Customer Relationship Management 1
The Role of Customer Relationship Management and Marketing:
An Evaluative Study of Significant Factors on Organizational
Performance, Market Share and Profitability
Abstract
In the present day complex and competitive business environment, retaining
valuable customers has become a challenge to any organization. There has been
tremendous increase in the knowledge, expectations and preferences of
customers, which has made the building of a sustained relationship with
customers an absolute necessity for organizations to know the needs and
preferences of the customers and react swiftly to meet them. In this context, the
concept of Customer Relationship Management (CRM) has assumed a significant
position in building and sustaining relationship with the customers to ensure
continued business growth. The objective of this study is to review the strategic
nature of CRM and its contribution to the overall organizational objectives of
increasing market share and improving profitability. The study used a mixed
research method of a qualitative case study of Vestia Readymade Garment
Company, Egypt and a quantitative questionnaire survey among the customers of
the Company to look into the areas where the company has to strengthen its
efforts so that it can introduce effective CRM initiatives for capturing the lost
market share and improve upon it. Based on a strategic analysis of the
functioning of the Company, the study has made several recommendations to
prepare the organization for a successful implementation of CRM strategies.
Customer Relationship Management 2
Table of Contents
Abstract ........................................................................................................................................... 1
Chapter 1 Introduction .................................................................................................................... 4
1.1 Marketing Function – an Overview ...................................................................................... 5
1.2 Customer Relationship Management – a Background Note ................................................. 7
1.3 Aims and Objectives ............................................................................................................. 9
1.4 Rationale ............................................................................................................................. 10
1.5 Method ................................................................................................................................ 11
1.6 Structure of the Dissertation ............................................................................................... 11
Chapter 2 Literature Review ......................................................................................................... 12
2.1 CRM – An Overview .......................................................................................................... 12
2.2 Main Thrusts of CRM ......................................................................................................... 15
2.2.1 Enhancing Customer Value and Organisational Performance..................................... 15
2.2.2 Continuity of Transaction Process with Customers ..................................................... 16
2.3 Process of Customer Relationship Building ....................................................................... 19
2.4 Customer Relationship for an Industry Supplier ................................................................ 20
2.5 Customer Relationship and Consumer Behavior ................................................................ 22
2.6 The Rise of Social Media in CRM ...................................................................................... 23
2.6.1 Changes in CRM "The Rise of Social Media" ............................................................. 24
2.6.2 Importance of Social Media for CRM ......................................................................... 25
2.6.3 Challenges for new product launches .......................................................................... 27
2.6.4 Distinguishing Features of Social Relationship Management ..................................... 27
2.6.5 Why CRM needs to change ......................................................................................... 28
Chapter 3 Research Methodology................................................................................................. 30
3.1 Introduction ......................................................................................................................... 30
3.2 Characteristics of the Research ........................................................................................... 30
3.3 Research Approach ............................................................................................................. 31
3.4 Research Strategy................................................................................................................ 31
3.5 Sources of Data ................................................................................................................... 32
3.5.1 Primary Data ................................................................................................................ 32
3.5.2 Secondary Data ............................................................................................................ 33
3.6 Research Methods ............................................................................................................... 33
3.6.1 Qualitative Method ...................................................................................................... 34
3.6.2 Features of Qualitative Research Method .................................................................... 34
3.6.3 Quantitative Method .................................................................................................... 36
3.7 Case Study .......................................................................................................................... 37
3.8 Survey ................................................................................................................................. 38
3.9 Summary ............................................................................................................................. 39
Customer Relationship Management 3
Chapter 4 Case Study and Survey ................................................................................................. 40
4.1 Introduction ......................................................................................................................... 40
4.2 Vestia – An Overview ......................................................................................................... 40
4.2.1 Relationship with Stakeholders.................................................................................... 42
4.2.2 Strategic Analysis ........................................................................................................ 44
4.2.3 Environmental Scan ..................................................................................................... 46
4.2.4 Resources Analysis ...................................................................................................... 55
4.2.5 Conclusion on Strategic Analysis ................................................................................ 66
4.3 Analysis of the Findings from Market Survey.................................................................... 67
Chapter 5 Conclusion and Recommendations .............................................................................. 73
5.1 Conclusion .......................................................................................................................... 73
5.2 Recommendations ............................................................................................................... 75
References ..................................................................................................................................... 82
Appendix – Questionnaire ............................................................................................................ 86
Customer Relationship Management 4
Chapter 1 Introduction
“The concept of marketing is the exchange process in which two or more parties give something
of value to each other to satisfy perceived needs.” (Kurtz, 2008) People exchange money for
goods or services depending on their needs and preferences. The services may be both tangible
as well as intangible and exchange of money can take place in return for a combination of goods
and services. Although marketing has always been regarded as a part of business, the importance
of marketing has varied through time and the history of marketing has passed through,
production era, sales era, marketing era and finally relationship era. After the periods of Great
Depression and World War II the marketing era emerged during which there had been a shift in
the focus from products and sales towards satisfying customer needs.
The shift from the seller’s market to buyer’s market created the need for consumer orientation by
the businesses. The need for the companies to market their products and services increased and
this brought changes in the marketing concepts. Marketing assumed a conceptual base in which a
company-wide customer orientation to achieve a long-term success of the business became the
primary element (Kurtz, 2008).
The objective of marketing strategies has undergone major changes in the last decades towards
building the commitment of the customer towards a brand or a dealer. The development has
taken the forms of (i) creating customer satisfaction through the delivery of superior quality
products and services, (ii) building brand equity, which is facilitated by factors like perceive
quality, brand loyalty, association of the customer towards the brand, trademarks, packaging and
convenience of distribution channels, and (iii) creating and maintaining relationships. Of these
three forms, most of the present day businesses pursue customer satisfaction by delivering
Customer Relationship Management 5
quality products and services, and creating and maintaining customer relationships as the most
important marketing strategies.
In this context, the concept of Customer Relationship Management (CRM) has assumed great
significance during the recent period. The concept of ‘customer management’ covers handling
the customer relationships from the entire organizational point of view. This calls for the
establishment and maintenance of customer relationship at all points of time during the entire the
product lifecycle. The relationship starts from the point at which the customer floats an enquiry
for the product or service until such time the product or service is delivered to the customer and
even beyond to provide after sales service and support. It is essential that the relationship be
maintained at all stages of sales including the extension of service to the product already sold.
Based on this theoretical premise, this study analyses the role of customer relationship
management and marketing in enhancing the organizational performance, market share and
profitability through an evaluative case study.
1.1 Marketing Function – an Overview
Alderson (1957 cited in Brassington & Pettitt, (2003, p 5) defines marketing as an exchange
process between an organization and the consumers of its products or services. Successful
marketing is in fact a complex process. Brassington & Pettitt, (2003, p 3) state that marketing
covers a wide range of absolutely essential business activities which bring the product one wants,
at the time the product is needed and at the price that one can afford containing all the
information that one needs to make informed and satisfying consumer choices. A simple
marketing model promoted by Kotler & Armstrong, (2000) describes marketing as the exchange
of goods and services from one direction and money in return. Successful marketing also
involves the exchange of communication and information from seller to the prospective buyers
Customer Relationship Management 6
as an integral part. An efficient and successful advertising campaign provides the consumer, the
information about the product or brand of the company and the feedback from the consumer to
the company will provide the company an insight into the quality and success of the product or
service marketed by the company.
The marketing function varies enormously according to the nature of the business and
organization and the market, which it serves. The marketing function is responsible for the four
Ps of marketing – product, price, place and promotion. McCarthy, (1960) introduced the 4ps into
the marketing mix with the thinking that these four groups of elements will influence the demand
for the product (Baker, 2003). Although essential for the success of any business, the marketing
function need not be seen as the largest or most important function. “In fact, in a truly marketingoriented organization the need for a specialized marketing is far less than it is in a sales or
