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1.1 Introduction

As has been commented upon in academic research, “today, in the business world, management recognises that customers are the core a business.” Expanding market share for any business relies upon the strength of their ability to be able to attract customers to purchase their product or service. However, it has not been until relatively recently that business has begun to understand that it is not solely the reliance upon attraction of customers that is important to success. Equally, if not more important, is the need to retain the customer and their future loyalty to the product offering or brand, as this is the only way in which the corporation can sustain their competitive advantage over other market players. Moreover, it has also been recognised that there is a significant cost benefit in the retention of existing customers in comparison with adding a new customer and this is especially true in an industry that has reached saturation point, which is certainly the case in the UK mobile telecommunications sector.

1.2 Background on CRM tools and systems

Consequently, it is not surprising to find that an increasing number of businesses are becoming more focused upon the need for including customer relationship management (CRM) processes, tools and systems as a key element of their corporate marketing strategy. Indeed, in a survey conducted by Boston based Bain and Company, which covered 708 corporations across the America’s, Europe, Asia and Africa and resulted in 6,373 respondents, 78% were actively using management tools as a key element of their drive for competitive advantage, with the same percentage incorporating customer surveys within this strategic area. With the advancement of technology, both in terms of software, the internet and other developments, these CRM tools and systems have become more innovative as corporations seek to improve their customer retention and loyalty. It is this particular element of the CRM discipline that forms the focus for this dissertation which, by using T-mobile as a case study corporation, intends to undertake an assessment and evaluation of the impact that such tools have upon the corporation’s marketing department.

1.3 Case study T-Mobile

T-Mobile is a wholly owned subsidiary of the German telecommunications giant Deutsche Telekom. The current brand name was introduced in 2002. Within its sector, the company is the world’s sixth largest mobile communications business, based upon the number of subscribers, and the third largest mobile multinational after Vodafone (UK) and Telefonica (Spain). Globally, the company has over 101 million subscribers. In the UK, T-Mobile has 13 Million subscribers and operates through 294 separate retail locations in addition to its online website. On the 1st July 2010, T-Mobile UK became part of a joint venture with Orange, operating through a new corporation called Everything Anywhere Ltd, which is “jointly owned by Deutsche Telekom and France Telecom.” Together the two businesses account for around 28 million subscribers and share administrative facilities.

As stated, T-Mobile is operating within a highly saturated industry sector, which can be evidenced from recent statistics. For example, as can be seen from figure 1, mobile phone ownership had increased to over 80% by 2008 . More recently, by 2010, this number had risen to around 90% ownership of 2G and 3G mobiles (figure 2), although it should be noted that the number of actual mobiles owned significantly exceeds this figure because many individuals have more than one phone.

Figure 1 Consumer durable statistics

Source: http://www.statistics.gov.uk/cci/nugget.asp?id=868

Figure 2 Communications adoption 2010

Source: OFCOM (2010)

In terms of market share, the statistics show that T-Mobile’s percentage of the UK market has remained relatively static during the course of the five years to 2009, as indeed has that of Orange, the company with which it has now formed an alliance. In contrast, O2, Vodafone and 3UK have achieved significant share growth during the same period. Superficially, at least, this appears to suggest that the latter corporations have not only managed to secure a greater rate of market share growth than T-Mobile but have also been more successful at retaining the loyalty of their existing consumer base. Consequently, this result suggests that there is a need for improvement in the T-Mobile CRM systems.

Figure 3 Mobile phone market shares

Source: OFCOM (2010)

1.4 Aims and objectives

The aim of this study is to evaluate and assess the impact and success of CRM tools and systems within a practical corporate environment, in other words, it seeks to ascertain the extent to which these tools are achieving their goals of customer retention. Therefore, it is intended to resolve the following research propositions:

1. That CRM tools are having the effect of increasing customer loyalty to the T Mobile brand and improving repurchasing levels.

2. That the marketing department at T Mobile have been successful in introducing innovative CRM tools which has provided the corporation to achieve a competitive advantage over its main competitors within the mobile phone sector.

To facilitate the robustness of this dissertation and the fulfilment of the aims that have been set, it is intended to conduct the research within the following framework of objectives. The focus of these objectives will be the mobile sector of the UK telecommunications industry, using T Mobile as the case study organisation: –

To provide a brief overview of the definition of CRM and its purpose within a corporate environment, with particular reference to its development and effectiveness of use within the UK mobile telecommunications sector

To provide a detailed examination of the main challenges faced when using CRM tools and identify the latest technologies that are being used to address these issues.

To provide a critical analysis of the way in which the case study organisation, T Mobile, has introduced CRM tools and systems into their business. Moreover, this objective will also seek to investigate how these systems have been incorporated into the latest strategies developed by their marketing department.

The final objective is to use the results of the research conducted t make recommendations for improvement, if applicable.

1.5 Scope and structure of dissertation

To aid clarity and understanding of the content the remainder of this study has been formatted within the following framework. In the next chapter (2) a critical literature review is presented which concentrates upon the definition of CRM, the various tools and systems that are used to improve and enhance its management, as well as identifying how T Mobile have utilised these tools within their CRM strategy. Chapter three examines the methodology options available to the research and provides the reasoning for the methods that have been chosen, as well as indicating the limitations and how these have been addressed. Within chapter four, the research findings are presented and explained and these are further discussed in the chapter (5) that follows. The final chapter (6) brings the dissertation to a conclusion and, based upon the findings that have been discussed, also contains recommendations that are intended to assist the case study organisations and other in maximising the benefits the receive from effective implementation of CRM systems.

Furthermore, as attachments to the main dissertation, additional appendices have been added. These comprise of a biography that provides details of all the publications and other information that has been relied upon and referred to within this study. Additionally, the appendices contain details of the primary research conducted, such as the questionnaires and interviews, together with full details of the responses received.

Chapter 2: Literature review

2.1 Introduction

The academic and corporate interest in the importance of a relationship that a business can and should develop with their customers has been a part of the corporate strategy for some time . In this respect, it has long been recognised that the extent to which a corporation understands its customer and their needs will have a significant impact upon both their achievement of competitive advantage and in developing appropriate marketing strategy . However, since the middle of the 1990’s CRM has not only taken the theory and art of interacting with customers to a new, more collaborative level, but the concept itself has become almost inextricably linked with the rapidly developing area of information technology and systems . In other words, from a practical, if not psychological aspect, the majority of CRM related studies are now focused upon its development and practice within the internal and external technologies tools and systems available to the corporation.

Therefore, within this critical review of existing literature the intention, following a brief overview of the various definitions that have been applied to CRM, is to focus upon the CRM, how these are implemented in the IT environment, and to also evaluating the benefits and barriers. Following on from this the relationship between these issues and the manner in which they have been implemented within the case study corporation T-Mobile.

2.2. Defining CRM and its purpose

As has been the case with almost every theory related to corporate strategy and management, there have been a number of attempts at providing a comprehensive and robust definition for the term CRM. These have ranged from the complex to the simple. At the former end of this scale is the lengthy definition that was used by Payne and Frow for the purpose of their research study into this area.

Figure 4 CRM definition

Source: Payne and Frow (2006, p.168)

However, as Payne and Frow indicate the term, which gained prominence in the 1990’s, has in the past been defined as “CRM can be interpreted as a process of digitizing a staff’s knowledge about his or her customers.” Nevertheless, in view of the connection that exists between CRM and IT, perhaps the simplest and most appropriate definition that exists can be more succinctly described as it being “information-enabled relationship marketing.”

2.2.1 Purpose of CRM

In terms of the purpose of CRM systems, from the corporation’s viewpoint, the consensus of opinion is that this can be applied to five key areas, which are as follows:

1. Acquisition of new customers

The purpose being to secure new customers whose values equate with those that the firm or its brand is delivering. In financial terms, this will also reduce the fixed cost per customer, which can add further value by, for example, reducing product price.

2. Increasing revenue from existing customers

This is achieved by encouraging existing customers to purchase other products or accessories, which in the mobile environment might consist of additional apps.

3. Improving customer retention rates

Aimed at improving customer loyalty which will result in a continuation of their repurchasing habit

4. Reducing recurring costs

Improvements made to internal/external systems should lead to a reduction in the cost of delivering messages and services to the customer without impacting adversely on quality

5. Reduce costs of acquisition

Helps to improve the efficiency of attracting new customers, which has cost benefits

2.2.2 Key changes brought about by introducing CRM

As can be seen from the following table (1), the design, execution and implementation of the CRM process within the business has an impact upon four key areas of its operations.

Table 1 key change elements of CRM

Source: Gurau et al (2003, p.211)

It is apparent that the two main elements of this change are the effect that it will have upon firstly, the customer and, secondly, the business employee’s. From a customer aspect, the process will be focused upon understanding and satisfying their needs, which at the same time will provide them with a greater sense of being appreciated and respected by the firm as their views are being listened too. The other aspect, which is interrelated with the first, is ensuring the efficiency of understanding that the staff have in terms of operating the new CRM system as, only through this approach will the customer satisfaction determinants be fulfilled.

2.3 CRM theoretical models

There have been several theoretical CRM models developed over recent years, which have set out to provide an understanding of the way that these processes work and the interaction between the various elements. Of these, it is considered the two that provide the greater amount of detail about these processes are the QCI (figure 5) and Payne’s five processes (figure 6) models.

Figure 5 QCI model

Source (Buttle 2009.19) QCI model developed by a consultancy firm

Figure 6 Payne’s five processes m model

Source (Buttle 2009, p.20) Payne’s five process model

The benefit of the QCI model is that it shows the revolving and continuing cycle of the CRM customer based element. In other words, it defines the triple task of which is to win-back old customer, target new ones and continue to learn from the information gathered from the consumer so that the value of the product and brand can be constantly evolving to meet their changing needs and demands. Another important element of this model is that it indicates the bi-directional approach or communication between the various elements, which is essential in the development of a successful customer relationship programme.

Conversely Payne’s model, which has been adapted from Michael Porter’s ‘value chain,’ takes a straight line approach and splits the process into two distinct parts, these being the primary steps, related to external and customer activity, and the supporting direction, which is related to internal operations. In focus therefore, this model is targeting the impact of the relationship between the customers on the one hand and the profitability of the business. Nevertheless, it is apparent in both cases that there needs to be a robust link between all of the component parts and it is this link which has been found to be best created through the adoption and implementation of appropriate CRM IT systems.

2.4 CRM and IT

As this review has revealed earlier, most CRM tools and systems are now implemented through the use of information technology and this is increasingly being seen as the most appropriate manner of controlling and measuring customer relationship. Nonetheless, in terms of corporate acceptance of this situation, this has been slower in materialising. However, this position is rapidly changing as indeed can be evidenced from a survey conducted in 2002 which showed corporate employee’s satisfaction with IT CRM systems increased from 35% in 2000 to 78% in 2992.

It is apparent from this change of opinion that corporate employees have now begun to recognise the main advantages that exist within the new IT developments in CRM, which have been clearly identified within academic research (Table 2).

Table 2 difference between old and IT based CRM

Source: Gurau et al (2003, p.201)

One interesting observation becomes immediately apparent from a review of this list is the increased interactivity force and power of the customer and the impact that this has upon the corporation’s and its drive for competitive advantage. For example, not only does the Internet provide bi-directional between the customer and the corporation, it also allows for the same to occur between customers, which means that their influence upon other and potential customers is much greater within the World Wide Web environment. For this reason, it is important that the best practice is adopted for the CRM systems.

2.4.2 Best practice for CRM in IT

The first important factor to remember, which is linked to that discussed in the previous section is that CRN management tools usage on the internet should not be confined to just being price driven. The reason for this is that most online retailers have resorted to this approach, which reduces its competitive advantage for the firm. In addition therefore, the Internet message also has to achieve customer satisfaction “to increase competitive advantage” against other online competitors.

The level of the customer satisfaction both with the product and with the relationship that he or she enjoys with the firm is a key factor in determining the extent of their loyalty to the firm and their repurchasing behavioural patterns. Moreover, as indicated within the following diagram (figure 7), if there is a significant level of dissatisfaction being experienced, the person in question can act as a disruptive force. Through the communication means available on the Internet, these ‘dissatisfied’ customers can create adverse perceptions in the minds of potential new customers about the quality and appropriateness of the product and brand. This could act as a deterrent, dissuading these new customers from an initial purchase trial.

Therefore, to ensure competitive advantage is maintained a high level of customer satisfaction with both the product and the brand and its service and promotion must be maintained, to such an extent that, as Shrimp and Madden “a triangular love relationship” develops between the brand product and customer.

Figure 7 Customer satisfaction matrix

Gurau et al (2003, p.201)

2.6 CRM tools, systems and their objectives

2.4.1 Use of Internal Tools and systems

With regard to the internal implementation and management of CRM processes, the core factor is for the business to comment this process using a two-step process:

Step one

This step focuses upon the business and customer strategy review. Business strategy is to commence with an overview of the internal and external business environment. Customer strategy involves examining the existing and potential customer base to identify which segment is most appropriate for the business product

Step two

Consists of building a multichannel objective, which means that s number of channels must be managed in an integrated manner

The multiple channels that are referred to in step two above will include a number of activities. For example, perhaps the most important of these is the need for a data depository (or memory bank) from which information can be mined and retrieved. In addition, the business will need to have front and back office applications which a) interface with customers, and b) include back office applications that support internal administrative, supply and logistical processes. All of these elements must be aimed at improving the quality of service marketing that is applied to the external CRM tools. In other words, they should be designed to enhance the service value chain operated by the business and from the business viewpoint, the effective management of its customer base.

Another of the beneficial uses of internal CRM tools is that it can be integrated with other computerised systems, providing information to areas such as the supply chain, resource planning and even financial systems

2.4.2 Use of external CRM tools

In essence, most of the external CRM tools will be related to marketing , especially those that are focused upon the Internet and, in this respect can provide opportunities that can be used to adopt new marketing models that will enable the marketer to get “inside the lives [and minds] of your customer.”

Within the offline environment, many businesses have used these systems for the purpose of direct mailing and the creation of loyalty and reward programmes, all of which are designed to improve customer retention and loyalty. Alternatively, in the online environment the marketers are provide with three main marketing opportunities, which include the development of a brand website and involvement with social networking, as well as online advertising. In relation to all of these opportunities, the focus for the marketer must be upon the creation of an interactive dialogue between the business and the customer to ensure the objectives and needs of each party are met.

