Marketing Management Unit 14

Unit 14 Customer Relationship Management

and Other Contemporary Issues
Structure:
14.1 Introduction
Objectives
14.2 Relationship Marketing Vs. Relationship Management
14.3 Definitions of Customer Relationship Management (CRM)
14.4 Forms of Relationship Management
Continuity marketing
One-to-one marketing or individual marketing
Co-marketing
14.5 Managing Customer Loyalty and Development
Strategies to prevent defection and recover lapsed customers
14.6 Reasons Behind Losing Customers by Organisations
14.7 Significance of Customer Relationship Management
14.8 Social Actions Affecting Buyer-Seller Relationships
14.9 Rural Marketing
14.10 Services Marketing
14.11 E-Marketing or Online Marketing
14.12 Summary
14.13 Glossary
14.14 Terminal Questions
14.15 Answers
14.16 Case Study

14.1 Introduction
In the previous unit we dealt with the personal communication channels
used by an organisation to reach their target audience. We analysed
personal selling, sales management basics, HR practices in sales
management, personal selling process, and direct marketing. It is crucial for
an organisation to use the channels effectively to create and maintain a
good relationship with its customers.
Changes in customer expectations can be spotted throughout the globe.
Customer Relationship Management (CRM) strategies have become

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progressively crucial worldwide due to these changes in customer

expectations as well as changes in the nature of markets.
CRM is a managerial philosophy that relies on building long-term
relationships with customers. CRM can be defined as “the development and
sustenance of mutually beneficial long-term relationships with strategically
significant customers.“
The implementation of CRM is desired by companies due to the benefits
associated with these strategies among their customers, such as greater
loyalty and profits. The CRM strategy embraces acquisition, retention, and
overall customer profitability of a particular group of customers.
In this unit, you will deal with the concept of CRM. In the recent years,
however, several factors have contributed to the rapid development of direct
interaction between producers and customers. The concept of CRM as a co-
operative and collaborative process has thus tended to be more common.
Its purpose is mutual value creation on the part of the marketer and
customer. CRM solutions provide customer-oriented services for planning,
developing, maintaining, and expanding customer relationships, with special
attention paid to the new possibilities offered by the Internet, mobile devices,
and multi-channel interaction.
In this unit, we will comprehend the concept of rural marketing, services
marketing, and e-marketing. A few years ago, the rural market in India was
an unknown territory and many companies were not interested in entering
the rural markets of India, as the demand pattern was fragile, seasonal,
purchasing power was scantly distributed among a few wealthy landlords.
But now, everyone is looking at rural markets as the next growth driver in
Indian market. The service sector has come to stay as one of the key drivers
of modern economic systems. The service sector has become more
competitive and is posing more challenges to marketing managers to apply
marketing principles and strategies to achieve success in the service sector.
E-marketing or online marketing is comparatively new, but is growing at a
fast pace and has become an essentially important aspect of strategic
marketing implementation. Today, in many organisations, it is considered as
a functional aspect of marketing strategy.

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Case Let

CRM at Wells Fargo

Wells Fargo is one of the world’s largest banks in terms of market
capitalisation. “CRM is a hot topic”, says Clyde Ostler, executive Vice-
President of the Internet services group at Wells Fargo. “We have
databases of customer profiles that help us with the next best cross sell.
We have statistics that will determine what kind of products that customer
has and what behavior they will exhibit in the future. The Internet enables
you to do all that and a little bits more.”
Wells Fargo has about 1.8 million Internet banking customers and is
adding roughly 100,000 customers a month. Finding ways of tracking
these customers is increasingly important.
One example of e-CRM at Wells Fargo is the bank’s system of dealing
with 4000 e-mails from its two customer service centres. To enhance
service inquiries, the bank bought a system that uses modelling language
to understand what is really meant by each incoming inquiry. The system
watches how customer service agents respond to customer inquiries and
creates a database of answers that are then developed into responses
that can be sent automatically or after approval. The result is that Wells
Fargo has been able to handle twice as many e-mail inquiries with greater
accuracy and without increasing staffing.

This unit provides answers to the following questions:

 What is CRM?
 What are the forms of CRM?
 Why is it important to manage customer loyalty?
 Why have rural marketing, services marketing, and e-marketing gained
importance of late?

