Customer relationship management
Customer relationship management has been brought to the light in late 90s. At that time period relationship marketing has appeared as most dynamic topic for academics as well as practitioners. In the millennium also, relationship marketing has become the most dynamic technology topic for practitioners. In 90s the term “customer relationship management” was emerged only in the information technology vendor (Payne, and Frow, 2005). Both the terms relationship marketing and customer relationship management are often interchangeable. As per the definition of American Marketing Association (2013), marketing is a set of institutions, activity and processes of creating, communicating, delivering, and exchanging the services in the form of direct services or products which have a value for their customers, partners, and society. This definition also point out the managing good relationships with the customers or clients is an essential function of marketing managers to enhance their company’s competitive advantage in the emerging market (Chakravorti, 2009).
In this report a complete analysis of customer business strategy or customer relationship management has been done to understand the concept of relationship marketing. Also this repost includes a brief analysis of this strategy’s implementation in Red Balloon organization operating in Australia since 2001. This report will discuss different theories and strategies given in the literature of customer relationship marketing.
The underlying research of strategic business is that firms or organizations are capable to achieve superior financial growth in the competition as well, when they are capable of developing superior resources and skills to achieve an advantage in the competition (Van Alstyne, Parker, and Choudary, 2016). According to the competency based view, organization’s focus is to aim the only on creating value activities or value chain services. In the context of competitive business strategy, only those activities are considers that are with a great impact on the differentiation or those having a growing or large proportion to the costs. Researches also state that institutional environmental forces are shaping the organizations and this shape of an organization has important consequences on social environment.
Customer business strategy is composed of different parts, management of marketing, sales management, and technical management, and service management of a business (Maté, Trujillo, and Mylopoulos, 2017). Core content of the customer business strategy is to enhance the degree of automation in the organization to enhance the productivity and efficiency of the organization to make business. In this process organizations are looking for automation in all the business aspects through a continuous process of improvement and management of sales, customer services, and marketing of their services and business (Demuijnck, 2015). All these efforts of an organization are made to improve their business efficiency, service, and reduce the cost of their products or services, also to expand their sales to increase the total revenue and profit of the business so that companies can improve their enterprise competitiveness (Payne, and Frow, 2005). Also the business strategy is defined as the firm’s working plan to achieve its vision, competing successfully, prioritizing objectives, and optimising the financial growth with its new strategic business model (Chang, 2016). There are different
Price skimming strategy
In terms of core definition, customer business strategy is an innovative approach of an organization’s management to make an interaction with its present as well as future customers to analyse the customer data to improve the business relations with them.
In the globalizing world new companies are often facing some unique challenges in the form of their business hurdles. In the starting era of business, companies were using different strategies like identifying their products, adjusting product prices and many more. In the global world there are so many new challenges which organizations are facing. To overcome these challenges companies are using some unique strategies. These marketing strategies to grow business are also known as business strategies also. These business strategies are price skimming strategy, acquisition strategy, product differentiation strategy, and growth strategy.
This strategy evolves charging a high price for their products or services particularly during their introductory phase. SMEs will use this strategy to recover their production and advertising costs quickly. However to implement such strategy companies must have something special about the product or service on which these high prices are charged. This strategy is often used to introduce a new product in the market. Main motive of charging high price in the starting time is to collect as much as revenue from the market using the advantage of high demands. Also at this time competition is not there for the product in market to lower the price. As the demand gets lower and completion enters into the market companies lower their product or service price also.
Acquisition is the process in which a larger company purchases almost shares on another smaller or competitive company to take control over it. a successful acquisition occur when buying company own more than 50% shares of the targeted company. In this process the acquiring company purchases the assents and resources of the targeted or acquired company. Company adopt this strategy for various reasons like, to achieve greater market share, cost reduction or niche offering, increased synergy, and economies of scale. Sometime for SMEs, to enter a new economy or county, buying an existing company is the only viable option or easiest way to expand its business overseas. In this process the purchased business already have its own resources and assets, a brand name value, and other intangible established in the target country. Such facilities will help the acquiring the company to ensure its quick start off with an existing solid customer base in the new target country (Williams, et al., 2016).
Acquisition strategy
When acquiring is more beneficial than expanding company’s own business in the new target country it is considered or become the part of its growth strategy. This is just because sometime expanding the business causes efficiency losses to the parental company. Larger organizations look for promising young companies to acquire, this strengthen the business growth and high profits. In some cases when an organization attracts number of competitor companies or the product supply ramps up from the existing company, they may look for the acquisition strategy to balance their demand supply.