However, it is equally important, having implemented these processes, that their performance is monitored, which means that control systems, such as a KPI’s or Balanced Scorecard approach needs to be also included within the process.

2.7 CRM at T-Mobile

In relating the above elements of the literary review to the case study organisation, T-Mobile, the extent to which this corporation has followed the advices and processes described in the previous section can now be identified. It is apparent from a visit to their website that the company is offering similar promotional material and product descriptions to those of other mobile organisations. Furthermore, in terms of building a customer relationship the site also offers a discussion forum, although it has to be said that this is not immediately apparent unless one visits the ‘contact us.’ Similarly, with the same criticism, the company has also engaged with online social networking, though this appears to be limited to the ‘Twitter’ site at present.

Consequently, when all of this activity is added to the data that is collected from the contact us site and the further customer details that are required when requesting help, or making a payment, it is also apparent that the organisation must have the internal CRM systems available to enable it to develop a data depository. From this, the business would be able to produce a targeting programme that can design offers for a specific group of customers, where existing or new.

2.8 Summary

In summary therefore, it can be concluded from this review that the main elements required for the implementation of a successful CRM system that will deliver the goal and objectives of the business, must be based upon the following key factors:

Mission vision

Creating basic functions, structure and content that are designed to deliver customer satisfaction and are designed to prevent the death of the relationship

Commitment

Ensuring clarity of definition, good leadership and help from the supply chain to achieve objectives

Monitoring

Effective management, use and control of the information acquired and evaluating the ongoing performance

Customer orientation

Focus on committed customers and a loyalty programme with financial incentives tend to lead to a greater level of customer satisfaction. Also learning to see the brand through the customer’s eyes

Marketing

Concentrate upon firing up the front line

Within the following chapters, it will be discovered the extent to which T-Mobile’s current CRM tools and systems have succeed in these goals and objectives.

Chapter 3: Research methodology

3.1. Introduction

One of the most essentials prerequisites for the conduct of any study of this nature, which includes both an understanding of the theoretical processes and their transition into a practical commercial environment, is ensuring that the appropriate methodology is chosen for use . The following sections outline the approach that has been adopted for this dissertation.

3.2 Research philosophy

The philosophy adopted for the study has been based upon a combination of the positivism and interpretivism approach. In relation to the former, the benefit is that it allows the researcher to introduce previously published facts and concepts that can be reviewed objectively, for example, in this case such a modus would include previously published academic literature and the opinions of expert observers. Interpretivism, on the other hand, permits the researcher to observe the reactions and perceptions of individuals, which in this case would be those who supply mobile product and the consumers who use them.

3.3 Methodology strategy

With a study that combines the theoretical with the effectiveness of its transitioning into a practical environment, the methodology chosen would rely upon either the quantitative or qualitative approach, or a combination of the two. The former allows for a more detailed and study of specific elements or opinions, for example, as would be gained from the use of an individual case study organisation or the conducting of interviews. The latter relies upon a large scale of investigation and, in this respect the use of existing academic resources or the conducting of a survey would have the desired outcome.

3.4. Choice of research methodology

In considering the appropriate approach that would be suitable for this dissertation, the author has heeded the advice from other academics that a combination of the qualitative and quantitative approach might enhance the results and findings and has therefore decided upon this method. The reason for this choice is based upon the fact that, although only one organisation is being included as a case study, the size of the consumer market is considerable. The intention with the latter is to seek a consensus of opinion from these consumers as to what CRM strategies and tools are most likely to affect their purchasing and loyalty choice and for what reason. The data and information required from these approaches will be amassed through the secondary and primary data collection processes.

3.5. Secondary data collection process

Secondary data comprise two areas of research, both of which will have been pre-published and generally available in the public domain. For the first part, this will include publications related to theoretical concepts related to the key elements of CRM and the models and tools developed which are available in books and journals located in either bookstores, libraries or reputable online publishing websites. The second part is the collection of statistics and other external opinions that have been made available from the Office of National Statistics, the OFCOM regulator and other NGO organisations or expert observers.

3.6. Primary data collection process

Regarding the collection of primary data, three approaches have been used. The first of these was the case study itself, for which T-Mobile’s own website has been used in conjunction with reviews related to the corporation that have been published by other industry observers. However, to appropriate and robustly address the aims and objectives of the dissertation it was also determined that there was a requirement for the researcher to gather information, opinion and evidence from those considered to have a more intimate involvement with the industry sector . To achieve this situation it was decided to use an approach that combined the use of semi-structured interviews together with consumer surveys .

3.6.1. Semi-structured interviews

For the purpose of semi-structure interviews, two employees from the case study corporation were chosen and, in addition, a representative from the OFCOM regulator and a consumer group . The benefit of this approach was that it provided the researcher with the ability to achieve an understanding of the CRM tools and strategies implement by the T-Mobile Corporation, as well as their views and opinion as to the success of these methods.

3.6.2. Questionnaire and survey

The questionnaire took the form of an online survey , which was targeted to social networking groups as well as a similar survey conducted at one of T-Mobile’s retail location, where the corporation’s customers formed the respondents. These surveys, to which only the researcher had access to the results, were aimed at providing a collective consumer view and opinion in relation to the benefits the considered applicable to them from CRM processes. The questionnaire itself was constructed with a range of question styles. From the closed type which was used for responses such as age and gender, to the ‘linert’ style, which is designed to test the degree to which the consumer agrees or disagrees with a specific statement, with five choice options being available.

3.6.3. Ethical issues within primary research

There are issues that need to be appropriately addressed with any primary research. Predominantly, these are related to data and privacy protection. In the design, construction and implementation of the semi-structured and survey used within this particular dissertation the ethical issues were dealt with in the following way. Firstly, as can be seen from the questionnaires, there were no questions that required the divulgence of any person data save for age and gender. In other words, no information of a personal or financial nature was requested. Furthermore, it was made clear to the respondents that their involvement with the survey was a matter of personal choice. With the interviews, again it was confirmed that participation was voluntary and, moreover, that privacy would be protected by not indicating the interviewee by name. In addition, in this case transcripts of the interview were sent to each participant for their agreement prior to the results being included within this study.

Therefore, it is considered that the primary research processes have been implemented in a manner that cannot be seen to have caused harm to the respondents and, furthermore, comply with current protection legislation and codes.

3.7. Limitations

The limitations that can be seen to ‘potentially’ affect the chosen methodology can be described as follows. Concerning the secondary research process, the main concern is to ensure two things. Firstly, it is important to ensure that the data has been collected from reliable sources and is, as far as can be assessed, free from bias or inaccuracies. Secondly, it is also important to ensure that the research relied upon is the most current available.

With the primary research, it is equally essential to ensure that bias is not allowed to affect the design in terms of things like questions. In addition, the other limitation is related to the sample size selected for these events.

Within reason it is considered that, taking into account the restrictions in relation to issues such as time, cost and geographical locations, the research conducted for secondary and primary purposes has reduced the impact of these limitations to acceptable levels.

3.8. Summary

It is the researcher’s considered opinion that the methodology adopted for this study, as set out within this chapter, was sufficiently robust as to add value to current research into the area of customer relationship management and, in addition, has adequately addressed the aims and objectives..

Chapter 4: Findings and data presentation

4.1. Introduction

The findings presented within this chapter include those related directly to the case study data provided in the introductory chapter, as well as the results of the primary interview and questionnaire results.

4.2. Case study and interview findings

One factor that has become apparent about T-Mobile and its development over the past few years is that the UK market share for the business has not increased, in other words, if there has been any customer gains, these have been countered by similar levels of losses. This result appears to indicate that, to date at least, the business CRM process is not perhaps as robust as other competitors are, particularly when compared with O2 and Vodafone. However, this view of the CRM process does not appear to be a viewed shared by the two representatives of T-Mobile who took part in the semi-structured interview.

4.2.1. Interview findings

The full transcri

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This essay will present an analysis of some of the reasons for the commercial success of the recent movie “The Hunger Games” a film that generated $155m in ticket sales in the US alone (LA Times, 2012).

One of the key activities of the marketing function is to undertake environmental analysis in order to consider adaptations to the marketing mix which will ultimately lead to higher levels of profitability (Jobber, 2007). A key aspect which the success of The Hunger Games draws upon is a changing social dynamic within the external environment which has seen a preference of consumers for movies over books. As such, it is argued that the success rate of many recent movies including The Hunger Games and other well known films such as the Harry Potter series have come from what is essentially a product adaption from book to motion picture, a conversion which better meets the needs of the consumer (LA Times, 2012).

Other factors that may be seen as relating to the successes driven by considerations in the external environment relate to the timing of the release of the product. A well known definition of good marketing being the right product, in the right place at the right time (Brassington and Pettitt, 2006). In this case, Velasco (2012) argues that the timing of the release of the product was a crucial piece of marketing, in effect the March rollout seeing that The Hunger Games was released into a market which was largely devoid of competition with many competing major motion pictures not being due for release until the later summer period.

Other theoretical considerations which aid one’s understanding of the reasons for the commercial success of the hunger games may relate to customer segmentation and targeting (Kotler et al, 2009). In this case, sources compare the success of The Hunger Games to that of the Harry Potter series. Here it is indicated that The Hunger Games takes advantage of a broader approach to demographic segmentation than that of the Harry Potter films (LA Times, 2012). For instance, while the Harry Potter series has a very limited audience, namely children and those looking after them, The Hunger Games was marketed at a much broader demographic including the lucrative teenage segment. As such, a broader interpretation of the segmentation concept saw The Hunger Games simply having a wider audience to draw upon in the first place. Some sources have also indicated that in its current format as a motion picture, the film has “downplayed” the romantic aspects of the original book in an attempt to further widen the appeal to both male and female segments of the population (Velasco, 2012). Again this may be seen as a key reason for the success of the movie with an audience which is potentially twice as big in comparison to targeting only one gender group.

Other sources in analysing the commercial success of the movie have considered the direct promotional elements of the marketing mix (Brassington and Pettit, 2006) most notably focusing upon contemporary forms of promotion such as social media advertising (Belch and Belch, 2009). In this case, Acuna (2012) argues that The Hunger Games has made use of the most comprehensive social media marketing campaign of any movie to date which has included a raft of activity on social networking sites such as Facebook and activity using other sources such as Tumbler and Twitter. Such activities are designed to effectively amplify the official messages transmitted by advertisers with advertising in the social media often resembling that of traditional word of mouth forms of marketing (Yeshin, 2006). In analysing this element of the marketing mix, one may consider that the use of such promotional activities also links to the segmentation and targeting strategy as previously outlined. In this case, one may see that the teenage to early twenties target audience is also the audience which is most susceptible to social media and other forms of contemporary advertising.

Other sources such as Reuters (2012) go further in assessing the impact of The Hunger Games online and social media marketing campaign. In this case there is a consideration that the marketing campaign on the behalf of The Hunger Games in the social media environment has been so large in scale and so successful that this will limit the amount of money future film producers spend on traditional advertising such as television advertising. Despite this success seen in the context of The Hunger Games, the article (Reuters, 2012) goes on to point out that such a tactic is far from risk free with the previous 2009 film “Bruno” suffering from “bad-word-of-mouth” reviews in the online social environment and damaging the credibility of the offer.

Despite the use and success of contemporary forms of marketing such as online marketing and social media marketing, the films promoters have not neglected classical forms of promotional material with considerable effort being made to raise the profile of the movie through traditional paper based forms of advertising. In this case Acuna (2012) indicated that in the US 80,000 free posters for the film were handed out while another 3,000 billboard and bus shelter hoardings were paid for. All of these may be seen as key methods of raising the profile of a marketing offer in the context of an untargeted marketing audience (Yeshin, 2006).

Having reviewed the evidence there is little doubt that the recent major motion picture The Hunger Games has been a commercial success and that furthermore, a large amount of this success has been due to positive marketing activities. However, the paper has also revealed that in order to create such a marketing success a whole range of activities and factors have had to be taken into account including environmental analysis, effective segmentation and the creation of an innovative marketing mix. If there is a single important factor to be derived from this paper then it is perhaps the need for contemporary marketers to truly understand the changing landscape of the promotional environment in which social media marketing may now be seen as a core area of focus moving forward.

Bibliography

Acuna, K. (2012). The Hunger Games by the numbers: 20 marketing tactics to ensure success. Available online at: http://www.businessinsider.com/the-hunger-games-box-office-debut-will-marketing-will-2012-3?op=1 [Accessed on 19/11/12].

Belch, G, E. Belch, M, A. (2009). Advertising and promotion. 8th ed. Boston: McGraw-Hill.

Brassington, F, Pettitt, S. (2006). Principals of marketing. 2nd ed. Harlow: FT Prentice Hall.

Jobber, D. (2007). Principles and practice of marketing. 5th ed. London: McGraw Hill.

Kotler, P, Keller, K, L, Brady, M, Goodman, M, Hansen, T. (2009). Marketing management. Harlow: Pearson Education.

LA Times. (2012). The hunger games: five lessons from its box office success. Available online at: http://latimesblogs.latimes.com/movies/2012/03/hunger-games-jennifer-lawrence-box-office-155-million.html [Accessed on 19/11/12].

Reuters. (2012). Hunger Games success spells trouble for TV ads. Available online at: http://in.reuters.com/article/2012/05/04/hollywood-socialmedia-idINDEE8430EM20120504 [Accessed on 19/11/12].

Velasco, S. (2012). How The Hunger Games scored a marketing win. Available online at: http://www.csmonitor.com/Business/2012/0327/How-The-Hunger-Games-scored-a-marketing-win [Accessed on 19/11/12].

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Introduction

The American Marketing Association (1960, pp. 9-10), stated one of the first definitions of a brand. They stated that a brand was “a name, term, sign, symbol or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors” (AMA, 1960, pp. 9-10).

Unfortunately, due to this definition being very product-orientated with a lack of definition for visual features, it was heavily criticised by a various amount of academics (Arnold, 1992; Crainer, 1995). Since then, the definition of ‘brand’ has been adapted to a more modern form. Many research academics offer a variant of the definition (Aaker, 1991; Doyle, 1994; Kotler, et al., 1996; Stanton, et al., 1991), with most of these using the revised version provided by Bennett (1988, p. 18) “a brand is a name, term, design, symbol or any other feature that identifies one seller’s good or service as distinct from those of other sellers.”

There have been a vast variety of other brand definitions, with some being more customer-orientated and others being more product orientated, but Bennett provides a simple and sophisticated definition on what a brand is.

