of the customer  - and for them, a single

view of your organization - is a good start…

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Fortune

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 Customer insight(close) and segmentation:   Wehelp clients   understand customer   needs and

behaviors using our BothBrain® approach and

develop actionable segmentation from the resulting

insights. We help clients define the target customer  or 

"sweet spot"—the area of   distinct advantage over 

competitors— to   inform business decisions and

investment allocation.

 Product and category management: We help firms

break down barriers(protection) to   innovation andimprove  ongoing customer-led product development

so their value proposition is differentiated and meets

customer needs.SJ-AP-I/CA/SOC40

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 Pricing:   We help   resolve the pricing

paradox(statement)—pricing is almost always the #1

profit lever , yet it remains under-developed in mostcompanies—by building long-term pricing capabilities

and capitalizing on in-year-revenue opportunities.

 Sales and channel effectiveness:   We help

companies   identify quick, targeted, customizedsolutions   as well as   strategic and operational

improvements   to boost underperforming sales

organizations.

 Marketing and brand strategy: We help companies

align   marketing and brand strategy   with

overarching business objectives;   ensure marketing

investments   are   generating highest returns and

reinforcing (strengthen)   the brand positioning; and

build a loyal customer  base through branding that

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 Customer experience: We work with companies

to develop a series of positive interactions

with the customer to earn their  

advocacy(promotion) and inform

consistent(reliable)   delivery of experiences to

drive top-line growth.

 Loyalty:   We help companies   nurture (raise)

promoters—loyal customers who are   more

profitable, and who are   activeproponents(supporter ) of your business in good

times and bad.

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What is a product strategy?

 A product strategy identifies, in broad terms,  how you

plan to sell your products to your marketplace.

 It documents how the people in your marketplace (your 

clients)   think about your products   and business. It

documents  how your business positions   its products

and services and it contains your  strategies for selling. A product strategy can   encompass any number of 

products, depending on the nature of your business. You

could have  one strategy for each major product or,

perhaps, the same strategy for all of them. A more diverse organization selling different products

such as finance, travel and music into different markets

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 important?

 The product strategy forms the basis for 

executing a product roadmap   and   subsequent

product releases.

 The product strategy enables the company to

focus on a specific target market and feature set,

instead of trying to be everything to everyone.

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Elements of a product strategy Who are you selling   to? Define your target customer or 

market. Identify  whom you are selling   to, and what thatmarket looks like.

 What are you selling? Describe how potential customers

will perceive (recognize) your product compared to

competitive products.   Understand what makes your 

product unique in the market . What value do you provide your customers?

Determine what problems your product solves for 

customers. You cannot be everything to everyone within a

particular market, but you can help to   solve specific

problems. Create a value proposition to position the value

you provide and the benefits that customers will receive

with your solution.

 How will you price your product?  State how you will

price the product. Include its perceived value and a pricing

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Creating your product strategy

 To create your product strategy,  start with identifyingthe market problems you would like to solve.

This includes interviewing your target market,

understanding the competitive landscape and

identifying how you will differentiate yourself . Your product strategy  will change over time  as you

learn more about your market, and as (if) you decide

to enter different markets.

Listening to your market and developing your product strategy is a circular process; as you learn

more, you will evolve your product strategy and the

problems you solve.SJ-AP-I/CA/SOC46

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Power of the product strategy

 The power of a product strategy comes from  what

you define as well as what you exclude.

 By identifying a   particular target market   in your 

product strategy, you are also   excluding other 

markets. This helps your company to understand

which projects fall outside the product strategy and

distract(divert) from strategic goals.

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Channel Strategy

 Introduction

 Traditional and Electronic Distribution Channel decision at the retail level

 Channel decision at the wholesalers

 The evaluation criteria of customer 

 Channels from the organization’s perspective Market coverage by using current channels

 Market coverage by using new channels

 Dual channel distribution

 Multi channel distribution Channel-Modification Decisions Qualitative

Factors

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Introduction

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Channel Strategy The number and type of channels that customers are

using has rapidly grown to include the Internet, smart

phones and a host of social media options.

 The result is an   increase in possible customer 

touchpoints   presenting more and differentopportunities for organizations to interact with their 

customers.

 The broad principles by which the firm expects to

achieve its distribution objectives for its target

market(s)

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What is a marketing channel? A marketing channel consists of 

 Individuals and firms involved in the process of making a

product or service available for consumption or use by

consumers and industrial users.