Objectives:
After studying this unit, you should be able to:
 define customer relationship management and
 describe the forms of CRM
 explain the importance of creating and maintaining customer loyalty

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 identify why organisations lose customers

 analyse the significance of CRM
 elucidate the growing relevance of rural marketing
 examine the significance of service marketing
 explain the growing relevance of online marketing

14.2 Relationship Marketing Vs. Relationship Management

CRM is a comprehensive approach that provides seamless integration of
every area of business that touches the customer – namely marketing;
sales, customer service, and field support – through the integration of
people, process, and technology, taking advantage of the revolutionary
impact of the Internet. CRM creates a mutually beneficial relationship with
the customers. In the rapidly expanding world of e-commerce, there is a
new generation of empowered customers emerging who demand immediate
service with the personalised touch.
Relationship marketing is a term often used in marketing literature. We
sometimes use it interchangeably with CRM. Relationship marketing has
been defined more popularly with the focus on individual or one-to-one
relationship with customers integrating data-base knowledge with long-term
customer retention and growth strategy. Some writers have taken a strategic
view and shifted the role of marketing to genuine customer involvement
(communicating shared knowledge) rather than manipulating the customer
(telling and selling). Overall, the core of CRM and relationship marketing
focuses on co-operative and collaborative relationships between the firm
and its customers and for other marketing factors. It must, however, be
noted that CRM programmes now envisage a wider spectrum of efforts
other than data-based one-to-one relationship with customers, which
characterises relationship marketing.

Self Assessment Questions

1. The foundation of CRM is based on ________________relationship.
2. Relationship marketing focuses on maintaining ______________
relationship.

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14.3 Definitions Of Customer Relationship Management (CRM)

CRM refers to the holistic approach that an organisation can take to manage
their relationships with customers, including policies related to contact with
customers, collecting, storing, and analysing customer information and the
technologies needed to perform these tasks. You should think of CRM as a
strategic process that will help you understand your customer's needs and
how you can meet those needs and enhance your bottom line at the same
time. CRM is a comprehensive strategy and process of acquiring, retaining,
and partnering with selective customers to create superior value for the
company and the customer. The basic objective of CRM is to increase
marketing efficiency and effectiveness. It is the co-operative and
collaborative processes that help in reducing transaction costs and overall
development costs of the company.
CRM can be defined as an alignment of strategy, processes, and
technology to manage customers and all customer-facing departments and
partners. CRM, in short, is about effectively and profitably managing
customer relationships throughout the entire lifecycle.
Most CRM initiatives begin with a strategic need to manage the process of
handling customer related information more effectively. For beginners, it
could simply mean better lead management capabilities or sales pipeline
visibility. However, as organisations mature in their CRM initiatives, they
shall visualise CRM as a tool to acquire strategic differentiation. It includes
adoption of IT related systems, training of employees, and amendments in
business processes related to customers. It is not just software but an
approach to update and enhance business methods to improve customers’
relationship with the organisation.

Self Assessment Questions

3. The general objective of CRM is to increase marketing efficiency and
effectiveness. (True/False)
4. CRM can be used by the organisations as a strategic differentiator.
(True/False)
5. CRM can be defined as an alignment of strategy, processes and
_________________.

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14.4 Forms of Relationship Management

It is possible to distinguish between three main types of CRM programmes,
which actually have variations attempted by innovative marketers. The three
main forms of CRM programmes are:
1. Continuity marketing
2. Individual marketing
3. Co-marketing
Figure 14.1 depicts the three forms of CRM

Continuity
Marketing

Forms of
CRM

Co- Individual
marketing Marketing

Fig. 14.1: Forms of CRM

Let us now study the three forms in detail.