A strong brand can offer a variety of benefits for a company as it can be used to differentiate between competitive offerings. This can allow a brand to become a critical factor for the success of a company. The majority of companies will seek to maintain an incredibly strong and positive brand that can identify with customers on a personal level.

This report will conduct an in-depth exploration into the various factors that constitute a successful brand, and how a company can build a strong brand. With brand image being such an integral force on a company’s success, it is imperative that they successfully create and manage their brand. A variety of factors that can impact on the creation and maintenance of a brand will be explored, included brand identity, brand image, brand equity, brand congruence, co-branding and the evaluation of brand performance.

Brand Identity

A company should be have a clear, defined strategy on what their brand identity is meant to be. Kapferer (2012, p. 156) provides an excellent framework that allows a company to measure and decide on their brand identity. It measures brand identity on six levels, these are;

Physique
Relationship
Reflection
Personalit
Culture
Self-Image

A company may seek to favour some of these factors more than others, or they will attempt to balance their brand identity amongst all of the factors. This is largely dependent on the industry in which the company operates. A company like Apple may focus on self-image, relationships and personality, whereas Marks & Spencer’s would be more concerned with self-image, relationship and culture.

Furthermore, Aaker (1997) conducted a detailed study to define five brand characteristics that can help develop a company’s brand identity or personality. The definition of brand personality is “the set of human characteristics associated with a brand” (Aaker, 1997, p. 347). The use of brand personalities has become more common because consumers often associate brands with human personality traits. Aaker (1997) defined the five brand characteristics as;

Sincerity: Down-to-earth, honest, wholesome and cheerful.
Excitement: Daring, spirited imaginative and up-to-date.
Competence: Reliable, intelligent and successful.
Sophistication: Upper class and charming
Ruggedness: Outdoorsy and tough.

Brand characteristics can be used “to compare personalities of brands across product categories, thereby enabling researchers to identify benchmark personality brands” (Aaker, 1997, p. 354).

Brand Image

A company’s brand image can be measured through a variety of channels. One of these channels is in a literal sense, and is through the use of a logo. The American Marketing Association defines a logo as (AMA, 2015) “a graphic design that is used as a continuing symbol for a company, organization, or brand. It is often in the form of an adaptation of the company name or brand name or used in conjunction with the name”. Furthermore, Budelmann, et al., (2010, p. 7) define a logo as “a graphic representation of a brand…a logo is a picture that represents the collection of experiences that forms a perception in the mind of those who encounter an organization”. A logo can be used to portray a brands identity through the use of imagery, and allow a company to spread their brand awareness via a constant icon.

However, brand image is not only related to a company logo. It is also how consumers perceive a product or service that a company has to offer (Levy, 1978). This is strongly related to the brand identity or personality traits that a company attempts to adopts. However, the brand identity will be what the company is trying to achieve, whereas brand image is generally in regards to the consumers perception of a brand (Dobni & Zinkhan, 1990).

Brand Equity

A company’s brand equity can be measured through a variety of methods. Feldwick (1996) identifies three main factors on how a company can measure their brand equity. These are; stating the total brand as a separable asset on the balance sheet, the level of strength of a consumer’s attachment to a brand and a description of the beliefs the consumer has about a brand. Different companies will measure their brand equity in different ways. Activision Blizzard value the goodwill of their company at approximately ?7bn (Blizzard, 2014, p. 93), which will include how much they believe their brand equity to be.

Keller (1993) takes a more consumer-based approach to brand equity, suggesting that brand equity represents a condition where the customer is familiar with the brand, and recalls a favourable, strong brand association. This approach would be more concerning to a brand manager, as they would have to build a brand that is attractive to the target audience of the company. Furthermore, it would also mean that the company should be offered positive service quality, as brand equity can be heavily dependent on a consumers’ past experience with a company. This attitude allows brand equity to be very subjective and personal, meaning it is hard to measure or manage by a brand manager.

Co-branding

Co-Branding is a relatively recent branding strategy, with its original formation thought to be in the 1990s. One of the first research studies to be conducted on co-branding was by Norris (1992) who investigated brand alliance within the field of brand ingredients.

As competition becomes even stronger within markets, and with the introduction of more and more companies, the use of co-branding is becoming a more prominent strategy for companies to undertake (Washburn, et al., 2004). Co-branding strategies are being implemented through a variety of markets, from Betty Crocker and Hershey’s to Dell and Intel processors.

A co-branding strategy “represents a long-term brand alliance strategy in which one product is branded and identified simultaneously by two brands” (Helmig, et al., 2008, p. 360). Furthermore, there are four fundamental characteristics that compose co-branded products, these are:

Participating brands should be independent before, during, and after the offering of the co-branded product (Ohlwein & Schiele, 1994).
The co-branding strategy should be implemented on purpose (Blackett & Russel, 1999).
Co-operation between two brands should be visible to potential customers (Rao, 1997).
One product must be combined with two other brands at the same time (Hillyer & Tikoo, 1995).

If all four of these core characteristics are successfully implemented in a co-branding strategy, then it can provide a variety of benefits for all organisations involved. A co-branding strategy helped Kwik Shop stores appeal to all age groups and to “offer a range of healthful to indulgent eating options” (Odesser-Torpey, 2015, p. 1). This is because it teams up and ‘co-brands’ with a variety of restaurants across Iowa. This co-branding strategy helped the company grow its revenues, along with improving their brand image and spreading brand awareness. This would be a great success for any brand manager, however deciding on which companies to co-brand with, and how to successfully implement the strategy can be very difficult.

There has also been a growing interest in the co-branding of corporate brands and social or cause-related brands (Simmons & Becker-Olson, 2006; Dickinson & Barker, 2007). This is because a cause-related brand can bring a corporate brand “a Fair Trade value, a safety and ethical guarantee that they are beyond the level corporate brands can usually offer” (Senechal, et al., 2013, p. 367). Many brand managers will use this strategy to simplify the company’s co-branding strategies, as being associated with fair trade usually offers an instant positive reception and increased brand awareness.

The main purpose for companies to pursue a co-branding strategy is to increase customer awareness and perception of certain products. Prior research has concluded that pre-existing attitudes of one brand can be passed on and related to brands within the co-branding alliance (Simonin & Ruth, 1998). Dickinson & Barker (2007) highlighted that the existence of such a positive transfer between brands is one of the key motives for a company to follow a co-branding strategy.

Evaluation of Brand Performance

Although a brand manager may be able to successfully identify the company’s brand identity, and successfully market this brand image, they must also be able to monitor and evaluate their brand performance. There has been a direct link between brand performance and an increase in market share, premium pricing strategies and an increase in customer loyalty (Chaudhuri & Holbrook, 2001). This highlights the significant impact that branding has on a company’s financial and operational success.

Brand performance is generally measured through two methods, brand profitability performance and brand market performance. Profitability performance tries to relate a brand to revenues, whereas market performance is how the brand has impacted market share or sales volume (Chirani, et al., 2012). However, a company can combine both of these factors by monitoring market share, price and distribution coverage as indices for brand performance. If a brand is performing successfully then a company would expect an increase in market share and profitability.

There is definitely a variety of factors that can be accounted for by brand performance, and all have an intrinsic part to play in a company’s success. It is for this reason that a company will hire a brand manager to construct, maintain and monitor a brand profile, in the hopes of increasing profitability and market share.

Conclusion

There are a variety of frameworks and theories that a brand manager can utilise to successfully create a strong brand for a company. With branding being strongly linked with market and financial performance, it is imperative that a brand manager use these theories to their advantage. Furthermore, they can systemically go through the various theories to build and monitor a strong brand.

The brand identity and personality is the first stage to achieving this, and should be decided by the managers of a company. These traits would be heavily dependent on the products a company make, or the market they operate in. A brand manager will want to ensure that the perceived brand image of a company is in-line with the brand identity that managers were wanting to achieve. As the brand identity should be a reflection of the products that a company produces, this should already partly be met. However, the brand manager should ensure that all marketing activities are also centred on promoting the appropriate brand image to coincide with the desired brand identity.

After a brand manager has devised a successful brand image, they should continue to monitor the brand’s equity and performance. The brand equity can be measured via the balance sheet, but should primarily be valued based on consumer perceptions. As brand equity is heavily tied to customer experience, all employees of a company should ensure they are providing the highest degree of quality possible. Furthermore, a brand manager can also review the performance of a brand through market share and generated revenues. This is because a strong brand has strong ties to customer loyalty, which in turn should generate significant revenues for a company.

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Why is it important for an international marketer to study culture? Outline the main techniques available for undertaking cultural analysis?

Where once marketers of goods or services may have targeted customers only in their domestic market, the globalisation of the business environment through improved technology, reduction in trade barriers and emergence of large multinational corporations (Palmer & Hartley, 2002), means that the marketers of today may have the option to consider marketing internationally. It is posited that an international firm is one that expands from its domestic market into new markets, using its existing capabilities, and this differs from a multinational corporation (MNC) which may have units acting autonomously in several countries (Miroshnik, 2002). Globalisation is not a new concept, and has been seen as the standard for some time (Levitt, 1983).

Entry into a new international market is both an opportunity and a risk and may be achieved through a number of means, including exporting, direct investment, licensing, joint ventures and strategic alliances, each with varying levels of risk that the company must weight up prior to entry (Palmer & Hartley, 2002). Once an entry decision has been made, it is posited that cultural analysis of the target country is imperative for this to be undertaken successfully (Morden, 1995). Management styles, strategies, technologies and structures appropriate to one culture, may be detrimental to the brand when used in a different culture (Miroshnik, 2002). The international marketer must consider what adaptation, if any, is required to its marketing mix (Palmer & Hartley, 2002) and may use cultural analyses to determine to what extent current marketing programmes can be utilised, or how appropriate they would be to the new market (Kotabe & Helsen, 2001). Indeed, recent studies appear to favour adaptation to the new culture, thus the interest of the international marketer in culture and its consequences continues to increase (de Mooij & Hofstede, 2010).

It is suggested that the behaviours modelled by an individual will be the result of the prevailing cultural values within their society, their social class, reference groups (e.g. family and friends) and their individual physical and psychological attributes (Palmer & Hartley, 2002, p 382). Notable contributors in the field of cultural knowledge include Hofstede, Hampden-Turner and Trompenaars (Morden, 1995).

Of use for the international marketer wishing to analyse the culture of a new country versus its domestic market are conceptual models which identify, classify and measure culture as specific dimensions, enabling a comparison to take place (Miroshnik, 2002). Herskovits’ (1989) five dimensions of culture are material culture, social institutions, men and universe, aesthetics and language and language (Miroshnik, 2002).

Material culture concerns consumer demand, including quality and attributes of goods/services required and encompasses both economics and technology; the former looks at how a country makes use of its capabilities and technology concerns its production of goods and development techniques (Miroshnik, 2002). An understanding of material culture will be imperative for the international marketer in its marketing mix decisions; while considering whether the product/service meet local demands for quality and attributes, or whether there exists a capability for the product/service to be produced in the country. Many brands will adapt their product to suit the culture in that country, even if only slightly, an example would be Coca Cola and McDonald’s who adapt their products/menus to suit local tastes; McDonald’s also consider the experience, for example, in France where fast food was not as consistent with the culture of enjoying and taking time over food (Palmer & Hartley, 2002).

Social institutions include decision making, leadership styles and social class (Miroshnik, 2002). Social class may be particularly important to the international marketer, for example the Hindu caste system remains relatively stable throughout a Hindu’s life, with less likelihood of movement between social classes than in western societies and overall it is posited that those within a particular class will share common attitudes and behaviour patterns (Palmer & Hartley, 2002). An understanding of the class system in the target country, and its similarities/differences to current countries will be paramount.

Man and universe comprises religion and superstition, this could be very important to the marketer as religions, beliefs and practices can vary greatly between countries, for example superstitions are integral to Russian culture and religion is intrinsic to Arab and Asian business (Miroshnik, 2002). To be unaware of cultural sensitivities around this area could be detrimental to any international marketer.

Aesthetics involves folklore, music, arts and visual/aesthetic/symbolic norms and whilst this dimension could be glossed over as simplistic or superficial, aesthetics can be extremely important to a culture and thus to the international marketer, for example it would be inadvisable to use a bat within branding in Russia as it is considered bad luck (Miroshnik, 2002).

Finally, language as a dimension is to consider the nuances of what is said, unsaid, plus non-verbal communication (Miroshnik, 2002).

Hofstede cultural dimensions

The assumption that an employee working for a multinational with its own organisational culture will adopt that culture, rather than retain their individual pre-existing culture, was found not to be the case by Hofstede (1983), Miroshnik, 2002). Hofstede’s four dimensional model of national culture, introduced in the 1970’s, may be used to analyse cultural differences; it is posited that this allowed culture to be unwrapped from a single dimension into multiple dimensions (Minkov & Hofstede, 2011). The dimensions are power distance, individualism-collectivism, masculinity-femininity and uncertainty avoidance (Hofstede, 1983). Hofstede’s cultural model shares similarities with the work of Trompenaars (1993) and the GLOBE study (House et al, 2004), a strong inducement for international marketers to use Hofstede’s cultural dimensions to analyse cultural distance is the large number of countries measured, enabling easy comparison (de Mooij & Hofstede, 2010).

Power distance relates to the way the society deals with power distance including the importance and respect allotted to superiors, and conversely to subordinates (Hostede, 1983), also attitudes to inequality (Hofstede, 2006b). Luxury brands may be important in high power distance countries, as their acquisition would demonstrate to others that they are required to show deference (de Mooij & Hofstede, 2010).

Individualism/collectivism concerns personal goals as opposed to collective or group goals (Hostede, 1983). Self-actualisation is important to consumers in individualist cultures and brands that help the consumer to promote their sense of self may do better than in collectivist cultures, where identity is linked to the social system they belong to (de Mooij & Hofstede, 2010). The more direct communication style suitable for an individualist culture may be deemed inacceptable in a collectivist culture, and they may respond more favourably to marketing that promotes collective benefits and family harmony (de Mooij & Hofstede, 2010). Of the four dimensions, Hofstede states that it is this dimension which has lessened in its impact, for example Japanese youth are more individualistic than their parents whilst they continue to mirror their parents in the other dimensions (Hofstede, 2006a).

