CRM in Retail - customer relationship, customer relationship management, customer data, customer database, customer preference, marketing activities, customer contacts, transactions, information, market basket analysis, retail analytics, target customers, Customer lifetime value, Customer pyramid, platinum segment, gold segment, iron segment, lead segment, RFM Analysis, Customer Retention Approaches, Frequent Shopper
Program, Special Customer Service, Personalization, Community CRM in Retail - customer relationship, customer relationship management, customer data, customer database, customer preference, marketing activities, customer contacts, transactions, information, market basket analysis, retail analytics, target customers, Customer lifetime value, Customer pyramid, platinum segment, gold segment, iron segment, lead segment, RFM Analysis, Customer Retention Approaches, Frequent Shopper Program, Special Customer Service, Personalization, Community
RecommendedAbstract Maintaining customer relationships has been identified as a primary and enduring problem for small firms. Database marketing, often touted as a means to improve customer relationships, is scarce in small firms. This paper examines relationship marketing, database, retail and small business literature to determine the appropriateness of a database-oriented marketing approach for small retail firms. This review concludes that small retail firms may benefit from the adoption of a database-oriented relationship marketing program, but that the firm must carefully consider its customer orientation, consumption norms in its sector, financial capabilities, and managerial resources and attitudes, before adopting such an approach. Journal Information The Journal of Marketing Theory and Practice is devoted to the publication of peer-reviewed articles addressing substantive, managerial issues in marketing. In the context of developing, enhancing, and disseminating marketing knowledge, JMTP publishes both conceptual and empirical work, so long as the work provides strong implications for the managerial practice of marketing. Unlike other marketing journals that may be more focused on specific methodological approaches, deal with theoretical issues without regard to application, or represent various subfields of marketing, JMTP is positioned as a general marketing journal affording a quality outlet for more managerially-oriented research across the scope of the field. Publisher Information Building on two centuries' experience, Taylor & Francis has grown rapidlyover the last two decades to become a leading international academic publisher.The Group publishes over 800 journals and over 1,800 new books each year, coveringa wide variety of subject areas and incorporating the journal imprints of Routledge,Carfax, Spon Press, Psychology Press, Martin Dunitz, and Taylor & Francis.Taylor & Francis is fully committed to the publication and dissemination of scholarly information of the highest quality, and today this remains the primary goal. Rights & Usage This item is part of a JSTOR
Collection. customer relationship management (CRM) a business philosophy and set of strategies, programs, and systems that focuses on identifying and building relationships with a retailer's best valued customer percentage of the customers purchases made from the retailer objective of CRM is to... develop loyalty and repeat purchase behavior among a retailers best customers customers are committed to purchasing merchandise and services from the retailer and will resist the activities of competitors attempting to attract their patronage 1. collecting customer data 2. analyzing customer data and identifying target customers 3. developing CRM through frequent-shopper programs 4. implementing CRM programs first step in the CRM process construct a customer database customer database should contain the following info: transactions customer contacts customer preferences descriptive information five approaches to overcome problems of identifying information 1. ask customers for identifying info 2. connect internet and store purchasing data 3. offer frequent shopper programs 4. use biometrics to identify customers 5. place RFID chips on merchandise frequent shopper programs (loyalty programs) programs that identify and provide rewards to customers who patronize a retailer measuring human characteristics such as a fingerprint, etc the degree to which consumers feel they privacy has been violated depends on: 1. their control over their personal information when engaging in marketplace 2. their knowledge about the collection and use of personal info` small files stored on a customer's computer that identify customers when they return to a website EU perspective that customers own their personal info and most opt in or agree to share it US consumers must tell retailers not to use their information second step in CRM process analyze consumer data and identifying target customers two objectives for analyzing the customer database: 1. identifying the retailers best customers 2. using analytical methods to improve decisions made by retail managers customer lifetime value (CLV) the value of a customer, the expected contribution from the customer to the retailer's profits over the entire relationship with the retailer a method often used in catalog and internet channels to determine customer segments that a retailer should target for promotion or catalog mailing how recently, how frequently and how much money they have spent applications of statistical techniques and models that seek to improve retail decisions through analyses of customer data an information processing method that relies on search techniques to discover new insights into the buying patterns of customers, using large databases the data mining tools determine which products appear in the market basket that a customer purchases during a single shopping trip third step in CRM process: developing CRM through frequent-shopper programs two objectives of frequent shopper programs 1. to build a customer database that links customer data to their transactions 2. to encourage repeat purchase behavior and loyalty To move frequnet-shopper programs beyond simple data collection and short term sales effects, retailers might: 1. create tiered rewards 2. treat frequent shoppers as VIPS 3. incorporate charitable activities 4. offer choices 5. reward all transactions 6. make the program transparent and simple 80% of sales or profits come from 20% of the customers top 25% CLVs most profitable and loyal customers second highest quartile, buy a significant amount of merchandise from the retailer but they are not
