CRM P&G

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<p>CUSTOMER RELATIONSHIP MANAGEMENT AND THE P&amp;G GILLETE OFFERING</p> <p>ACKNOWLEDGEMENT</p> <p>I express my sincere gratitude to my faculty guide Mrs.Roli Raghuvanshi,lecturer, Amity school of busness, for his/her able guidance, continuous support and cooperation throughout my project, without which the present work would not have been possible.</p> <p>I would also like to thank the entire team of P AND G STAFF, for the constant support and help in the successful completion of my project.</p> <p>2</p> <p>CONTENT</p> <p>S.NO.1. 2. 3.</p> <p>TOPIC</p> <p>PAGE NO.</p> <p>ACKNOWLEDGEMENT..................................................................................1 EXECUTIVE SUMMARY................................................................................3 INTRODUCTION..............................................................................................5 INDUSTRY INTRODUCTION.......................................................................41</p> <p>4.</p> <p>5.6. 7.8. 9. 10.</p> <p>OVERVIEW OF FMCG SECTOR IN INDIA..............................42COMPANY PROFILE.....................................................................................46 RESEARCH METHODOLOGY &amp; OBJECTIVE ..........................................69 FINDING &amp; ANALYSIS.................................................................................74 CONCLUSION................................................................................................82 RECOMMENDATION....................................................................................84 FUTURE PROSPECTS...................................................................................85 BIBLIOGRAPHY............................................................................................86 QUESTIONNAIRE..........................................................................................87</p> <p>11.12. 13.</p> <p>3</p> <p>EXECUTIVE SUMMARY</p> <p>Before we begin to examine the conceptual foundations of CRM, it will be useful to define what is CRM. A narrow perspective of customer relationship management is database marketing emphasizing the promotional aspects of marketing linked to database efforts. Another narrow, yet relevant, viewpoint is to consider CRM only as customer retention in which a variety of after marketing tactics is used for customer bonding or staying in touch after the sale is made. Shani and Chalasani define relationship marketing as an integrated effort to identify, maintain, and build up a network with individuals consumers and to continuously strengthen the network for mutual benefit of both sides, through interactive, individualized and value-added contacts over a period of time. The core theme of all CRM and relationship marketing perspectives is its focus on cooperative and collaborative relationships between the firm and its customers, and/or other marketing actors. CRM is based on the premise that, by having a better understanding of the customers needs and desires we can keep them longer and sell more to them. Growth Strategies International (GSI) performed a statistical analysis of Customer satisfaction data encompassing the findings of over 20,000 customer surveys conducted in 40 countries by Infoquest. The conclusions of the study were: A Totally Satisfied Customer contributes 2.6 times as much revenue to a company as a Somewhat Satisfied Customer. A Totally Satisfied Customer contributes 17 times as much revenue as a Somewhat Dissatisfied Customer.</p> <p>4</p> <p> A Totally Dissatisfied customer decreases revenue at a rate equal to 1.8 times what a Totally Satisfied Customer contributes to a business. By reducing customer defection (by as little as 5%) will result in increase in profits by 25% to 85% depending from industry to industry. An important facet of CRM is customer selectivity. As several research studies have shown not all customers are equally profitable (Infact in some cases 80% of the sales come through 20% of the customers). The company must therefore be selective and tailor its program and marketing efforts by segmenting and selecting appropriate customers for individual marketing programs. In some cases, it could even lead to outsourcing of some customers so that a company better utilize its resources on those customers it can serve better and create mutual value. However, the objective of a company is not to really prune its customer base but to identify appropriate customer programs and methods that would be profitable and create value for the firm and the customer. Hence, CRM is defined as:</p> <p>5</p> <p>INTRODUCTION</p> <p>Differentiate Customers: All customers are not equal; recognize and reward best customers disproportionately. Understanding each customer becomes particularly important. And the same customers reaction to a cellular company operator may be quite different as compared to a car dealer. Besides for the same product or the service not all customers can be treated alike and CRM needs to differentiate between a high value