Masculinity-femininity classifies the cultures relative importance of what may be considered as more male characteristics such as advancement and success versus more traditionally feminine characteristics such as being nurturing (Hostede, 1983). The Netherlands have a more feminine culture with both men and women valuing the softer skills; this can impact upon marketing strategy as more feminine cultures may wish to communicate differently than masculine cultures (Hofstede, 2006a), for example a tour operator using travel agents or call centres more heavily in feminine cultures to allow more opportunity for direct communication. Also, it is posited that household chores such as shopping will be shared more in feminine cultures, thus the marketer must consider who will be making the buying decision; perhaps that target audience will be different from the domestic market. In masculine cultures, status brands may symbolise success and achievement (de Mooij & Hofstede, 2010).

Uncertainty avoidance deals with anxiety relating to the unknown and the extent to which consumers within the culture would seek to avoid this uncertainty (Hostede, 1983); this would also include the expression of emotion and control of aggressive behaviours (Minkov & Hofstede, 2011). In high uncertainty avoidance cultures, the ‘seal of approval’ from experts may be welcome within marketing, additionally this may impact upon the types of product that will be more successful in the country, for example, preventative medication is more prevalent in high uncertainty avoidance cultures (de Mooij & Hofstede, 2010).

Hofstede added a fifth dimension in 1991, long versus short term orientation which relates to gratification deferment (Hofstede, 2006b) and cultural focus on the past, present or future (Minkov & Hofstede, 2011), thrift may be more important to long term orientated cultures (de Mooij & Hofstede, 2010) which could affect pricing decisions for international marketers.

Hofstede’s dimensions are not without their critics; criticisms include incorrect characterisation of dimensions (Jacob, 2005) and that the dimensions are out of date with a lack of societal range in the sample (McSweeney, 2002)however Hofstede posits that the adoption of his dimensions into the mainstream as a cornerstone of cultural research (Minkov & Hofstede (2011) has its disadvantages, namely that they may not be used as originally intended- as a means to discover differences in national culture (Hofstede, 2002).

Like Hofstede, Trompenaars also looked at time orientation and individualism/collectivism, yet Trompenaars looked at a further five dimensions, namely universalism/particularism, affective/neutral relationships, specificity/diffuseness, achievement/ascription and internal/external control (Trompenaars, 1996)., Criticism of this typology hinge on its reduction of acomplex construct such as leadership style to two dimensions when the respondent may use both leadership styles in different circumstances, or indeed a different style altogether, but is forced to choose from one of two given styles (Jacob, 2005).

The conceptual work of Hall (1976) considers cultures as being either high or low context, as a continuum of how much context matters in the culture, and may be used as a tool for international marketers to understand cultural differences and the management implications of the same (Kim et al, 1998). It is posited that a high context culture would have strong respect for social hierarchy, bonds between people would be strong, people may be more self-contained with feelings and messages may be simple but with deep meaning, examples of countries with a high context culture include Japan, China and Korea (Kim et al, 1998). In high context cultures personal relationship may be important in the business to business relationship (Kim et al, 1998), which would have important implications for the marketer, for example, how the relationships could be developed. Conversely, the low context country would be a more individual culture, messages may be more overt, and bonds between people may be more fragile and breakable should they be considered to be untenable; countries such as Switzerland, Norway and Sweden are considered to have low context cultures (Kim et al, 1998). The marketer in a low context culture may not have as much trouble acquiring customers, as they may have in retaining them.

With the wealth of information gained from the various means of cultural analyses, the international marketer will then need to consider the impact upon its marketing strategy. Using Hofstede’s terminology, they may be currently marketing in an individualist culture and attempting to persuade through marketing, but it is suggested that this would be quite wrong if they were attempting to begin to market to a collectivist culture where inducing positive feelings about the brand and building trust would be paramount (de Mooij & Hofstede, 2010). What the international marketer should seek to achieve is congruence in the brand’s marketing set against the cultural norms of that country (de Mooij & Hofstede, 2010).

However, the international marketer must also take on board that culture will never be a ‘one size fits all’ descriptor for a country, as there will most likely be subcultures, for example the UK, with its distinctive subcultures (Palmer & Hartley, 2002). Additionally, people may be members of more than one cultural group at one time- the traditional family culture, work culture, and perhaps even a different cultural group of friends (Jacob, 2006).

Culture surrounds the consumer; to develop international marketing strategy without an understanding of it would be foolhardy (de Mooij & Hofstede, 2010), equally, the international marketer undertaking cultural research based upon a single model of cultural analyses, subsequently assuming cultural homogeneity could be equally set upon the wrong path (Jacob, 2006). What is clear is that culture is by no means a simple concept, and is one that would require extensive research on the part of the international marketer.

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Hofstede, G. (2002). Dimensions do not exist: A reply to Brendan McSweeney. Human Relations. 55 (11), 1-7.

Hofstede, G. (2006a). Geert Hofstede: Challenges of cultural diversity. Human Resource Management International Digest. 14 (3), 12-15.

Hofstede, G. (2006b). What did GLOBE really measure? Researchers’ minds versus respondents’ minds. Journal of International Business Studies. 37, 882-896.

Jacob, N. (2005). Cross cultural investigations: emerging concepts. Journal of Organizational Change Management. 18 (5), 514-528.

Kim, D., Pan, Y., & Soo Park, H. (1998). High versus low context culture: a comparison of Chinese, Korean and American cultures. Psychology & Marketing. 15 (6), 507-521.

Kotabe, M., & Helsen, K. (2011). Global Marketing Management: International Student Version. John Wiley & Sons

Levitt, T. (1983). The globalisation of markets. Harvard Business Review. May-June, 92-102.

McSweeney, B. (2002). Hofstede’s model of national cultural differences and their consequences: A triumph of faith- a failure of analyses. Human Relations. 55 (1), 89-118.

Minkov, M., & Hofstede, G. (2011). The evolution of Hofstede’s doctrine. Cross Cultural Management: An International Journal. 18 (1), 10-20.

Miroshnik, V. (2002). Culture and International Management: A Review. Journal of Management Development. 21 (7), 521-544.

Morden, T. (1995). International Culture and Management. Management Decision. 33 (2), 16-21

Palmer, A., & Hartley, B. (2002). The Business Environment. McGraw-Hill Education.

Trompenaars, F. (1996). Resolving international conflict: culture and business strategy. Business Strategy Review. 7 (3), 51-68.

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Introduction

The development of e-marketing has been one of the most important and influential trends in the field of business, marketing and Information Technology offer the past decade. It has revolutionised the manner in which certain businesses market their products and the advent of social media offers the potential to revolutionise the manner in which businesses and consumers interact in the future. This essay will evaluate the impact of e-marketing upon businesses and will do so in three clear sections. The first section of the essay will define the concept of e-marketing and the second section will examine how e-marketing helps businesses to reach their customers. The third and final section will highlight some of the most important advantages and disadvantages of e-marketing. The conclusion will argue that the impact of e-marketing upon businesses has been largely positive and that despite a number of potential problems e-marketing offers exciting new opportunities for business growth and development.

Defining the concept of e-marketing

In the first section of this essay it is important to clearly define the concept of e-marketing. This is a vital task, because in order to be able to fully understand how e-marketing affects businesses and their customers it is important that the notion of e-Marketing is first of all adequately defined. Patricelli argues that e-marketing is a general term used to denote a wide array of different Internet-related activities. These include “website building and promotion, consumer communications, e-mail marketing and newsgroup advertising” (Patricelli 2002: p.141). However, the term e-marketing has developed enormously over the past decade and today it encompasses a far wider range of activities and one of the most important of these is the use of social media in order to advertise online. Pride settles on an altogether more comprehensive definition of e-marketing, stating that he understands the concept as referring to the “strategic process of creating, distributing, promoting and pricing products for targeted customers in the virtual environment of the Internet” (Pride 2010: p.70). E-marketing is best understood as a broad concept and one that has gained additional platforms in recent years with the advent of smart phones and tablets such as the iPad. As a result, the notion of e-marketing is defined most clearly when it is understood as referring to the creation, distribution, promotion, pricing and communication of products across the entirety of the Internet and the wide variety of platforms that constitute the Internet in a modern context.

How does e-marketing help businesses reach their customers?

E-marketing helps businesses reach their customers in a wide variety of different ways. Boone claims that the Internet offers businesses the chance to reach their customers in a number of unique ways and that one of the most important of these is the global reach of the consumer base that the Internet is able to provide. According to Boone, “the net eliminates geographic protections and limitations of local businesses and it gives smaller firms a wider audience” (Boone 2011: p.105). It is for this reason that the Internet is often seen as being inextricably linked to the wider force of economic globalisation, which some economists see as being responsible for the increasing retrenchment of the nation state and the rising power of non-state actors such as multinational corporations (MNCs). The ability to reach customers connected to the Internet anywhere in the world is seen as an enormous benefit to businesses in their quest to reach, attract and retain customers. Another way in which e-marketing helps businesses to reach their consumer bases is the extent to which it is able to further personalised marketing. It allows businesses to create products that “meet customer specifications” and in recent years the advance of this type of marketing in particular has been seen as perhaps the most significant long-term development in the course of e-marketing (Boone 2011: p.105). Through the use of social media, for example, business analysts believe that corporations may well be to harness enough information in order to tailor products, services and critically search engine results in such a way that consumers will be automatically attracted to them, because the products and services shown will be of interest either to them personally or to their close friends on social networking websites. However, even in the absence of such sophisticated targeting techniques certain websites such as Amazon have made great strides in personalising content to individual users, as Chaffey explains. “Amazon is the most widely known example where the customer is greeted by name on the website and receives recommendations on site and in their emails based on previous purchases” (Chaffey 2009: p.32). Boone argues that e-marketing offers other important ways for businesses to reach their customers including the use of interactive marketing and integrated marketing. Interactive marketing is a form of marketing in which the advertising process is driven by buyer-seller communication and where the “customer controls the amount and type of information received from the marketer” (Boone 2011: p.106). Integrated marketing refers to a type of marketing strategy in which all promotional and communication efforts are combined in order to create a unified and consumer-centric promotion campaign. It is clear; therefore, that e-marketing offers a wide variety of different ways for businesses to reach consumers.

What are the advantages and disadvantages of e-marketing for businesses?

E-marketing has a number of important advantages that make the adoption of e-marketing approaches and strategies attractive for businesses. One powerful argument in favour of e-marketing revolves around the cost and speed of this approach to marketing and Jones argues that these two factors in particular set e-marketing apart from other marketing approaches. “There is much evidence that makes a case for marketing electronically because of the cost-benefit ratio and the speed-to-market advantage” (Jones 2008: p.304). However, it is important to understand that e-marketing is only a cheap option when one considers it in the context of the size of advertising budgets that large firms used to have in relation to television and radio advertising. Whilst small e-marketing campaigns may be cheap, any larger scale campaign is likely to still incur a significant cost, but some of the other most important advantages of e-marketing ensure that this approach to advertising has become increasingly popular in recent years. These advantages mainly revolve around the ability of this form of marketing to collect information and deploy it in unique ways.

The increased ability to garner data and critically the ability to analyse this data in relation to consumers is something that offers businesses many valuable insights into not only their marketing campaigns, but also their business strategies as a whole. In fact, in certain cases e-marketing has developed to such an extent that certain businesses are able to make vast profits by offering comparisons between different websites, websites that are commonly referred to as comparison websites. These companies have no discernible products of their own and instead they offer a service in which they “are uniquely equipped with product listings, consumer reviews, store ratings, and personal shopping lists that offer creative shopping options to consumers on the Internet” (Lebson 2011: p.10). Examples of such comparison websites include Money Supermarket, Compare the Market and Go Compare and once these businesses have built their infrastructure their business model revolves almost exclusively around collecting consumer data and maximising SEO (Search Engine Optimisation). Comparison websites are therefore in one sense one of the most pure examples of e-marketing, because their business models rely almost exclusively upon effective e-marketing to target customers. E-marketing offers further important advantages including the ability to reduce costs via the use of automation and software programs and also allows marketers and consumers to interact in a far faster fashion than would be the case when using traditional means of communication. However, the analysis above has already touched upon one significant advantage of e-marketing that has great potential to evolve substantially in the future. The use social networking and social media in particular offers enormous potential to marketers and opens the door to revolutionary changes in the way customers and businesses interact with one another. The impact that social media websites such as Facebook and Twitter have had upon the way in which people use the Internet has been evident in the past few years and Rana argues that the user-driven, community orientated way in which social media communicates leads to a different type of Internet, full of organic content and user-friendly websites (Rana 2009: p.255). Businesses are thus far only scratching the surface of how to exploit such new opportunities, but Facebook for example offers an advertising service that allow businesses to target individuals based on a range of different criteria. Such adverts therefore are targeted at particular consumers in a much more focused way than even adverts traditionally used on Google, known as Google Ads (Facebook, 2011).

However, despite the numerous advantages of e-marketing businesses must be aware of the fact that e-marketing also presents businesses with a number of potential pitfalls. Certain businesses such as the comparison websites listed above rely completely upon the Internet to the extent that without technology they would actually have no business. Clearly, the Internet will not go away, however the dependency upon technology is something that can cause Internet-centric businesses major problems and also make them vulnerable to a wide range of different cyber attacks (Liebsch 2009: p.87). Another disadvantage of e-marketing has become particularly apparent in recent years and is inextricably connected with the rise of social media. Whilst social media has the potential to offer many e-marketing benefits, businesses must also beware of the danger that poor reviews and poor customer service can have upon their operations. The opinions of one disgruntled customer can go viral at lightning speed and therefore irrevocably undermine a particular business, product or service in an instant. This type of increased transparency also manifests itself in other ways and leads to a situation in which consumers are empowered to search for the lowest prices from a wide range of different online businesses. The fact that the Internet offers an almost unlimited consumer base is one of its clear advantages, but its global reach also affects the competition that businesses experience and as a result online businesses are likely to face stiff competition and many other companies highly competent in their e-marketing expertise. As a result, companies must focus upon distinctive e-marketing strategies and campaigns that differentiate themselves from their competitors in order to be able to cope with the extent of the competition that can be found online in today’s marketplace.

