E-marketing: Customer Relationship Management and its …



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|E-marketing: Customer Relationship Management and its aspects |

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|5/19/2011 |

Sources must be cited in APA format. Your response should be a minimum of one (1) single-spaced page to a maximum of two (2) pages in length. Define e-marketing. Discuss three (3) aspects of e-marketing that facilitate customer relationship management. Suggest three (3) specific potential improvements in understanding customer needs and motivations that have developed from the use of e-marketing. Give examples to support your discussion.

E-marketing:

According to Turban, Efraim et al(2008) E-marketing is a broader definition of e-commerce that includes not just the buying and selling of goods and services but also servicing customers, collaborating with business partners, and conducting electronic transactions within an organization.

E-marketplace

Whereas E-marketplace is an online marketplace where buyers and sellers meet to exchange goods, services, money, or information.

E-marketing facilitating CRM :

Customer Relationship Management: According to Turban Efraim et al(2008) CRM is a business strategy to select and manage customers to optimize long-term value. It requires a customer-centric business philosophy and culture to support effective marketing, sales, service processes.

The way in which e-marketing assists CRM is through eCRM. eCRM is customer relationship management conducted electronically. E-marketing assists in CRM in its following three activities:

1. Operational CRM: it is related to typical business functions involving customer services, order management, invoice or billing, or sales and marketing automation and management. E-marketing helps in all of the above processes and helps improving building and maintaining customer relationships.

2. Analytical CRM: it involves activities that capture, store, extract process, analyze, interpret, and report customer data to a user who then analyzes them as needed.

3. Collaborative CRM: it deals with all the necessary communication, coordination, and collaboration between vendors and customers.

Tan et al. (2002) and Payne (2005) distinguish the following classification of CRM programs in which e-marketing plays the pivotal role:

➢ Loyalty programs. These programs try to increase customer loyalty. An example is a frequent flyer points given by airlines.

➢ Prospecting. These promotion programs try to win new, first-time customers.

➢ Save or win back. These are programs that try to convince customers not to leave or, if they’ve left, to rejoin. Different kinds of incentives are given to leaving people to stay with the company.

➢ Cross-sell or up-sell. By offering complementary products (cross-sell) or enhanced products (up-sell) hat customers would like, companies make customers happy and increase their own revenue.

Improvement in understanding customer needs and motivations from using e-marketing:

Following are the ways in which e-marketing has improved the company’s understanding about their customers’ needs and motivations:

1. Personalization in e-marketing: Personalization refers to the matching of services, products, and advertising content to individuals and their preferences. The matching process depends upon what company knows about the individual consumer. Better understanding of consumers eventually leads to better products and service online and therefore facilitates customer relationship management. Within e-marketing, companies generate user profile which defines customer preferences, behaviors, and demographics. These user profiles can be generated in several ways. Following are the major strategies used to compile user profiles in e-marketing.

• Solicit information directly from user: usually done with the help of questionnaires and interviews

• Observe what people are doing online: Usually done with the help of cookie. Cookie is a data file that is placed n a user’s hard drive by a remote web server, frequently without disclosure or the user’s consent that collects information about the user’s activities at a site.

• Build from previous purchase patterns: For example builds customer profiles to recommend books.

• Make inferences: Infer from information provided by customers on other issues or by analyzing similar customers.

2. Customer analysis: e-marketing uses analytics CRM which refers to the use of business analytics techniques and business intelligence such as data mining and online analytic processing to CRM applications. Many sources of customer data including real-time Web movement activities and real-time customer interaction and activities in POS and even while playing slot machines in casinos. The large amount of data is processed and stored in data warehouse and/or in a data mart. Several types of analytical tools can be applied to create, for example, customer profiles used for planning advertising and marketing campaigns.

3. Finer customer segmentation groupings: e-marketing provides organizations with a better opportunity to serve markets b segmenting the total customer markets n a finer way and then catering to those segments and markets with personalized attention, products and services.

Sources must be cited in APA format.  Your response should be a minimum of one (1) single-spaced page to a maximum of two (2) pages in length.

Explain what segmentation variables are and then discuss the four (4) groups of segmentation variables. Then, for each of the following products, identify two (2) possible segmentation variables and briefly describe why you chose each one. a. Shoes b. Cameras c. Magazines d. Hotel Accommodations e. Recreational Vehicles

Segmentation Variables: An important consideration in defining the markets to be segmented is estimating the variations in buyers’ needs and requirements at different product-market levels and identifying the types of buyers included in the market. The segmentation variables divide the target market into smaller and manageable segments in which the customers show similar behavior on some grounds. These segments should be measurable, accessible, stale, actionable and differentiable to give best results. One or more variables may be used to divide the product-market into segments (W. Cravens, David (2000) and F. Piercy, Nigel (2000). Following are the four segmentation variables:

1. Characteristics of People and Organizations:

The characteristics of people sell into two major categories:

i) Geographic and demographic

ii) Psychographic( lifestyle and personality)

According to W. Cravens, David et al. (2000) demographic variables describe buyers according to their age, income, education, occupation and many other characteristics. Demographic information helps to describe groups of buyers such as heavy users of a product or brand. Demographics used in combination with buyer behavior information are useful in segmenting markets, selecting distribution channels, designing promotion strategies, and other decisions on marketing strategy.