as loyal as the platinum customers and patronize some of the retailers competition customers in this quartile purchase a modest amount of merchandise, but their spending levels, loyalty and profitability are not substantial enough for special treatment customers with the lowest CLVs, can make a negative
contribution to the firm's income two approaches that retailers use to retain customers and increase the share of wallet personalization and community developing retail programs for small groups or individual customers, many small local retailers practice 1 to 1 a group of customers who are bound together by their loyalty to a retailer and the activities the retail sponsors and undertakes involves offering and selling more products and services to existing customers to increase the retailer's share of wallet with these customers the process by which a retailer attempts to offer the appropriate quantity of the right merchandise, in the right place, and at the right time so that it can meet the company's financial goals highest classification level second level in the merchandise classification scheme departments are managed by divisional merchandise managers (DMM) third level for categorizing merchandise and organizing merchandise management activities, group of items targeting the same customer type smallest unit available for inventory control an assortment of items that customers see as substitutes for one another approach to managing merchandise assigns one buyer or category manager to oversee all merchandising activities for the entire category vendor, works with the retailer to develop a better understanding of customer shopping behaviors, create assortments that satisfy consumer needs, and improve the profitability of the merchandise category financial ratio that assesses a buyer's contribution to ROA is gross margin return on inventory gross margin/average inventory at cost (1-gross margin percentage) x sales to stock two paths to achieving high GMROI: gross margin and inventory turnover to improve the inventory turnover, buyers can... either reduce the level of inventory or increase sales approaches to increase inventory turnover 1. reduce number of SKUs within a category 2. reduce backup for each SKU 3. buy merchandise more often but in smaller quantities 4. increase sales and not increase inventory proportionally approaches to increase gross margin: 1. increasing prices 2. reduce COGS 3. reduce customer discounts when attempting to increase GMROI, buyers need to strike a balance to determine... appropriate levels of inventory turnover and gross margins merchandise planning process 1. forecast category sales 2. develop an assortment plan 3. determine appropriate inventory level and product availability 4. develop a plan for managing inventory 5. allocate merchandise for stores 6. buy merchandise 7. monitor and evaluate performance and make adjustments staple merchandise (basic merchandise) categories in continuous demand over an extended period of time continuously monitoring merchandise sales and generating replacement orders, often automatically, when inventory levels drop below predetermined levels in demand only for a relatively short period of time consist of items whose sales fluctuate dramatically depending on the time of year forecasting staple merchandise: 1. use of historical sales 2. adjustments for controllable and uncontrollable factors forecasting fashion merchandise categories: 1. previous sales data 2. market research 3. fashion trend services 4. vendors an unstructured personal interview in which the interviews uses extensive probing to get individual respondents to talk in detail about a subject a small group of respondents interviewed by a moderator using a loosely structured format the set of SKUs that a retailer will offer in a merchandise category in each of its stores and from the website number of different merchandising subcategories offered number of SKUs within a subcategory process of determining the variety and assortment for a category when editing the assortment, the buyer considers the following factors: 1. the firm's retail strategy 2. the effect of assortments on GMROI 3. the complementarities among categories 4. the effects of assortments on buying behavior 5. the physical characteristics of the store stocking out of a specific size or color SKU SKU rationalization programs objective is to increase inventory turnover by reducing the number of SKUs without reducing sales number of each SKU in the assortment plan that the buyer wants to have available for purchase in each store product availability (level of support or service) percentage of the demand for a particular SKU that is satisfied cycle stock or base stock inventory for which the level goes up and down due to the replenishment process amount of time between the recognition that an order needs to be placed and the point at which the merchandise arrives in the store and is ready for sale percentage of SKUs received complete on a particular order amount of inventory below which the quantity available should not go of the items ill be out of stock before the next order arrives specifies the amount of merchandise in dollars (not units) that needs to be delivered during each month, based on sales forecast, the planned discounts to employees and customers, and the level of inventory needed to support the sales and achieve the desired GMROI objectives three types of analyses related to the monitoring and adjustment step: sell through analysis ABC analysis of assortments multi-attribute analysis of vendors compares actual and planned sales to determine whether price reductions (markdowns) are required identifies the performance of individual SKUs in the assortment plan uses a weighted average score for each vendor
