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Introduction to the customer relationship management

The organization of this chapter has been designed to provide ideas of the overall contents of the research carried out. This chapter outlined the introduction of customer relationship management (CRM), the problems or limitations encountered in carrying out this research project, the objectives as well as the scope of research project, the significance of this research project and the terms of definitions of few important terminologies.

CRM stands for Customer Relationship Management. Customer Relationship Management is commonly construed as a hot topic in the market literature these days. It is evident from the happening of economic reforms in many countries around the world which also witnessed a tremendous development of sophisticated information technology and the invention of the internet that has significantly set the pace of this trend.

Many organizations want to build and maintain a good record of customer relationship management in order to survive and grow in a very competitive environment. Be it

consciously or subconsciously, these organizations are in their way to achieve the

ultimate goal and vision laid down by themselves. The reality of today’s business world has been presented through many journals, white papers, books, articles, seminars and workshops which denote no shortage of descriptions and definitions of the term Customer Relationship Management.

And, the general perceptions of these definitions focus on describing CRM as a business strategy which is aimed to optimize profitability, revenue as well as customer experience by organizing around the customer segments, fostering customers’ satisfying behaviors and implementation of the processes that are more customer-centric. However, with these definitions aside and while the organization may have the desire to improve its customer-centric approaches, focus and outcomes, CRM does not just happen just as it is. The whole process needs an appropriate CRM vision, strategies, action plans and also the proper implementation.

However, in order to ensure that CRM vision remains relevant and important to an organization, some perfect mechanism or more accurately defined strategies must be introduced and put in place to measure, monitor and manage the implementation of CRM. This kind of strategies have to be exercised with care and imbibed in the organization as an on-going or continuous improvement of processes as to help the organization to sustain lasting relationships. This would enable the organization to

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understand, anticipate, manage and also personalize the customer experience within the organization’s current as well as potential customers and employees.

The ideal of promotion of this CRM approach should also accompanied by a clear

understanding of the following aspects which are all deemed as very important to the success or achievement of CRM vision :-

The customers - their wants and needs.

The organization - its competencies and desire.

The commitment by organizations to “relate” and therefore, to provide quality service for both its internal as well as external customers.

For this, it definitely requires proper mechanism or strategies in the word of CRM to measure and benchmark the change in actions, process, people competencies as well as

the organizational structure to cater for its implementation.

CRM has been defined in many ways by many people. However, CRM according to the general perception of the people is nothing but a series of customer centric process initiatives taken by an organization with the customer being placed at the centre of the universe. This effort is also to recognize and to ensure that each of the changes and automation introduced actually adds value to the important customers over their life

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time. With all these initiatives in place, it is expected that CRM would be utilized as a strategic differentiator for the organization vis-à-vis their competitors.

However, from the technology perspective, CRM is said to include a set of applications that address the needs of customer-facing functions which in turn would be able to feed a common database that is supported by business analytics.

Just like FMCG (Fast Moving Consumer Goods) and other product marketing, companies should avoid pitfalls of spreading themselves too thin in terms of brand and product extensions or range extensions and thereby lose their focus. “In 2000, business globally spent around $10 Billion on CRM software and around twice that on CRM services. Anticipation for the coming 5 years from now shows that 55% of CRM initiatives will fail to meet measurable benefit objectives and will fail to positively affect return on investment, due to lack of business processes for conducting ongoing measurements” (Source : Gartner, “In Pursuit of CRM Economics”, August 7th 2000).

This was much due to the lack of planning, coupled with undefined business goals and the absence of appropriate measurements in place to be implemented. In general, it is also caused by lack of focus as these companies are not very sure of what they should expect from CRM. In some worst cases, confusion arises about what CRM is all about.

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General perceptions also agreed that CRM is not merely a technology. It is being perceived as a continually evolving process which requires a shift in attitude away from the traditional business model of focusing internally. CRM has been regarded as an approach taken by a company towards its customers, backed up by thoughtful investment in people, technology and business processes.