production dominated company.” (Baker, 2003, p 10)
Consumer behaviour is one of the important determinants of marketing strategies. (Blackwell et
al., (2001) define consumer behaviour as activities undertaken by people, when obtaining,
consuming and disposing of products or services (p 6). Consumer behaviour with respect to
certain product or service is analyzed to ascertain the response of the potential customers to
different advertising strategies of an organization. Analysis of consumer behaviour is undertaken
to enable the organization to create and promote unique selling point to its target audience so that
the company can achieve its marketing and advertising goals. The company must have a
thorough understanding of the consumer behaviour in order to maximize the return on its
investment on marketing and advertising.
Based on the analysis of the consumer behaviour, a firm will create and implement its marketing
strategies around those factors, which influence customer behaviour. There are a number of
Customer Relationship Management 7
factors, which influence the buying decision of the consumers. These factors include the
previous buying experience of the buyer, their current preferences, influence of environmental
factors and the impact of the marketing and advertising campaigns launched by the company.
Other demographic factors like age, occupation, educational background, personality and life
style of the consumer influence the customer’s choice. Brand loyalty represented by the
preconceived thoughts about the quality and functionality of the products or services also has
influence on the buying decisions of the consumers. Kotler, (2006) identifies culture as one of
the most important and fundamental determinants of the consumer choices (p. 124), where
culture embodies the norms, beliefs, artefacts and customs that society provides to an individual
and which constitute the value of the society (Fill, 2002, p. 83).
1.2 Customer Relationship Management – a Background Note
Rapid development in the field of information and communication technology (ICT),
particularly, the proliferation of Internet has enabled business organizations to choose the ways
in which they could communicate with their customers. When found essential the companies are
able to build effective customer relationships through the Web, which previously the companies
have been accomplishing in a complex way. The ability of the companies to respond swiftly and
directly to the customer needs and preferences and to enable the customers experience a highly
interactive and personalized service, the companies presently are in a position to build, nurture
and maintain continued customer relationships than ever before. The ability to use the online
presence has enabled companies support the personal interactions with the customers developed
through the sales force, customer service representatives and operators engaged in call centers.
Internet and various ICT applications have increased the opportunities for the companies to offer
Customer Relationship Management 8
services to their customers at reduced costs and in some cases offer achieve difference levels of
quality in service delivery by allowing only electronic contact.
This ICT based development in customer relationship management or CRM as it is known as,
has assumed a significant role in the realm of marketing. Major companies operating on a global
basis have adopted the concept of CRM as their major marketing strategy. There has been a
considerable change in the way in which marketing is viewed with the increased need to
understand customers’ need and preferences and managers are made to focus on those customers
who have the potential to ensure long-term profitability to the companies. The traditional market
approach called for the training of the marketers to attract customers, either new or those who are
currently the customers of the competitors. This approach required large volume of mass
advertising and sales promotions with heavy discounts offered to customers and channel
members. Presently the marketing concept has changed from customer acquisition to retention,
requiring a different mindset and a different and new set of marketing tools and techniques.
Reichheld & Teal (2001) created the base for the development of CRM initiatives, where his
study showed tremendous increase in profits, when the firm was able to increase the customer
retention rates marginally. For example, his studies showed that with an increase of as little as a
5% in customer retention could result in a higher net present value delivered by customers in the
business of advertising agencies to the extent of as high as 95% and at a lower level to the extent
of 35% in firms doing computer software business.
There are other studies like the one
undertaken by McKinsey have proved that retaining customers would enable the firms to double
their gross income than acquiring new customers. The rapid development in ICT and innovative
CRM-related products has made it easier for the companies to have an effective customer
Customer Relationship Management 9
relationship management and enhance their profitability by carefully monitoring the customer
relationships.
However, there is a problem with CRM in that it implies different things to different people.
Some of the businesses can accomplish CRM through direct e-mails. For some other businesses,
CRM is mass customization or customer relationship is maintained by developing products,
which meet the specialized needs of the individual customers. CRM is viewed from a difference
perspective by the firms in information technology (IT) sector, where CRM is translated into
complicated technical processes and end use.
A basic CRM model consists of seven essential components to make it effective and successful.
The components of CRM are (i) a comprehensive database of customer activities and
preferences, (ii) critical and constructive analyses of the database, (iii) based on the analyses,
deciding on the targeted customer segment, (iv) identifying the necessary tools for targeting the
particular customer segment, (v) identifying the ways in which relationships can be established
with the targeted customers, (vi) security and privacy issues and (vii) installing and using
appropriate metrics for measuring the success of the CRM initiatives.
The central focus of this study is to provide an end-to-end view of the CRM process from
managerially useful and effective marketing perspective. The study revolves around the things
the managers need to know about their customers and the ways in which such information can be
used to develop a complete CRM perspective.
1.3 Aims and Objectives
The central aim of the research is to examine the role of CRM and its components in enhancing
the organizational performance by improving the customer relationship. In the process of
achieving the central aim, the research is expected to accomplish the following objectives.
Customer Relationship Management 10
1. To examine the management practices and systems with respect to customer acquisition
and retention in general and factors affecting such practices
2. To review the strategic nature of CRM and its contribution to the overall organizational
objectives of increasing market share and improving profitability
3. To study the case of Vestia Readymade Garments Company, Egypt for evaluating the
role and influence of CRM in facilitating improvements in organizational performance in
terms of market share and profitability
4. To recommend best practices in CRM based on the findings of the research and a review
of the relevant literature.
1.4 Rationale
In the present day competitive business environment, the need to establish and maintain effective
customer relationship cannot be underestimated. This is true especially in view of the
comparatively higher cost involved in acquiring new customers rather than retaining the existing
customers. Existing customers can be retained only through the provision of a higher quality
level of service, which in turn calls for understanding the needs and preferences of the customers
and reacting swiftly to the changes in customer expectations. Information and communication
technology-based CRM tools and techniques provide the necessary support to the organizations
in their endeavor for improved customer service and retention. Without an effective CRM in
place, it would be difficult for companies to improve the quality of their service delivery.
Therefore, the study of the role and importance of CRM in contributing to the improved
organizational performance becomes significant. In addition, with a number of CRM tools and
techniques available, it is important to study the different components of CRM in depth so that
Customer Relationship Management 11
companies may be able to engage the appropriate CRM tool, which will produce the desired
results.
1.5 Method
This research uses a qualitative case study research for evaluating the role and importance of
CRM in improving the organizational performance.
1.6 Structure of the Dissertation
In order to present a comprehensive research report, this dissertation is structured to have
different chapters. This chapter while introducing the subject matter of the topic lays down the
aims and objectives of the research. Chapter two presents an analytical review of the relevant
studies on CRM and its components with the objective of adding to the existing body of
knowledge on CRM and its role on organizational performance. While chapter three provides a
brief description of the research methodology, chapter four contains the case study of Vestia
Readymade Garments Company, Egypt. Chapter five concludes the report with few concluding
remarks and recommendations of best practices in CRM and areas for further research.
Customer Relationship Management 12
Chapter 2 Literature Review
The cost of acquiring new customers has found to be five times as that of retaining the existing
customers. This signifies the role and contribution of Customer Relationship Management in
improving the organizational performance in today’s complex and competitive business
environment. Customer Relationship Management (CRM) is a managerial concept, which
involves the application of latest information and communication technology tools for gathering
information on changes in customer needs and preferences so that the organization will be able
to improve the quality level of service delivery. Different functional channels like sales,
marketing, after sales service and customer care form the basis for providing the required
information for effective CRM. CRM involves the total process of capturing information from
different organizational processes such as customer order scheduling, order execution, meeting
service requirements of customers and transaction history relating to individual customers. The
central purpose of CRM is to provide necessary empowerment to the organizational members
based on the information relating to customer needs and practices. This empowerment is
expected to enable the organization render innovative, personalized and superior quality
customer service. Thus, CRM has a significant role to play in improving the organizational
performance in terms of high rate of customer retention through improved service quality. This
chapter presents a review of the relevant literature on Customer Relationship Management and
its role as a marketing strategy.
2.1 CRM – An Overview
In the beginning of 1990s, many business organizations were keen to find out the ways of
establishing and sustaining long-term relationship with their customers. The firms were also
Customer Relationship Management 13
particular in securing competitive advantage in a market, which became increasingly
competitive. In the process, the firms started to analyze the factors that influenced customer
satisfaction with the products and services offered by them. With the result, a less tangible but
more encompassing phenomenon or perception evolved, which was beyond the comprehension
of the then prevalent narrowly focused sales and marketing tools. It was found to be an attitude, a
value or a methodology, which a firm used to transact with its customers. It was the perception,
which the customer carried about the ways in which a firm operating in the marketplace deals
with its customers (Storbacka and Lehtinen, 2001).
Firms observed that improving customer satisfaction requires co-ordinating all the internal and
external organizational processes dealing with serving of the individual customers. To put simply
the phenomenon is about people and building relationships. Building up one-to-one relationship
and information flows with the individual customers enable firms not only create sustainable
competitive advantage for the firms and but also increase value for the customer (Storbacka and
Lehtinen, 2001)
Although there was a beginning towards customer-centric thinking during the 1990s, firms did
not go far enough to identify and satisfy the higher needs of a customer. This was due to the
inability of the firms to perceive all the possibilities of identifying the customer needs. This
