Customer Relationship Management Literature Review

Introduction

The use of the internet has increased at a high rate in the recent past. The use of the internet has given many companies an enabling platform to enable the companies to reach the global audience in a very easy and effective way. Through the internet media, companies can respond to their customers promptly, and they are also able to advertise any new commodity to the large number of people who access the internet globally (Andereasen, 2005). In addition to advertisements, internet marketing enables companies to keep customers’ data in a digital form as well as store the customer relationship data in an electronic nature (Andereasen, 2005).

One of the original big ideas in marketing is that for firms to stay in existence, they should not focus on selling products but rather on fulfilling the needs of their customers. Thus, a drill manufacturer is in the business to provide the customer with a hole, and a railroad company is in the business to provide the customer with transportation. This is a key component of CRM because the emphasis is not on how to sell the product but rather on creating value for the customer and, in the process, creating value for the firm (staying in existence). In other words, it is a process of dual creation of value. Andreasen (2005) introduced the concept of the augmented product, stressing that consumers are interested in the total buying experience and not just the core product. Again, CRM relies on this concept because it tries to find the specific elements of the exchange process that produce value to the customer.

For instance, reports of a study carried out On Philanthropy researchers in 2005 indicated that online marketing in American businesses is increasing at a very high rate; EIG Inc was considered as an example. Mohan (2005) asserted that “the study found out that $1.11 billion was spent in 2005, an estimated $1.34 billion spent in 2006, and the number was expected to rise further by the year 2007″. The study further established that slow growth was expected in 2009 as a result of the global recession. The study found out that 89 percent of Americans of the age bracket 13-25 years were in a position to change from one brand to another of the same price and type depending on their taste (Mohan 2005). According to Pavlik (2008), “the use of online marketing and advertising has more advantages when compared to the traditional media marketing.” These advantages are discussed in some sections of this paper. This study provides a good example of how an increase in online marketing is currently growing at a high rate. There are specific reasons that have lead to these increasing trends. However, the increasing rate of using online marketing may also be affected by other factors, such factors limit the way companies can use this effective method of marketing.

Trade history is based on the Ricardian theory of international trading which assumes that goods usually form the basis of international trade. But this theory has since then been expanded by many researchers to necessitate the inclusion of intermediate goods such as fuel and machinery. By the inclusion of other goods, markets have become more competitive than before, hence leading to reduced prices of goods.

The current country partners in the Australian and the U.S markets are; China, Japan, and New Zealand. These countries have played a significant role in developing the two markets.

In the past, many countries did not consider international marketing but preferred internal trading, since it was less involving and cheap. Nowadays many countries have partnered hence going further to form trading blocs, which are being considered as the basic way of trading. These trading blocs have enabled many economies to develop from shackles to the new heights of today. These trading blocs have off late had a positive implication in international politics, which is a good trend. The emergence of trade blocs started way back in 1834 where the German Customs Union was formed (Nigel, 2007, p.36). The other trading blocs that have since then emerged are;

• European Free Trade Association
• European Union
• North America Free Trade Association
• East Africa Economic Community
• Economic Community of West African States
• Asia Pacific Economic Cooperation

In these trading regions and other trade markets, there are barriers and restrictions to countries that want to venture into such markets. Trade barriers or restrictions may come to inform of tariffs, subsidies, embargos, import licenses, export licenses, and voluntary export restraints. These types of restrictions have an overall increase in the cost of doing business and product prices go up.

In international trade markets, it is always prudent for countries to consider the products they are offering in these types of markets; that means providing high quality and improved products to the market. The product life cycle should also be determined; this enables the entrepreneur to determine the amount of money to use while marketing. It is also important to take into consideration the product packaging and branding, if the two are done properly marketing becomes easier.

Literature Review

Market Research

International marketing can be defined as the marketing done by companies to foreign markets outside their national boundaries. This form of marketing involves the identification and targeting of a particular market zone or area. Another consideration usually taken by the companies that want to venture into the international market is the marketing strategy. For example, for DHL to enter the Australian market, the Company must find a good entry point and create an appropriate marketing strategy.

This report will consider all fundamental processes involved in the international markets such as advertising campaigns, sales promotions and, technology. Some companies consider outsourcing marketing strategies rather than using their means, these results in exposing such companies to trade risks. It is important to note that DHL uses its marketing strategies in such markets, thus avoiding such risks. After the company has chosen to venture into international markets; it must also choose the mode of engagement in this type of market. The rules of engagement entail; direct investment.