There is a very real and intangible danger for businesses which focus on technology to the extension of all else. The concept of CRM contains everything that all organizations need to succeed. There are three important elements in the concept of Customer Relationship Management, i.e. :-

The element of C = CUSTOMER : When started initially, all businesses were focusing on the needs of their customers. As businesses grow larger and become more complex, they changed to be more inward-looking as they try to cope with issues internally. Through implementation of CRM, one important goal is to ensure that the individual customer become crucial and relevant at an acceptable cost to the company.

The element of R = RELATIONSHIP : With a huge customer base, it is quite difficult for many organizations to well understand their individual customers’ preferences. Until relatively recently, it was quite impossible for large any

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organizations to form relationship or even close relationship with their customers

especially when their customer base qualified for millions. This is an area whereby the use of technology can help businesses build a more meaningful and an ever lasting relationship with their customers, besides running to keep them loyal and strive to increase their value to the said businesses.

The element of M = MANAGEMENT : Many businesses did not implementing CRM just because they have had a change of perception or that they now decided to take care of their “neglected” customers. It is generally accepted that the norm of loyalty should be equivalent to profit which provide win-win situation to both customers and businesses. The management of customer relationship demonstrates that the business has ultimate controls over the relationship with the customers. It provides the right information at the right time together with the right price to keep the customers happy to stay. The element of management must also understand why and anticipates what else and the customers like most.

1.2 RESEARCH PROBLEMS

The organization selected is F&N Coca-Cola (M) Sdn Bhd (FNCC). The management of FNCC is fully aware that they are facing ever changing environment internally and

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externally such as its sales operations, branding and marketing, full service vending and

technical services, logistic distributions, procurements and issues related to human relationship management. In addition to this, the organization is also trying its best ability in improving the effectiveness of its customer relationship management because the competition in the customer economy has been flooded with abundant of choices for customers. Therefore, it is essential that the organization be able to push its customers’ expectations to a greater height.

However, in doing this, the organization needed to be focused and taking the necessary measurement in introducing and implementing its CRM strategy in order to achieve its organizational CRM vision to become the leading food and beverages player in Malaysia and also the goal to emerge as a world class enterprise that provides superior returns to its

shareholders. The researcher is, therefore, keen to explore the insight of the organization’s CRM project in its quest to achieve the CRM vision through the implementation of performance driven CRM strategies in order to move towards the desired result.

The organization is also particularly concerned over the various aspects of influence towards the adoption and implementation of its CRM project especially the lack of system capability in handling total beverages, cold drink equipment management and placement, human capital development and retention as well as the deteriorating of

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technical standards and expertise.

In addition to these factors, the organization is also seriously looking into its branding and marketing exercises in order to avoid any weaknesses that surface in terms of planning, execution, monitoring as well as intelligent on competitors. Ineffective people management and skill gaps is also major concerns by the management as a whole besides the unbalanced manufacturing infrastructure that would contributes towards inconsistency in its standard of procedures.

The researcher has undertook this research project to examine the effectiveness of the CRM project for this organization and to provide greater insight to the implementation and the success of its CRM strategy which is driven by performance base approaches. The current state of CRM in this organization has indicated that its present CRM initiatives and capabilities of its CRM implementation is definitely a crucial consideration for the management in mapping out the future “to be” CRM state in the organization.

Looking across the whole organization of FNCC, there are a lot of clear indications for improvements especially in the areas of key account management in its modern trade which has became the growing channels which needs continued investments and

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developments. In addition to this, the other critical areas that needed more attention is its dealer management system which shows the importance of its current CRM strategies to be aligned with its business strategies.

THE OBJECTIVES OF RESEARCH

This research project was carried out from the perspective of a Multi-National Company (MNC) which has footed in our country to become a major beverages manufacturer and living a household brand name throughout the country. The organization chosen in this research project, namely F&N Coca-Cola (M) Sdn Bhd (FNCC) is a local MNC and has been specifically identified as the subject of research in view of its long established history and existence in our country, Malaysia as well as its blend of experience in this industry, especially in terms of beverages products.