14.4.1 Continuity marketing
These programmes are generally aimed at retaining customers and
enhancing their loyalty. The basic premise is that of offering long-term
special services with potentiality of increased mutual value. For end-users in
mass markets, an attempt is made to offer rewards to consumers by way of
membership and loyalty-cards with a variety of rewards, which may include
privileged services, discounts, and cross-purchased items.
14.4.2 One-to-one marketing or individual marketing
These programmes aim at meeting individual customer’s needs, which are
fully satisfying and uniquely customised. In the mass markets, information
on individual customers becomes the basis of individual customer
interactions. An attempt is made to fulfil the unique needs of each as well

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as develop frequency marketing, interactive marketing, and after sales

programmes for high yielding customers. Advancement in information
technology has made it possible to use customer information at low cost.
Customer business development is the form of individual marketing vis-à-vis
distributor customers. A large manufacturer may be able to offer expert
advice based on his/her knowledge from across many markets and also
offer resources to build the business of distributors.
14.4.3 Co-marketing
Co-marketing has long been used in individual marketing by way of key
account management programmes. It involves appointment of separate
teams by marketers to decide on the use of company resource to be used to
meet individual customer needs. If necessary, joint planning with customers
is done at the national as well as global levels.

Self Assessment Questions

6. Which of these is a technique used in continuity marketing?
(a) Point-of-purchase display
(b) Loyalty cards
(c) Publicity
(d) Window display
7. Customer business development is the form of __________marketing.
8. ____________ attempts to engage customers directly in the marketing
process.

14.5 Managing Customer Loyalty and Development

Managing customer loyalty is the basic platform of relationship formation. In
a highly competitive and challenging business environment, organisations
are really blessed if they are fortunate to have loyal customers in their
customer inventory. With the backup of loyal customers, the organisation
could enjoy a number of advantages. In short, having loyal customers will
serve as a sustainable competitive edge to the organisation concerned in
the present day context. Therefore, organisations should keep “managing
customer loyalty” as their prime agenda.

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Customer loyalty is a company's ability to retain satisfied customers.

Maintaining customer loyalty is one of the toughest challenges for any
marketing department in a business enterprise, since the wants of a
customer are modified at much faster rate than their needs. A customer
loyalty programme is based on a simple premise - as a company develops
stronger relationships with their best customers, those customers will stay
longer with the company and become more profitable. For example, many
companies issue loyalty and membership cards to their regular customers
that give them a few advantages like discounts, reward points, free home
delivery of products, etc.
Figure 14.2 depicts the loyalty and membership cards used by various
companies.

Fig. 14.2: Examples of Loyalty and Membership Cards

(Source: http://www.plasticcards-india.in)

Let us now study the strategies used to prevent defection and recover
lapsed customers.

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14.5.1 Strategies to prevent defection and recover lapsed customers

The below mentioned strategies are considered for managing the faith of the
customers:
 Total knowledge about customer behaviour – The organisation
should have complete knowledge regarding the behaviour and migration
patterns of the target customers.
 Interactive communication system: – It is essential to develop
transparent and interactive communication system.
 Special promotion campaign – Whenever the signals of customer
defection are noticed, it is essential to come out with the specially
designed promotions to attract the attention of likely defectors.
 Developing barriers to exit – The organisation should carefully evolve
barriers to exit, which includes the following:
 Emotional appeal
 Conformation to specification
 Durability
 Lifetime utility
 Social relationship
 Flexibility
 Added value
 Concessional price schemes
 Commitment
 Innovative approach
 Reducing risk
 Avoiding threat
 Holistic care
For example, Jet Airways uses emotional appeal combined with rational
appeal in its advertisements to keep the target audience interested.
Figure 14.3 depicts one such Jet Airways advertisement.

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Fig. 14.3: Jet Airways Ad

(Source: http://img237.imageshack.us/img237/9930/ad0070804yp3.png)
 Knowledge about lifestyle and life cycle – Lifestyle of the target
customers has to be studied. The lifestyle represents the activities,
interests, and opinions of the customers. Knowledge about the lifecycle
stage is equally important. Organisations should match their offerings to
the lifestyle and lifecycle stages and this approach would prevent
defection.
 Customer specific approach – The approach to prevent defection
must be customer specific. It must be in tune with the customer
categories, contribution towards revenue generation of the organisation,
and also with specific personality traits of the customers such as
aggrieved customers, annoyed customers, and frustrated customers,
etc.
 Customer win-back programmes – The organisation must introduce
reward-based customer win-back programmes. Employees involved in
customer win back programmes should be given suitable incentives and
every win-back should be celebrated and documented.
 Building customer care team – A customer care team specially
focusing attention on defection drivers should be formed. The team can
devote attention to identify causes for defection and rectify the same.
 Improvement of value delivery system – Value delivery system
consists of the entire process right from the time a customer has
expressed a need to the stage customer receives the required service or
product. The value path in the value delivery system should be

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constructed effectively so as to exceed the expectations of the

customers. Such an approach would prevent defection.