situation was the result of the organisations performing just to meet and satisfy the current and
presumed needs and preferences of the customer.
In general, firms assumed that the customers were less innovative and more conservative in their
approach towards the acquisition of products and services. When firms adopt the concept of
marketing managed by customer satisfaction alone, it greatly limits the potential of delivering
greater value to the customer. Under such circumstances, firms that follow customer-centric
Customer Relationship Management 14
policies to fulfil perceived wishes of its customers, rather than knowing the actual preferences of
the customers, would not implement innovative ideas. This is because the firms may not feel any
pressure to acquire higher level of competence to secure competitive advantage in a marketplace
where customers have a number of choices of better alternatives from the competing firms.
In such a scenario, there is the need for a firm to think ahead of the competitors than meeting the
presumed wishes of customers. The firms in order to be competitive must strive to build and
sustain enhanced customer relationship value in each of their dealing with the customers. This
necessity is understood when firms strive to enter into collaborative and cooperative relationship;
more specifically, one-to-one relationship with the individual customer.
Greenberg (2004) states
“Customer relationship management is not about hard and software, it is about the
‘people’. Specifically, it is about sales, services, helpdesk and marketing people
sharing information about customers. Armed with more complete, timely
information, these people can make better decision and, ultimately, keep
customers coming back to buy more products. At its core, CRM is an important
business methodology that helps companies quickly align their products, services,
marketing message, and sales approach with customer needs and expectations.”
In essence, firms to be successful in their marketing efforts must be relationship-driven. Firms
can achieve this by gaining a better understanding of the aspects that will enhance customer
value and such understanding is increased with closer interaction with customers by building
intimate relationship. Hence, deploying relationship strategies, which will enable organizations,
enhance customer value and organisational performance, by creating a win-win situation is the
central focus of Customer Relationship Management (CRM).
Customer Relationship Management 15
2.2 Main Thrusts of CRM
In order to enhance customer satisfaction and to acquire and retain highest value customers,
majority of large business organizations have deployed some kind of CRM techniques (Howarh,
2003). CRM meets various inter-connected objectives, which enable organizations derive
maximum benefits from CRM practices. However, the following sections present some of the
main thrusts, which are in the purview of any CRM initiative.
2.2.1 Enhancing Customer Value and Organisational Performance
The strategy of enhancing customer value and improving organizational performance enables a
relationship-driven firm to gain a key and sustainable competitive advantage, as the firm can
operate differently from its competitors. The ability of the organization to perceive clearly, what
it can offer within the limitation of its competencies, will support the firm in its efforts to create
value for the customers. The success of customer relationship depends on the close interaction
and continuous exchange of information between the customer and the firm; the objective of
such interaction and exchange being the ability to identify mutual benefits and opportunities that
help to improve the relationship. When an organisation wants to enhance the customer value, it
has to think in the same way as the customer thinks so that the firm will be able to understand the
things, which will enhance the value for the customer and the ways in which the objectives can
be achieved. The process of establishing a close relationship between the firm and its customers
with the objective of creating value for both of them is a continuous one rather than a one-off
interaction. The synchronization of the needs of the customer and the business processes of the
organization is one of the key actions involved in the process of building customer relationships.
Customer Relationship Management 16
This collaborative action results in the creation of significant competitive advantage for both the
customer as well as for the firm (Jobber, 2001).
A relationship-driven organization is able to realize value creation once it practises the concept
of relationship management from the perspective of both the customer value and the
organisational performance. Thus, CRM encompasses a broad array of concepts ranging from
product, service, customer and production or organisation (Jobber, 2001).
2.2.2 Continuity of Transaction Process with Customers
CRM does not distinguish between pure goods or services organisation. CRM applies in the
context of both the organisation and the customer, irrespective of whether the firm supplies
goods or services or a combination of both. The central focus of CRM is to ensure the continuity
of the relationship process, in which the firm delivers something that customer, is able to use for
deriving maximum benefits and his own value generation. It is the general presumption that
value is only realised in the customer’s process and therefore, the mere delivery of physical
goods and services may not be able to create customer value. There is the need for the
relationship process to facilitate the value creation process for the customer (Jobber, 2001).
In the context of CRM, products are treated as a process for achieving the marketing objectives
of a firm. A process in CRM has more value than that of the product itself. Because of this
approach, the price differentiation and distinguishing products by features from that of the
Customer Relationship Management 17
competitors, is considered incomplete as compared to a process and therefore CRM assumes that
such practices do not reflect the true potential value that the customer will be able to realize
eventually. CRM expects the customer to receive greater net benefit in a process based exchange.
Therefore, the thrust of CRM is process differentiation rather than product differentiation. When
process becomes an integral part of the customer relationship management, firms should be able
to differentiate the entire process related to customer relationship for gaining substantial
competitive advantage. Hence, CRM enables firms to differentiate their process and build
customer relationship using different fundamental values and eventually the ability to build
relationship becomes a core competence of the organisation.
The traditional marketing practices are based on the assumption that customer derives value
though the mere exchange of products and services. However, such an assumption is the
reflection of one-time product transaction. In building a sustained customer relationship, the firm
strives to engage itself in a process of customer value creation through the process of
identification and transfer of its own competence to render valuable support to the customer in
the value generation on their own accord.
Customer Relationship Management 18
Transaction-based relationship has lost its significance. The focus now is in building competence
for the total duration of a customer relationship. In building such competence, the firm is able to
deploy its resources effectively to gain sustainable competitive advantage (Jobber, 2001).
Therefore, CRM advocates a shift from the traditional transaction-based marketing concept to
customer relationship-based thinking. CRM involves change of thinking from product promotion
to increasing competency. It has been proved that mere selling of products or services alone
cannot lead the firms to profitable business operations. There must be a process of continuous
development of competence that supports a relationship and delivery of customer value through
continued customer relationship (Jobber, 2001).
2.2.3 Creating Value for the Customer
In order that a business may remain competitive and ensure its long-term growth, it becomes
imperative that the organization go beyond meeting the currently expressed needs of the
customer or satisfying the customer by offering current value. Such offerings are typical myopic
view advocated by the traditional marketing techniques. Had the organizations remained
concerned with meeting only the current needs of the customers, innovative products like MP3,
CNN, and Blackberry would not have been invented. Therefore, organizations have to play a
proactive role in discovering customers’ unexpressed and future needs to ensure long-term
success.
Dependence on the traditional marketing techniques like obtaining feedback from the customers
and market surveys will not help organizations to uncover hidden opportunities. Collecting
feedbacks from the customer is in fact an important source of information for an organization.
However, such a technique should be considered as one of the several efforts or processes
undertaken by the company for unveiling new opportunities to provide increased value to the
Customer Relationship Management 19
customer. Customer feedback should be an element in a much wider scope of customer
relationship driven strategy of an organisation. (Jobber)
Traditional marketing techniques help organizations only to bring out the customer’s view at the
surface. When the organization is able to build sustained relationship with the customer, such
relationship enables organisation to become more familiarised with customers’ functional values
and requirements for the situation. This ability helps the organisation to make an accurate
assessment of the customer needs and create greater value for the customer. Organizations can
use this unique ability to offer future opportunities for both the organisation and customers as
one of the critical sources of competitive advantage, which the competitors do not possess.
(Jobber)
2.3 Process of Customer Relationship Building
Prior to converting its marketing approach to customer relationship-centric one, an organization
should assess the nature of its transactions and current working relationship with the customers.
The organization can accomplish this by undertaking sort of a marketing audit on the information
about the customers in possession of the organization, the contents of its marketing database,
relevant marketing knowledge and transaction histories. Information concerning these areas can
be gathered from various functional departments of the organization like sales, marketing,
project, and R&D, finance, production and service departments. The organization should ensure
that such information is readily available, collected and collated to align itself in building a
sustained customer relationship. Such an audit of the information enables the organization to go
through the process of customer selection and to formulate strategies for implementing the
customer relationship initiatives. (Robert-Phelps, 2003)
Customer Relationship Management 20
Based on the collected and collated customer information, the organization has to analyze the
probable position of individual customer towards building the relationship. While every
customer may turn out to be unique in some, many customers may have the unique characteristic
in similar ways. The organization has to proceed with segmentation of the customer base
depending on the unique characteristics possessed by the customer groups. The segmentation can
be carried out based on the current value of the segment, potential value, current behaviours, past
transaction histories and patterns in purchases carried out.
Segmentation of the customers on the above basis should provide the organisation the ability to
rank the customers based on the level of potential relationship value, which could be generated
with individual customer segments. Based on the guidance the organisation can proceed to
mobilize the necessary resources to invest in building relationship with the targeted customer
segments. The organization should ensure that there is no wastage of resources and it could
generate maximum value. The organization should also consider the fact that in some cases,
customers do not prefer to build a relationship with the suppliers and that they are keen to
bargain with everyone to get the best possible price or they do not perceive any significant and
tangible benefits to them by aligning with suppliers. (Robert-Phelps, 2003)
2.4 Customer Relationship for an Industry Supplier
Irrespective of the size and nature of business, a supplier has to depend on his customers for sales
and revenue growth. In most cases, potential benefits are likely to accrue from building a
relationship with the customer. However, the process and approach of building customer
relationship has to be undertaken based on the value that the business can derive from the
customer and different levels of relationship leads to the generation of different degrees of value.