Advertising Campaign Strategy

Advertising is one of many forms of communication used by companies to relay information to its consumers; this information can be relayed by the use of an identified sponsor (Miller, 2005). Companies should not only choose to use attractive product prices and quality products but should also consider the access to these products; otherwise, they may result in failure in this type of market. The most important thing in communication is the type of information relayed; to whom and the number of times it should be communicated. Pavlik (2008) also indicates that “advertising is not only the form of communication but also there are other forms, such as sales promotions and public relations.”

Advertising as a form of marketing communication usually informs the consumer about the product, mainly its use and, how it is used. Advertising links the brand to the people for them to believe it and come closer to it; it also creates awareness of the same, hence creating brand equity among the people. With the increase of similar service providers in markets such as the United States, DHL will want to be more proactive in its advertising strategies; otherwise, its product will not see the light of the day. DHL being such a well-networked company; the company must use the proper avenues of advertising to help the consumers in Australia and the United States in using its services.

Many companies usually consider various factors when selecting an appropriate advertising campaign strategy, such factors are media coverage, media timetable, budget and, specific advertising message.

Media coverage

The faculty of advertisement and information dissemination has been drastically improved after various forms of media were invented and put into use. Companies have continually and naturally utilized various forms of media to enhance their communication to let a large number of people’s population get to know what they produce and what they do. As years have progressed more sophisticated communication technologies have continued to be invented and this has enabled people to come up with new innovative concepts and ideas aimed at maximizing their sales. All this advancement of communication and media technology has promoted and enhanced consumerism and made it possible for people to get to know and consume new products where there was none consumed before. The new media technologies have also triggered the changing of luxuries into necessities. Despite the variety of means of communication at the disposal of many companies, it however important to note that before a company develops its sales and marketing strategies it has to select the realistic media to use in advertisement and communication.

Most of the advertising messages are sent via the media. The media has several channels such as electronic media, display media, network media, broadcast media and, print media. Mass media is the most effective means of advertising because it caters to the behavior and attitudes of personalities toward a certain product, this often takes two processes. First, the opinion leaders receive the information, and then it flows to the public. The implication of the two processes is that; the opinion of the public is cross-blend by the opinion leaders and that the people usually get involved in social groups, which makes it possible to relay the media ideas. Advertising agencies consider it important to relay information to opinion leaders and thereafter they can transfer the ideas to the public. The effectiveness of the media can be justified because many people if not all have access to media facilities.

A well-coordinated media which is either within or across media types should be emphasized by all companies; this will ensure better coverage of the product. To reach the maximum number of people and also to increase the impact, the media should be channeled using the appropriate time frame. Many companies have sought to increase their sales pitches through online and offline data transfer.

Media timetable

When a company is choosing the type of media to use, it can be faced with two main problems: macro scheduling and micro scheduling. Macro scheduling is the use of business cycles and seasons to arrange for an advertising program, although the latter involves cost evaluation and expenditure allocation for a short period, it obtains the highest impact. Where a new product has been launched in the market several features are taken into consideration such as advertisement continuity and pulsing. The Company should consider the amount allocated on advertisements over a certain period and space.

Budget

A budget is a very important tool when arranging the type of advertising machine to use and the following factors should be taken into consideration while doing the same;

• Product life cycle: New products require bigger budgets while existing products in markets require less.
• Consumer base and market share: According to Fiore & Shawn, (2001) “Products which have high market share require a high expenditure for maintenance; this is the same also for the consumer base.”
• Competition and clutter: Highly competitive Products require bigger budgets. Advertisement clutter requires an additional budget even though competitors are few.
• Advertising frequency: This is the number of times the advertisement can be played. The higher the rate of advertisement, the more the process becomes expensive and vice versa.
• Product substitutability: Products that are easily substituted such as beer and cigarettes require bigger advertising budgets.

Specific advertising message

Advertising is dependent on the message put across to the consumers but mostly on how it is said. When the message is wrongly placed, the impacts of the advertisement are not decisive. For this reason, many companies usually seek experienced sponsors and have the skills to perform this task.

The sales promotion strategy to consumers

For a company like DHL, it is important to use this form of advertising because it enables the company to capture instant users of its services who seek low-priced services and premiums even though such customers are not loyal to the company. Such an activity forces consumers to buy commodities in bulk, hence increasing the sales of the company. Sales promotions challenge consumers to try new services which are on offer in the market.