Conclusion

In conclusion, this essay has clearly shown that e-marketing impacts upon businesses in a number of important ways. When used effectively, e-marketing campaigns and strategies have the potential to reach customers in a speedy and low-cost manner and can provide promotion for a wide range of products and services. E-marketing also offers businesses the opportunity to garner data about their consumer base to an extent that has hitherto been very difficult to achieve via traditional marketing methods. The development of e-marketing and social media advertising has led to examples of businesses in recent years that appear to little more than categorise and filter information relating to products and services on the Internet, taking a small cut from any transaction that may occur as a result. However, despite the global reach, speed and the extent of information that can be gained from e-marketing there are a number of important disadvantages to this type of marketing that businesses must bear in mind. The technology driven approach of e-marketing leaves certain businesses vulnerable and overly-dependent upon technology. It also empowers dissatisfied consumers to a far greater extent than ever before and can lead to bad reviews that have the potential to greatly destabilise certain e-marketing campaigns and operations. However, despite these problems it is reasonable to conclude that e-marketing is on the whole a positive development for businesses and that despite certain dangers its impact upon businesses has been largely positive.

Bibliography

1. Boone, L., 2011. Contemporary marketing. London: Cencage
2. Chaffey, D., 2009. Internet marketing. London: Pearson
3. Facebook, 2011. Facebook Adverts. http://www.facebook.com/advertising/?campaign_id=214294157440&placement=exact&creative=5811616952&keyword=facebook+ads&extra_1=66df06ba-739c-b0c8-f265-00003f94ac68 Accessed 05/01/2012
4. Jones, S., 2008. Business-to-business. London: Maximum
5. Lebson, S., 2011. Intellectual property operations and implementation in the 21st Century. Oxford: Blackwell
6. Patricelli, F., 2002. E-business and e-challenges. London: IOS
7. Pride, W., 2010. Marketing Express. London: Cencage
8. Rana, N., 2009. E-marketing intelligence. London: E-Marketing Intelligence

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There are many academics that suggest the correct way to conduct market research (Lockett & Blackman, 2004; Beall, 2010), but in truth, there are a variety of different ways that are effective dependent on the situation. Kolb (2008) states the research process is comprised of four steps, which are; determining the research question, choosing the research approach, planning the research method and implementing the research. This highlights the importance that planning has in the market research process, as physically implementing the process comes after extensive planning and preparation.

This report will critically discuss the above four stages to conducting effective market research. An in-depth analysis of each stage will be conducted, to understand how each factor within the process affects the overall shape and effectiveness of market research.

Determining the Research Question

This is the first step to conducting effective market research and can often be rushed by many companies. As most organisations are eager to implement the process, they can be quick to decide on the research questions. However, it is imperative that the company or researcher decides on a clear research question, as the research question guides and centres the overall shape of the market research. Furthermore, it is absolutely crucial to the rest of the research process. Answering the wrong question can waste tremendous amounts of resources for a company, and make the market research completely ineffective (Springett & Campbell, 2006).

One of the main reasons for companies choosing the wrong research question is because they make false assumptions (Kolb, 2008). This means, to avoid false assumptions from being made, that a company will have to take the time to think critically about what the issue is, or what they are trying to understand through the implementation of market research. As previously stated, the research question should not be rushed, as it is a crucial step for implementing effective market research. This can be overcome by basing assumptions on previous research or experiences, which will guide the company to an educated and precise research question (Swartz, 2001). Some internal research data that a company could use are; sales receipts, complaint information, databases, orders or financial analysis. Furthermore, the research could show a variety of different problems, which could then be condensed into one research question to provide precise and effective market research (Martin, 2007).

Research Approach

Kolb (2008) states there are three different research approaches. These are; descriptive research, exploratory research and causal research. The approach that a researcher will take will be largely dependent on the research question, as they differ quite significantly.

Descriptive research is “concerned with the present and attempts to determine the status of the phenomenon under investigation” (Singh & Nath, 2010, p. 195). In essence, this will be used by a researcher or company when they want to discover specific details about something, such as consumer average spending. This is because it will analyse statistical data, and is most commonly in the form of surveys. A survey is most commonly used because it can obtain results of a large sample to draw conclusions that can be generalised amongst the population.

However, descriptive research is often expensive and time-consuming. This is because of the large amount of data that needs to be collected and analysed (Kolb, 2008). Furthermore, the type of research that surveys provide is often limited, as it only measures a small percentage of the population. It can also be an inconvenient approach to research, which makes it difficult to conduct research effectively. Consumers value their time, and generally do not want to spend it filling out surveys. However, online channels are minimising the inconvenience of surveys, and making a descriptive approach, once again, an effective method of conducting market research (Kolb, 2008).

Exploratory research is “about putting one’s self deliberately in a place – again and again – where discovery is possible and broad, usually (but not always) non-specialized interests can be pursued” (Stebbins, 2001, p. vi). This type of research could be used to measure consumer attitudes, opinions or beliefs towards a brand. These studies vary in size, but will usually be smaller than descriptive research. To conduct exploratory market research effectively, the researcher must explore deep into consumer’s emotions and attitudes, which would be hard to do with a large sample. The focus is more on choosing the right participant, and not trying to conduct the research on a large amount of people. Furthermore, it usually comes at a lower cost to a business, and doesn’t take quite as much time. However, it still suffers with inconvenience, as it can be hard to find participants to conduct the research with (Stuart, et al., 2002).

Causal research is a research approach that focuses on investigating into cause-and-effect relationships. That is to say, it will measure one variable with another and how these variables interact with each other (Brains, et al., 2011). Furthermore, it can be used to give insight into strategic change that a company may wish to pursue. This is because it can investigate whether the change will be beneficial or not for a company. However, it can still be used to research the effectiveness of change after it has happened. Causal research is often used as a preliminary approach, with the results being made more conclusive with the use of descriptive or exploratory research (Brains, et al., 2011).

It is imperative that a researcher or company knows what research approach it wants to take. As stated, it is largely dependent on the research question. However, if a company takes the wrong approach to answer the research question than they will not conduct effective market research, as they would be using the wrong tools and values to gather the data. Kolb (2008) compares choosing a research approachto a car mechanic, if a mechanic was fixing a car, he would choose a wrench, not a spatula. Furthermore, similarly to how the research question shapes the research approach, the approach will also have a significant impact on the research method. This highlights the important of each stage, and why planning and preparation is crucial to successful market research.

Research Method

There are two methods to market research; quantitative and qualitative. These methods differ greatly; quantitative research is an “approach for testing objective theories by examining the relationship among variables…which can be measured…so that numbered data can be analysed” (Creswell, 2014, p. 4) and qualitative approach will “allow a researcher to examine people’s experiences in detail, by using a specific set of research methods such as in-depth interviews or focus groups…” (Hennik, et al., 2011, pp. 8-9). More recently, especially in larger studies, these methods have been combined to form a mixed-method approach. This is a method which “combines elements of qualitative and quantitative research approaches for the purpose of breadth and depth of understanding and corroboration” (Johnson, et al., 2007, p. 123). What method a researcher or company will take is largely dependent on the situation. If a company wishes to understand consumer perceptions then they may prefer a qualitative study (Brunso, et al., 2002; Knox, 2000), whereas measuring consumer average spend would primarily be quantitative in nature (Muijs, 2010). Which method a researcher will conduct must be decided, as it will influence the approach and philosophy the research will inherit. Furthermore, it will also be a determining factor on the form of market research, such as via questionnaires, focus groups or interviews (Muijs, 2010).

Qualitative research will primarily take on an interpretivist philosophy, and an inductive approach. An interpretivist philosophy gives importance to human belief, and focuses on evaluating a small sample in detail to understand the views of many (Easterby-Smith, et al., 2002). Furthermore, an inductive approach “begins with the collection of data, rather than with a theory, and uses data to identify regularities or themes, or to suggest theories…” (Hayes, 2000, p. 789).

On the other hand, quantitative research will generally take on a positivist philosophy, and will also usually take on an inductive approach. A positivist philosophy is quite different to interpretivist, because it focuses on the collection of large amounts of data and quantifying the data with thorough statistical analysis (Lee, 1991). Using the examples above, if a company wanted to conduct effective market research to analyse consumer average spend, than they would conduct quantitative research with a positivist and inductive approach. This is because the researcher will collect a large sample of data to statistically analyse the average spend of a company’s consumers. Doing interviews would be small-scale and ineffective as it wouldn’t represent a large enough sample.

As previously mentioned, the research method will be a determining factor for what tool to use to conduct the research. Quantitative research will usually take the form of a questionnaire, which is a “survey instrument used to collect data from individuals about themselves, or a service or product…each respondent is exposed to the same questions…to ensure the differences can be interpreted as reflecting differences” (Siniscalco & Auriat, 2005, p. 3). On the other hand, qualitative research is usually in the form of focus groups or interviews, which are “a form of group interview that capitalises on communication between research participants in order to generate data” (Kitzinger, 1995, p. 299). This shows the disparity that exists between the different methods, and why a researcher must be clear on what their research method. Trying to obtain data using the wrong research method will yield negative results and will more than likely cause the market research to underperform.

Implementation and Findings

After the planning and preparation has been conducted, the market research, such as questionnaires or focus groups, can be implemented and analysed. Physically conducting research is perhaps the most complex stage of the market research process, but is made significantly easier through rigid planning and preparation (Craig & Douglas, 2005). Furthermore, this stage may consist of going out into the field to collect results, or simply waiting for participants to fill out a survey. It can be both the longest, or shortest, stage of the marketing process, with it being made significantly more effective with proper planning.

All the data collected would be analysed by whatever means appropriate. If a survey was used then the most effective method would be through the use of statistical software. However, qualitative research, such as focus groups, will primarily be analysed by the researcher or company, which will allow them to interpret the data how they sit fit. This can raise issues of bias, which is the extent to which researchers or participants may seek to influence the process of data collection, analysis and findings (A Bryman, 2008). However, if the company wishes for the market research to be conducted effectively, then it will be sure of eliminating all possible threats of bias.

Furthermore, this would be the stage where secondary research could be used, as it would help supplement the primary market research. Secondary research is “the re-analysis of data for the purpose of answering the original research question with better statistical techniques, or answering new questions with old data” (Glass, 1976, p. 3). The use of secondary research is usually decided by the researcher, but generally helps fortify any of the findings from the primary research ensuring that the market research is more effective and thorough.

Conclusion

From the discussion of how to conduct effective market research, it becomes quickly apparent that the most vital stage to conducting market research is the planning and preparation stage. A company must clearly define what there aims and objectives are, as it will help shape and design the overall market research process. There are a plethora of alternative methods to conducting market research, but each different method has its merits. A survey will not explore in-depth attitudes of consumer behaviour, but it will gauge a good understanding of average spend.

Utilising the wrong tools, approaches or philosophies to answer the research question will end up with ineffective market research being conducted, with the company losing substantial amounts of resources. Furthermore, the planning and preparation stage is so important because it will make the physical conduction of the research much easier. If a company knows what they are trying to discover, in what method, and with what tools, than they will be able to conduct the most effective market research in the most efficient manner.

Bibliography

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Brunso, K., Fjord, T. A. & Grunert, K. G., 2002. Consumers’ food choice and quality perception, Aarthus: MAPP working paper 77.

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Creswell, J. W., 2014. Research Design: Qualitative, Quantitative and Mixed Methods Approaches. Thousand Oaks: SAGE Publications.

Easterby-Smith, M., Thorpe, R. & Lowe, A., 2002. Management Research: An Introduction. 2nd ed. Thousand Oaks: SAGE Publications.

Glass, G. V., 1976. Primary, Secondary, and Meta-Analysis of Research. Educational Researcher, 5(10), pp. 3-8.

Hayes, N., 2000. Foundations of Philosphy. 3rd ed. London: Thomson.

Hennik, M., Hutter, I. & Bailey, A., 2011. Qualitative Research Methods. Thousand Oaks: SAGE Publications.

Johnson, R., Onwueghuzie, A. & Turner, L., 2007. Toward a definition of mixed-methods research. Journal of Mixed Method Research, 1(2), pp. 112-133.

Kitzinger, J., 1995. Introducing Focus Groups. BMJ, Volume 311, pp. 299-302.

Knox, B., 2000. Consumer perception and understanding of risk from food. British Medical Bulletin, 56(1), pp. 97-109.

Kolb, B., 2008. Marketing Research: A Practical Approach. 1st ed. s.l.:SAGE Publications.

Lee, A. S., 1991. Integrating Positivist and Interpretive Approaches to Organizational Research. Journal of Organization Science, 2(4), pp. 342-365.

Lockett, A. & Blackman, I., 2004. Conducting market research using the Internet: the case of Xenon Laboratories. Journal of Business & Industrial Marketing, 19(3), pp. 178-187.

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Muijs, D., 2010. Doing Quantitative Research in Education with SPSS. Thousand Oaks: SAGE Publications.

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This essay explores the need for customer relationship management systems. It begins by explaining how the organisational environment has changed and the pace of change is accelerating. It then considers how a better understanding the customer contributes to organisational success. Following this, it defines what is understood by ‘CRM’ or customer relationship management, and finally it considers the importance of using technology effectively when designing a CRM system.

The emergence of CRM is a response to a changing global environment, as Court (2004:4) observed twenty years ago, large companies used one of very few television channels to reach 80% of the US population, but the media explosion would require them to advertise across 20 channels to reach the same. Furthermore, brand loyalty is in decline, and product life cycles are shortening: customers are becoming more indifferent to marketing messages since “customers, whether consumers or businesses, do not want more choices. They want exactly what they want, when, where and how they want it – and technology now makes it possible for companies to give it to them” (Pine et al, 1995:104). This belief forms the very basis of the purpose of CRM – that customers have hidden or overt preferences that marketers can reveal by building a learning relationship (Mukerjee, 2007). Thus, it involves not only attempting to interpret the needs of customers based on their buying behaviour but predicting their future needs.

However, there remains no universal definition of CRM – some distinguish between customer relationship management and others argue the M refers to marketing (Gamble et al, 1999) and as a result, different approaches to CRM have been identified.

A strategic approach is a core customer-centric business strategy which aims to win and keep profitable customers whereas an Operational approach focuses on the automation of customer-facing processes such as selling, marketing and customer service. A third approach is analytical in nature: focusing on the intelligent mining of customer-related data for strategic or tactical purposes and finally, a collaborative approach applies technology across organisational boundaries with a view to optimizing company, partner and customer value (Buttle, 2009).

These different approaches when combined, however, do enable firms to explore their relationship with the customer in a more holistic way. Thus CRM is not merely a matter of database marketing, nor just a marketing process of segmenting the market and acquiring customers or any single IT initiative or loyalty scheme (Buttle, 2009). Firms must be driven by a desire to be more customer-centric if they want to compete effectively and thus, CRM can be thought of as “a core business strategy that integrates internal processes and functions, and external networks, to create and deliver value to targeted customers at a profit. It is grounded on high quality customer-related data and enabled by information technology” (ibid, 2009: Loc 852).