Customer Relationship Management 21
Supplier-customer relationship in the industry-business presents a good example of significant
potential value that can be generated from the establishment of partnership. In the industrybusiness, there is an established alliance among most of the suppliers and customers, which
enable them to adapt and match their processes to each other, share information and experiences
to eliminate insecurity and uncertainty in dealing with each other. The collaboration and sharing
of information and knowhow would demonstrate their commitment in a relationship, which leads
to trust and promotion of future value and business. It is particularly imperative for an industry
supplier to follow a customer relationship-centric marketing approach. This is because most of
the value and competitive advantage are evolved through a long-term commitment of resources,
large capital outlay in research and development, and through the process of continuous
information exchange between supplier and customer (Fisk and Grove, 2000).
The marketing approach differs largely based on the nature of the business and size of the
organization and the market, which the organization serves. The development and monitoring of
product, price, place and promotion – four Ps of marketing is the ultimate responsibility of the
marketing function. McCarthy (1960) introduced the concept of 4ps into the marketing mix with
the expectation that these elements will be able to enhance the demand for the product (Baker,
2003). However apart from the four Ps there is the factor of ‘customer relationship’ which has
more say in altering the demand for the product and this fact has been realized by the firms over
the period. Although the marketing function is one of the essential functional elements for the
success of any organization, it does not assume the largest or most important position in
organizations where each of the functional areas has been trained to be customer-centric. “In
fact, in a truly marketing-oriented organization the need for a specialized marketing is far less
than it is in a sales or production dominated company.” (Baker, 2003, p 10)
Customer Relationship Management 22
2.5 Customer Relationship and Consumer Behavior
Consumer behaviour is one of the factors that determine the marketing strategies of an
organization. Blackwell et al., (2001) define consumer behaviour as “activities undertaken by
people, when obtaining, consuming and disposing of products or services” (p 6). Analysis of the
consumer behaviour is undertaken by the organization mainly to ascertain the perceptions of the
potential customers on the advertising strategies used by the organization for promoting its
products. This analysis enables the organization the creation and promotion of unique selling
points aimed at its target audience to achieve the marketing and advertising goals. The
organization will be able to realize maximum returns on its investment on marketing and
advertising by having a complete understanding of the consumer behaviour.
Depending on the analysis of the consumer behaviour, the organization can formulate and
implement different marketing strategies around the factors influencing the customer behaviour.
There are several factors, which have a lasting influence on the purchasing behaviour of the
consumers. These factors include the prior purchasing experience of the customer, the current
preferences, impact of environmental factors and the effect of the marketing and advertising
campaigns made by the company. There are other demographic factors like age, occupation and
educational qualification, personality and life style of the consumer, which have influence on the
customer’s preferences. Brand loyalty representing the perceptions of the customer about the
quality and functionality of the products or services also influence the purchasing decisions of
the consumers. Kotler, (2006) argues that culture needs to be considered as one of the most
important and fundamental determinants of the consumer preferences (p. 124), where culture
exemplifies the norms, beliefs, artefacts and customs that the society thrusts on the individual
member and which constitute the value of the society (Fill, 2002, p. 83).
Customer Relationship Management 23
Customer satisfaction levels on the quality and utility of the product or service is another
important determinant in acquiring and retaining customers. In this context, relationship
marketing is the new development in the marketing literature, which has presented a challenge to
the current marketing theories and philosophies (Kotler, 1991; Gronsroos, 2004; Gummesson,
1997). Relationship marketing is a strategy, which focuses on the moods and behaviors of the
customers so that the organization can build strong relationship with the customers. Relationship
marketing is of particular importance in the context of banking and allied financial services, as
these institutions have to build and sustain successful relationships with the customers to survive
amidst stiff competition.
2.6 The Rise of Social Media in CRM
It is inevitable to consider the topic of CRM without a careful thought of the meaning of the
world relationship. CRM signifies the concept of relationship between the customer and the
supplier. Differentiating between primary and secondary relationships literature has supported
that the relation between the customer and supplier is rather lying somewhere between the
secondary and primary in what is named a “transitional” area. In order to maintain a close
relationship between the supplier and the customer trust must mutually grow leading to more
exchange of personal resources rather than tangible resources.
The relation between people can be considered most important form of a social relationship.
Academically, the social position is defined as the position, which a person occupies in the
complexity of people interacting with one another. The Internet bridges gaps and brings people
closer, thus making it easier to create a relationship between a groups, in other words creating
online communities formed of relations between customer and suppliers.
Customer Relationship Management 24
Businesses are continuing to make use of communities on their websites to gather information
about their customers. In addition, they make a great use of the online discussions (through blogs
and boards) where customers can share with each other their opinions and help suppliers derive
necessary conclusions they might not be able to arrive at in real life.
The massiveness of industrialization and the shift from small scale to large-scale businesses it
continued to increase the distance between supplier and costumer thus making it hard to
communicate. This has increasingly led to the call for shift from one-way communication to a
two way one, which allows the customer to constantly get back to the supplier. This do not
necessarily involve increased efforts or costs, on the contrary due to the development of
information technology it was highly facilitated.
The use of Internet as a channel with the customer has made the relationship management
develop under pressure and cause prices to drop. Customers now are bridged together from all
over the world; they share their opinions and have more than one option to choose and compare
from, this is what we call transparency. This is in addition to customers’ power online; things
like auctions allowed more power to the customer at the transaction side than the supplier and
more than ever before. Companies should consider the benefits and drawbacks of the Internet
channel carefully, and to reap benefits of IT and to learn knowledge of their customers and
develop appropriately in order to be able to serve the customers better.
2.6.1 Changes in CRM "The Rise of Social Media"
A 2008 report by Forrester Research predicted that spending on Web 2.0 technologies would
grow to $4.6 billion by 2013.The general perception is that social networking tools are for young
people with time on their hands; but others see them as great tools for building relationships which is also one of the objectives of CRM systems. Indeed, organizations are pulling customers
Customer Relationship Management 25
to new community-focused Web sites, complete with contests, games and prizes galore.
Companies understand the potential of using social media tools to strengthen brand images, share
company news and connect with customers and prospects.
From the customer’s point of view, the rise of social media aids outreach. Many use blogs and
RSS feeds as a way of pushing news and soliciting honest feedback from their customers, driving
an ongoing dialog. For example Starbucks used Twitter to unveil VIA, its new line of instant
coffee. This type of insider communication is a breakthrough to consumers who crave
exclusivity, and a way to start new conversations in an environment that is less stale than the
email questionnaire or paper coupon offer.
The most customer-focused companies want to encourage conversations not only with their
customers and prospects, but also in between them. Companies are using social media to
encourage and cultivate customer communities. One goal is to lower customer support costs by
encouraging peer-to-peer support, with customers sharing product tips and fixes with each other.
Articles prove that brand management is also a key goal: Coca Cola’s Facebook fan page is
second in popularity only to Barack Obama's. Companies cannot buy that kind of PR, nor can
you cultivate that level of goodwill through traditional campaigns.
2.6.2 Importance of Social Media for CRM
People like to use all different methods of communication. Some people like to use Facebook to
send messages. Therefore, companies must now make Facebook part of the contact center. They
also must add monitoring of your fan page on Facebook to their contact center. Social media is
an addition to customers who are reaching out to companies. On the relationship-management,
side companies should target more than just pure-listening mode. Companies should really
engage with lead customers - the ones, who are out in front and very passionate about things, get
Customer Relationship Management 26
them really hooked into the organization, and not just through surveys or user group meetings
twice a year. This can be accomplished without spending much money. "They love to be heard"
In the old days, companies conducted surveys and called it market research or direct surveys to
their B2B clients. Respondents were then asked to tell what they thought. Now with the use of
social media, companies can get to overhear conversations, which is significantly more genuine
as far as opinion and attitude because customers are talking among themselves. Companies even
get to go join the conversation. CRM is showing that a person is a part of the community rather
than just being behind the desk of a call center being able to respond.
That means companies have to see them actually in the field, to do ethnographic research, and go
watch them in their jobs and in their lives. Companies have to invite them in to co-design how
they would ideally accomplish what they want to do, how they would ideally do what they want
to do. Today, more than ever before, businesses can invite customers to help shape the company
activities. Customers have input on which products to develop with which features, how events
should be planned, and what kind of meaningful dialogue they would like to have.
When one-way communications becomes a customer dialogue, it changes the enterprise's
demand creation activities significantly. It enlivens, energizes, and stimulates the value- creation
network. In addition, the efficiency effect-speed, accuracy, and scale-leverages the
communications budget exponentially. However, to achieve these benefits management must
bust the most important in Demand Creation -the one separating the enterprise from its
customers. Often, companies and their customers seemed to have lived in two separate worlds
and at loggerheads, almost enemies. At minimum, they negotiated different sides of transactions
and invoices. Salespeople were not viewed as customer advocates; research was theoretical, dry,
time-bound and devoid of the emotional understanding that a true relationship requires.
Customer Relationship Management 27
2.6.3 Challenges for new product launches
Customer relationship building is even more critical with new product and service introductions
that require customer "leaps of faith." Most new product launches have two customer barriers to
overcome: The Functional Barrier: Customers do not know how the product works, are not clear
on its benefits, are not aware of its features, or do not believe it delivers superior value. Relevant
information, engagingly presented from a credible source, is required to overcome the functional
barrier.
The emotional barrier: Customers do not feel right about adopting the new product. They may be
nervous about change, they may not trust the new supplier, they may have a relationship with
another supplier that they feel should not be broken, or they may have internalized negative