It is important to note that, sales promotions do not target loyal brand buyers because they do not change their patterns of buying, for the reasons of sales promotions. Research has shown that sales promotions do not alter the total category of buying volume. For example, a study conducted on 1,000 promotions revealed that only 16% were positive on the build-up of total category volume.

Research Methodology

This paper used both primary and secondary data to come up with various perspectives of different authors. Journals and books related to customer relations were visited on the internet and in the library and a compilation of the findings was given.

According to many advertising types of research, men and women have different affective and cognitive needs (Brunel and Michelle, 2003). Researches indicate that men’s cognitive needs are higher than those of women and also women exhibit higher needs for emotions than men. These differences are not normally considered when companies decide to use online marketing. From a theoretical perspective, men exhibit higher cognition character that leads them to be critical when making judgments depending on the nature of a message (Brunel and Michelle, 2003). As a result of this nature, men will tend to critically judge an advert and most likely ignore emotions that are created by the advertisement. According to Brunel and Michelle (2003) “the traditional advertising models, such as the attention, interest, desire, action (AIDA) concept, rely on the premise that “advertising is something done to consumers rather than something consumers interact with”. This determines how the advertisement is considered by the audience. Using this traditional advertising model cognition involved determining someone’s knowledge and therefore a company could determine the needs of a consumer easily. The traditional advertising models also considered conation details which depended on the behaviors of the audiences, with these companies were also able to know what they could do to market their services. The use of the internet requires a certain amount of cognition, judgment, and awareness for one to decide whether or not to take an action (Sheppard, Hartwick, & Warshaw, 2008).

Further studies found out that women tend to respond higher to non-verbal stimuli, imagery interpretation, and descriptions than men do. According to wood (2006) “women also tend to be more attentive and therefore ask more questions, this leads to them exhibiting an in-depth analysis of information.” These differences determine how the internet message will be perceived in the case of online advertising (Wood 2006).

The online market creates a two-way communication process which is not possible in other advertising media services. This makes it have better communication tools than other advertising media services (Miller, 2005). Through a company website, information on brand building can be communicated, and also a good marketing relationship is built. A website is an opportunity for consumers to interact with the brand and this helps them to determine the good or bad of a commodity. This cannot be possible when using traditional media advertising. Pavlik (2008) supporting this idea noted that “advertisers adjust to a new medium that is not bound by either space or time and that can involve and engage the consumer.”

Online marketing is considered to be less expensive when compared to traditional media advertising methods. This is so because the ratio of the cost of online advertisement to the reach target is high. According to Guiltinan (2006), “Companies can reach a wide audience for a small fraction of traditional advertising budgets.” Internet resource provides consumers with the opportunity carry out research, purchase commodities, and services at a very convenient way. In this case, the cost-volume-profit analysis which is the main goal of marketing is well arrived at. It is also possible to measure the statistics of online marketing in a very cheap way. This is not possible while using billboards advertisements. Traditional media marketing is associated with the use of expensive means such as billboards, newspapers, and even traveling. This differs from online marketing in that, marketers are just required to post details of their commodities on the websites and the targeted audience can have the opportunity to see the details of these commodities (Brunel and Michelle, 2003).

Due to being exposed, rates of response, and the level of effectiveness, it is quite easy to track when compared with the traditional media this is possible by the use of web analytics, an example of this is how Internet marketing can provide greater accountability to the consumers. Marketers together with clients are thus conscious of the necessity to determine the combined effects of marketing. The impacts of multi-channel marketing can be had to evaluate, even though they help in ascertaining the cost of media campaigns (Korgaonkar, and Wolin 1999).