customer and a low value customer. What CRM needs to understand while differentiating customers is: - Sensitivities, Tastes, Preferences and Personalities - Lifestyle and age - Culture Background and education - Physical and psychological characteristics Differentiating Offerings</p> <p> Low value customer requiring high value customer offerings Low value customer with potential to become high value in near future High value customer requiring high value service High value customer requiring low value service</p> <p>6</p> <p>Low value customers who High require high levels of service must either purchase the higher level of service or become our competitors low value/high cost customers</p> <p>High value customers who require a high level of service are maintained without expanding the costly offering to the entire customer population</p> <p>Low</p> <p>Service RequirementLow</p> <p>Keeping Existing Customers</p> <p>Customer Value</p> <p>High</p> <p>Fig. Customer value Service Matrix Grading customers from very satisfied to very disappointed should help the organisation in improving its customer satisfaction levels and scores. As the satisfaction level for each customer improve so shall the customer retention with the organisation. Maximizing Life time value</p> <p>Exploit up-selling and cross-selling potential. By identifying life stage and life event trigger points by customer, marketers can maximize share of purchase potential. Thus the single adults shall require a new car stereo and as he grows into a married couple his needs grow into appliances. Increase Loyalty Loyal customers are more profitable. Any company will like its mindshare status to improve from being a suspect to being an advocate. Company has to invest in terms of its product and service offerings to its customers. It has to innovate and meet the very needs of its clients/ customers so that they remain as advocates on the loyalty curve. Referral sales invariably are low cost high margin sales. (Fig. Categorizing Customers)</p> <p>7</p> <p>Summarizing CRM activities: The CRM cycle can be briefly described as follows: 1. 2. 3. 4. 5. 6. Learning from customers and prospects, (having in depth knowledge of Creating value for customers and prospects Creating loyalty Acquiring new customers Creating profits Acquiring new customersCreating Profits Learning from customers a&amp; prospects</p> <p>customer)</p> <p>Fig. CRM Activities</p> <p>High Strategic Importance To Your Low Business Plan</p> <p>*You have No Choice But To Handle Them Very Carefully. Will Consume Energy # Think Of Innovative Ways of Getting them On Your Side, But The Cost Of Acquisition Must Be Controlled *Focus On Short Term Profitability. Spend Minimum Energy To Meet Your Objectives. #Dont Pursue. Use Opportunity As It Comes. Short Term Acquisition Shouldnt Affect Long Term Image.</p> <p>*Cultivate Relationship. Spend Energy. Go Out Of Your Way. #Think Of Strategies TO Move Them Away From Competition. Will Consume Disproportionately High Energy.</p> <p>*Existing Customers#Potential</p> <p>*Very cautious decision needed. Re-examine Customers business Plan &amp; Strategy. Evaluate That Your Loss (i.e. Your competitors gain) Doesnt become nightmare for you. #Needs In-depth strategic review as acquisition alone and dissatisfaction later could be more harmful</p> <p>Low</p> <p>High</p> <p>Relationship &amp; Profitability Potential</p> <p>Acquiring new customers 5 3 4</p> <p>1 Creating value for customers &amp; prospects 2</p> <p>Creating loyal customers</p> <p>8</p> <p>Figure Customer Life Cycle Management</p> <p>Customer Need Assessment &amp; Acquisition</p> <p>Customer Retention and referrals for new customers Customer Development through personalization and customization</p> <p>Customer Equity Leverage through Cross Selling and Up Selling</p> <p>The Emergence of CRM Practice The Past: Looking back at a snapshot history of marketing, we can see the following clear developments and progression over the last four decades: 1960s the era of Mass Marketing, when Gibbs SR toothpaste began the first marketing of this kind with its black and white campaign. 1970s saw the beginning of segmentation, direct mail campaigns and early telemarketing (such as publishing) 1980s where Niche marketing made millionaires of those who were best at it.</p> <p>9</p> <p> 1990s Relationship Marketing. The explosion of telemarketing and call centres, all set up to develop relationships with customers. The recognition of the true value of retention and the use of Lifetime Value as a business case. In addition to this, a number of key marketing concepts can also be used to see where CRM has developed from: Satisfying Needs, Customer Orientation The organisation needs to be arranged so that all functions contribute Profit must be the consequence of delighting customers (Kotler)</p> <p>Developing customer relationship has historical antecedents going back into the pre industrial era. Similarly artisans often developed customized produce for each customer. Such direct interaction led to relational bonding between the producer and the