 Role of the channel in marketing strategy

 Links a producer to buyers

 Performs sales, advertising, and promotion

 Influences the firm’s pricing strategy

 Affects product strategy through branding policies,willingness to stock and customize offerings, install,

maintain, offer credit, etc.

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The Channel-Selection

Decision Fundamental Questions

 Who are potential customers?

 Where do they buy?

 When do they buy? How do they buy?

 What do they buy?

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Traditional and Electronic

Distribution

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Traditional Marketing Channel

Designs

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The Design of Marketing

Channels

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Channels

 Direct distribution is typically used when:

Buyers are easily identifiable

Personal selling is a major component of the

communication mix

Organization has a wide variety of offerings for

the target market

Sufficient resources are available

Intermediaries are not available for reachingtarget markets

Intermediaries do not possess the capacity to

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The Design of Marketing

Channels

 Indirect distribution must be considered

when:

Intermediaries can perform distribution functions more efficiently and less

expensively

Customers are hard to reach directly

Organization does not have resources to perform distribution function

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Representative Electronic

Marketing Channels

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Disintermediation

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Channel Selection at the Retail Level

Channel Selection Decisions

 1. Which channel and intermediaries will provide the

best coverage of the target market?

 2. Which channel and intermediaries will  best satisfythe buying requirements of the target market?

 3. Which channel and intermediaries will be the most

profitable?

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Channel Selection at the Retail Level

Target Market Coverage

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Level

 Effective Distribution occurs when a limited number of retail outlets account for a

significant fraction of the market potential.

 Example: A marketer distributes the product

through 40% of available outlets, but theseoutlets account for 80% of the market.

 Satisfying Buyer Requirements

Information

ConvenienceVariety

 Attendant servicesSJ-AP-I/CA/SOC63

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Channel Selection at the Retail Level

Profitability 

 Margins = Revenues – Channel Costs

 Channel costs are:

- Distribution costs

- Advertising costs

- Selling costs

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Channel Selection at Other Levels of

Distribution Types of Wholesaler 

 Specialty wholesaler 

 – Limited line of items within a product line

 General-merchandise wholesaler 

 – Wide assortment of products

 General-line wholesaler 

 – Complete assortment(variety) of items in a

single retailing field Combination

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The evaluation criteria of

customer 

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The evaluation criteria of the

customer 

 Information  –characteristics , price and service of 

products

 Communication-customer needs are identified

 Transaction-exchanging of orders, invoices and

payment from the customer 

 Distribution – product delivery at the convenience

of customers

 Service – customer  should receive good service

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Channels from the organization’s

perspective

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Market coverage Market coverage by using current channels

 No overlap and No conflict Significant overlap and conflict

 Minimal overlap and small conflict

 Market coverage by using new channels

 Scenario planning(identify unfulfilled or changed

customer needs and changes)

 Dissatisfied customers(indication of unfulfilled customer

needs)

 New technology

 Control(control of its sales channels.ie standardproduct)

 Conflict(change channels structures)

 Profitability

 

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D l Di t ib ti

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Dual Distribution Occurs when an organization distributes its

offering through   two or more different marketingchannels that may or may not compete for similar 

buyers the main consideration is whether it   will

provide incremental sales revenue or cannibalize

existing sales When is it used

own brand and private store brand

distribution to large and small retailers

Multi brand strategy

geographic factors

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Multi-Channel Marketing

 Multi-channel marketing involves the

Blending of an electronic marketing channel

and

 A traditional channel   in ways that aremutually reinforcing in attracting, retaining,

and building relationships with

customers.

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Multi-Channel Marketing

 Justifications An electronic marketing channel can provide incremental

revenue (Victoria’s Secret)

 An electronic marketing channel can leverage(Control) the

presence of a traditional channel (Ethan Allen)

 Multi-channel marketing can  satisfy buyer requirements(Clinique division of Estée Lauder)

 Considerations

 Actual incremental revenue or merely cannibalization ?

 Incremental cost to launch and sustain an electronicforefront

 Disintermediation – a traditional intermediary member is

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Channel-Modification Decisions

Qualitative Factors

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Channel Modification Decisions Qualitative

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Channel-Modification Decisions Qualitative

Factors

 1. Will the change improve the effective coverage of thetarget markets sought? How?

 2. Will the   change improve the satisfaction of buyer 

needs? How?

