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THESIS ABSTRACT
ON
Assistant Professor, Shri Vaishnav Institute of Management, Indore, Madhya Pradesh, India, shrutiawathi12@gmail.com
RESEARCH HYPOTHESIS
HO1: There exists no positive impact of Customer Relationship Management process in increasing the sales volume.
H11: There exists a positive impact of Customer Relationship Management process in increasing the sales volume.
HO2: There does not exist a positive effect of CRM in increasing the number of customer.
H 12: There exists a positive effect of CRM in increasing the number of customer.
H04: There is a difference between the companies with and without CRM in terms of sales.
H14: There is no difference between the companies with and without CRM in terms of sales.
BACK GROUND
Once upon a time the business of world was war. The focus has since been shifted. Now economies are competing for consumers.
Man has decided to enjoy the fruits of the labor of previous generations. Old order is giving way to a new order- 'serve Consumer
for a profit'. Of many things that go into making this a reality, Organized Retail surely occupies a very high spot.
In its more than a century old history, Organized Retail has proved that it is the ultimate 'clearing house' of 'demand-n-supply',
mother of the concept of marketing and more. Today people look for better quality product at cheap rate, better service, better
ambience for shopping and better shopping experience. Organized retail promises to provide all of them.
Todays conditions for doing business are changing rapidly. There are some aspects that are of great importance for the new
situation that companies are facing. First of all the lifestyle of people are changing and consequently the patterns of consumption.
Nowadays more women are working, the number of elderly people is increasing and often nuclear families are broken up, which
implies more single homes. The changes in society has also led to that the needs of the customers are increasingly
sophisticated. This is confirmed by Stone (2000) who states that customers desire to be served in a personal manner with
direct communication. Mr. Grnroos (1993) explains it with the trend in our society to focus on the individual. Each customer
would often like unique solutions where their individual needs are taken into account.
Another change is due to the rapid development of technology. New technologies for distributing and collecting information have
affected both companies and customers. Customers are continuously informed through different communication Medias.
Sometimes they are drowning in too much information from different companies but on the hole the customer knowledge is
increased substantially. As the knowledge increases the customers discover new options, thus the customer fidelity is decreased.
With new communication Media Companies can change their way of marketing as well as the possibility of gathering customer
data is improved.
Finally, the competition on the market is increasing domestically as well as globally. In order to reach success, companies
must find new long-term competitive advantages. It is not enough to rely on advanced technology and high quality, because
soon your competitors will have reached the same level. The solutions must be tailored after the customers specific needs
and wants, with the purpose to increase the customers experienced value of the product or service. All these changes imply that
there is an increasing need for new ways of thinking within this area.
This diverse and uncertain environment has forced companies to restructure themselves in order to increase their chances to
survive and grow. (Zineldin, 1998) This has led to that new approaches have emerged in the marketing research. One
approach is relationship marketing, which has attracted considerable interest from both marketing academics and practitioners.
(Grnroos, 1993)
RETAIL SCENARIO
Retail Business is a global business. Retail business grew between 25% - 30% percent in India and 13 percent in fast growing
economies China and Russia. Global retail industry has been expanding to new markets for a few years now. It is not a secret that
retail business is one of the most actively developing sectors of national economy. Besides territorial extension retail chain now
tends to create new formats of retail outlets in order to gain more customers. With the increase in the purchasing power of the
people the retail business is sure to flourish.
Retail business is all about the study of the relationships of customer satisfaction, customer loyalty, and profitability: By retails
business we mean a lot of things right from banks to a shop at the door step, no matter how big or small the business is, it all runs
on the basic principles of customer satisfaction, customer loyalty, and profitability.
The attitudinal shift of the Indian consumer in terms of "Choice Preference", "Value for Money" and the emergence of organized
retail formats have transformed the face of Retailing in India. With a growth over 20 percent per annum over the last 5 years,
organized retailing is projected to reach US$ 23 Billion by 2010.Today, with the customers being provided with an array of
choices is the king. Customer can choose what to buy what not to buy and from where, so a good retailer will always strive to
achieve the maximum customer satisfaction. After the customer satisfaction comes the loyalty to the customer, which plays a
major role in bonding and cementing the relationship of the retailer and the customer. Last but not the least is the profit part,
which without saying is the most important aspect of any business.
ORGANIZED RETAIL IN INDORE
Indore with an expected 40 lacs+ population making it the most populous city in Madhya Pradesh. Indore is one of the fastest
growing Tier III cities in India. It already is the Commercial Capital of Madhya Pradesh. Its a favored test market for industries
owing to the diversity of its population. With pace of growing diversity and industrial developments, Indore is also growing with
a higher rate. As a result in past few years it is also being recognized as one of the hot prospective market for the organized retail
stores and the major retail players.