Self Assessment Questions

9. _______________ is a company's ability to retain satisfied customers.
(a) Brand perception
(b) Competitive edge
(c) Customer loyalty
(d) Brand building
10. Companies should avoid using emotional appeals in their ads if they
want to increase customer loyalty. (True/False)
11. Companies should not try to win-back customers who have left them as
it is cost ineffective and time consuming. (True/False)

14.6 Reasons Behind Losing Customers by Organisations

If customers perceive that a company has a deficiency in any of the factors
that positively contribute to customer loyalty, they may be less loyal. Such
factors include customer service, customer attention, product quality,
promises, and competition.
 Customer service – It is expected from occasionally dissatisfied
customers. Even if you have the best customer service team and you
resolve problems at the earliest, some customers will have problems.
Leaving this case aside, customer service is one the major reasons why
organisations lose customers.
 Customer attention – It is one the major reasons why a customer,
specially a business customer, decides not to deal with an organisation.
You must have noticed that people move to other restaurants if the
restaurant that they first visited is full and they are left unattended by
their executives. Customers can even sacrifice quality for speed.
 Product quality – It is obvious that any company that compromises on
product quality is likely to lose its customers. Though some customers
might stay if the price is low, in the long run the company is bound to
have less, loyal customers.

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 Failure to keep promises – The companies must live up to the

promises made in their communication. If an ad says “customers will get
40% flat discount on all items”, then it must give them the same
(provided the “conditions” were not stated). Similarly, if an executive of a
B2B company tells a business customer that his/her products will be
delivered within 7 days, it must do it within that time frame. A customer
who trusts a company is more likely to be loyal.
 Competition – When the offerings of different organisations are not
differentiated, competitive parity exists. Competitive parity here means
that there is equality or essential equivalence between the competitors.
If customers perceive that brands are identical, perceived risk is low and
there is a greater tendency for brand switching as the likelihood of
loyalty toward the product declines.

Activity 1
Conduct a secondary research to find out why Nokia’s market share has
been falling in recent times. Also suggest some strategies to Nokia for
overcoming this phase.

Self Assessment Questions

12. Some customers are never satisfied. Marketers should try repeatedly to
satisfy those customers. (True/False)
13. Customer loyalty does not always depend on product quality.
(True/False)

14.7 Significance of Customer Relationship Management

The significance of CRM lies in the host of benefits that it provides. The
following are the benefits of CRM:
 It allows organisations not only to retain customers, but also enables
more effective marketing. It creates intelligent opportunities for cross
selling and opens up the possibility of rapid introduction of new brands
and products.
 Keeping the customer happy is obviously one way of ensuring that they
stay with the organisation. However, by maintaining an overall
relationship with the customer, companies are able to unlock the

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potential of their customer base and maximise the contribution to their

business.
 The strategic benefits of CRM allow companies to reduce the cost of
customer acquisition and give established players the ability to react like
a new market entrant, the very people they are battling against.
Ironically, the costs of customer acquisition are increased and the
potential of customers can then be capitalised through cross selling of
other products and services.

Self Assessment Questions

14. CRM allows companies to ____________ cost of customer acquisition.
15. CRM enables a company to _____________ customers and enhances
opportunity of cross selling.