information or someone else's opinion that makes them not believe the new information coming
from the new product supplier. Overcoming the emotional barrier requires the building of trust.
The customer dialogue is most critical to obtain attitude change and adoption to overcome these
barriers; successful application of network tools can be part of the solution, which again supports
the use of social media and a new channel for CRM.
2.6.4 Distinguishing Features of Social Relationship Management
Today we have new "networked organization" tools to do just that. Now far-sighted marketers
are experimenting with ways to use social media tools on a Web 2.0 platform such as Facebook,
MySpace and LinkedIn. These tools are now proving their ability to increase customer intimacy
through continuous customer interaction. What is most significant about this story is how the
new social media tools provide an opportunity for innovation in dialogue and personalization
with the customer.
Customer Relationship Management 28
Unlike a CRM system that is focused internally on the sales organization or PRM (Partner
Relationship Management) that is focused on partner relationships, ERP (Enterprises Resource
Planning) that helps internal operations; SRM (Social Relationship Management) is an externally
facing solution that deals with information (data) outside a company's firewall as well as with the
inherited processes outside a company's four walls. As such, the beneficiaries of a SRM system
are across all functional aspects: like sales people, channel managers, product managers, service
people, support organizations, Human Resource Departments and all other groups facing and
touching the respective business ecosystem, community or government organizations
While almost all defined business processes are organization related and internally focused (with
a few exceptions like parts of a sales process), SRM processes are almost exclusively outside
focused. Today, an employee in sales, support, marketing, HR is limited to a phone number or
email address and manually maintaining all the correlating data. Using a SRM tool, the same
employee is focusing on relationship relevant activities, not data collection and administration, is
focusing on conversation not scripts to leave a message etc. Unlike today where a social media
active person would visit the relevant networks and then go from person to person a SRM tools
suggests the right people and supports the socializing process. Best practices and methods help
SRM users to stay in touch and use the SRM system to a mutual benefit of the participating
parties. One of the core benefits is helping the team to focus on the relevant people not on the
interesting places
2.6.5 Why CRM needs to change
One of the drivers of the CRM 20 effort is, as Greenberg (2004) has said, “to avoid having “15
million” different definitions of CRM like we had at the turn of the century and to a degree still
have today. But if we are to avoid the error of the 15 million definitions, I think it would be wise
Customer Relationship Management 29
to begin by discussing the drivers of CRM today.” The fundamental reason so many people see a
need to redefine CRM is that so many of us realize that the CRM we inherited from the go-go
1990s is no longer appropriate today. After all, we still perform the functions of marketing and
selling, and we still service and support our customers.
It would be a significant error to say that CRM must change because customers have changed or
because markets are different than they were, though that is certainly true. More fundamentally,
everything else has changed as well, right down to the types of innovation that are going on in
many fields today. The following few pages try to identify at least some of the drivers of change
that lead inevitably to a conclusion that we more or less already feel in our collective gut.
Customer Relationship Management 30
Chapter 3 Research Methodology
3.1 Introduction
This chapter presents a description of the research methodology, used in conducting this study.
The purpose of this chapter is to illustrate the process, strategy and approach followed for
accomplishing the objectives of the research. The chapter also discusses the process of data
collection and analysis. The research has used the qualitative research method of case study. A
brief description of the case study method forms part of this chapter.
According to Walliman (2005), research is a systematic examination of a social or other issue to
arrive at a resolution for the issue, using a critical analysis of the factors influencing the issue.
Therefore, any research involves a process more than a mere collection of facts and shuffling
them around. The Oxford Encyclopaedia English Dictionary defines research as (i) “the
systematic investigation into the study of materials, sources etc. in order to establish facts and
reach new conclusions. (ii) an endeavour to discover new or collate old facts etc. by the scientific
study of a subject or by a course of critical investigation” Leedy (1989) defines research as a
process by which the researcher attempts to discover systematically, and with the evidence
supported by facts, the answer to a question or the resolution of a social issue. Kerlinger (1970)
define research more technically to mean “the systematic, controlled, empirical and critical
investigation of hypothetical proposition about presumed relations among natural phenomenon.”
3.2 Characteristics of the Research
Walliman (2005) lays down the salient features of the phenomenon of research. Walliman (2005)
regards research as a systematic and controlled activity and distinguishes it from the process of
gaining experience, which is rather uncontrolled and non-systematic due to its haphazard nature.
Customer Relationship Management 31
Research is a process of reasoning and encompasses the steps for arriving at a resolution for an
issue based on logical arguments. This process of reasoning functions “in an abstract world,
divorced from reality” (Walliman 2005). Research is empirical in nature and draws conclusions
from the knowledge of individuals and from the settings located around the issue researched.
Research is also characterised by its nature of self-correction. Different research methods
available are subject to criticism about their outcomes and they are open to the process of
scrutiny. The findings, which are the products of the research, are also subjected to rigorous
testing to check their validity and reliability.
3.3 Research Approach
Social researches follow either a deductive, or an inductive approach. Saunders et al (2003)
observe that deductive approach enables the researcher develop several hypotheses and pursue a
research strategy to test the hypothesis and report thereon. Under inductive approach, the
researcher starts the process of research with the collection of data using different methods and
after the data collection designs, a theory based the analysis of the data collected. For conducting
the research on implementation of CRM, the inductive approach is the appropriate one and it was
followed in completing the study. Creswell (1994) is of the opinion that the inductive approach
aptly associates with the exploration of research themes, which are relatively interesting and
exciting as well as controversial.
3.4 Research Strategy
The adoption of an appropriate research strategy helps the researcher to conduct the research in
the proper perspective. The researcher by using the correct strategy can follow the right course of
action to schedule the research activity according to overall timeframe and define the research
Customer Relationship Management 32
method for conducting the research. Remeyni et al (1998) argue that adopting the appropriate
research strategy is crucial for the efficient conduct of the research and the research strategy
creates a platform from which the researcher can observe the research issues concisely. Carson et
al (2001) propose various research strategies like grounded theory, action research, case study,
survey and experimental research. The selection of the right strategy depends on the nature and
scope of the research. Saunders et al (2003) are of the opinion that the name of the research
strategy is unimportant and the appropriateness of the strategy for the efficient conduct of the
research does matter. The research strategy involves the selection of a suitable research method
and the research tools for collection and analysis of data.
3.5 Sources of Data
Data collection is an important step involved in the research process. Data for the research can be
collected from primary and secondary sources. Data collected using the primary sources are
known as the primary data and from the secondary sources are called secondary data. The
researchers use these sources of data depending on the nature of inquiry to meet the research
objectives.
3.5.1 Primary Data
Walliman (2005) defines primary data, as “primary data are those from which the researcher can
collect data by direct, detached observation or measurement of phenomena in the real world,
undisturbed by an intermediary interpreter”. According to Walliman (2005), data and
information collected from the primary sources may represent influential readings and includes
the process of counting and measuring taking an inanimate form. The inanimate forms are the
result of reports or observance of conditions or events relating to the research issue. The
Customer Relationship Management 33
researcher may also record the experiences of the people involved in the research to become
primary data for the research. The primary data for the current research were collected from the
case study of Vestia Readymade Garments Company Egypt and the survey conducted among the
customers of Vestia.
3.5.2 Secondary Data
The researcher is at liberty to choose the sources from which he would like to collect as
identified by him. The data collected from sources other than the primary sources is secondary
data. Some of the sources that offer secondary data are newspapers, articles in journals, other
printed sources and electronic sources. Saunders et al (2003) are of the opinions that the utility of
the secondary data is enhanced greatly as it draws information from many sources. However, the
secondary data suffers from a shortcoming, that such data in some cases become unreliable.
Walliman (2005) considers the secondary sources to provide information of inferior values
because errors may occur in the secondary data, as in the case of secondary data, information
passes from one person to another. For the completion of the current research, electronic sources
like Internet, electronic database of different Universities, academic journals, magazines and
various other textbooks were used.
3.6 Research Methods
The researcher considered the use of different research methods for the current study. The
selection of an appropriate research method is crucial to ensure successful outcome of the
research and the selection often depends on the subject under study. Based on the available
information about different research methods and on a careful analysis of merits of using the
qualitative and quantitative research methods, the researcher proposed to use the qualitative
Customer Relationship Management 34
method for the conduct of the research. The following sections present a brief description of the
qualitative and quantitative methods.
3.6.1 Qualitative Method
The qualitative method is one of the two major approaches to research methodology in the field
of social science. It involves investigation of the opinions of the participant, their behaviours and
experiences from perceptions of the informants themselves. As against the quantitative research
method, the qualitative method does not involve the analysis of quantitative data and the method
does not rely on statistical analysis. Instead, the qualitative method makes use of logical
deductions to analyse the data collected, which deal with the human aspects of the issue under
study. There are some demerits of this method in that it is more expensive and considers the
opinions and viewpoints of small sample population and it is often difficult to measure. Lofland
& Lofland (1984) observe that qualitative research method uses non-quantitative methods of data
collection and analysis. The central focus of qualitative research method is "quality" of the data
and findings rather than “quantity”. Researchers like Adler and Adler (1987) are of the opinion
that qualitative method is more a subjective methodology and in most cases makes the researcher
himself the research instrument.
3.6.2 Features of Qualitative Research Method
Number of practitioners and researchers has contributed to the development of qualitative
research method (Bogdan and Biklen, 1982; Lincoln and Guba, 1985; Patton, 1990; Eisner,
1991). They consider qualitative research as a ‘naturalistic’ research. The following is the
summary of the salient features of the qualitative method as contributed by different scholars and
academicians.
Customer Relationship Management 35

