Strategic Marketing

1. Imperatives for Market-Driven Strategy

2. Markets and Competitive Space
3. Strategic Market Segmentation
4. Strategic Customer Relationship Management
5. Capabilities for Learning about Customers and Markets
6. Market Targeting and Strategic Positioning
7. Strategic Relationships
8. Innovation and New Product Strategy
9. Strategic Brand Management
10. Value Chain Strategy
11. Pricing Strategy
12. Promotion, Advertising and Sales Promotion
Strategies
13. Sales Force, Internet, and Direct Marketing Strategies
14. Designing Market-Driven Organizations
15. Marketing Strategy Implementation And Control
 CHAPTER 4

STRATEGIC CUSTOMER
RELATIONSHIP
MANAGEMENT

McGraw-Hill/Irwin Copyright 2009 by The McGraw-Hill Companies,

 PIVOTAL ROLE OF CUSTOMER
RELATIONSHIP MANAGEMENT
DEVELOPING A CRM STRATEGY
CRM Levels
CRM Strategy Development
CRM Implementation
VALUE CREATION PROCESS
Customer Value
Value Received by the Organization
CRM and Value Chain Strategy
CRM AND STRATEGIC MARKETING
Implementation
Performance Metrics
Short-Term Versus Long-Term Value
Competitive Differentiation
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 CUSTOMER RELATIONSHIP
MANAGEMENT
CRM is a cross-functional core
business process concerned with
achieving improved shareholder value
through the development of effective
relationships with key customers and
customer segments.
CRM Recognizes That
Customers:

Vary in their economic value

to the company
Differ in their expectations
toward the firm
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 4-3

CUSTOMER LIFETIME VALUE

Customer lifetime value (CLV) calculates past

profit produced by the customer for the firm
the sum of all the margins of all the
products purchased over time, less the cost
of
reaching that acustomer
To this is added forecast of margins on
future purchases (under different assumptions
for different customers), discounted back to
their present value.
This process provides an estimate of the
profitability of a customer during the time
span of the relationship.
The CLV calculation is a powerful tool for
focusing marketing and promotional efforts
where they will be most productive.
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 4-4

PERSPECTIVES TOWARD CRM

STRATEGIC-
THE ENTIRE
COMPANY

REQUIRED THE CUSTOMER

MARKETING
FUNCTIONS

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 4-5

THE STEPS IN DEVELOPING A CRM

STRATEGY

Gain enterprise commitment

Build a CRM project team

Business needs analysis

Define the CRM strategy

Source: V. Kumar and Werner J. Reinartz, Customer Relationship Management (Hoboken, NJ: John Wiley & Sons,
Inc.), 2006, 39.
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 4-6

DEFINE THE CRM STRATEGY

Value
Proposition
1

5 2
Other Business
Stakeholders CRM Case
STRATEGY

Enterprise 4 3 Customer
Transformation Plan Strategy

Source: V. Kumar and Werner J. Reinartz, Customer Relationship Management (Hoboken, NJ: John Wiley & sons,
Inc.), 2006, 42.

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 4-7

IMPLEMENTATION DANGERS

Implementing Without Developing a

Customer Strategy

Failing to Initiate Necessary

Organizational Change

Allowing Technology to Dominate

the CRM Process

Focusing on the Wrong Customers

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 4-8

VALUE CREATION PROCESS

Value Received by Value Received by

the Customer the Organization

THE VALUE EXCHANGE

Successful Value
Exchange

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 4-9

METRICS How General Electric Co.

FEATURE Measures Customers
Experience
Happy (And Not-So-Happy) Customers
General Electric is a big user of the Net Promoter concept of
customer satisfaction, popularized by Fred Reichheld of Bain & Co.
Below, questions similar to those on which GEs Capital Solutions unit
asks customers to rate the units performance on a 0 10 scale.
How willing are you to recommend us to a friend or
associate?
How would you rate our ability to meet your needs?
How would you rate our people?
How would you rate our processes?
What is your impression of our market reputation?
How would you rate the cost of doing business with us?
How would you rate the overall value of our product or
service as being worth what you paid?
Source: Kathryn Kranhold, Client-Satisfaction Tool Takes Root, The Wall Street Journal, July 10, 2006, B3. 4-11
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CRM AND VALUE CHAIN STRATEGY

The Perfect Customer Experience

The perfect customer experience, which must be affordable
for the company in the context of the segments in which it
operates and its competition, is a relatively new concept.
This concept is now being embraced in industry by
companies such as TNT, Toyotas Lexus, Oce, and Guinness
Breweries, but it has yet to receive much attention in the
academic literature. Therefore, multi-channel integration is
a critical process in CRM because it represents the point of
co-creation of customer value. However, a companys ability
to execute multi-channel integration successfully is heavily
dependent on the organizations ability to gather and deploy
customer information, from all channels and to integrate it
with
Adrian other relevant
Payne and Pennie information.
Frow, A Strategic Framework for Customer Relationship Management, Journal of Marketing
(October 2005), 173.

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 4-11

CRM AND STRATEGIC MARKETING

CRM STRATEGIC
MARKETING

From the perspective of strategic marketing, there are

several reasons why CRM is important and why there
should be extensive marketing involvement in decisions
about CRM. Importantly, an organizational perspective is
needed in guiding the CRM strategy.

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