14.8 Social actions affecting Buyer-Seller Relationships

Buyer-seller relationships are not only affected by the commercial
transactions between them but also by their social actions. Table 14.1
depicts the social actions that affect the buyer-seller relationships.
Table 14.1: Good Things and Bad Things That Affect Buyer-Seller
Relationships

(Source: www. ba.nccu.edu.tw/aihwa/CH03.ppt)

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14.9 Rural Marketing

The rural areas are where the markets of the future lie. Urban markets are
becoming increasingly competitive and saturated for many products. On the
other hand, rural markets offer growth opportunities for firms caught up in
intensive battle in urban and metro markets. Marketing gurus describe rural
markets as the market of the new millennium. According to them, marketers
have to understand the rural customers before they can make inroads into
rural markers.
The size of the rural market is fast expanding. Britannia ventured into basic
items such as biscuits, with their brand called ‘Tiger’. This brand is steadily
gaining market share and also creating new markets. LG has ventured into
the rural market, selling black and white TVs with great success and hopes
to further penetrate the markets in the near future with colour televisions.
ITC's e-chaupal initiatives to equip the rural farmers, HLL's Project Shakti to
empower rural women consumers through income generation projects are
some of the examples, which have opened new vistas in rural marketing.
Figure 14.4 depicts some products that have done really well in the rural
markets of India.

Fig. 14.4: Products that are a Success in Rural Markets of India

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A sound understanding of rural consumer behaviour and customer demand

patterns will help the rural marketer to creatively serve the rural market with
ample success.
Rural marketing should not be considered as an expense but as an
investment. Of course, the initial costs for distribution and communication
are high and returns come after a long period of gestation, yet it is an
investment worth making. For success, the following points must be
considered:
 An efficient countrywide distribution network must be created so that
company's products are available to the farmers at their doorstep.
 Advertising communication and servicing must be evolved in tune with
rural needs and in ways different from what is effective in larger towns
and cities.
 There should be a strong research and development team to produce
products specifically for rural areas.
 Role of trade in distribution and communication must be strengthened.
 Pricing of products should be in line with the economic competence of
villagers.
 Packaging should be simpler and more functional than ornamental.
In rural marketing, institutional promotion is more important than brand
advertising. To a marketer, this is another hurdle because he/she may
promote the institution and some other brand may be bought. Inability of the
smaller retailers to carry stocks without adequate credit facilities is an
impediment for growth of retail in rural areas. Rural markets have also
inadequate warehousing, which leads to delay in replenishments of stocks.
Marketers must overcome all these barriers to successfully market their
product in the rural market.

Self Assessment Questions

16. Marketing experts see _____________ market as a market of the new
millennium.
(a) Rural
(b) Urban
(c) Kid’s
(d) Women’s
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17. In rural markets,_____________ advertising is more important than

product advertising.
(a) Brand
(b) Institutional
(c) National
(d) Local

14.10 Services Marketing

Service sector is one of the key contributing factors for the growth of our
economy and civilisation. Though marketing literature is dominated by
manufacturing and product-centric business practices, service marketing
constitutes a strategic area, which has propelled growth and success for
many organisations. Pure services and products are hypothetical extremes
as every product today is associated with some level of service.
Alternatively, physical evidences are created for augmenting services and
reducing customer’s perception of risk. Service is defined as any activity or
benefit that one party can offer to another, which is essentially intangible
and does not result in an ownership. Its production may or may not be tied
to a physical product. The level of intangibility makes us develop a
continuum for services as pure services, associated services accompanying
a manufactured product, services accompanied by minor products and pure
tangible products.
Services have distinct characteristics of intangibility, inseparability,
perishability, variability and lack of ownership.
The marketing mix for manufactured products is insufficient to explain the
special nature of services and hence the 4Ps concept developed in product
marketing is extended in service marketing by addition of people, process,
and physical evidence (you have already learned this in unit 2).
Service quality is an important issue in marketing of services due to the fact
that both production and consumption of services occur at the same time.
Since services cannot be standardised, it is very difficult to present services
on quality dimensions. The various service quality dimensions include
reliability, responsiveness, assurance, and empathy. The quality of a service
will delight a customer when it exceeds the service expectations of the
customers.

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There are five types of service quality gaps that a service marketer should
try to bridge through an effective service-marketing programme.
Figure 14.5 depicts the four producer gaps and one consumer gap.

Fig. 14.5: Gaps Model of Service Quality

(Source: www.ausweb.scu.edu.au)

Let us now study the gaps model in detail.