According to Palanisamy (2005) “online marketers can determine what messages or offerings are appealing to the audience.” The outcome of campaigns are easily determined and tracked instantly as online marketing initiatives normally require customers to click on an advertisement, look at a website, and therefore access the required information

An advertising website can provide an opportunity to consumers of a commodity to interact with it, therefore, making the consumers develop positive attitudes towards the commodity. This contributes so much to the feeling by a company that the brand is liked. Palanisamy (2005) noted that “Researchers also find a positive correlation between brand attitude and time spent on a Web site”. As a result, companies have recognized the need to establish interactive sites which will provide numerous opportunities to ensure that consumer engagement with their services is achieved. Research conducted in the United States by Forrester Research in 2005 found out online retail sales were expected to increase by 11 percent, to a total of 156 billion US dollars (Bruner and Annand, 2000). Bruner and Annand, (2000) also assert that “it was only those companies which will adopt a strong branding strategy that can coup with the retail marketplace which is very competitive.” Haugtvedt, Petty, and Cacioppo (2002) noted that “even in a difficult economic climate, interactive media continues to consume a larger piece of the overall advertising pie, which reflects the ongoing secular shift from traditional to online media”.

Another major advantage associated with internet marketing is that companies can connect and easily reach the target audience. Forrester Research (2005) used the example of a group of consumers who were college students. The target population for the consumption of commodity Y was those college students. These students have access to the internet and their interactivity was very high. The students were provided a good market for commodity Y because their interaction rate was very high and the online advertisement which was used for the commodity engaged and entertained them (Korgaonkar, and Wolin 1999).

Discussion

Factors influencing customer relationship management

• Impacts of the modern technology internet marketing

The modern advancement of the technology industry especially the telecommunications sector has had a positive response to the trend of online marketing and advertisement (Bruner and Anand 2000). This has created an opportunity for many industries to shift from the old online advertising that used simple ads to the use of rich multi-media experience. The result of this paradigm shift is that companies are provided with the chance to ensure effective engagement and management of advertising companies that will lead to influencing customers to develop tastes and feelings towards certain commodities or services (Bruner and Anand 2000). An example of the technological advancement that is leading to the increase of online advertising is the use of broadband.

The use of broadband in America is growing; by the year 2005, most of the residences in America had adopted broadband technology. The trend continued until the year 2008 when close to ninety percent of the American homes had adopted this technology (Chekitan and Schultz 2005). According to a study conducted by Nielsen in 2008, the number of citizens who were able to use and access the internet in the United States was 220,141,969. From this total, more than one hundred and ninety-nine people used broadband technology (Chekitan and Schultz 2005). These people are therefore able to see advertisements posted on companies’ websites any time they open their computers. Through the use of rich multimedia content, the online advertisement will lead to creating fuzzy feelings which can be liked by the audience (Fiore and Shawn 2001).

The result of this technological advancement has enabled many banks to use online services in the United States (Gray 1999). This has been much successful because many people now prefer to use this system since it is easier instead of going to the bank’s branches to seek these services. Statistics of the study conducted by Nielsen (2008) found that there are close to one hundred and fifty million adults in the United States who use online banking. This growth is attributed to the high rates of internet connectivity in America due to the use of broadband technology. The study also found out that forty-four percent of internet users can access bank services online (Hoffman and Novak, 34).

Another business that is growing as a result of the use of broadband technology is the use of internet auctions (Korgaonkar and Wolin 1999). Some commodities which were traditionally found in flea markets only can now be sold through internet auction websites like eBay. The use of e-stores to sell many commodities has as well increased in the United States, commodities like, clothing, gadgets and move props are currently sold through such stores. Pavlik (2008) asserts that “through the websites like eBay sellers and buyers can access the prices of commodities; this enables them to determine the prices without going to the flea market which would provide the same prices.” This ensures that vendors in the flea market post the prices of their commodities on the advertising websites while at the same time they run their businesses at the business premises (Korgaonkar and Wolin 1999).

The trend of online advertising in the United States has developed at a high speed to make it worth many billion United States dollars per annum. Price water house coppers (2006) established that 16.9 billion US dollars are used in the process of internet marketing (Kotler and Keller 2009). Internet marketing has also been used in the political arena in the United States; the 2008 campaigns employed this method whereby the Presidential aspirants used it to communicate their objectives to their constituents. Even President Barrack Obama himself was able to raise more than one million US dollars to be used in the Democratic candidature campaign through online dollars (Kotler and Keller 2009).

Another notable industry that is using online marketing is the tourism sector. The marketing of museums in the United States is done online to engage many audiences in this sector. The improvement in technology has enabled museums to market digital projects online (Andereasen 2005).

• Article marketing

According to Palanisamy (2005) “this is the form of advertising whereby short articles regarding a company business are written and then these articles are then easily made available through distribution to the marketplace.” These articles contain references and other useful information regarding a business, for instance, products or services, contacts, and business location (Palanisamy 2005). Currently, article marketing has been able to be done online due to technological advancement. Traditionally, this method was used as a media but currently, online advertisers have made these articles accessible via the internet (Palanisamy 2005).