The main objective of this research looks at the various elements or components in the implementation of CRM in a fast moving consumer goods (FMCG) environment, which encompass an important functions i.e. the philosophical functions of CRM. This is the most crucial component of CRM in the eye of the researcher which entails the CRM strategies carried out based on the performance driven approach to accomplish the organization’s vision, supported by the true working culture and commitments to enable

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an effective customer relationship management. All these components must be developed and executed harmoniously in order to garner much sought positive results for the organization.

The CRM vision underlined by the management is also not comprehensive towards a

more customer centric approach. The CRM vision of the organization stated that it would

want to be the leading food and beverages player in Malaysia and a world class enterprise providing superior returns to its shareholders. From this statement, the researcher is in the opinion that there should be a more concrete efforts to implement the CRM strategies that should be focusing towards performance driven approach in order to achieve its real meaning of CRM.

This research is also carried out to evaluate the significant of CRM is leading the changes in an organization and bringing the success through a performance driven approach to embrace the customer revolution and thrive in the customer economy. This is the exploration of ideas undertaken by a multi-national company (MNC) which has been rooted in Malaysia for many years and a still leading the way in the beverages industry. Specifically, the research aims truly to explore the experience of an MNC in engaging the performance driven approach of customer relationship management to

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pave its way in achieving, retaining and increasing its customer base as well as in managing strategically based on the model of best CRM practice.

THE SCOPE OF RESEARCH

The research project focuses on the meaning of CRM in general and adoption of this

approach in a dynamic way i.e. being performance driven strategy in order to achieve the

organization’s vision as well as to satisfy the needs of a business undertaking from the perspective of a multi-national company, in this case, F&N Coca-cola (M) Sdn Bhd (FNCC) which is one of the leading beverages producer in our country as well as in the world.

This research will further examine the importance of performance driven CRM carried out by FNCC to embrace the customer economy of which it present a best practice model of customer relationship management. The experience and approach undertaken by the organization have definitely bringing a better dimension to be adopted by the other organization in the country in view of its success and sustainability in bringing success to the organization thus far.

CRM has become one of the most promising and compelling concepts which on the

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high level encompasses the thorough understanding of customers, how to interact with them, how to make the process more efficient and how to support as well as to satisfy them with products and services. All these were brought together in this research project to look at the organization’s business performance driven CRM strategies besides the support of its business process, business applications, information technology infrastructure as well as other supporting technologies and relevant platforms.

The general perception of this research puts customer in the center of the enterprise and organizes around them, as it should. The performance driven CRM strategies are ultimately an organizational roadmap connecting their business strategies, business processes and the supports in terms of technology, while these strategies zoom in on achieving the organization’s CRM vision, besides the norms of obtaining higher profits and revenues.

All these have also been put together in this research project to show the importance of developing a proper and relevant framework to provide the pathways for an organization to accomplish its CRM vision through the working of performance driven strategies. There should be a proper implementation of strategies in order to provide a clear guidance of practice for CRM and achieving the organizational goals as desired.

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1.5 SIGNIFICANCE OF RESEARCH

The researcher believes that by presenting a clearer picture o f the current state of CRM in the organization and analysis of the problems that arises thereof, it would be more practical to provide the required solutions to any problems that had been encountered as well as to prepare a more meaningful and comprehensive framework in implementing CRM strategies for the organization.

It is recognized that the business objective of CRM is to maximize an organization’s profit from their customers, as a result of knowing them, treating them well and fulfilling their needs. Sales force automation, customer contact solutions, multimedia routing and data management tools have been claimed as being the key to a business’s CRM solution. While these are all useful and reliable aids to a business, none of them are CRM solutions, more simply acknowledged as not a mere a technology. Instead, CRM should be regarded as a more holistic approach to refocusing the business on customers, rather than on the internal structure of an organization.