1. The first gap exists between customer expectations and management
perception of what the consumer expects.
2. The second gap exists between management perception and service
quality perception.
3. The third gap exists between service quality perception and service
delivery.
4. The fourth gap exists between service delivery and external
communications to the consumers.
5. The last gap exists between perceived service and expected service by
the consumer.
An effective quality management programme should try to develop
strategies to fill the gaps and create customer delight.

Activity 2
How do the top service marketing companies manage the service quality?
Conduct a secondary research to find out the service quality management
practice of Jet Airways.

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Self Assessment Questions

18. There is nothing like a pure service or a pure product. (True/False)
19. Traditional 4Ps are sufficient to market a service. (True/False)

14.11 E-Marketing or Online Marketing

Internet revolution has developed as an alternate way of living. Online
buying has become one of the alternative living patterns in the 21st century.
People are showing increased interest in online marketing as it provides a
real time, interactive, and personalised environment for the marketers to
transact on online storefronts.
We can think of the Internet as a worldwide means of exchanging
information and communicating through a series of interconnected
computers. This wonderful technology provides marketers with faster,
efficient, and powerful ways to handle designing, promoting, and distributing
products, doing research, and collecting loads of market information almost
instantly.
The commercial application of the Internet became possible with the
creation of World Wide Web and several other tools to access websites.
These include browsers, directories, and portals. Firms create their
corporate website and post vast amount of information on it that includes
product description, operating instructions, invitation to suppliers to submit
bids on company’s planned purchases, and contacting sales people.
Use of the Internet permits companies to collect marketing research
information at reduced costs and manpower involvement. Wherever
feasible, companies have shortened distribution channels to reach the
customers and are using variety of methods to minimise any possibility of
channel conflict or sales force complaints.
Internet marketers have to make their websites attractive to the right target
audience so that they are motivated to visit their specific websites.
Depending on the product category and the company’s marketing objectives
for the Internet, a website can just be a simple source of information about
the company and its products or a powerful tool to build brand image, a
means to offer samples, or generate sales leads.

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Types of Internet advertising

An organisation uses a variety of online tools for e-marketing. Some of them
are ad banner, website, ad button, sponsorship, interstitial, classified ads
and e-mail.
 Ad banner – Ad banner is the most basic type of Internet advertising. It
is like a billboard that appears across the top or bottom of a web page
and when clicked upon by the user, it sends him/her to the advertiser's
site. The size of the banner is about four and half by one and half
inches. Other names given to banners include side panels, skyscrapers,
and verticals.
 Website – A website is a location on the Internet where anyone can find
out about the company, its products and/or services. It is used as a
brochure to promote the company's products or services. There are
some companies which use their websites as a source of information
and entertainment and encourage the Internet users to visit often. Some
other companies use the Web as an online catalogue store, conducting
business right on the Internet.
 Ad button – An ad button is a smaller version of the banner that often
looks like an icon and usually serves to provide a link to the advertiser's
home page.
Figure 14.6 depicts ad banner and ad buttons on NDTV’s website.

Fig. 14.6: Ad Banner and Ad Buttons on NDTV’s Website

(Source: www.ndtv.com )

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 Sponsorship – Internet advertising of this form is becoming popular.

Companies sponsor all the sections of a publisher's web page, or
sponsor single events for a contracted period of time. Companies get
considerable recognition on the website in the form of integrating
sponsor's brand with the publisher's content as an advertorial, or with ad
banners and buttons on the web page, in exchange for their
sponsorship.
 Interstitial – This is a relatively more recent form of Internet advertising
and is also referred as the intermercial. This is an animated ad that pops
up on the computer screen while downloading a website. Advertising
Age has reported that this type of ad is twice as effective as ad banners
at generating higher levels of brand awareness.
 Classified ad – This type of Internet advertising offers an excellent
opportunity for local advertisers and is becoming popular among
advertisers. Many of the classified websites offer free classified
advertising opportunities as ad banners of other advertisers already
support these sites. A classified ad is quite similar to the ones that are
seen in the newspapers.
 E-mail – Many Internet advertisers send e-mails that contain text and
video, streaming video, newsletters, and news releases.

