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A draft submitted in partial fulfillment of the requirements for the Degree of Master's Pratisurya Anand MBA IB Marketing PRN:

N: 12020241092
Mentor: Dr. Gaganpreet Kaur Ahluwalia Co-Mentor: Ms. Shilpa Kulkarni IB Marketing 14th January, 2014

Dissertation Report

Title:
Study Customer relationship management as a subset of Relationship marketing, and analyse its rule in todays business environment.

Abstract:
Customer relationship management (CRM), also known as relationship marketing, has recently emerged as an integral marketing concept in the business world. In an attempt to reach and connect with customers in an environment highly saturated with products, advertisements, and promotions, businesses are implementing a customer relationship management component in their marketing schemes. CRM practices enable marketers to build long lasting relationships with consumers at the individual level through the use and management of a number of different programs and key components.

Introduction:
As a relatively new practice, the definition of customer relationship management has been debated by field experts and is ever evolving. In fact, the term has come to mean different things to different individuals and organizations. In its inception, customer relationship management was narrowly defined as promotional marketing based on a customer database (Bickert, 1992). Peppers and Rogers define CRM to be a complex process that builds one-to-one relationships with customers in order to achieve long term growth (1993). According to Gronroos, relationship marketing extends past persuading customers to buy products; it is about fulfilling their expectations in the hope of transforming them into long term, loyal customers (2009). Most experts can agree, however, that the central theme of CRM is carefully selecting the most valuable customers and maintaining and strengthening relationships with those customers for long term profit maximization. Sheth and Parvatiyar define CRM as a comprehensive strategy and process of acquiring, retaining, and partnering with selective customers to create superior value for the company and the customer (2001, p. 5). It is a mutually beneficial relationship built upon a foundation of trust and loyalty through marketing, customer service, and relationship programs.

Literature Review:
Customer relationship management is a relatively new field, but its importance is becoming even more evident as time passes. The paradigm shift from focusing on attracting new customers to retaining current ones is at the backbone of CRM (Winer 2001). Reichhelds studies revealed that small increases in customer retention rates greatly increased profits, proving that long term customers can be more valuable (1996). More revenue on average is generated from repeatPratisurya Anand - Dissertation Page 1

purchase customers when compared to one time buyers (Reichheld 1996). With potential profit maximization in mind, businesses are turning to customer relationship management in order to better understand customers. Traditional marketing and mass advertising are proving to be ineffective in such a commoditized environment. With the number of similar products on the market increasing and competition among the firms escalating, companies must look toward capturing customers on some factor other than product quality, price, or convenience (Brown 2000). They must focus on building unique, one to one relationships with customers based on individual needs and wants; thus, implementing customer relationship management is critical to the growth and future success of firms.

1. Relationship marketing tactics: Relationship marketing is carried out with many relationship marketing tactics, which are widely to be applied in todays business. Many tactics may have potential to influence relationship quality and retaining customers. On basis of previous researches, four ways of implementing relationship marketing tactics are focused on this study, such as service quality, price perception, value offers and brand image. These four tactics will be discussed in detail in the next chapter.

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2. Relationship quality: It is usually used to assess the effectiveness of relationship marketing tactics. It is also considered to be antecedent of achieving customer loyalty. Customer satisfaction and trust are two basic components for measuring relationship quality. Higher level of relationship quality is reflected by higher level of customer satisfaction and trust.

3. Switching costs: It happens when a customer switches from an existing service provider to a new one. Switching costs perceived by customers can be either monetary or non-monetary (time, effort, risk taking, psychological nature, etc.). It is considered as a barrier that influences customers decision to change service provider, in turn affect customers willing to remain loyalty with current service provider.

4. Customer loyalty: It was defined by Oliver (1997, p.392) as deeply held commitment to rebury or repatronize a preferred product or service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behavior. Customer loyalty is thought to be the final goal that a firm can apply relationship marketing tactics, by building long-term mutual relationship with customers.

Customer relationship management has attracted the attention of both marketing practitioners and researchers over the last decade. Despite, or maybe due to, the attention drawn to the subject, a clear agreement on what CRM is and especially how CRM should be developed remains lacking. CRM is the values and strategies or relationship marketing with particular emphasis on customer relationships turned into practical application.

CRM is a strategy view of how to handle customer relationship from a company perspective. The strategy deals with how to establish developed and increase customer relation from profitability perspective, based upon the individual customer needs and potentials. The basic underlying CRM is that the basis of all marketing and management activities should be the establishment of mutually beneficial partnership relation with customers and other partners in order to become successful and profitable.

CRM is the integration of customer focuses in marketing, sales, logistics, accounting .i.e in all parts of the organization operation and structure. Those are the activities a business performs to identify, qualify, acquire, develop and retain increasingly loyal and profitable customers by delivering the right products or services to the right customer through the right channel at the right time and the right cost (Johansson & Storm, 2002). CRM can be best describes as an

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evolution of marketing from product or brand management to customer management. (Peelen 2006).