A strategy is the long-term direction of an organisation and operates on three main levels. Firstly, it is concerned with the overall scope of an organisation and how to add value to the organisational as a whole, or the corporate-level. Secondly, at a business level: how the business should compete in their particular market. And thirdly, how the components of an organisation deliver effectively the corporate-level strategies in terms of resources, processes and people (Johnson et al, 2014:7).

Therefore, a CRM approach must devise clear objectives to be achieved and which are measureable. Clearly one of those objectives is profit but clearly linked to this is sustainability. Mukerjee (2007) argues that this requires a firm to have four capabilities. The firm must have the technological capabilities to enable the desired functionality for the CRM practice. Secondly, its people must have the skills, abilities and attitudes responsible to generate CRM and implement initiatives. Thirdly, it must focus on the processes that the company has identified to enable the CRM initiatives to be fulfilled, including its transactional interactions with customers, and finally the firm must identify the right approaches to acquire the knowledge and insight into enhancing the customer value by developing stronger and deeper customer relationships with the right set of customers.

Thus ‘finding the right set of customers’ is the starting point for CRM. The IDIC model devised by Peppers and Rogers (1996) suggest firms must first identify who its customers are and build a deep understanding of them. Then, the firm must identify which customers have the most value now and which will offer the most for the future. Following this, the firm must interact will customers to ensure an understanding of customer expectations and their relationship with other suppliers or brands, and finally the firm must customise the offer and communications to ensure the expectations are met.

The next step is building a relationship with the customer. Buttle (2009: Loc 1082) defines a relationship as distinct from a transaction: The latter is a one off, but the former is a more enduring social construct, but emphasises trust and commitment. Thus a CRM system must continually strive for improved customer retention as well as recruiting new customers who have future profit potential. A useful tool for exploring this is customer portfolio management.

A portfolio segments customers into mutually exclusive customer groups which are clustered on the basis of one or more strategically important variables. This allows for different groups to manage in different ways as it recognises differing needs, preferences, expectations, but also enables analysis of revenue and cost profiles. Clusters can by consumer type, e.g. other businesses (B2B) or ultimate consumer (B2C). And each sub-group can be further categorised, e.g. business type, or through psychological, geographical, demographical and behavioural clusters (Jackson, 2015).

Then it is to appraise the value of such groups. It is a mistake to value according to revenue or volume since they take no account of the costs to win and keep the customer, it must be related to profit (Ambler et al, 2004). Such comparisons can then be modelled on a bivariate grid, and then combined again, for example, ‘attractiveness’, or kept separate, and adding a third dimension (trivariate grid approach) for example, assessing against the company and network fit: the operational, marketing, technological, people and other competencies and liquidity a company has, or can develop, to exploit the segment (Buttle, 2009).

Thus the portfolio approach provides a sense of focused decision-making that can take into account a number of variables and classifications and assist with forming the strategy of the organisation from a corporate prospective. It provide the ‘vision’ of the organisation. It follows, then, that the business and operational CRM strategies can then focus on the ‘how’ to implement CRM systems.

This starts with determining priorities to determine the goals and objectives. Chan (2005) believes that in order to successfully build a customer-centric organisation, all the organisational interactions with the target customers must be tracked whether it is at a primary stage, e.g. marketing, during the interaction, or following the interaction. One approach to this is Value Chain analysis.

Porter’s (1985) Value Chain identifies nine ways that company create value, and classifies them as primary or secondary, as the diagram below demonstrates:

Value is created by companies managing each component more efficiently and effectively, and in particular improving the co-ordination of these activities across the business. The competitive position is strengthened by understanding which of these are especially significant to customers, how rare and difficult to mimic these core competencies are, as well as any other factors which support the organisation in achieving its goals (Johnson et al, 2014).

These other factors include understanding the role that the organisational stakeholders, including suppliers, customers, owners, partners and employees contribute (Buttle 2009). He (ibid: Loc 9638) argues that the relationship between suppliers is particularly critical. The organisation, therefore, acts as a link between the suppliers and customers, and for the customer-centric organisation that relationship between the suppliers and customer must de-emphasise the short-term, opportunistic behaviours to maximise immediate profit but rather stress the long-term mutually beneficial gains.

Furthermore, companies need to keep adding value to retain customers in order to sustain competitiveness, and potentially leap-frog rivals. There are several approaches that organisations can enhance customer value, for example, product and service innovation, finding complete solutions, lowering costs, using more efficient technology and removing ‘pain points’ – simplifying or removing those activities which a customer must endure to get the value (Mukerjee, 2007). Shaw and Ivens (2002) believe that it is the latter issue that is the main focus for CRM: understanding the customer experience rather than just the customer.

Firms can make use of a number of methods for investigating customer experience, including ‘mystery shopping’ and experience mapping, a process to chart and improve what happens at every point the customer interacts with the organisation; process mapping (Buttle, 2009). Another approach is to study the customer activity cycle, which involves breaking down the process into basic elements and collecting data at each point in the cycle (Vandermerwe, 1993).

Thus, CRM systems make use of sophisticated analytical tools, and these must be supported by CRM technologies. CRM technology must be able to meet a wide-range of functions, not just to capture data, but assist with assimilating that data into databases, which must be robust, scalable and secure (Mukerjee, 2007). Furthermore, such technologies must be accessible to all stakeholders, meaning they cannot be difficult to navigate or configure. They must also be able to operate across any communication channel and integrate with other systems to contribute to a single view of, and for, the customer (Buttle, 2009) who lists many well-known CRM solution providers, for example Oracle, SAP, salesforce. Com, Microsoft and E.piphany (ibid: Loc 8026).

Therefore, when designing a CRM systems a thorough understanding of the interconnectivity of the customer, the suppliers, the technology, analytical tools and the firm’s strategy is required and needs to be constantly monitored, as the model below demonstrates:

Adapted from: Buttle (2009: Loc 2863)

Earlier in this assignment, ‘finding the right set of customers’ was suggested as the starting point for CRM system design, and thus it is appropriate to return to this in order to stress the importance of the cyclical and interconnectedness of CRM when designing a system. The activity of ‘finding the right set of customers’ means right now and in the future in order to devise an appropriate strategy, and do so profitably. This process is known as data mining. Buttle (2009) defines data mining as “the application of descriptive and predictive analysis to support the marketing, sales and service functions”. Data mining provides answers to questions that are at the heart of CRM and therefore when designing a system, it is important to understand that CRM is a holistic approach.

Another key consideration when designing a CRM system is that it should assist the organisation in its quest to keep abreast of and prepare for changes in current trends. Traditional marketing methods have been challenged in recent years by changing social trends, the reduction of governmental controls, rising income levels, threats from rivals, an increasingly sophisticated customer who has greater access to information (Mukerjee, 2007). All of this, has contributed to the shortening product life cycle, which as substantially increased the pressure on firms to not just acquire customers but retain them.

Any system that is designed must also be implemented. Narver et al (1998) state that customer orientation is a type of organisational culture, therefore before embarking in CRM, the organisational culture must be ready and able to fulfil the CRM objectives. The organisation, or rather the people within it, must be able to respond quickly, and the company able to support, train and hire people with the necessary attitude, skills and abilities in order for them to contribute to CRM. Furthermore, the company may have to radically reconstruction its entire systems, particularly the structural design of the organisation in order to change the culture from resistant to embracing change.

This assignment has explored the notion that CRM is a holistic approach which assists the organisation in not just responding to its environment but to also compete against rivals. Customer relationship management cannot deliver its promised benefits without appropriate customer-related data, which in turn must be analysed using a wide-range of tools in order to meet the strategic, operational, analytical and collaborative CRM purposes. To design a CRM system means putting the customer at the heart of the organisation and adapting and sustainably exploiting all the resources available in order to meet their needs.

References

Ambler, T., Kokkinaki, F. and Puntoni, S (2004) Assessing marketing performance: reason for metrics selection, Journal of Marketing Management, Vol. 20, p 475 – 98.

Buttle, F. (2009) Customer Relationship Management, Abdingdon:Routledge.

Chan, J.O. (2005) Toward a unified view of customer relationship management, Journal of American Academy of Business, Vol 6 (1), p 32 – 38.

Court, D.C (2004) A New Model of Marketing, McKinsey Quarterly, Vol 4, pages 4 – 6

Gamble, P, Stone, M, and Woodcock, N (1999) Customer Relationship Marketing: up close and personal, London: Kogan Page.

Jackson, J. (2015) Marketing, E-bookPartnership.

Johnson, G., Whittington, R., Scholes, K., Angwin, D. & Regner, P. (2014) Exploring Strategy, Harlow: Pearson Education.

Mukerjee, K (2007) Customer Relationship Management, New Delhi: PHI Learning.

Narver, J, Slater, S and Tietje, B (1998) Creating a Market Orientation, Journal of Market Focused Management, Vol 2, p 241 – 255

Peppers, D and Rogers, M (2004) Managing Customer Relationships: a strategic framework, London: Piatkus.

Pine, B, Joseph, I.I, Peppers, D and Rogers, M (1995) Do you want to keep your customers forever? Harvard Business Review, Vol 73 (2) p 103 – 114.

Porter, M (1985) Competitive Advantage: creating and sustaining superior performance, New York: Free Press.

Shaw, C and Ivens, J (2002) Building great customer experiences, Basingstoke: Palgrave MacMillan.

Vandermerwe, S (1993) Jumping into the customer activity cycle: a new role for customer services in the 1990s, Columbia Journal of World Business, Vol 28 (2), p 28 – 66.

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This question will be answered in three distinct sections. In the first section the major differences in the evaluation of goods and services will be outlined and in the second section the reasons behind these differences will be examined further. In the third and final section it will be important to concentrate upon the impact that the differences between goods and services will have upon concept evaluation techniques and/or methods. Throughout this investigation we will refer to the case of the Concept Development Corporation and consider this case study in order to further elucidate upon this investigation.

It is important to begin this investigation by answering the first question, namely what are the major differences between the evaluation of tangible goods (like toys) and services? The vast majority of money in an economy is spent on either goods or services and therefore it is important to be aware of the differences between the two concepts. Firstly of all, goods are an entity that can be consumed by the customer. An example of a good is a book or food. In the case of a book, the customer can consume the product on many occasions, in the case of food only once. However, both books and food are united in the sense that they are tangible goods that a customer can use. It is the tangible nature of goods that is often used in order to define goods and as Adil points out, “goods are real things that people can touch and use” (Adil 2006: pp.4). Services, on the other hand are defined as something that a person does for another, for example, fixing another person’s car or completing some handiwork in the house would be classed a service. In contrast to goods, services tend to be defined by their intangible nature, because the product one receives is not something one can physically grasp, but rather it is the provision of something that one needs by another person. As Berry points out, “whereas goods are first produced, then sold and then consumed, services are first sold, then produced and consumed simultaneously” (Berry 1985: pp.34). It is clear that there are important conceptual and practical differences between goods and services. Kerr also focuses upon the intangibility of services as their defining feature and argues that as the ubiquitous haircut example illustrates, services tend to have an intangible quality and often (though not always) require the physical presence of both client and service provider” (Kerr 2008: pp.151). However, the difference between tangible good and intangible services are not the only theoretical and practical differences between the two concepts. Firstly, services are often an input into the production process, as the examples of telephone services or accounting illustrate. Due to the fact that such input services can be vital to the development of certain parts of the economy, one could argue that without adequate input service provision certain parts of the economy may never grow at all. “Countries with inefficient service provision, thus tend to have lower productivity in the manufacturing, agriculture and government sectors” (Kerr 2008: pp.151). Adequate service provision can, therefore, at times be vital in developing an economy in a manner that goods cannot be. Another important difference between goods and services is that “services tend to be differentiated products, whereas some goods are homogenous in nature and other goods are differentiated” (Kerr 2008: pp.151). As one can see, therefore, there are a number of important differences between the evaluation of goods and services.

It is important now to move on to discuss why these differences between goods and services exist in the first place. As has already been noted above, the major difference between goods and services is the fact that goods are tangible products whereas services tend to be intangible in nature. The differences between the two concepts is clearly illustrated by the example of the Concept Development Corporation. Crawford and Di Benedetto ask the reader to imagine a scenario in which a group of talented and creative friends decide to embark upon a business venture in which they can put their skills to effective use. “So, they quit their jobs, pooled their savings, rented a small, three-room office, hired a couple of people, coined the name Concept Development Corporation and started serious work” (Crawford & Di Benedetto 2006: pp.189). They quickly realised that they were far more effective at creating ideas than evaluating them and they came up with two product ideas that exemplify the differences between goods and services outlined above. The first area in which they had a creative idea was regarding a product that can be defined as a good and their idea was to create toys for children, particularly toys that contained some education value for the children that played with them. “Their strategy was to develop unique toys that required little up-front expenditures. Most toys would have some game or competitive aspect, be it educational, and involve paper, colour, numbers and the like” (Crawford & Di Benedetto 2006: pp.190). The second area in which the group of friends had a business idea was in the field of writing and this product is best defined as a service. “These services primarily involved designing and writing instruction sheets for area firms (training manuals, copy for package inserts, instruction signs – anywhere words were used to instruct people in doing things)” (Crawford & Di Benedetto 2006: pp.190). It is clear, therefore, from examining the two types of products developed by the Concept Development Corporation that one product is best defined as a good and the other as a service and that a number of important differences exist between the two products.

In the final section it is important to consider the consequences of the differences between the two products of the Concept Development Corporation on concept evaluation techniques and/or methods. It is clear, that, due to the fact that goods and services are different in nature, different techniques must be employed in order to evaluate the two concepts. For example, in order for a customer to evaluate the extent to which a good is soundly constructed, they may want to stress-test the product to ensure that it can withstand external pressure inflicted upon it. This type of test would not be applicable to a service. Therefore, due to the fact that goods a re tangible in nature and services tend be intangible, it is far easier to test the toys that the Development Corporation will produce than to test the writing service of the Corporation. As Berry states, “most services contain few search properties and are high in experience and credence properties, making their quality more difficult to evaluate than quality of goods”

(Berry 1985: pp.40). On the other hand, another study has found that customers use different criteria in order to judge the quality of goods and services. Whereas customers are more likely to trust their own judgment or those of sales people when it comes to products, one study found that “buyers relied heavily agreed or strongly agreed with the statement that there is upon personal sources of information in evaluating services, a difference in the purchasing of goods and services” (Jackson 1995: pp.103). It seems, therefore, that the evidence suggests strongly that goods are more readily evaluated than services and Hartman argues that this is the only effective criteria that can used to distinguish in the evaluation of goods and services. He states that “goods were distinguished from services only on the ease of evaluation dimension” (Hartman 1993: pp.10).