Self Assessment Questions

20. A __________________ is not an ad but a location on the Internet that
provides information about a company and its products.
(a) Interstitial
(b) Sponsorship
(c) Classified
(d) Website
21. According to Advertising Age,________________ is twice as effective
as ad banners at generating higher levels of brand awareness.
(a) Ad button
(b) Sponsorship
(c) Interstitial
(d) E-mail

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14.12 Summary
Let us recapitulate the important concepts discussed in this unit:
 CRM is a comprehensive approach that provides seamless integration
of every area of business that touches the customer – namely
marketing; sales, customer service, and field support – through the
integration of people, process, and technology, taking advantage of the
revolutionary impact of the Internet.
 CRM creates a mutually beneficial relationship with customers. In the
rapidly expanding world of e-commerce, there is a new generation of
empowered customers emerging who demand immediate service with
the personalised touch.
 The term customer loyalty refers to a customer’s commitment or
attachment to a brand, store, manufacturer, service provider, or other
entity based on favourable attitudes and behavioural responses, such as
repeated purchases.
 An organisation needs to study the needs of various market segments
and design the marketing programmes tailor made to suit the segments.
Customer anticipates several things from the company in addition to the
product; which the firm has to study well to bridge the gaps between
customer expectations and firm’s delivery.
 In recent years, rural markets have acquired significance, as the overall
growth of the economy has resulted in a substantial increase in the
purchasing power of the rural communities.
 Services have become an integral part of any economy's infrastructure
and have become indispensable to urban life. Services marketing is
marketing based on relationship and value. It may be used to market a
service or a product that has a service element attached to it.
 E-marketing (or online marketing) is the marketing of products or
services over the Internet. The Internet has brought many unique
benefits to marketing, one of which is lower costs for the distribution of
information and media to a global audience.

14.13 Glossary
Ad banner: A form of online advertising that entails embedding an
advertisement into a web page.

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Classified ad: Small messages grouped under a specific heading

(classification) such as automobiles, employment, and real estate, in a
separate section.
Competitive parity: The perceived equality or essential equivalence
between the competitors.
Continuity marketing: These programmes are generally aimed at retaining
customers and enhancing their loyalty.
Customer relationship management: It is a comprehensive approach
which provides seamless integration of every area of business that touches
the customer.
Intermercial: Attractive, lively commercials that run while people are waiting
for web pages to download.
Relationship marketing: Marketing activities that are aimed at developing
and managing trust and long-term relationships with larger customers.

14.14 Terminal Questions

1. Define CRM. What is the significance of CRM?
2. Describe the different forms of relationship management.
3. What is the relevance of managing customer loyalty in marketing?
4. Why is rural market important? What should marketers keep in mind
when catering to this market?
5. Explain the core concepts of marketing. Define service and explain its
relevance in modern society.
6. How is e-marketing better than traditional forms of marketing?

14.15 Answers

Self Assessment Questions

1. Mutually beneficial
2. One-to-one
3. True
4. True
5. Technology
6. (b)
7. Individual

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8. Co-marketing
9. (c)
10. False
11. False
12. False
13. True
14. Reduce
15. Retain
16. (a)
17. (b)
18. True
19. False
20. (d)
21. (c)

Terminal Questions
1. CRM offers long-term changes and benefits to businesses that chose to
use it. The reason is that it allows companies to interact with their
customers on a whole new level. For more details, refer section 14.3
and 14.7.
2. Different forms of CRM are continuity marketing, individual marketing,
and co-marketing. For more details, refer section 14.4.
3. Customer loyalty creates customers commitment or attachment to a
brand, store, manufacturer, service provider, or other entity that is
beneficial for the parties in the long run. For more details, refer section
14. 5.
4. Rural market is important because of its considerable size. Marketers
should not target this market with the same marketing mix designed for
the urban market. For more details, refer section 14.9.
5. A service is an intangible offering that may be offered independently or
attached to a physical product. Service sector is a largest contributor to
the country’s GDP. For more details, refer section 14.10.
6. E-marketing enables a firm to target the global audience. For more
details, refer section 14.11.