This can be supported by the fact that around 20 shopping malls have been constructed in the city in fast 4-5 years, including
M2K The Mega Mall, Indore, Globus City Mall, Pakiza Shopping Mall (3 branches), Treasure Island, Orbit Mall, Mangal City
Mall, Pro Mart, C 21 Mall, Indore CENTRAL, Satyam Shopping Mall, Luv Kush Mall, Onam Plaza Mall etc...As a result
Indores organized retail market is being served by n nos of small and big organized stores in the form of Supar Bazaars, Mega
Stores or Hyper Markets all over the city.
Today, almost all the major brands are available here and including more than 50 brands having their own exclusive outlets. Few
of the giant retail stores which are doing well here are Big Bazaar & Food Bazaar (6 stores) , Vishal (5 outlets) , Reliance Fresh
(13 outlets), More Megastore , Pantaloons, Provogue, Koutons and the list is uncountable. Implementing a customer relationship
management (CRM) solution might involve considerable time and expense. However, there are many potential benefits.
A major benefit can be the development of better relations with your existing customers, which can lead to:
Increased sales through better timing due to anticipating needs based on historic trends.
Identifying needs more effectively by understanding specific customer requirements.
Cross-selling of other products by highlighting and suggesting alternatives or enhancements.
Identifying which of your customers are profitable and which are not.
CRM is potentially a useful concept in the marketing and customer service areas of a retail sector. The information and data
attainable from a retail sectors customers is so deep and detailed, that the potential of CRM in this sector is enormous. However
before CRM can even be considered, the retail sector must ensure it has its retail basics in order.The key stage for a retail sector to
implement, as with any bricks-and-mortar retail business, is a method by which it can identify the customer at any touchpoint. If it
can achieve this, the remaining stages of the Peppers & Rogers IDIC methodology should give accurate and profitable results.
Research has suggested that the motivation of a CRM initiative should be to enhance the customer experience.
Customers are not interested in gimmicks unless they perceive a benefit from them. It is more difficult for retail sectors to
realize a time when customers are locked in. This utopian consequence of successful CRM put forward by Peppers & Rogers
Group (2001) may be impossible in this sector due to the low cost of changing retail sectors. The bottom line of any retail
organization is to achieve its target sales and sustain the customers as the loyal ones and then the customary exercise of capturing
the new-fangled .With the price war and the competition wounding the margins, what could better touch the hearts of the
customers and outfit them to turn into the loyal ones. Here ethics plays a vital role.
RATIONALE
All companies are facing massive challenges in todays highly competitive market and strive to acquire the maximum possible
market share in an overcrowded market. There are certain threats which companies are facing such as:
These factors are compelling for a designing of CRM Solutions and comprehensive strategies by integrating people, process and
technology to maximize relationships with all customers.
The field of customer relationship marketing can be viewed as a sub-area of market focused management.At the most simple
level, CRM strategy prescribes that it is more effective to invest in long-term customer interactions than to rely on a series of
potentially unrelated, one-time exchanges. In practice, however, CRM is not that simple to implement. There are multiple
stakeholders to consider, and organizations must make certain that value is provided for all members of a potential partnership.
Here, in this study consider several strands of relationship marketing, including the concepts of: customer relationship
management, stakeholder theory, affinity marketing, promotional incentives, strategy, and leadership.
Although many researchers have been conducted worldwide regarding CRM in Organized retail sector, still looking at the
dimensions of the Indian market, CRM stands to be the survival mantra. For sales, CRM is an especially important research
domain. As a strategy, organizations pursue CRM for a variety of reasons, including information sharing between departments to
improve customer service or simply to stay abreast of the competition.
India is currently the twelfth largest consumer market in the world. According to a study by McKinsey Global Institute, India is
likely to join the premier league of the worlds consumer markets by 2025, improving its position to the fifth. But this growth is
not going to happen in a smooth way. Any change always comes up with some friction, and Indian retail sector is and will be
witnessing the same friction.
The purpose of this thesis is study of Customer Relationship Management process and its sales increment withy reference to
Organized retail Stores in Indore City. Having presented the immense potential and current status of the organized retail
industry, this thesis continues to cover up the Indian retail scenario with the objective of weighting some of the major concerns
regarding CRM that organized retailers will have to consider as they venture into the Indian market. The study outlines the
transformation of the Indian consumer and highlights the characteristics of the organized retail sectors in the country.
Thereafter the study responds by underscoring the criticality of performing a deep analysis of a firm's readiness to undertake a
CRM initiative. This assessment provide detailed answers to the questions like: What is a firm's current CRM capability? And
what changes must be in place embarking on a CRM initiative, for increment in the sales volume?
RESEARCH METHODOLOGY
The Study
The research purpose of the current study is descriptive in nature as the research purpose is clearly structures and this study aims
at gaining insights into CRM, and effectiveness of CRM practices in increasing the sales volume in Organized Retail Stores.