It is more than the competencies that the organizations may have in their own capacity

rather than just a list of technology. CRM is being placed as an important element with the goal being to win, know and keep or maintain profitable customers. This research project, therefore, is significant for the organization to search and re-look into its

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CRM implementation and examine the effectiveness of the strategies that have been proposed as well as to achieve the most meaningful results at the end of the process.

The researcher is also concern with the future state of CRM in the organization and had examine extensively the various factors that influenced the CRM process in the organization. This, in the opinion of the researcher, is of utmost importance as it would further provides the pathways to create a meaningful and appropriate framework of CRM

strategies that should be more performance driven in order to achieve the CRM vision of the organization.

1.6 F&N COCA-COLA (M) SDN BHD ( FNCC )

Fraser and Neave Limited (F&N) had its origins from the soil of Singapore, more than

a century ago, in the spirited decisions of two enterprising young men, John Fraser and David Neave, who diversified from their partnership in printing business to pioneer the aerated water business in Southeast Asia in 1883. From a soft drinks base, F&N had further ventured into the business of brewing in 1931, dairies in 1959 and glass bottle manufacturing in 1972, property development and management in 1990 and publishing and printing in 2000.

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Please refer to Appendix 1 to learn more about the history of FNCC.

Today, F&N Coca-Cola (M) Sdn Bhd has emerged as a leading Pan Asian Consumer Group with core expertise and dominant standing in the food and beverages. Leveraging on its strengths in marketing and distribution, research and development, brands and financial management as well as acquisition experience, the company has successfully penetrates local market as well as market across Asia, besides dwelling in the world market guided by its key resources and strategic directions. FNCC presently owns an

impressive array of renowned brands that enjoy market leadership across a mix of beer,

dairies, soft drinks and other beverages.

A renowned brand that has since become a household name to many, FNCC has established itself as a leader in the food and beverage arena in Malaysia and Singapore since the era of 1930s. Beyond soft drinks, the company has successfully ventured into beer brewing, glass manufacturing as well as producing, marketing, sale and distribution of dairy products such as milk drinks, ice cream, isotonic and Asian drinks, while building more and more reputable brands well recognized across the region.

Through the years, FNCC’s Research & Development team has undoubtedly demonstrated its commitment via a vast array of nutritional products of the highest

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quality to satisfy changing consumer tastes. This is affirmed by the company’s consistent dominance in market share across various products and its winning awards over the years.

Today, Magnolia fresh milk provides consumers the ideal quick pep up for the day, while an ice cold Tiger Beer brings it to a satisfying close, and in between, a refreshing Fruit Tree or 100Plus can always be relied on to satisfy the palate and revitalize the soul.

Through established distribution networks and joint partnerships, FNCC has further

aim to reinforce its foothold in the food and beverage arena geographically across the Asia Pacific Region, expanding its portfolio of brands, strengthening its Research and Development capabilities.

The strategy for company’s growth can only be achieved by providing operating

efficiencies, expanding into new markets and also venturing into new businesses – measures that have been actively pursued by FNCC.

Therefore, in moving forward, FNCC has set its targets on the following:

Re-deployment of assets to higher-yielding activities to focus on asset-light, fee-

based businesses

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Effective capital management to improve returns to shareholders ;

Expanding and growing core businesses through intra-market growth, expansion to new markets and new synergistic ventures ;

Balancing the existing business portfolio by increasing contribution from Food & Beverage and Publishing & Printing businesses.  

1.7 CRM VISION OF F&N COCA-COLA (M) SDN BHD (FNCC)

" To be the dominant world class Total Beverage Company

in Malaysia offering a range of dynamic brands to meet the customers’ needs and preferences "

In this context, the company remains committed to the drives of innovation, quality, excellence by continuously meeting and exceeding the demands of all its

customers, consumers, shareholders, employees as well as the community. The CRM vision of FNCC is aim to be the service provider to all its customers by deploying a more customer centric operations in order to offer more dynamic brands in the local

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market, hence, total beverage company in Malaysia. In its quest to achieve its under-lying CRM vision, the company has embarked on its CRM project that was derived from the response to the channels, brand, customers and consumers in the market.