In conclusion, it has become evident during this study that a number of fundamental differences exist between goods and services. Goods are tangible in nature and can be consumed once or multiple times by the customer whereas services tend be intangible in nature. This fundamental difference between the two products has been clearly reflected in the experiences of the Concept Development Corporation, which created toys for children as well as a writing enterprise. The toys for children were a clear example of a good whereas the writing enterprise was a clear example of a service. It is likely that the Concept Development Corporation would have far more success in evaluating the toys as a product, because the studies cited in this investigation suggest that evaluating goods is a simpler task than evaluating services. The Concept Development Corporation will have to bear the differences between goods and services in mind when developing their products further.

Bibliography
Adil, J., 2006. Goods and services. Minnesota: Capstone Press
Berry, L., 1985. Problems and Strategies in Services Marketing. The Journal of Marketing, 49 (2), pp.33-46
Crawford, M., Di Benedetto, 2006. New Products Management. London: McGraw-Hill Publishing
Hartman, D., 1993. Consumer Evaluations of goods and services: implications for services marketing. Journal of Services Marketing, 7 (2), pp.4-15
Jackson, R., 1995. An Empirical investigation of the differences in goods and services as perceived by organisational buyers. Industrial Marketing Management, 24 (2), pp.99-108
Kerr, W., 2008. Handbook on International Trade Policy. Cheltenham: Edward Elgar Publishing

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This essay will briefly describe the development of services thinking within the Operations Management paradigm. The discussion will subsequently identify differences between manufacturing and service organisations. The first part of the discussion will draw to a close with a brief mention of hybrid manufacturing/service organisations.

The second part of the essay will outline the unique challenges involved in marketing and managing services, borrowing from the academic literature belonging to the field of service marketing. The key characteristics that derive the unique challenges in marketing and managing services will be described and suggestions that ameliorate these challenges will be brought into the discussion. The conversation will be brought to a close with a short review of the field of service marketing, reflecting upon the role of the key service characteristics.

Johnston (2005) describes the evolution of services thinking through three stages encompassing a period including the 1980s and 1990s. Conventional wisdom began to embrace a distinct role for services within an Operations management paradigm in the 1980s (Johnston, 2005: 1278). Early academic efforts were restricted to the description of services juxtaposed with manufacturing in an attempt to confirm the importance of services and promote theory building (Johnston, 2005: 1280-1281). Having established the role of services within the field of Operations Management, academics focused upon theory development and empirical testing (Johnston, 2005: 1281-1285).

Debate surrounding the emerging role of services within the field of Operations management will have inevitably produced contradictions. Perceptions of the differences between manufacturing and service organisations varied from no discernible differences (Lawrence, 1989) to rigid dichotomies based upon types of organisational behaviour and characteristic outputs (McDonald, 1994: 6; Troy and Schein, 1995).

McDonald (1994) describes the theoretical differences between manufacturing and service organisations from internal organisational and output perspectives.

The distinction between the two types of organisation based upon differences in internal organisational arrangements focuses upon the transformation process, employee skills/knowledge and the status of results (see Table (1) below).

Table (1): Internal Contrasts between Manufacturing and Service

ManufacturingServiceProduction is capital- or equipment-oriented
Technical skills dominate
Training will dominate
Production results are variable
Production is people-oriented
Interpersonal skills dominate
Education will dominate
Service results are subject to more variation

(McDonald, 1994: 6)

McDonald’s (1994: 6) theoretical comparison of the output of the two types of organisation further develops the notion of two separate operational systems (see Table (2) below).

Table (2): Differences between products and services

ProductService
The customer receives a tangible product in the form of goods which can be seen and touchedThe customer receives an intangible service, which may or may not satisfy
The goods remain with the customerServices are consumed at the moment of delivery
The production and delivery of goods are usually separatedProduction, delivery and consumption of services are often at the same time
Few producers deal with customersMost producers deal with customers
The customer is rarely involved with productionThe customer is often closely involved with production
Goods can be servicedServices have already been consumed and cannot be serviced
Goods are subject to liability, but the producer has more opportunity to ameliorate the effect on the customer and this the financial penaltyServices which do not meet the requirements are difficult to replace – the financial impact is usually total
Goods can be purchased to store in inventory to satisfy the customer’s needsServices cannot be stored, but must be available on customer demand
Goods can be transported to the point of saleSome services are transportable (e.g. information through communication lines) but most require the transportation of the service provider
The quality of goods is relatively easy for customer’s to evaluateThe quality of services is more dependent on subjective perception and expectation
Goods are often technically complex – the customer therefore feels more reliant on the producer The quality of services is more dependent on subjective perception and expectationServices appear less complex – the consumer therefore feels qualified to hassle the producer

(McDonald, 1994: 6)

The use of classification to differentiate between manufacturing and service organisations is an important academic activity, which provides a basis for theory development and empirical testing. Despite the utility of typologies, they can easily be misinterpreted by practitioners and more importantly, misrepresented by academics. A typology is not intended to represent an empirical reality, but rather an ideal reality that serves as a basis for the investigation and description of empirical reality. The danger occurs in any field of study when a theoretical ideal is misrepresented as a generalised empirical fact, which is essentially the problem of reification.

Contemporary studies of manufacturing and service organisations broach the discussion of organisations that combine product and service offerings (Gebauer et al, 2008 and Martinez et al., 2010).

Gebauer et al. (2008: 219-220) provide insight into how manufacturers experiencing difficult competitive conditions could exploit services to sell more products, achieve differentiation of their product portfolio and increase the likelihood of higher and more stable financial returns.

Martinez et al. (2010: 450) claim that there is an increasing tendency for manufacturing companies to integrate product and service offerings rather than focus exclusively on products. Their argument is based upon the assertion that manufacturing systems are relatively easy for competitors to imitate and that there is increasing evidence that manufacturers are integrating their products with services to achieve sustainable competitive advantage.

Although the emergence of service thinking within the Operations management paradigm was based upon a dichotomous view of manufacturing and service organisations, a trichotomy that includes mixed manufacturing/service organisations more accurately reflects the spectrum of modern organisational configurations.

The preceding paragraphs discussed the theoretical emergence of the service organisation. Management Discourse is dominated by theoretical polarities, which focus upon perceived differences between manufacturing and service organisations. These differences stem from the characteristics of their respective outputs. The unique challenges faced by service organisations in the marketing and management of their offering has been discussed by numerous academic studies. The extant theoretical hegemony in the academic literature propounds the view that the challenges posed by service offerings originate in their four principal characteristics (Ojanen et al, 2009; Tuzovic, 2009; Moeller, 2010; Jaaskelainen et al, 2012):

Intangibility – services do not exist in material form and deny the customer any physical interaction. This is a challenge for marketing, because without an object that can appeal to our senses, “…customer risk perceptions are increased and quality is more difficult to assess than for manufactured goods (Winsted and Patterson, 1998: 295).” According to Awara and Anyadighibe (2014: 35), “Intangibility, is the critical goods-services distinction from which all other differences emerge”;

Heterogeneity – a large number of service offerings have a high degree of human input, which creates managerial challenges in the achievement of a uniform, repeatable customer experience (Awara and Anyadighibe, 2014: 35 and Winsted and Patterson, 1998: 295);

Inseparability – the nature of service transactions often demands the presence and interaction of the customer. Following Awara and Anyadighibe (2014: 35), it is “…simultaneous production and consumption which characterises most services.” The proximity of the customer makes the production of services highly interactive, demanding high levels of service customisation and tailored marketing (Winsted and Patterson, 1998: 295);

Perishability – services cannot be stored, which can lead to difficulties in balancing supply with demand (Awara and Anyadighibe, 2014: 35).

The four basic service characteristics outlined above are commonly referred to as IHIP characteristics in the service marketing literature and the roots of their existence go back as far as the 1970s (Parasuraman et al, 1985; Groonroos and Ravald, 2011).

In response to the unique challenges represented by the IHIP characteristics, Booms and Bitner (1981) in Awara and Anyadighibe (2014: 36) recommended that the 4Ps marketing mix (Product, Place, Pricing and Promotion) be extended to include:

People – “…all people directly or indirectly involved in the consumption of a service…”(Awara and Anyadighibe, 2014: 36);

Physical evidence – “…the environment in which the service is assembled and in which the seller and customer interact, combined with tangible commodities that facilitate performance or communication of the service.”(Awara and Anyadighibe, 2014: 36); and

Process – “…procedures, mechanisms and flow of activities by which the service is delivered…”(Awara and Anyadighibe, 2014: 36).

In addition to the service marketing mix, Awara and Anyadighibe (2014: 37) describe criteria that could be used as bases for a differentiated service offering: Offer; Delivery; Image; Service Quality.

IHIP characteristics are generally treated axiomatically within the management discourse and a lack of critical reflection upon their contribution to knowledge is probably indicative of the hegemony of epistemological dogma (Hultman and Ek, 2011). Nevertheless, there are signs of interest in critically re-evaluating service marketing and management as a field of study.

Moeller (2010) identifies the lack of critical treatment applied to the IHIP characteristics. However, instead of dispensing with IHIP and investigating the possibility of new characteristics, the study focuses upon the re-evaluation of IHIP through the lens of the FTU (Facilities/Transformation/Usage) framework (Moeller, 2010: 360-361). The FTU framework is employed to dismantle IHIP and apply it to different aspects of a service offering (Moeller, 2010: 365). The study claims to reveal the applicability of components of IHIP in their service context rather than the use of IHIP as representative of service marketing per se (Moeller, 2010: 365). However, the ability of Moeller (2010) to take a reification (IHIP), break it down into components and claim that it is more relevant in its component parts or groups of those component parts is inconsistent. The characteristics coupled with theoretical aspects of service do not escape the problem of IHIP applied as a single entity.

Hultman and Ek (2011) critically evaluate the philosophical underpinnings of the field of service marketing. An important part of their discussion is the inclusion of social philosophy in an evolving discourse to describe service marketing as an essentially social process. The IHIP characteristics are subjected to criticism and reduced to an irrelevance (Hultman and Elk, 2011: 173). The authors agree with the critics of IHIP, asserting that they “…find these descriptors impossible to use for defining services and explaining the difference between services and goods.”(Hultman and Elk, 2011: 173). They also resist the current tendency in the field of service marketing to replace one paradigmatic cage with another, their project being occupied with the broadening of the study of service marketing rather than its continued limitation.

The ability of Hultman and Elk (2011) to realise the ambition of opening up the field of service marketing would depend upon the willingness and ability of incumbent researchers to embrace the project. An increase in interest shown in the field by critical management theorists would also have the affect sought by the authors.

The two studies used to demonstrate critical contributions to the field of service marketing originate from different epistemological beliefs, but they both achieve similar results. Although Moeller (2010) did not intend to undermine IHIP characteristics, it achieved this end almost as successfully as Hultman and Elk’s (2011) dismantling of IHIP characteristics. As the traditional view contained in the field of service marketing would suggest that the unique challenges in marketing and managing services derive from IHIP characteristics, has the invalidation of IHIP characteristics left the essay question unanswered? Conventional wisdom from service marketing would probably respond no, the question has been answered from the stock of knowledge. Whereas opponents of the conventional wisdom would probably argue that the field has never possessed the ability to effectively answer the question.

This essay has outlined the differences between manufacturing and service organisations against the backdrop of service theory development in the field of Operations management. A representation of manufacturing and service organisations as polar opposites, typical of the conventional wisdom in Operations Management, was provided. The portrayal of manufacturing and service organisations was extended through the discussion of mixed manufacturing/service organisations, encouraging the creation of a trichotomy to more effectively depict theoretical types.

The unique challenges in marketing and managing services were discussed with the support of evidence from the field of service marketing. The IHIP characteristics of services were introduced and suggestions for handling marketing and managing challenges derived from the IHIP characteristics were included. Critical contributions to the field of service marketing were summarised for the purpose of developing the discussion of IHIP characteristics and their relevance.

References

Awara, N. F. and Anyadighibe, J. A. (2014). An Appraisal of strategies and challenges of services marketing in a globalized business environment. International Journal of Managerial Studies and Research. Vol. 2 (9): pp. 32-40.

ebauer, H., Krempl, R. and Fleisch, E. (2008). Service development in traditional product manufacturing companies. European Journal of Innovation Management. Vol. 11 (2): pp. 219-240. [online] Accessed at: https://www.deepdyve.com/lp/emerald-publishing/service-development-in-traditional-product-manufacturing-companies-20b8PY3CQY/1

Groonroos, C. and Ravald, A. (2011). Service as business logic: implications for value creation and marketing. Journal of Service Management. Vol. 22 (1): 5-22. [online] Accessed at: https://www.deepdyve.com/lp/emerald-publishing/service-as-business-logic-implications-for-value-creation-and-G07NwBivq

Hultman, J. and Ek, R. (2011). Can there be only one? Towards a post-paradigmatic service marketing approach. International Journal of Quality and Service Sciences. Vol.3 (2): pp. 166-180. [online] Accessed at: https://www.deepdyve.com/lp/emerald-publishing/can-there-only-be-one-towards-a-post-paradigmatic-service-marketing-Y7dJ6L8Ttz?articleList=%2Fsearch%3Fquery%3DIHIP%2Bcharacteristics

Jaaskelainen, Laihonen, H., Lonnqvist, A, Palvalin, M. and Sillanpaa, V., Pekkola, S. and Ukko, J. (2012). A contingency approach to performance measurement in service operations. Measuring Business Excellence. Vol. 16 (1): pp.43-52. [online] Accessed at: https://www.deepdyve.com/lp/emerald-publishing/a-contingency-approach-to-performance-measurement-in-service-jw2hN5WFOn?articleList=%2Fsearch%3Fquery%3DIHIP%2Bcharacteristics

Johnston, R. (2005). Service operations management: return to roots. International Journal of Operations & Production Management. Vol. 25 (12): pp. 1278-1297. [online] Accessed at: https://www.deepdyve.com/lp/emerald-publishing/service-operations-management-return-to-roots-vsgfLtpMjt/1

Lawrence, P. (1989). Manufacturing or Services After 1992? Economic Affairs. Vol. 9 (4): pp. 14-17. [online] Accessed at: https://www.deepdyve.com/lp/wiley/manufacturing-or-services-after-1992-T53SsLh5ql

Martinez, V., Bastl, M., Kingston, J. and Evans, S. (2010). Challenges in transforming manufacturing organisations into product-service providers. Journal of Manufacturing Technology Management. Vol. 21 (4): pp. 449-469. [online] Accessed at: https://www.deepdyve.com/lp/emerald-publishing/challenges-in-transforming-manufacturing-organisations-into-product-El30Qhp1p1/1

McDonald, J. (1994). Service is Different. The TQM Magazine, Vol. 6 (1): pp. 5-7. [online] Accessed at: https://www.deepdyve.com/lp/emerald-publishing/service-is-different-HcpInUSN2w

Moeller, S. (2010). Characteristics of services – a new approach uncovers their value. Journal of Services Marketing. Vol. 24 (5): pp. 359-368. [online] Accessed at: https://www.deepdyve.com/lp/emerald-publishing/characteristics-of-services-a-new-approach-uncovers-their-value-hmFU6ISzFq

Ojanen, V.; Xin, Y. and Chai, K-H. (2009). Innovation management in technology-related knowledge-intensive business services. International Journal of entrepreneurship and innovation management. Vol. 10 (2): pp. 162-177. [online] Accessed at: https://www.deepdyve.com/lp/inderscience-publishers/innovation-management-in-technology-related-knowledge-intensive-yjEI8G1Oi0/1

Parasuraman, A., Zeithaml, V. A., Berry, L. L. (1985). Conceptual Model of Service Quality and Its Implications. The Journal of Marketing. Vol. 49 (4): pp. 41-50.