Initially the study explains the concept and practices of CRM in ORS and further explains the effectiveness of CRM practices in
ORS through data analyses (gathered and collected through questionnaire). Towards the end of the study the conclusion is
presented by answering the research questions, whereby facilitating the organizations to better understand and predict the
customers relations to maximize the gains and minimize the loss.
Sample Design
a)
Population
The populations in this study comprise of all the managers and the sales executives of organized retail Stores in Indore city.
b)
Sampling frame
The sampling frames for this study are the organized retail stores of Indore City.
c)
Sample Size
The final sample of 300 subjects drawn from a total of 450 subjects selected through random basis from ORS located in
Indore. The incomplete filled in sets of data were screened out.
d)
Sampling Technique
In order to suite the research purpose the non probability convinces sampling technique was used.
Data collection
To collect the primary data two structured questionnaire were designed and used. The data for the questionnaire were collected
from the managers and the sales executives of ORS in Indore City. A few managers were interviewed to get further insights into
CRM practices.
Data Analyses
To achieve the objectives of our study and testing of the hypothesis T test (Paired and Independent sample) to study the cause and
effect of CRM on sales and other factors. There after Correlation Analyses were applied statically prove the type of association
between the above two. And factorial analyses were done to the results of the data was analyzed to arrive at to the finding. Graphical
Representation of the data is also done.
This study also showed the importance of keeping track of contact persons changing company. Contact persons might be able to
generate business with the new company as well and is therefore of high value. It was found that the users (manager and the sales
executives) of the CRM system has an easy access to different programmes comprised in the CRM system, whereby resulting in
fast and accurate information about the customer facilitating sales
CONCLUSIONS
The results drawn from this study should be viewed in the light of the research methods employed and is valid for this sample. The
study provides substantial support as to the applicability of many of the variables and respective conceptualizations provided
in theory to the study of CRM in Organized Retail Stores.
With the application of CRM a significant importance is given to the customer satisfaction after consumption. Further the conclusion is
being structures in answering the research questions of the study as follows:
Objective 1
To Study the Conceptual Framework of CRM In Organized Retail Stores
While enduring the research process, it was comprehended that retaining all customers might not be the most favorable
for companies. CRM systems can assist sales and marketing process to identify advantageous customers faster and more
reliable than any other resources. CRM is about mainly related to the basic conditions for the survival of an enterprise and specifically
of maintaining good relations with the customers thus enabling the enterprise to be more competitive. It is observed that with the
introduction of the application of CRM, the organizational capacity to act and react to the market conditions has increased enormously.
For enterprises, the main competitive advantage brought about by CRM practices is that the ORS can measure the result of all
interactions, enriching customer acquaintance and extrapolating that information in the form of continuously refined offerings and
service.
Objective 2
To Analyze the Effectiveness of CRM in Improving Target Market Effectiveness of Seasonal Programs and Promotions
On the way to the progress of the research it was understood that CRM facilitates the segmentation and target marketing
management of the customer base; thereafter the retailer can subject CRM efforts to build Target Marketing effectiveness, of
seasonal programs and promotions and thereby ensuring a higher share of the customer's wallet, in addition to meeting the
customer needs. It also helps in understanding the changing behavior that fuels new product development ahead of competition.
Thus CRM system has a positive effect in Target marketing and helps to retain and communicate better with customers. This has
proved to be a very effective tool since specific offers can be segmented to specific customers.
Objective3
To Study the Impact of CRM in Increasing the Revenue per Customer Visit, And the Number of Visits by Customer
While succeeding towards the answers for this objective an attractive insight that was explored was the CRM Customer Value
Model. The CRMs Customer Value Model offers solution to the, Customer expectations which are difficult to manage and are
often cause of dissonance which results in loss of existing customer base. Here the CVM helps in understanding of customer
expectations which is essential for a long term and symbiotic value relationships are to be established. The collective
understanding of customers behavior needs and wants; the customer value model answers to deliver the value in the most cost
effective manner. Thereby defining the customers expected life cycle, performance measurement mechanism and corresponding
service mix offering that are crucial for success. The model further helps in understanding the attitudinal shift in substantial
competitive advantage. As a result the offering to the customers are well defined and planned and it could be justified that, the
CRMs Customer Value Model has a positive impact on increasing the number of customers i.e. creating the new customers,
increasing their visits and increasing the size of the basket.
Objective 4
To Examine the Impact of CRM in Sales Forecasting and Understanding the Share of Market
With keeping in mind the conclusion of objective three enhancing to objective four; that the Customer Profitability can be arrived
by the frequency factor which helps Organized Retail Stores in forecasting the purchases made by the customers and hereby
undergoing the study of the Customer Lifetime Value managers can identify those who are likely to be profitable in future.