THE CORPORATE CULTURE OF FNCC

Value & Respect The People

Treating everyone fairly and with trust and respect.

Developing people to achieve their maximum potential.

Working together as a team, accepting differences among people and sharing the same values.

Recognizing and rewarding the people to raise level of performance and

job satisfaction.

Communicate Openly

Communicating clearly, quickly and consistently when deal with others.

Providing clear direction and communicating Company Performance effectively on a timely basis.

Asking questions, listening attentively and giving feedback to one another.

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Understanding and responding quickly to the changing needs of the employees, customers, shareholders and other stakeholders.

Have Integrity

Meeting the highest ethical standards in all business activities.

Fulfilling customers' requirements by delivering quality and value to all constituencies.

Maintaining commitment, singularly and unconditionally to learning

excellence and continuous improvement in everything undertaken.

Challenging the status quo and achieving what have been promised.

Committed To Winning

Being creative, innovative, motivated and confident about work and organization.

Setting and meeting individual goals consistent with business goals.

Believing in what to be done and delivering results.

Employees to be fast, boundary-less, intelligent risk-takers with accountability and responsibility.

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1.9 TERMS OF DEFINITION

In presenting a complete and clearer picture of the subject matter, it is also important

to highlight several definitions to the terms used in this research project, which comprises

of the CRM vision, performance driven CRM and the CRM strategies. The three main aspects of discussion could be presented as follows :-

CRM Vision

A CRM vision is the drive towards two desired outcomes for an organization i.e. the starting point in the direction towards the desired end results and also a set of course of actions to begin an organization’s journey to achieve these end

results.

This kind of vision can be structured in many ways and should include some of the following basic components :-

a vision statement crafted to foresee the future of the business.

a mission statement explaining how the organization expects to do its

business.

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the core values statement provide the picture of what is essential to the accomplishment of the mission and the fulfillment of the vision.

a description of standards against which they are to be measured.

It should, therefore, provide both a program of projects to deliver against the

strategic vision of the organization as well as a framework to evaluate whether other investments add to and deflect from the net benefits that is to be realized. All the appropriate approach to be implemented should also be more customer focus in order to achieve an organizational CRM vision as customers are the segment which is most important in maintaining the survival of an organization.

An organization should be more appreciative towards its customers and its vision should also be aligned towards maintaining an ever lasting relationship with its

customers.

Performance Driven CRM

Performance driven CRM is regarded as a mechanism of measurement, monitoring and management of performance that helps to maintain the CRM vision as relevant, alive and achievable as well as enabling change towards a

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success and lasting CRM. This kind of approach offers the standards of performance and a balance score card for an organization’s care initiatives towards more customer-centric perspective.

Performance driven CRM would help to ensures the organization’s CRM vision

becomes reality by way of fostering a cycle of continuous improvement, delivers the skills needed to identify the changes in customer preferences and the ability to respond to them.

This is a kind of methodology adopted with its aim to deliver the desired results to the organization as it is said to provides a performance management programs that would enable the measurement and monitoring of customers’ needs, organizational competencies and quality services for all existing as well as new customers.

CRM Strategy

This is regarded as a domain whereby 2 main aspects in the development of a CRM suite application has been laid on i.e. :-

1. the change management of an organization’s point of view in respect of

the business and the relationships with the different players in the market;

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2. the need of knowledge management in relation to the concepts of acquiring,

using, sharing and storing of data and knowledge about customers and

market.

The CRM strategy defines how the organization wants to treat and interact with its existing as well as new customers and even to its prospects. The CRM strategy is seen to clarifies the intended utilization of various platforms as well as the treatment to different segments of the customers in the market. This in turn feeds the technology strategies and plans, which would then help to define what

business processes, applications and the supporting technology that are required.

Frequently, this also leads to the re-engineering dated business processes, the efforts of making account information available and accessible to the customers and also the creation of a self-service option online for the customers. In many cases, all these efforts would drive the need to integrate or enforce the steps to be taken in modernization of the existing system in the organization.

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