Troy, K and Schein, L. (1995). The quality culture: manufacturing versus services. Managing Service Quality, Vol. 5 (3): pp. 45-47. [online] Accessed at: https://www.deepdyve.com/lp/emerald-publishing/the-quality-culture-manufacturing-versus-services-K2oGrXOL9g

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Introduction

The emergence and growth of small to medium enterprises (SMEs) globally has generated increasing interest into research on how the strategy and tactics of these companies differ from or overlap with general marketing theories, as well as theories designed for multinational corporations (MNCs) (Bridge, O’Neill, & Cromie, 2003, p. 123). Through definition, SMEs benefit from less financial and human resources than their large corporate competitors, yet some of these companies managed to gain a competitive position in their respective industries (Chaston & Mangles, 2002, p. 67). With less financial resources dedicated to marketing and significantly smaller marketing teams, SMEs revolutionised areas of marketing through the need to find more creative ways to gain a good position in the market (Burns, 2007, p. 259).

Whilst marketing in the traditional sense through extensive paid for advertising campaigns and price competitiveness requires extensive funds, SMEs have a need for more cost effective campaigns with tangible results, as their ability to invest in marketing initiatives is significantly lower (Storey & Greene, 2010, p. 33). In order to respond to this practical need, an increasing number of scholarly research projects are focusing on tracing the successful strategy of SMEs that thrive in conquering a significant market share (Knight, 2000, p. 13). The impact of the perceived success of small companies has generated a paradigm shift in the entrepreneurial world, hinting at the fact that a well executed vision counts more than a company’s cash flow. At the same time, the influence of the internet and globalisation has made its impact felt on the ability of SMEs to advance beyond their capability to serve local customers (Dholakia & Kshetri, 2004, p. 311).

Often opting for the most effective means of marketing, SMEs have indeed become the role models of other companies in their attempt to communicate with and gain the loyalty of customers (Lu & Beamish, 2001, p. 567). As such, this essay is analysing the relevance of standard marketing practice to SMEs and also the innovative solutions employed by small or medium businesses and their impact on the academic knowledge regarding marketing. Drawing a parallel between available scholarly knowledge and practice exemplified through the successful marketing initiatives of SMEs, this essay attempts to draw a clear conclusion in regards to the emerging paradigm shift in marketing.

Entrepreneurship and organisational structure in SMEs

Entrepreneurs usually become owner-managers of SMEs through launching their business idea and gaining the necessary funding for it from grants, loans or self-funded initiatives (Stokes & Wilson, 2010, p. 35). Due to the fact that the entrepreneur is in charge of all the decision making of a firm, SMEs are often faced with operational and strategic challenges that their large corporate counterparts do not experience (Stokes, Wilson, & Mador, 2010, p. 194). On the other hand, SMEs have the advantage of an organisational structure that presents closer working relationships within the company, which can aid the business to become an industry leader (Chaston, 2000, p. 166). To start with, setting the vision of a company and attempting to inspire all members of a business to share the views of the senior management is a challenging task (Southon & West, 2002, p. 94). More often than not, large corporations struggle with the resonance of their vision throughout the entire corporation more than small businesses, for obvious reasons. The hierarchical management structures often met in MNCs are inexistent in small corporations, where the success of the team is seen as a result of equal effort from all those involved in the business (Adler, 2001, p. 220). As such, the contact between the leaders of the business and the end employees is more common in SMEs (Bolton & Thompson, 2000, p. 82).

The leaders and employees of a business are the first and sometimes most important brand ambassadors of a company (Morhart, Herzog, & Tomczak, 2009, p. 122). The relationships within a company are usually reflected in the behaviour of employees with external stakeholders and a strong corporate reputation usually stems from the cohesion inside a company (Kuhn, 2008, p. 1227). Close contact with all other members involved in the operations of a firm and constant communication leads to a strong vision and innovative ideas, due to constant exchange of information, often in face to face settings (Crotts & Turner, 1999, p. 116). On the other hand, the complex and formalised communication matrix that can be identified in large companies may inhibit the exchange of views and ideas and may lead to the loss of meaning of the values and vision of a firm, also inhibiting innovation (Dougherty, 1992, p. 180).

Market research capabilities

Uncovering the demands and opportunities of the market can be a complex issue, hence why large corporations delegate this task to teams within the research and development (R&D) function of the company (Von Zedtwitz & Gassmann, 2002, p. 573). The subtleties involved in the market research, including tactics of audience profiling and anticipation of demands require specific skillets (Schindehutte, Morris, & Pitt, 2009, p. 93). As already mentioned, SMEs have significantly lower human resources that they can rely on for the purpose of market research and development. As such, they either rely on commonly available market research released by market research companies, due to its accessibility. However, this does not allow SMEs to gather the knowledge necessary to respond to relevant market demand in a quick manner. In addition to this, publicly available information can also be accessed by similar competitors, therefore not offering any of the companies using it the competitiveness of innovation (Wong, 2005, p. 270). Traditional market research conducted through expensive face to face, phone or post methods are more accessible to large corporations that can invest the capital in these initiatives. The internet, particularly social media platforms have opened up new methods, which are much cheaper and arguably more effective for conducting market research (Deakins & Freel, 2009, p. 143).

Granted, large corporations can still use an effective mix of the old and new methods, which would offer them a competitive edge over SMEs, but the depth of the research is only relevant when it can be effectively put into practice (Greenhalgh, Robert, Macfarlane, Bate, & Kyriakidou, 2004, p. 603). The ability to analyse data obtained via any market research method and turn this into relevant information for marketing purposes is still closely linked with the talent available within a company, and once again the MNCs have an edge over SMEs. Nonetheless, the flexibility of operations of SMEs is the core advantage of these companies over MNCs, as they can easily modify products and services to suit the needs of their consumer (O’Regan, Ghobadian, & Gallear, 2006, p. 35). In the toy industry for instance, the product offerings of smaller businesses translates into significantly lower costs incurred by changes, than in the case of large corporations who have are dealing with higher volume of products.

Opportunity marketing

In terms of market research and responsiveness, one of the advantages of SMEs is the close ties they can develop with local communities, making them stronger as competitors to large corporations in specific regions (Perrini, Russo, & Tencati, 2007, p. 290). The debate regarding localisation of international businesses in specific regions is a result of the perceived influential power of SMEs, as the flexibility of smaller businesses to take advantage of the opportunities presented by each specific market is significantly higher. Whilst global businesses rely on the recognition of brand name and reputation, SMEs rely on the convenience they can offer in the market due to proximity of shops or familiarity with the demands of the local customer base (Stokes, 2002, p. 85).

In regards to opportunity marketing, SMEs can build a competitive edge for themselves through responding to immediate needs of local consumers due to the flexibility in operations that they benefit from (Rae, 2007, p. 72). As such, distributors of toys in the UK, for instance, can take advantage of important events in the local community better than MNCs, as they will be aware of local community events for children faster than the global brands present in the area. The low capital requirement for market entry in the toy manufacturing industry is an advantage for the entrepreneurial initiatives in the industry (Ecorys Research and Consulting et al., 2013, p. 36). The multitude of options for supply chain management in the UK, through local manufacturing facilities or import of products from overseas is luring for entrepreneurs that can identify a market need in a particular area of the industry or a specific region (Kirby, 2003, p. 269). Although the price competitiveness of large toy chains such as Toys R Us is quite a high threat to the entry of SMEs in this industry, local businesses can take advantage of their knowledge regarding the more subtle needs of the consumers in their attempt to win over the market share (Michman & Mazze, 2001, p. 201).

Positioning is paramount for the success of smaller businesses over their multinational competitors, and the ability to take advantage of proximity of schools is an important factor in the success of SMEs (Patten, 2001, p. 14). Whilst MNCs have an intrinsic need to find or build large stores to accommodate their extensive product range, SMEs can take advantage of strategically placed boutique stores in the vicinity of areas where the footfall of customers can make a significant difference to their financial returns. The product offerings of SMEs can be tailored to suit the needs of their local customer base and individuals with significant entrepreneurial talent will identify the gap in the market which is not fulfilled by MNCs (Davenport, 2005, p. 683).

Innovation and word of mouth marketing

The perceived risks associated with innovation may represent a higher threat for SMEs, due to their investment power, but the focus on niche product offerings could significantly reduce this risk. Therefore, innovation in the context of small business ventures needs to be seen as the ability to respond to the needs of a niche consumer base, usually referring to a local consumer base and their immediate need (Freel, 2000, p. 27). Whilst MNCs in the toy industry have to balance out the needs of a large consumer base with their ability to market new products, due to the need to respond to the desires of all of their customers, niche small businesses can venture into offering tailored products without endangering their strategy and operations (Carson, Cromie, McGowan, & Hill, 1995, p. 54).

In addition to this, the marketing of large corporations is usually concerned with the ability of their messages to appeal to a large consumer base, whilst smaller businesses can easily tailor their marketing tactics to appeal to a specific consumer group (Dalgic & Leeuw, 1994, p. 39). Through the ability to take advantage of specific needs and wants of local consumers, SMEs have higher chances of being featured in local press or radio, therefore being able to develop more lucrative public relations initiatives. For example, entrepreneurs in the toy industry can identify important school events that they can sponsor, therefore gaining important exposure for their brand and becoming known to the relevant consumer base. Research of these opportunities is not easily accessible to MNCs, therefore leaving a gap in the market for SMEs to gain popularity over the well established chain stores. These initiatives increase the opportunity for SMEs to take advantage of both opportunity marketing and word of mouth marketing.

Children and their parents are the target consumer groups of the companies in the toy manufacturing industry and whilst these groups are sensitive to advertising, there is still significant reliance on impulse buying for these products (Seiter, 1992, p. 240). As a result of this, even though SMEs are less likely to have the funds necessary for investment in standard marketing tactics such as extensive ad campaigns on TV channels, this is not necessarily seen as a barrier in the toy industry. The ability to reach the customer in person and persuade them to make a purchase is still important in the toy industry and SMEs have the added advantage of proximity to the customer and the chance to reach out into the community at key moments, when the need for their products increases (Brown, 1990, p. 180).

The importance of CSR

Entrepreneurs in the toy industry must realise the primary importance of safety and quality of the products sold (TIE, 2013, p. 2). Increasing concerns of outsourcing of manufacturing and testing to production facilities in developing countries have impacted on the reputation of MNCs. Therefore, the ability to demonstrate a commitment to local or national manufacturing can significantly impact on the perception of customers in regards to the quality of products and the overall image of the small companies (Spence & Schmidpeter, 2003, p. 93). This can diminish the impact of pricing tactics used by MNCs, as customers are willing to pay premium prices for products that they perceive as safe and durable for their children (Trudel & Cotte, 2009, p. 62).

Therefore, instead of seeking to compete with their large corporate opponents from a price perspective, SMEs in the toy industry should focus on quality of products instead and demonstrate that their corporate social responsibility (CSR) abilities are significantly higher than those of mass manufacturers of toys (Perrini, 2006, p. 307). The profitability of SMEs can therefore be increased by persuading customers to pay premium prices that reflect the added value of locally sourced products and services. In the context of SMEs, effective marketing of products demonstrates that the purchase of a product is part of a cycle that enables the entire economy of a region to prosper (Du, Bhattacharya, & Sen, 2010, p. 10). Managing to demonstrate how a customer’s investment impacts on the employability of the region is paramount in the success of SMEs over MNCs, through effective communication with the consumers that outlines how the profits of a company are invested back into the larger economy of a region.

Conclusion

Whilst this paper does not ignore the issues faced by SMEs due to the significantly lower financial and human resources available to them, it outlines the strategies and tactics to overcome any of these issues. Through effective marketing tactics that take into account the needs of local customers, as well as the ability to demonstrate how quality and safety is reflected in the premium pricing of toys sold by SMEs in the UK, the smaller entrepreneurial initiatives of individuals can have a significant competitive edge over the MNCs present in the region. Developing lucrative partnerships with local schools and media outlets can impact on the success of SMEs through the ability to create a stronger reputation of the company and meaningful relationships with the targeted consumers.

To conclude, whilst there are significant distinctions between SMEs and MNCs, there is not an innate need to reinvent the wheel in terms of marketing, only to tailor the tactics to the abilities and needs of a company. Whilst innovation, opportunity, word of mouth and CSR are equally as important to both types of companies, the manner in which the leaders of the companies can take advantage of these marketing drivers is significantly different. The success of SMEs is possible through focusing on smaller scale research of needs and wants of consumers and the ability to develop innovative solutions to respond to these without being hindered by the price competitiveness of MNCs.

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