The use of Web 2.0 has made online marketing of articles to become popular. Information can be transmitted through the viral propagation of business articles by the use of social networks websites like Linkedin and Facebook (Kotler and Keller 2009). The use of search engine optimization has also made it possible to market business articles. This technology determines how web pages are arranged depending on the keywords that are typed in search engines. In this case, the web page that is ranked high will be more likely visited by many visitors. Many internet advertisers rank business articles high; this implies that they are easily accessible to many people due to traffic and the result is that more sales are expected (Kotler and Keller 2009).

Search engine optimization ensures that business articles are distributed in the bio box of a business website, this results in the creation of more links to the same website. This effort makes such websites ranked high. This trend has increased recently and has resulted in many articles being written specifically for search engine optimization.

Factors limiting customer relationship management

• Security concerns

Many people who use a commodity or a service are very much interested in the privacy of personal information. Many consumers today fear buying commodities or services online because of the fear that their personal information might be exposed. Some companies which do online business have recently been found exposing and even selling information of their customers (Korgaonkar and Wolin, 1999). Most of these companies tell the audience who visit their website that the customer information is confidential. These companies tell their customers that, their information is never stored in the customer database but this information can still be sold to other companies or be shared among companies. However, most of the consumers may not be in a position to know if their personal information is shared and they, therefore, cannot stop this action (Sheppard, Hartwick, & Warshaw, 2008). Another concern that affects consumers when transacting online is if they will be served exactly what they intended to buy. Many companies have tried to provide their customers with solutions such as using strong consumer brands like Amazon.com and eBay to create confidence in their customers that they will get what they required. Additionally, companies address this problem by rating their service delivery to determine whether or not they provide customer satisfaction. Some companies assure security to their consumers by providing effective money transfer options like PayPal and the use of credit cards (Korgaonkar and Wolin 1999).

From a different perspective, even companies fear to do their businesses online because they fear exposing their secret information to the public and even competitors (Pavlik 2008). Some companies fear that in the process of marketing, they might display private information to competitors and therefore fear that this might affect their functioning. This leads to such companies providing only some of the information which may not be enough for the customers (Pavlik 2008).

• Technological limitations

The use of internet marketing requires the application of modern technology to ensure that it is effective. One major limitation is the internet connectivity speed. The traditional system was characterized by low internet speed that created a barrier in the transfer of information (Kotler and Keller 2009). Companies whose websites are complicated create problems for their consumers who use dial-up connections or low internet speed, this creates delay. This implies that only the consumers who have high internet speed can be reached by this marketing method. Such companies should therefore target only the consumer who can access their website.

• Literacy levels

Companies that use online marketing need to consider that not every consumer of a commodity or a service can use the internet. Internet is a very effective medium for online marketing. However, many people especially in the developing world do not even know what computers are. The use of online advertising for such people would therefore be irrelevant despite the advantages that are associated with online marketing. Companies should therefore decide on a better method of advertisement of services to reach such people who can be potential consumers of a commodity or a service (Kotler and Keller 2009).

Sales promotion strategy to trade channel members

Many countries usually organize their promotions in international markets similar to those of their local or domestic structures. The international sales force can be organized by firms within a certain country along geographical borderlines. When determining the international sales force, a company should consider the following: expatriates, third-country nationals and, the nationals of the host country.

The technology used to market the product or service

One of the best examples of technology that is used in marketing is viral marketing. According to Hoffman & Novak, (2006) “Viral marketing is the use of pre-existing social networks such as facebook to offer awareness of the brand and that this is a type of network marketing strategy that enhances the use of the Internet and thus enables a company to reach a wide range of consumers.” With this type of technology in use, it will increase the sales of DHL in the United States and Australian markets.

Seeding is another form of technology used to market products or services, and this is done through the Internet. Many options have been used while seeding on the Internet and they are:

• Blogs
• E-mail
• Online forums
• Podcasts

Conclusion

The modern advancement of the technology industry has led to the advancement of customer relations practices and provided several options which companies can choose from when considering the most appropriate technology for them. Companies are provided with the chance to ensure effective engagement and management of advertising companies that will lead to influencing customers to develop tastes and feelings towards certain commodities or services

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