consumer. It was only after industrial eras mass production society and the advent of the middlemen that there were less frequent interactions between producers and the consumers leading to transactions oriented marketing. The production and consumption factions got separated leading to marketing functions being performed by the middle men and middlemen are in general oriented towards the economic aspects of buying since the largest cost is often the cost of goods sold. In recent years however, several factors have contributed to the rapid development and evolution of CRM. These include: 1. The growing de-intermediation process in many industries due to the advent of sophisticated computer and telecommunication technologies that allow producers to directly interact with end-customers. For example, in many industries such as airlines, banks insurance, software or household appliances and even consumables, the de-intermediation process is fast changing the nature of marketing and consequently making relationship marketing more popular. Databases and direct marketing tools give them the means to individualize their marketing efforts. 2. Advances in information technology, networking and manufacturing technology have helped companies to quickly match competition. As a result product quality and cost are no longer significant competitive advantages.</p> <p>10</p> <p>3. The growth in service economy. Since services are typically produced and delivered at the same institution, it minimizes the role of the middlemen. 4. Another force driving the adoption of CRM has been the total quality movement. When companies embraced TQM it became necessary to involve customers and suppliers in implementing the program at all levels of the value chain. This needed close working relationships with the customers. Thus several companies such as Motorola, IBM, General Motors, Xerox, Ford, Toyota, etc formed partnering relations with suppliers and customers to practice TQM. Other programs such as JIT and MRP also made use of interdependent relationships between suppliers and customers. 5. Customer expectations are changing almost on a daily basis. Newly Empowered customers who choose how to communicate with the companies across various available channels. Also nowadays consumers expect a high degree of personalization. 6. Emerging real time, interactive channels including e-mail, ATMs and call centre that must be synchronized with customers non-electronic activities. The speed of business change, requiring flexibility and rapid adoption to technologies. 7. In the current era of hyper competition, marketers are forced to be more concerned with customer retention and customer loyalty. 8. As several researches have found out retaining customers is less expensive and more sustainable competitive advantage than acquiring new ones. 9. On the supply side it pays more to develop closer relationships with a few suppliers than to develop more vendors. 10. In addition several marketers are concerned with keeping customers for life than making one time sale. There is a greater opportunity for up selling and cross selling. In a recent study, Naidu, et al(1999) found that relational intensity increased in hospitals facing a high degree of competitive intensity 11. The globalization of world marketplace makes it necessary to have global account management for the customers. CRM Formation Process In the formation process, three important decision areas relate to defining the purpose (or objectives) of engaging in CRM, selecting parties (or customer partners) for appropriate</p> <p>11</p> <p>CRM programs and developing programs (or relational activity schemes) for relationship engagement with the customer.</p> <p>Purpose </p> <p>Increase Effectiveness Improve Efficiency -</p> <p>Role Specification Relationship Performance Strategic Financial Marketing Retenti on Satisfac tion</p> <p>Planning Process Process Alignment</p> <p>Programs </p> <p>Account Management Retention Marketing</p> <p>Monitoring Process Team Structure Communication</p> <p>Partners </p> <p>Employee Motivation</p> <p>Criteria Process Employee Training</p> <p>Evolution Enhancement Improvement</p> <p>Fig. CRM Purpose</p> <p>CRM Process Framework</p> <p>The overall purpose of CRM is to improve marketing productivity and enhance value for parties in involved in the relationship. By seeking and achieving operational goals, such as lower distribution costs, streamlining order processing and inventory management, reducing the burden of excessive customer acquisition cost, and through customer</p> <p>12</p> <p>retention economics, firms could achieve greater marketing efficiencies. They can enhance marketing effectiveness by carefully selecting, customers for its various programs, individualizing and personalizing their market offerings to anticipate and serve the emerging needs of individual customer, building customer loyalty and commitment, partnering to enter new markets and develop new products, and redefining the competitive playing field for their company. Thus, stating the objectives and defining the pur...</p>