Before positioning and investigating the components and the business philosophy of CRM. We must first develop our perspective of CRM for the purpose of this research. Hence, several researches have made attempts to define CRM. The definition of CRM adopted from different sources ranges from narrowing IT enabling solutions to a broadly and strategically approach to managing customer relationship. Fig

Figure: The CRM continuum, Payne & Frow 2005 "CRM involves using existing customer information to improve company profitability and customer services"( Couldwell 1999).

CRM is a management approach that enables organization to identify, attract, and increase retention of profitable customers by managing relationship with them" (Hobby 1999).

" CRM can be viewed as application of one to one marketing and relationship marketing. Responding to an individual customer one the basis of what the customer says and what else is known about the customers( Peppers, Rogers, and Dorf 1999). "CRM includes numerous aspects, but the basic theme is for the company to become more customers centric. Methods are primarily web-based tools and internet presence(Gosney and Boehem 2000).

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CRM comprises the business processes and organization performs to identify, select, acquired, develop, retain and better services customers. (Bondenberg 2001).

"CRM as those process that address all aspects of identifying customers, creating customer knowledge, building customer relationship and shaping their perception of the organization and its products( Kotler 2001). CRM is the technology used to blend sales, marketing, and serivce information system to build partnership with customers(Shoemaker 2001).

Defines CRM as enterprise approach to understanding and influencing customer behavior through meaningful communications in order to improve customer acquisition, customer retention, customer loyalty and customer profitability( Swift 2001). CRM is a comprehensive strategy and process of acquiring, retaining and partnering with selective customers to create superior value for the company and the customers( Parvitiyar and Sheth 2001).

"CRM is about the development and maintenance of long term mutually relationship with strategically significant customers( Buttle 2001).

CRM is an enterprise wide mindset, mantra, and set of business process and policies that are designed to acquired, retain and services customers. CRM include the customer facing business process of marketing, sales and customer services (Greenberg 2002). CRM is an IT enhanced value process, which identifies, develops, integrates and focuses the various competencies of the firm to the voice of the customers in order to deliver longterm superior customer value, at a profit, to well identify existing and potential customer segments. (Starkey 2002)

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CRM aligns business processes with customer strategies to build customer loyalty and to increase profits over time. (Reichheld and Schefter 2002)

CRM means obtaining customer information, understanding what different customers are worth, treating different customers differently and improving efficiency (Newell, 2003).

Customer relationship management is the initiation, enhancement, and maintenance of the mutually beneficial customer and partner long-term relationship through business intelligence-generated strategies based on the capture, storing and analyzing of information gathered from all customer and partner touch points and transaction processing system". (Brana 2008). The strategic use of information, process, technology, and people to manage the customer relationship with the company across the whole customer life cycle.( Kim and Woo, 2008).

In reviewing of the illustrated definitions, we can find that most of definitions concentrate on the terms related to customer's acquisition, retention, satisfaction, profitability and loyalty. As a result, the following can be stated in this regard: 1. CRM is not the target, its only a tool used to make the entity more customers centric and to develop the concept of relationship marketing. 2. Customer management in the twentieth century is no longer the responsibilities of customer services department only. Its a complimentary process within all various parts of the organization. 3. The customer's data base can be considered as corporate assets. The sufficient use of these assets leads to increase profitability and establish revenue growth. 4. CRM can be used for support management decisions for better segmentation and targeting for the most profitable customers. Moreover, it helps the organization to avoid the unprofitable customers and turn them into competitors.

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5. CRM is a comprehensive tool helps the companies build mutual beneficial relationship with its customers. This research deal with CRM as a business philosophy rather than just a technology. It is believed that in order to reach a successful CRM implementation, one would need to do much more than just plug in a new technology and assume that it is going to be functional. CRM is not just about call center solutions, direct mail, web pages, or sales force automation, or viewing CRM as an internal activity emphasizing on establishing, maintaining, and enhancing relationships with customers and partners at a profit. (Hazobon 2006).

Theoritical Framework:

Research questions Companies have implemented various relationship marketing tactics into practice. However, some of those tactics did not work effectively, and there are phenomena showing that switching behavior frequently occur among most of targeted customers. Accordingly, our research questions are brought forward as follows:
(1) What kinds of relationship marketing tactics in practice positively contribute to customer loyalty? (2) How do different relationship marketing tactics impact on customer loyalty? (3) How Different is it in B2C as compared to B2B space?