Geographic location may be useful in segmenting product-markets. For example, there are regional differences in the popularity of transportation vehicles. In several U.S. states the most popular vehicle is a pickup truck. The “truck belt” runs from the upper Midwest South through Texas and the Gulf coast states. The Ford brand is dominant in the northern half of the truck belt while Chevrolet leads I n the southern half.

Lifestyle variables indicate what people do (activities), their interests, their opinions, and their buying behavior. Lifestyle variables extend beyond demographics and offer a more penetrating description of the consumer. Profiles can be developed using lifestyle characteristics. This information is used to segment markets, help position products, and guide the design of advertising messages.

2. Product Use Situation Segmentation: Markets can be segmented based on how the product is used. As an illustration, Nikon, the Japanese camera company, offers a line of high performance sunglasses designed for activities and light conditions when skiing, snowboarding, skating, and driving. Nikon competes in the premium portion of the market with prices somewhat higher than Ray-Ban, the market leader. Timex uses a use situation basis of segmentation for its watches.

3. Buyers’ Needs and Preferences: Needs and preferences that are specific to products and brands can be used as segmentation bases and segment descriptors. It includes customer needs, attitudes and perceptions towards a product or service which shapes the customers’ brand preferences, quality perceptions and quality needs and brand loyalty status.

4. Purchase Behavior: It includes the consumption variables such as the size and frequency of purchases useful in segmenting consumer and business markets. For example a specialty chemical producer concentrates it s marketing efforts on chemical users that purchase at least $100,000 of chemicals a year. The firm further segments the market on the basis of how the customers use the chemical. It also includes buyers’ decisions classified according to the extent to which the buyer is involved in the decision.

Possible segmentation variables:

Shoes: Buyers’ needs and preferences and Product use situation will be used as the vital segmentation variables for this category. The reason for using Buyers’ needs and preferences is that some customer preferences may vary. Some want style; others want comfort, colors, variety while a few are more price conscious.

The reason for using Product use situation is that some customers are professional skaters, footballers and skiers while others may need the shoes for usual jogging routine or as daily/ party wears. Therefore the type of shoes and customers will differ greatly according to the situation in which shoes will be worn.

Cameras: Product Use situation and Purchase behavior will be used as selected segmentation variables for this category. The reason for using Product Use situation is that some customers need cameras for personal use while some need professional cameras for photography, recording etc. therefore the situation in which cameras will be used shall define its target market. The reason for using Purchase behavior is that it defines the involvement levels of the buyer while purchasing the product. Purchasing cameras is a high involvement decision as they are an expensive purchase, are bought less frequently, have important personal consequences, and impact the consumer’s ego and social needs.

Magazines: Demographic and Psychographic segmentation variables will be used in the case of magazines. The reason for using demographic variable is that it contains buyers’ age, income, education, occupation and many other characteristics. Magazines contents and consequently target segment will differ according to the buyers’ age and affordability. For example, kids magazines will consider age as a necessary ingredient while deciding the contents of magazines. At the same way adult magazines will consider age as a necessary variable too. The reason for using Psychographic segmentation variable is that different interests, attitudes and opinions will determine the preference of target consumers. Readers of a technology related magazines will attract tech savvy, up-to-date consumers while Times and Business Week will attract a mature, politics oriented business people.

Hotel accommodations: Buyers’ needs and preferences and geographic location variables should be accounted for in hotel accommodation. For example some buyers prefer luxury, style and differentiated and personalized services as in the case of Ritz Carlton hotels. While a few buyers are more concerned with simple accommodation, no frills services and low price as in the case of La Quinta Inns which are specially designed for business persons and sales representatives and those who care less about the services as they’ve to stay outside most of the time for business reasons. Geographic variable should also be taken into account as buyers refer central location while visiting a foreign city and some prefer nearness to airport etc.

Recreational Vehicles: in this case Buyers’ needs and preferences, and demographic variables should be taken into account. Buyers’ needs and preferences will determine the reason of buying the vehicles as some customers want the vehicles as status symbol, while others are more towards the functional and performance quality the vehicle has to offer. At the same time, purchasing vehicles is a high involvement decision as they are an expensive purchase, are bought less frequently, have important personal consequences, and impact the consumer’s ego and social needs. The reason for choosing demographics is that it’ll determine the age, occupation, family size and income variables upon which the purchase of vehicles highly depend.

Bibliography

Turban, Efraim et al. (2008). Electronic Commerce: A Managerial Perspective, Prentice Hall

W. Cravens, David & F.Piercy Nigel. (2000). Strategic Marketing (9th ed.)

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