Identification of the Customer Lifetime Value driver enables managers to take specific actions to improve customers profitability
and in recognize the cash cows (profitable customers) and providing appropriate services to retain them. So, in nutshell the
objective once again stands with a positive outcome of CRM in better sales forecasting and understanding the share of market.
Objective 5
To Study the Effect of CRM On Cross Selling and Up Selling Opportunities
The study disclose that the advantage of the CRMs methods of cross selling and up selling of the products and services, which
keeps in mind the full sight of a customers profile; that is, having full visibility of their desiring, behavior and buying patterns in
real time so offers can be further personalized to suit individual needs and could be delivered when, and in a manner, that is most
appropriate for the customer. This part of the CRM mix - delivers optimum results: driving revenue, improving customer loyalty
and reducing churn. This ensures the positive effect of CRM on cross selling and up selling opportunities.
Objective 6
To Identify the Effectiveness of CRM on Customer Satisfaction and Retention
It could be accomplished that customer satisfaction and loyalty generates from the Brand, product, Company, Price, Place and
Variety which further generates Customer Retention. A CRM system after the exchange is made, stresses the understanding; so
that the Organized Retail Stores can offer them a better product or service fetching additional exchanges. Thus the CRMs
objective to retain profitable Customer stands positive hereby converting the loyal customers into loyal advocates.
Objective 7
To Explore the Potential Challenges Imposed By Factors in Effective Implementation of Globalized Campaigns to Manage
Customer Relations
Arriving at the conclusions for the above objective it was explored that the challenges imposed by the factors in effective
implementation of globalized campaigns, which presumably have significant resonance and meaning for customers and
consumers, are: (1) Country wide resource allocation and market structure across countries, (2) The effective implementation of a
campaign faces the problem of difference in cultural , economical and competitive structures, (3) With these differences the
adaption of a promotion campaign, (4) The senior management myopia, (5) Lack of global data base, (6) Communication
Channels between countries, (7) Inter country marker research standardization, (8) Vertical Coordination within countries, (9)
Horizontal coordination within countries, (10) The channels and distribution system. This gives a face of the new world wide
trend towards INTREGRATED CRM oriented approaches that seeks to develop and sustain two way, interactive and mutually
reinforcing relationships throughout the Globe.
SUGGESTIONS
In the view of the experience of the present work, the following suggestions for further exploration are as under:
Organized Retail Stores must understand the importance of CRM in their operations and view it as a vital tool towards success. It
should firstly be understood that CRM involves the whole organization and the business not just a sales and marketing activity.
Increasing competition is tempting customers to move from one firm to another in search of better services and more explicitly,
finding a complete solution to their problems. It thus becomes enormously important for organizations to have an integrated CRM
strategy across the establishment in each case of generating higher customer satisfaction and exchanges.
Findings suggests that there is an intense need for the customization of production and the logistics function in relation to the
marketing processes for customer centric handling of customer interactions at Sales Force Automation end. Organized Retail
Stores are required to find cost effective alternatives for non buyers or low-margin customers as not all customer relationships are
profitable and very few companies can afford to pay to deliver an equal echelon of services. Retailers must control the costs and
save the best resources for premium accountswhile working to bring low performers into an acceptable profit portfolio.
Findings suggests that Organized Retail Stores have to pay special attention on the cross selling and up selling activities so as to
improve sales volume, here the sales executives need to work beyond service thinking and become absolute sales instrument for
immediate and useful response to customers. To achieve the above and obtaining the enormous benefits of CRM the organized
retailers must train and motivate there sales force executives for obtaining higher exchange and timely updations for the sessions
should be made for acquaintance with the latest technology. This could further be achieved and enhanced through Sales Force
Automation.
It could be recommended that a high quality of speedy interactions should be made regardless of the channel, with 24/7 facility,
for immediate and useful responses to inquires. Organized Retail Stores ought to pay attention on Leveraging analysis as a means
to improve cross-sell and up sell and basket building effectiveness in emerging as a substantial competitive advantage.
In light of the findings it could be suggested that there is a requirement of a comprehensive strategy for the revenue and cost
measures to help generate the analyses of payout and the incremental net program revenue per customer. Organized Retail Stores
could further carry on an analysis to explore the impact of Customer Life cycle value model on the Cost and Sales Volumes ratios
for cash cowing the higher margin of profit on Customer Lifetime Value.
IMPLICATIONS FOR FUTURE RESEARCH
While conducting this research, some interesting subjects for further research popped-up in our minds. A more focused study
could be undertaken for analyzing the effectiveness of INTEGRATED CRM in organized retail stores, across nations. As with the
increasing Globalization the urgency of the above subject could be sensed. A study for developing more sophisticated WINBACK strategy methods for regaining the lost customers could be done for a better customer centric orientation results.
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