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Research Design:
This study will use a mixed methods design, which is a procedure for collecting, analyzing and mixing both quantitative and qualitative data at some stage of the research process within a single study, to understand a research problem more completely. The rationale for mixing is that neither quantitative nor qualitative methods are sufficient by themselves to capture the trends and details of the situation, such as a complex issue of doctoral students persistence in the distributed learning environment. When used in combination, quantitative and qualitative methods complement each other and allow for more complete analysis In quantitative research, an investigator relies on numerical data. He uses postpositivist claims for developing knowledge, such as cause and effect thinking, reduction to specific variables, hypotheses and questions, use of measurement and observation, and the test of theories. A researcher isolates variables and causally relates them to determine the magnitude and frequency of relationships. In addition, a researcher himself/herself determines which variables to investigate and chooses instruments, which will yield highly reliable and valid scores. Alternatively, qualitative research is an inquiry process of understanding where the researcher develops a complex, holistic picture, analyzes words, reports detailed views of informants, and conducts the study in a natural setting. In this approach, the researcher makes knowledge claims based on the constructivist or advocacy/participatory perspectives. In qualitative research, data is collected from those immersed in everyday life of the setting in which the study is framed. Data analysis is based on the values that these participants perceive for their world. Ultimately, it produces an understanding of the problem based on multiple contextual factors. In a mixed methods approach, the researchers build the knowledge on pragmatic grounds asserting truth is what works. They choose approaches, as well as variables and units of analysis, which are most appropriate for finding an answer to their research question. A major tenet of pragmatism is that quantitative and qualitative methods are compatible. Thus, both numerical and text data, collected sequentially or concurrently, can help better understand the research problem.

Area B2B & B2C:


The research will focus basically on the difference in perceptions between B2B and B2C companies, and how they choose to go about their CRM. How similar and how different is the approach of these companies regarding CRM B2C - Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods Company with a heritage of over 80 years in India and touches the lives of two out of three Indians. HUL works to create a better future every day and helps people feel good, look good and get more out of life with brands and services that are good for them and good for others.

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With over 35 brands spanning 20 distinct categories such as soaps, detergents, shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and water purifiers, the Company is a part of the everyday life of millions of consumers across India. Its portfolio includes leading household brands such as Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair & Lovely, Ponds, Vaseline, Lakm, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Walls and Pureit. The Company has over 16,000 employees and has an annual turnover of around Rs.25,206 crores (financial year 2012 - 2013). HUL is a subsidiary of Unilever, one of the worlds leading suppliers of fast moving consumer goods with strong local roots in more than 100 countries across the globe with annual sales of 51 billion in 2012. Unilever has 67.25% shareholding in HUL. B2B - The Danfoss Group is a global producer of components and solutions for refrigeration & air conditioning, heating & water, and motion controls. Danfoss has net sales of 2,600 million (US$3,400 million) and employs approximately 22,000 people worldwide with headquarters in Nordberg, Denmark. Danfoss Industries Pvt. Ltd., India is a 100% subsidiary of Danfoss A/S, Denmark. The Indian entity commenced its operations in 1999 with their registered office at Chennai. Danfoss has now grown to Sales and Support network comprising more than 10 offices and 60 partner companies. Danfoss, in India, is committed to offer a global experience to the clients with its quality products. The wide range of industries that they serve rely completely on them for their component and sub-system needs; be it the state-of-art refrigeration and air-conditioning components and controls or the technologically innovative VLT Drives or even their range of heating and water controls. Refrigeration & Air Conditioning Danfoss operates globally as a leading supplier of compressors and automated solutions to the refrigeration and air conditioning industry. Their product range is among the most complete in the world and is used within a number of business areas, ranging from household-, commercial-, food retail, and industrial refrigeration to air conditioning and products for the wholesale refrigeration market to automation in specific industrial sectors. For more than 60 years Danfoss has developed, manufactured, and marketed high quality products. Today Danfoss is the worlds leading manufacturer of refrigeration components operating in more than 100 countries. Danfoss offers the widest, most flexible and economical range of controls to regulate and monitor ammonia and fluorinated refrigerants in industrial refrigeration systems.

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Their comprehensive products line includes valves and controllers for pressure and temperature regulation, check valves, stop valves, motorized valves, and electronic liquid level controls, built for demanding applications in food processing, storage and chemical/petrochemical industries. All components are produced in factories certified under ISO 9001-the most stringent of the ISO 9000 quality standards. Supporting their quality products is a team of dedicated Danfoss engineers. Calling upon many capabilities, including Danfoss scientists, research and testing laboratories, application and technical support, and unmatched worldwide logistics expertise.

References:
Achrol, R. (1991, Oct) Evolution of the Marketing Organization: New Forms for Turbulent Environments. Journal of Marketing, pp. 77-93. Anderson, E., Fornell, C. & Lehmann, D. (1994 July) Customer Satisfaction, Market Share, and Profitability, Journal of Marketing, pp. 53-66. Arnold, M. & Reynolds, K. (2003) Hedonic Shopping Motivations. Journal of Retailing, pp. 77-95. Bickert, J. (1992, May) The Database Revolution. Target Marketing, pp. 14-18. http://www.hul.co.in/aboutus/introductiontohul/ accessed on 14-01-2014

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