 3. Which marketing functions, if any, must be absorbedin order to make the change?

 4. Does the organization have the resources to perform

new functions?

 5. What effect will the change have on other channelparticipants?

 6. What will be the effect of the change on the

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I f t t t t

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Infrastructure strategy

 organizational infrastructure is comprised of a  policy

and governance(authority) framework,

collaborative processes and accountability

mechanisms   on which the strategy is being

implemented

  This is done by meeting or exceeding the balancedscorecard objectives, achieving a culture of 

mutual trust and respect, and being recognized by

all customers as a benchmark.

  Infrastructure strategy is supported that there shouldbe process stability, manpower stability, increased

productivity, one piece flow, and a continuous

improvement culture.SJ-AP-I/CA/SOC75

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ELEMENTS OF ORGANIZATIONAL

INFRASTRUCTURE

 There are five basic elements common to all

organizational infrastructures —

 Goals,

 People,

 Process,

 Structure and

 Results.

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Goals and Results

 Goals and Results form the   template for 

infrastructure development.

  The organization's “Value Goal” defines how the

organization creates value that its customers are

willing to pay for.

 The “Results” the organization   measures and

rewards   establish priorities across the

organization.

 When the Value Goal is aligned with the Results itcreates the “blue print” for building organizational

infrastructure.

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People

 People — what they do and how they do it.

 Infrastructure defines the roles people play  and

assures people have the ability and willingness to

achieve high performance in these roles.

 Infrastructure institutionalizes high performance

by getting the right people doing the right things.

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P

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Process Process — the policies, procedures and rules an

organization establishes. Processes define how things get done inside

organizations — how plans are made, goals are set,

priorities are established, funds are distributed, people

are hired, products are developed, money is spent,communications takes place, decisions are made,

problems are solved, finances are managed and

people are rewarded.

 Processes increase performance by taking

discreet(careful) tasks and organize them into a

predecessor and successor relationship.

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St t

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Structure Structure creates focus and control.

  It creates focused action by  breaking the organizationinto distinct areas of responsibility   —   Research is

responsible for technology development, Development is

responsible for new products, Manufacturing is responsible

for building products and Sales for selling the products that

are built. Each organizational unit is focused  on, and heldaccountable for, its unique area of responsibilities.

 Structure creates control by   distributing authority

throughout the organization. A “boss” has the authority to

hold his or her people accountable to create compliance to

roles and rules. Bosses use authority to make sure people

play their assigned roles, follow the rules and remain

focused on their area of responsibility. Structure increases

performance by setting priorities and minimizing

redundancy of action.

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 Infrastructure organizes   people, process and

structure to get the   right people, doing the

right things, at the right time, right the first 

time.

 It maximizes performance creating the   ability,willingness and opportunity for people to achieve

high performance.

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DEFINING AND ANALYZING EXISTING

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DEFINING AND ANALYZING EXISTING

INFRASTRUCTURE

 The first step in defining an organization'sinfrastructure is to articulate the organization's Goal

and Result.   Goals and Results are not to be

confused with the organization's Vision or 

Mission.   Vision and Mission define the   business;

Goals and Results define the  infrastructure  that will

allow the organization to achieve its Vision or Mission.

 In an automobile metaphor, the car is the Vision while

the engine and drive train are the infrastructure that

allows the car to move.

 'The second step is to place your people, process and

structure   on a continuum from   integration to

differentiation.SJ-AP-I/CA/SOC83

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 Differentiation

 Organizations differentiate people, process and

structure to create efficiency and maximize its ability

to do things right the first time.

 Integration Organizations integrate people, process and

structure to create effectiveness and maximize its

ability to do the right tings.

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BUILDING NEW AND CHANGING EXISTING

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BUILDING NEW AND CHANGING EXISTING

INFRASTRUCTURE

 If you don't know where you going, any infrastructure will get you there.

Therefore

 the first step in building or changing infrastructure is  to establish the

organization's Goal (how it adds value) and it's Results (key metrics).

  Trying to build and organizational infrastructure without a clear Goal

and Result inevitably leads to high levels of personality and politics.

 Therefore establish Goals and Results is a critical first step ininfrastructure development.

 If the Goal is effectiveness and the measure is innovation, you will

want to  move to the left side of the Playing Field  and  integrate

these elements.

 to create an infrastructure more to the right (differentiation) to controlcosts and build the product right the first time.

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