A natural setting often forms the source of data under qualitative research. The researcher
is under the obligation to observe and make a full description of the settings, as they exist
during the conduct of the research. The researcher has also to interpret the setting
appropriately and during the whole process of research the researcher is supposed to
maintain the quality of ‘empathic neutrality’ (Patton 1990).

For the purpose of data collection, the researcher becomes the ‘human instrument’

Qualitative research mainly uses the inductive approach in pursuing the research issue

The researchers usually prepare descriptive reports at the end of qualitative researches.
The reports are prepared using an expressive language and ‘presence of voice in the text’
(Eisner 1991).

The researcher under the qualitative method assumes an interpretative character capable
of finding out the real meaning of the narratives of the people who participate in the
research proceedings. The researcher should also be capable of interpreting those
meanings for incorporating in the research report.

Under qualitative method, the researcher considers both the idiosyncratic and the
pervasive behaviors of the respondents and try to combine the best inferences from both
in making his analysis.

There is no predetermined format for the conduct of the qualitative research; but often the
researchers use an ‘emergent design’. The researcher is expected to concentrate on the
process of the emerging designs and control the outcomes of the design.

Qualitative research is based on the major criterion of ‘Trustworthiness’ (Hoepfl, 1997).
Customer Relationship Management 36
Patton (1990) observes that the above are not the exhaustive characteristics of the qualitative
research method. Nevertheless, these characteristics are the salient ones, which are considered
for using in any social research. These characteristic features provide a direction and a functional
framework through which the researcher will be able to formulate specific designs and methods
of data collection. Patton (1990) points out that these characteristics are mostly interlinked.
Lincoln and Guba (1985) are of the opinion that these characteristics are mutually inclusive and
are ‘reinforcing’. The emergent nature of the qualitative method can be considered as one of the
exclusive characteristic features. Patton (1990) states under qualitative research the researcher
has to first begin the process of data collection before he can decide on the research strategies, as
the researcher is under obligation to observe and interpret the meanings in context. For efficient
conduct of the qualitative research, the primary questions to be explored need to be specified in
advance and accordingly the strategies for data collection are to be planned.
According to Patton (1990), since there is no particular design for a qualitative research, the
purpose of the inquiry and credibility of information required form the basis for arriving at the
research design. "Qualitative studies typically employ multiple forms of evidence.… [and] there
is no statistical test of significance to determine if results ‘count’" (Eisner, 1991) The usefulness
and the credibility of the data and information reflect on the findings of the research, which need
to be evaluated by researcher and reader.
3.6.3 Quantitative Method
Quantitative method depends more on objective methods and is focused on the gathering and
analysis of numerical data concerning the research issue. Quantitative method relies on the
statistical and mathematical analysis of quantitative data. According to Burns and Grove,
quantitative research is "a formal, objective, systematic process in which numerical data is
Customer Relationship Management 37
utilized to obtain information about the research question" (Burns and Grove cited in Cormack
1991 p 140). Quantitative research uses research tools, which can ensure objective and reliable
findings. Under quantitative research, the researcher operates external to the original research,
and irrespective of the researcher, the outcomes are expected to remain same. The major strength
of the quantitative method lies in its ability to produce quantifiable and reliable data (William
Trochim 2001)
3.7 Case Study
Case study has been a popular research method used by a number of social researchers. “Case
study is an ideal methodology when a holistic, in-depth investigation is needed” (Feagin, Orum,
& Sjoberg, 1991). Various sociological investigative studies have used case study as an
important research method to acquire relevant data about the issues studied. By following case
study method, the researcher is sure to follow methods, which were well developed and tested
for any kind of exploration. “Whether the study is experimental or quasi-experimental, the data
collection and analysis methods are known to hide some details,” (Stake, 1995). The case studies
have the ability to bring out extensive information from different viewpoints drawn from
multiple sources of data. There are different types of case studies that can be used according to
the nature of each research. They are (i) Exploratory, (ii) Explanatory, and (iii) Descriptive.
Stake, (1995) proposed three other case study methods: Intrinsic case study in one where the
researcher has an interest embedded in the case; Instrumental case study enables the
understanding of more than that is obvious to the observer; Collective case study pertains to a
group of cases under study. One cannot consider the case study research as a sampling research.
The choice of the cases provides the base for the collection of maximum information for
facilitating the completion of the study within schedule. Case study suffers from the criticism
Customer Relationship Management 38
that it does not facilitate generalization of the findings and it is a frequent complaint on case
study research that the findings are cannot be applied widely in real life. Yin (1984) refuted this
criticism based on his explanation of the difference between analytic generalization and
statistical generalization "In analytic generalization, previously developed theory is used as a
template against which to compare the empirical results of the case study" (Yin, 1984)
Baker (2003) defines case study as, “it is involve a detailed and in-depth description and analysis
of a ‘case’ or ‘bounded system’ using multiple sources of information.” Robson (2002) explains
case study research as “the development of detailed, intensive knowledge about a single case, or
a number of related cases.” Baker (2003) is of the opinion that case study approach is mostly
suitable for individual researchers since the researcher would be able to study a single aspect of
the research issue in detail within the given timeframe. Emory & Cooper (1991) state, “case
study research suits within the vital pragmatism model and is fundamentally inductive theory
research; and at the same time acknowledging theory and fact (deduction and induction) are
essential for the other to be of value.”
3.8 Survey
Surveys are one of the most popular methods to collect primary data from the informed sources
of data. As Denscombe (1998) stated, the purpose of a survey is “to get a detailed and
comprehensive view about the data obtained, which will be used for mapping”. There are three
main characteristics in survey method, which are pointed out by Denscombe (1998) as follows:

Wide and inclusive coverage

At a specific point in time

Empirical research
Customer Relationship Management 39
The popularity of the surveys method is established because it provides a quantitative or numeric
description of some fraction of the population, that is, the sample, by asking question (Creswell,
1994; Neuman, 2000; Fink, 1995). Under surveys, it is possible to make a generalisation of the
results obtained as the surveys allow a large number of respondents to participate in the survey
(Davis, 1996). However, there is a low-response bias because many people do not wish to
participate in the survey (Aaker, Kumar & Day, 2001). In order to get a clear indication of the
areas where the chosen company of Vestia lacks in its efforts towards establishing its presence n
the market and to improve the efficiency of the CRM strategies, the survey method had been
chosen.
3.9 Summary
In view of the subjective nature of the study and the distinct advantages and suitability of the
case study method, this research employed the case study method. To substantiate the research, a
questionnaire survey was conducted among the internal and external customers of the company
chosen for case study, which forms part of the research. The next chapter presents the findings of
the case study on Vestia Readymade Garment Company Egypt, in support of the research
proceedings to achieve the stated objectives.
Customer Relationship Management 40
Chapter 4 Case Study and Survey
4.1 Introduction
The objective of this chapter is to present a case study of Vestia Readymade Garment Company
(hereinafter referred to as “Vestia”), Egypt, the findings of which will provide support in
achieving the objectives of the current research. This chapter contains a detailed strategic and
SWOT analysis of the company to assess whether there is a suitable atmosphere for the
implementation of CRM exists in the company.
4.2 Vestia – An Overview
Vestia was established in the year 1981 as an Egyptian-French joint venture. The objective of the
company was to manufacture mainly men's suits jackets and classical trousers. Soon after its
establishment, the company earned a global reputation for its high quality garments, produced
according to the latest models, styles, fashion, trends. The worldwide, recognition earned by the
company enabled it to become one of the prominent players in the Egyptian garment industry.
The company because of its technical expertise and excellence in quality was able to offer
alternative types of models in each production style in two ways. First, as readymade garments
manufactured according to standard measurement and second as special orders “meet to
measure” (M.T.M) customized to each individual requirements and body specifications. This has
made the company occupy an important role in the society, as one of the largest players in the
garment field.
Vestia is one of the pioneers in the manufacturing of suits. Stia co. supports the company’s
business (the subsidiary of Vestia in which Vestia holds 55% shares). Stia is one of the largest
worsted fabrics manufacturers and is the main supplier for Vestia for its requirements of worsted
Customer Relationship Management 41
suiting fabrics (100% wool, blended wool and polyester-viscose blends). This fabric is suitable
for all seasons and apparels made of this fabric are considered of high quality level. The support
in the raw material supply by Stia adds more value to the business of Vestia apart from
considerable saving in time in search of quality fabrics, which is the main raw material in suit
manufacturing.
The target customers of Vestia include end users, retailers, and wholesalers, who can be
classified in to three different categories. They are
(i) individual men and ladies, representing end users looking for latest fashion trends in
apparels either readymade or M.T.M made in accordance with latest Western styles
and designs,
(ii) government departments and public sector organizations and institutions looking for
uniforms and official garments and
(iii) agencies, retailers, wholesalers and other brands competitors looking for subcontracted
services like cutting and making (CM) or cutting, making and trimming (CMT) from
our production capabilities.
The company’s capabilities are enhanced with the presence of a team of well-trained workers.
The company has emerged as one of the best garment producers in the local market, because the
company has sound technical knowhow, best and automated machines and in addition has
instituted a complete quality system controlling quality of the garments in-line end of line and at
the final stage. With this ability, the company ensures achievement of best quality standards. The
operations of the company are supported ably by a very dynamic sales and administration team
having the capabilities to carry out the business with utmost cooperation and flexibility to
interact intelligently and politely with the customers. One of the major strengths of the company
Customer Relationship Management 42
is the upgrading of the production system with machines conforming to the latest technology in
the field and a complete quality control system. The company uses best quality imported
accessories to fulfill the high quality production to satisfy the customer needs. The company
maintains a good two-way communication with the customers as well as employees about the
company policies and regulations to ensure their loyalty and commitment. The business of Vestia
is further supported by its own showrooms and branches established all over Egypt. Apart from
using its own distribution channels, the company has many agencies representing the company in
different locations.
4.2.1 Relationship with Stakeholders
In order to make a strategic analysis of Vestia it is important that the relationship of the company
with different stakeholders be analyzed, which will form the basis for the strategic analysis of the
company. The following table illustrates the relationship of the company with various internal
and external stakeholders of Vestia.
Stakeholders
Stockholders
Objectives
– Earnings
– growth
Management
– Business
Growth
– Increased
market share
– Continuous
improvement in
Sales
Expectations
Maximization of wealth
Increased stock values,
More business shares.
Current Status
The company’s growth in the last
three year is not in the right track,
at least 5% yearly growth is the
minimum requirement to sustain
the company’s market position
To be ranked the first
The company was the pioneer in
company in its field is a
garments industry of Egypt. The
major goal to be achieved market share declined in the last
through continues
three years making the
improvement in all
management to look for increased
aspects of the company’s sales volume, increased growth
activities for better
rate of 25% annually, monitoring
performance and to meet competitors and to get rid of the
social responsibility
existing stocks as soon as possible.
towards employees
Customer Relationship Management 43
Employees &
workers
– More income
– Continued
employment
– Personal
Development
Improved job satisfaction
Job security, better
working conditions,
better salary rises and
promotion opportunities
Labor union
– Better
working
condition,
– Safety and
health care.
Improved job satisfaction
Job security, better
working conditions,
better salary rises and
promotion opportunities
Creditors
– Security for
money
advanced
– Protection of
interest in the
form of ability
of the company
to liquidate the
loans
Suppliers
Prompt payment of
interest and repayment of
principal amounts, Better
financial performance to
service the loan
repayment and interest
and opportunity for
extending further credit
facilities, more cash flow
and more business
volume.
– Timely
More sales volume,
payment of bills Continued business
– better terms of relationship, professional
credit
dealings, no delays in
making payments of the
bills, no rush orders and
sufficient lead time so
that quality of the
supplies can be
maintained, collaboration
in identifying innovative
products/fabrics
The company starts to give more
attention to its human capital as
one of the main resources and
competitive advantage. However,
there is the need for more training,
new compensation system to all
company level implemented, new
training programs to increase
productivity and better
performance measurement system.
Vestia always maintains a special
relationship with the labor union
offering a real participation in the
company business and defines the
company goals policies to
maintain and benefit from such
relationship
A very good relation with all
creditors well established through
the company history, problems
appears in the company cash flow
due to some economical factors
revising the financial policies for
improvement by developing
money management from 3% to
6%, increasing assets revenue
from 7% to 12%.
Vestia continues to import most
of the accessories according to the
quality standard the company
would like to achieve, this put us
in high risk due to globalization,
local suppliers must be found with
the same quality required, more
credit facilities is needed, just in
time delivery with minimum stock
is the need of the hour.
Customer Relationship Management 44
Customers
Competitors
Government
and Local
community
– Higher quality
– Competitive
prices
– Extended
credit facilities
Retail customers expect
higher quality products at
competitive prices, new
and latest fashion trends,
new and innovative
designs, better fabrics
and quality accessories
MTM service,
promotional offers and
price discounts
Agents and wholesalers
expect extended credit
facilities
– Improved
To be able to compete
market share
and acquire improved
– higher
market share, to obtain
profitability
pricing and costing
information of the
company and strict
observation of the norms
for competition conduct
established by society
and industry
– Higher Taxes Higher tax revenue,
– Compliance
healthy economic
of regulations
environment, compliance
– better
with labor laws, factory
business
regulations on safety and
environment
health, promoting more
– meeting social employment
responsibilities opportunities, meeting
environmental
requirements
The company needs to build
informed customer base, there is
the need to develop quality control
to offer better quality final
products at competitive prices, and
Company needs to provide better
sales service, after sales service
and training programs to all sales
force.
Vestia proposes to implement
market research and become the
market leader by establishing
competitive benchmarks and
achieving higher market share
The Company presently
contributes to the society through
sustaining the work force as H.R
assets and reduces the employee
turnover in the short run,
provides better working conditions
and ISOO regulation for
environment. Complies with all
governmental regulations
4.2.2 Strategic Analysis
Mintzberg (2008) states “Strategy deals with the unknowable, not the uncertain. It involves
forces of such great number, strength, and combinatory powers that one cannot predict events in
Customer Relationship Management 45
a probabilistic sense. Hence logic dictates that one proceed flexibly and experimentally from
broad concepts towards specific commitments” (p.104). Conceptually therefore, the strategic
analysis should start from defining the mission and vision of the company.
Mission and Objectives
The Mission statement of the organization encompasses the business vision with the definite
organizational values embedded therein. The mission should also consist of a statement of the
purposes of the firm. It also should contain vision-based futuristic goals that will steer the
organization towards capturing all potential business opportunities. The business vision forms
the basis for formulating the financial and strategic business objectives. The organization may
also evolve goals for its finance function, which would specify quantitative targets for sales
growth and profitability. “Strategic objectives are related to the firm's business position, and may
include measures such as market share and reputation” (QuickMBA).
The mission statement of Vestia as originally drafted reads
Our mission is to produce and sell high quality garments for our targeted
customer's business clients and the average employees, who are looking for
unique and fashionable stylish garments, so we produce our products according to
the latest fashion trends worldwide to meet their satisfaction.
Since the above mission, statement appears outdated and lacks the necessary spirit, the following
new mission statement is proposed for replacing the old one.
“Vestia company mission is to satisfy men's need in high quality garments
through providing the latest fashion trends worldwide with a unique after sales
service to keep our customer's loyalty and create a stakeholders value in the new
globalization era.”
Based on the stakeholder analysis mentioned above the following vision and objectives emerge
for the success of Vestia
Customer Relationship Management 46

Achieving higher profitability and business growth to provide added shareholder value
and to maximize shareholder wealth

Acquiring increased market share through enhancing customer satisfaction

Implementing training programs to all categories of employees to achieve improved work
performance

Providing high quality products at competitive prices and identify local sources of supply
for raw materials and accessories

Getting rid of the existing stocks by exporting them at available prices so that cost of
carrying inventory can be reduced and cash flow improved
4.2.3 Environmental Scan
An integrated understanding of the external and internal environments is essential for the firm to
understand the present and predict the future (Zahra & George, 2002; Sirman et al, 2003). The
environmental scan consists of the following essential components.

Internal analysis of the firm

Analysis of the industry environment

Analysis of the external environment
The internal analysis involves the identification of the power and weak spots of the firm and the
potential chances offered by the industry and the risks that the industry faces which will have an
impact on the performance of the organization. Firms can accomplish the analysis using SWOT
model. “Strategic management is founded on the notion that organizations must analyze
themselves and their environments and act to create their future in light of their internal strengths
and weaknesses and their external threats and opportunities” (Rabin et al 2000). The objective of
Customer Relationship Management 47
making an analysis of a firm’s internal environment is to understand how to make effective use
of the resources possessed by the firm. In fact, this is the key outcome the decision makers seek
while analyzing the internal environment. There is a definite relationship between the firm’s
resources, capabilities, core competencies and this relationship can be used to maximize the
competitive strength of the firm (Hitt, Ireland and Hoskisson, 2005). The growing gender, ethnic,
and cultural diversity in the workforce creates challenges and opportunities invariably to every
industry (Barlett & Goshal, 2002; Rugman and Verbeke, 2001).
The firm’s external environment is comprised of

General environment

Industry environment and

Competitor environment
“The general environment is composed of dimensions in the broader society that influence an
industry and the firms within it. Compared with the general environment, the industry
environment has a more direct effect on the firm’s strategic competitiveness and above-average
returns, as exemplified in the strategic focus,”(Carpenter, Bauer & Erdogan). The use of PEST
analysis helps analyzing the general environment (Hamel & Valikangas, 2003; Hawawini et al
2003). The economic environment refers to the nature and direction of the economy in which a
firm competes or may compete (Fahey and Narayanan 1986).
The industry environment is the set of factors that influence a firm and its competitive actions
and competitive responses – the risk of new firms entering the market, the bargaining ability of
the providers, the bargaining capacity of customers, the risk of alternative product, and the
intensity of competition from other players in the market. Porter’s Five Forces model helps
completing this analysis (Browne, 1994; Fahey, 1999; Feurer & Chaharbaghi, 1995; Robbins et
Customer Relationship Management 48
al 2000). “Research suggests that different geographic markets for the same product can have
considerably different competitive conditions,” (Carpenter, Bauer & Erdogan; Garcia-Pont and
Nohria, 2002).
General Environment
PEST Analysis
Under this section, the impact of political, economic, societal and technological factors on the
working of Vestia is analyzed.
Political factors
 Trade regulation and tariffs (Both Threat and Opportunity)
GATT agreements will affect Vestia directly from the new global competition, which is a threat
for the future business of the company, but at the same time will protect the company from the
impact of the fabrics smugglers which is clearly an opportunity for the company to reduce the
raw material cost and improve profitability
The company faces severe tariff problems with the customs authorities in respect of the import of
fabrics and accessories during the last five years. If the tariff problems are not solved through
settlement agreements, the conflict may lead the company to bankruptcy.
Other political factors like political stability-risk of military invasion, legal framework,
intellectual property protection, antitrust laws and others do not have any effects on the normal
functioning of the company.