This is a marketing process that showcases the advancement of differences between products (Banker, Mashruwala, and Tripathy, 2014). The strategy of differentiation tries to develop the product making it more attractive by enhancing and contrasting its unique qualities with the competitive products in the same market. A successful product differentiation always gives a competitive advantage to the company business (Barin Cruz, Boehe, and Ogasavara, 2015). This strategy can be seen in the products of Red Balloon, a company started in 2001 to serve not the products but an experience to its customers. This unique product of serving an experience was completely new in the market at that time. This unique idea made the company to sustain so long and continued. Company founder Naomi Simson, started this company with the same motive to serve people an experience not a product. She started the business as this was something unique that the corporate world and customers had not experienced yet.
Apart from attracting consumer interest, product differentiating strategy can enhance the brand loyalty and may allow the company to hike its product price. If company is claiming a unique and better product even if the company is making this belief based on the facts or some speculative means, company can attract customer for the same product.
Sustainability of an organization broadens the scope for one or more businesses in terms of their customer functions, customer groups and alternative technologies and this all is done to enhance the organization’s overall growth or performance. This growth of an organization can be seen in external assets as well as in external assets of the company. This growth discussed in the growth strategy is both the quantitative as well as qualitative development of business. However, the qualitative growth also reflects its impact in terms of quantitative form therefore, it can be stated that quantitative growth is a result of qualitative growth of the business. In business language growth is a way to showcase what the organization wants and what are the objectives or goals of the company (Filatotchev, Su, and Bruton, 2017). For example, Red Balloon has shown its growth in the form of creating a new parental company called The Red Group in 2017. Although it was a joint venture with Dave Anderson, it shows that the company is growing fast that makes a positive impact on its existing as well as future customers.
Product differentiation theory
Strategic planning is all about setting longer goals for the company and it is a process of development of a plan to achieve these goals. This decides that at which place leaders want to see their business in the future. Having a customer business strategy benefits the company or organization in different forms (Massa, Tucci, and Afuah, 2017). Some of the key benefits of having a business strategy are discussed below:
Having a proper business strategy always makes it clear to the people working in an organization that what is their goal. This makes employees understand that at which place is their current business is and at which place they are taking their business. This gives a clarity to leaders also as they can understand that in which direction they have to align their business and on which part their organization need to focus more (Kernbach, Eppler, and Bresciani, 2015).
Having a business strategy enables the leaders of the company to identify that what are the key essential moves they have to make to sustain their business goals and achieve them successfully.
Working on a business strategy evolves new innovative or creative idea that can enhance the new business opportunities to get success in more efficient way (Akter, et al., 2016).
Developing a proper customer business strategy is likely to give better business results as it is very clear to leader that where they are taking their business and what they have to do (Wirtz, et al., 2016).
Long with so many benefits, customer business strategy or business strategy have some disadvantages also. While choosing a business strategy organization must monitor the business carefully and avoid all the complacency. Also, it requires a skilful planning and difficult to implement as well. The implementation process requires a proper communicated plan, and implemented in such a way that requires a lot of supervision and active participation in the execution. Along with all these disadvantages there are other disadvantages of having a long terms business strategy (Holmes, et al., 2018). Some of them are as following:
Among ll other criticism of having a business strategy this one is the biggest. In every criticism this point of having a unpredictable future is common. While preparing a business strategy management has to predict some future conditions to make it reliable, but it is fact the future cannot be predicted so having a long time business strategy is very uncertain and risky as well.
Another criticism on having a business strategy is impeding company’s flexibility in the future. Many times, implementing a business strategy, results into saying no to some of the opportunities that the organization get while working on its business strategy. This inability of an organization to choose all of the opportunities presented to the organization is frustrating and results in negative impact on business. Another way that flexibility impeded is through integration and a well-structured alignment of the strategy. This integration and the alignments ensure that the company is working in the right direction but doing this can inhibit the adaptability of the organization (Morris, et al., 2006).
In order to implement a business strategy, technology strategy is harmonised with the organization’s business strategy. Business strategy integrated it a business strategy defines the continuous process of generating, evaluating, assessing and selecting the technical options required for the strategy. In this process company has to make right choice for the technology selection to be used in its business strategy (Wagner, Beimborn, and Weitzel, 2014).
Conclusion
The above report concludes that the organizations operating in this globalising world are seeking for business strategies to make their business more sustainable and successful as well. Making a business more sustainable is the process of continuing the business for a longer time period. In this order organizations prepare business strategies which require a lot of efforts form the management and its employees as well. In this order organizations have to face the associated advantages as well as disadvantages of having a business strategy for the future sustainability of their business. From the above discussed advantages and disadvantages of having a business strategy it is concluded that having a business strategy is goof up-to some extent. The only significant disadvantage of having a business strategy is the inability of companies to grab the opportunities which they are presented with during the strategic implementation period. This is the only area on which organizations need to work to make their business strategy more successful and efficient. For this organization need to design their business strategy in such a way that there is a scope to adapt or grab the future opportunities presented in the coming future. This will make the strategy more successful and can help in the process of implementation as well.
References
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