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14.16 Case Study

Future Group Goes Digital in a Big Way
Kishore Biyani’s Future Group will launch a slew of digital commerce
initiatives in the next few years as India’s largest retailer moves to sell a
wide range of products from bedspreads to treadmills through the Internet,
mobile phones, television and dedicated kiosks. “We were not satisfied with
our digital presence, and now we have decided to enter that space in a big
way,” said Kishore Biyani, CEO of the ` 9,000 crore group.

Fig. 14.7: A Still from Future Group’s Official Website

(Source: www.futurebazaar.com)

While the group’s online retail arm, Future E-commerce, already operates
an e-commerce portal, it will launch new initiatives such as SMS short
codes, tele-shopping, proximity marketing through mobile phones and virtual
shopping through manned kiosks in the coming weeks. “Most people in
urban areas spend 8 to 10 hours in a day on one of the four screens we are
targeting. This translates into huge sales potential,” said Mr Biyani.
The initiative will make Future Group one of the first modern retailers to
move into digital commerce in a big way. It will compete with portals such as

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eBay.com, Indiatimes.com and Rediff.com, as well as with websites of

Shoppers Stop and Landmark, on the Internet. E-retailing is yet to take off in
a big way in India and it’s not at all comparable with mature markets. The
size of online retailing in India is estimated at about Rs 500 crore a year and
that of teleshopping is estimated at Rs 900 crore. That makes a total of just
over $300 million. In comparison, a recession-hit US recorded $131 billion
retail e-commerce in 2009, according to Emarketer.com. Mr Biyani hopes to
change that with his new initiative.
“We will sell across four screens and we hope the scale of what we bring will
completely transform that space,” he said. He targets sales of Rs 300 crore
from digital commerce in the first year after the new initiatives are rolled out
fully. The company is in talks to acquire a small IT company with about 150
personnel to develop and maintain content and websites, he said, but
declined to identify the target. Mr Biyani himself is incubating the new
business unit that will be part of Future E-commerce, where venture capital
firms Kleiner Perkins Caufield & Byers and Ram Shriram’s Sherpalo
Ventures together hold 15% stake.
Its online store, FutureBazaar.com, will increase the number of products
available online significantly. At present, about 4,000 SKUs, or stock
keeping units, are available at FutureBazaar.com compared with 1.6 lakh
SKUs that an average Big Bazaar store stocks. SKU is the most basic
accounting unit of a product. Two sizes or two flavours of the same product
will be accounted as different SKUs.
“Whatever we sell through the digital platforms will be cheaper by 5% to
20%, compared with the prices in the shop,” Mr Biyani said. The cost of
selling a product is much lower when it goes from a godown directly to a
consumer’s home without taking up shelf space in a retail store that is
expensive to run. The website will also add more information about the
products, including videos.
As for tele-shopping, Future Group plans to buy airtime in bulk on TV
channels. But Mr. Biyani ruled out launching a dedicated channel for that. In
what will be an entirely new initiative, Future Group also plans to erect
manned kiosks where customers can browse through products and access
information as well as videos on a screen and even place an order and pay
cash. The company will extensively promote its SMS short codes and will

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also carry out proximity marketing using Bluetooth and cell tower-based
technologies.
Every week, three or four products from a particular category will be heavily
promoted across all the digital platforms, Mr. Biyani said.
Discussion Questions:
1. How will this digital marketing help Future Group?
(Hint: It will help Future Group in targeting a wider range of customers.)
2. How will the customers benefit from this initiative?
(Hint: Customers will get to shop for different products at reasonable
prices without physically visiting their stores.)
(Source: www.manzeal.com)

References :
 Tapan, P. K. (2010). Marketing Management: Excel Books, New Delhi
 Ramaswami, V.S., and Namakumari, S, (2003). Marketing Management:
Macmillan Publishers
 Zikmund, W.G.., Raymund, Faye, M. Jr., and Gilbert, W. (2003).
Customer Relationships Management, Wiley

E-References:
 http://www.crmforecast.com/strategy.htm – Retrieved on February 16,
2012
 http://www.world-agriculture.com/agricultural_marketing/rural_marketing.php
– Retrieved on February 16, 2012
 http://www.learnmarketing.net/servicemarketing.htm – Retrieved on
February 16, 2012
 http://www.focus.com/briefs/what-online-marketing/ – Retrieved on
February 16, 2012

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