the ratio of what customers receive (the perceived benefit of the products and services offered by the retailer) to what they have to pay for it high/low pricing strategy discount the initial prices for merchandise through sales promotions everyday low pricing (EDLP) strategy emphasizes the continuity of retail prices at a level somewhere between the regular non sale price and the deep-discount sale price of high/low retailers to reinforce EDLP strategy, guarantees customers that the retailer will have the lowest price in a market for products it sells advantages of high/low pricing -increases profits -creates excitement -sells slow moving merchandise -assures customers of low prices -reduces advertising and operating expenses -reduces stock outs and improves inventory management 4 factors retailers consider in setting retail prices 1. the price sensitivity of customers 2. the cost of the merchandise 3. competition 4. legal constraints measure of price sensitivity % change in quantity sold/% change in price (price elasticity X cost)/(price elasticity + 1) practice of adjusting prices up or down in response to demand to control the sales generated cost of merchandise + markup difference between the retail price and the cost of an item retail selling price initially set for the merchandise minus its costs actual sales realized for the merchandise minus its costs (MMU - workroom costs + cash discounts)/net sales (MMU + reductions)/(100% + reductions) break-even point quantity quantity at which total revenue equals total cost, and then profit occurs for additional sales total fixed costs / (actual unit sales price - unit variable cost) first-degree price discrimination charging each individual customer a different price based on their willingness to pay dynamic (individualized) pricing process of charging different prices for goods or services based on the type of customer, time of the day, week or even season, and level of demand second degree price discrimination offer the same multiple-price schedule to all customers, which encourages price-sensitive customers to take advantage of the lower price examples of second degree promotional markdowns clearance markdowns coupons price bundling multiple unit pricing offer a discount on the price of the specific items when they're purchased the practice of offering two or more different products or services for sale at one price multiple-unit pricing (quantity discounts) practice of offering two or more similar products or services for sale at one lower total price third degree price discrimination retailers often charge different prices to different demographic market segments practice of charging different prices in different stores, markets, regions or zones the practice of pricing certain items lower than normal to increase customers' traffic flow or boost sales of complementary products offer a limited number of predetermined price points within a merchandise category referas to the practice of using a price that ends in an odd number, typically 9 legal and ethical pricing issues 1. predatory pricing 2. resale price maintenance 3. horizontal price fixing 4. bait-and-switch tactics 5. scanned versus posted prices, and deceptive reference prices arises when a dominant retailer sets prices below its costs to drive competitive retailers out of business involves agreements between retailers that are in direct competition with each other to set the same prices an unlawful, deceptive practice that lures customers into a store by advertising a product at a lower than normal price (the bait) and then, once they are in the store, induces them to purchase a high priced model (the switch) a promise to customers to sell currently out-of-stock merchandise at the advertised price when it arrives price against which buyers compare the actual selling price of the product, and thus it facilitates their evaluation process three critical drivers of labor productivity are: ability, leadership, and effort identifies essential activities to be undertaken and is used to determine the qualifications of potential employees to recruit skillful or potentially skillful employees, store managers: 1. prepare a job description 2. find potential applicants 3. screen the best candidates Equal Employment Opportunity Commission (EEOC) allows employees to sue employers that violate the law affects the degree to which newcomers become involved, engaged contributors to the firm's successful performance 1. implement the retailer's strategy 2. build loyalty by providing a rewarding shopping experience 3. increase sales on a visit 4. control costs 5. meet legal requirements enables customers to locate and purchase products in an efficient and timely manner with minimum hassle offering customers an entertaining and enjoyable shopping experience three elements in design of stores layout signage and feature areas grid racetrack and free form parallel aisles with merchandise on shelves on both sides of the aisles, cash registers are located at the
entrances/exits of the stores loop, provides a major aisle that loops around the store to guide customer traffic around different departments within the store, POS terminals are typically located in each department bordering the track free-form or boutique layout arranges fixtures and aisles in asymmetric pattern, provides an intimate relaxing environment that facilitates shopping and browsing call-to-action, category, promotional, point-of-sale areas within a store that are designed to get
customers attention fixtures located on aisles and designed primarily to attract customer's attention and bring them into a department displays located at end of aisles in stores using grid layout promotional aisle or promotional area space used to display merchandise that is being promoted space management involves these key resource decisions: 1. allocation of store space to merchandise categories and brands 2. the location of the departments or merchandise categories and brands 3. the size of the store factors to consider when deciding how much floor or shelf space to allocate: 1. productivity of the allocated space 2. merchandise's inventory turnover 3. impact on overall sales 4. display needs for the merchandise demand/destination merchandise products that customers have decided to buy before entering a store diagram that shows how or where specific SKUs should be placed on retail shelves or displays to increase customer purchases design of an environment by stimulation of the five senses to create good atmosphere: lighting, colors, music, scent, and even flavors What is the ultimate objective of CRM programs quizlet?The objective of the CRM process is to develop loyalty and repeat purchase behavior among a retailer's best customers.
Which statement is true of a tiered frequent shopper reward structure?Which of the following statements is true of a tiered reward structure? It provides an incentive for customers to consolidate their purchases with one retailer to reach the higher tiers.
What is the primary objective of CRM process quizlet?The objective of the CRM process is to: develop loyalty and repeat-purchase behavior.
Which of the following statements about loyal customers is true?Which of the following statements about customer loyalty is true? Customer loyalty stems from an organization's ongoing efforts to meet and exceed customer expectations.
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From the retailers perspective frequent shopper programs offer the following benefits
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