Taxation – tax rates (Threat)
Changes in sales tax laws will affect the customers buying power in the domestic market, which
in turn will affect the company’s turnover for the future. Similarly, any proposed changes in
income tax slabs are likely to affect the profitability of the company, against which the company
has no protection.
Customer Relationship Management 49
Economic factors

Type of economic system (Opportunity)
Moving towards cartelization and the globalization have a positive and negative impact on
Vestia, positive as there is more potential global market share if it is able to deal with the fast
changes in the environment. Negative as the company has to enhance its knowledge base to
compete effectively in the global market.

Exchange rate and efficiency of financial markets (Threat)
Inefficient functioning of the financial market affects the Egyptian currency through high
fluctuation against the U.S dollar, which in turn affects the cost of production for the company
and causes problems in paying its currency liabilities on maturity

Business cycle stage recovery (Opportunity)
From a business cycle point of view, Vestia is in the recovery stage during the last three years
and the company will move gradually towards better business position. This could be an
opportunity for better business growth.

Inflation rate (Threat)
Inflation affects the market and the company in many ways as there is widespread increase in the
prices of all the inputs. Increase costs result in increased prices of the outputs that affect the
customer and sales figures. Labor wages need to be raised to sustain the skilful workers.

Interest rate (Threat)
The lower the interest rate in the financial market the more the market activities and the more
investment opportunities in the economy the more the customers consumption that enhances the
company sales figures. However, the current situation in respect of interest rate is unfavorable as
the interest rates are high that affect the company’s profitability and growth negatively
Customer Relationship Management 50
Social Factors

Demographics (Opportunity)
The location of the factory in the mid town of Alexandria city, gives the company an advantage
to attract more workers from the market. Even the exciting exhibits channel that cover most of
the sales area help the company achieve its sales goals and market penetration

Education (Opportunity)
The more qualified employee available in the market the more is the possibility to recruit and
employ the best caliber human resources. Another advantage with more educated people is the
growth in the white-collar segment in the market and can become one of the targeted segments
Technological factors

Recent technological development (Opportunity)
Technological development results in considerable saving in production time, improved product
quality, increased labor efficiency and improved and faster communication to go global with
more market share

Impact on cost structure (Opportunity)
Technological development leads to lowering of cost lead and therefore lower product prices,
which increases the capability to compete in the global export market

Impact on value chain (Opportunity)
New technology affects the company value chain positively through more coordination between
departments. For example, ERP system leads to more work-efficiency
The above analysis enables the assessment of external general environmental factors acting on
the functioning of Vestia. The following section analyses the industry environmental factors and
their impact on the business of the company.
Customer Relationship Management 51
Industry Environment
Porters Five Forces Analysis
Porters Five Force model helps analyzing the industry environment by assessing the impact of
new entrants, suppliers’ and buyers’ bargaining power, availability of substitute products and
competitive rivalry on the competitive position in the market. The following section presents the
five forces analysis.
1- Threat from new entrants

Economies of scale (Threat)
Globalization and the investments opportunities in Egypt may attract big investors in the field
with high production capacity enjoying greater economies of scale, which is a serious threat for
Vestia.

Product differentiation (Threat)
Entry of new firms with the backing of brand names will affect negatively the company position
in the market

Capital requirement (Threat)
Creating garment production infrastructure does not require high capital outlay and therefore
does not act as an entry barrier.

Switching costs (Threat)
High switching cost is lowering the company competing abilities to face the market changes and
stick to the traditional classic production and it reduces the segments that the company could
serve
2- Bargaining bower of buyers (Threat)
Customer Relationship Management 52
There are two types of buyers for Vestia – retailers, wholesalers with high power and end-users
with high power too because they can switch to another product with no cost which acts on the
competing ability of Vestia. The company should always try to provide the right product
required by the customers at the right price. Although the competitors face the same problem,
maintaining quality at competitive costs is a challenge.
3- Bargaining bower of suppliers (Threat)
Few suppliers in the local market and importing accessories and suitable substitute product are
not available.
4- Threat from substitute products (Threat)
Low switching cost low and relative better price performance of substitutes may act to reduce the
market share of Vestia
5- Extent of competitive rivalry (Threat)
There are numerous or equally powerful competitors with slow industry growth and high fixed
costs for storage of inventory
Task environment

Customers: (Opportunity)
Geographically since the location is a big size city with normal seasonal climate, the customers’
moves are favorable to the industry (Opportunity),
Demographically concentrating on some type of segments according to occupation, education,
sex and income provides more market options (Opportunity)
Behaviorally events and occasions play a big role in booming sales figures (Opportunity)
In general, therefore the task environments with respect to customers’ activities provide an
extensive opportunity for the business of Vestia.
Customer Relationship Management 53

Nature of labor market (Opportunity)
Having skilful workers and trying to keep them continuously engaged reflects a better
employment situation and it always help the company to cover its needs

Suppliers (Threat)
Excessive dependence on foreign sources, exchange fluctuations and inability to develop
domestic sources acts on the competitive ability of the company in terms of cost of production.

Competitors (Threat)
Global competition and some local businesses capture the market share of Vestia through their
advertising and sales promotion efforts
The following tables summarize the above environmental analysis
Threats
Factors
1-General environment
Trade regulation and tariffs(GATT agreement)
Taxation – tax rates( sales tax)
Type of economic system
Inflation rate
Interest rate
Exchange rate and efficiency of financial markets (T)
2-Industry environment
Threat from new entrants with low prices
Hostile takeover or to be sold to competitors
Bargaining bower of buyers
Bargaining bower of suppliers
Threat from substitute products
Extent of competitive rivalry
Fabrics and clothes smugglers
3-Task environment
Suppliers
Competitors
Impact
Probability
Importance
80%
30%
40%
100%
70%
80%
100%
100%
70%
50%
60%
70%
80%
30%
28%
50%
42%
56%
90%
100%
70%
90%
60%
70%
100%
90%
80%
50%
70%
100%
70%
100%
81%
80%
35%
63%
60%
49%
100%
90%
70%
100%
80%
90%
56%
Customer Relationship Management 54
The major threats are:
-GATT agreements (sever competition and Low price competition)
-Hostile tack over
-Fabrics smugglers
-Suppliers bragging power
Opportunities
Factors
1-General environment
Trade regulation and tariffs new fabrics sources
Type of economic system
Business cycle stage recovery
2-Industry environment
Demographics
Recent tech development
Impact on cost structure
Impact on value chain ERP
3-Task environment
Customers
Nature of labor market
M.T.M service
Impact
Probability
Importance
80%
70%
60%
100%
80%
80%
80%
56%
48%
60%
80%
70%
80%
100%
80%
70%
100%
60%
64%
49%
80%
80%
90%
100%
70%
90%
100%
56%
81%
100%
The major opportunities are;
GATT new fabrics resources
ERP system for strategic planning
Skilful workers with low cost
M.T.M service (special order tailoring) in cash-cow stage
The summarized information on the general, industry and task environment places Vestia in a
position to face equal amount of threats and opportunities.
Customer Relationship Management 55
4.2.4 Resources Analysis
The process of identifying the strengths and weaknesses of the organization involves the
understanding of the role of resources, capabilities, and distinctive competencies in the process
of creating value and profit by the organizations. The managers must also look into the
importance of superior capabilities, innovative abilities of the organization, quality concepts, and
services to the customers and the factors contributing to the ability to compete effectively.
Part of the strategic analysis process begins with assessing the level of performance in each of
the following areas:
Customer service, competitiveness, productivity and profitability based on the current situation,
comparison to goals, trend for the future, to discover our core competence, so we need to gather
information about the items below tangible and intangible recourses:
A- marketing resources
B- financial resources
C- Human resources
D- Operations/production resources
E- Management leadership resources
F- Organizational resources
G- Informational resources
Through a comprehensive checklist, that will help us to determine the company strengths and
weakness.
A-Marketing resources
1. Customer satisfaction with products/services (Strength)
Customer Relationship Management 56
The customer satisfaction is a weak point now, but the action taken by the top management to
implement after sales service is the right step to turn it to strength.
2. Ability to gain customers versus the competition(Strength)
Vestia provides the customers apparels made with the latest fashion trends fabrics with lot of
varieties so that the customer could chose from a number of varieties. Even the M.T.M service
provides the company the ability to attract more segments then the competitors.
3. Knowledge of the market (Weakness)
The company does not have enough knowledge sources to strengthen its marketing abilities.
Presently the company gains knowledge from internal resources in the form of reports of sales
representatives, which is not enough for marketing studies and forecasting of the future. More
information is to be gathered in that area from other sources such as industry, governments,
ministry of trade and local institutions
4. Product line breadth and depth (Weakness)
The company as a market leader has planned its production line with the technical knowhow of
French Vestra (joint venture) for the classic suits-jackets and trousers with breadth and depth
required at that point of time when the joint venture was entered. Such technical knowledge is
not flexible enough to adapt to the manufacture of casual outerwear or any future changes while
other competitors are able to switch their line to meet the market changes.
5. Product quality in terms of function (Strength)
The production quality of Vestia has a good reputation in the market and among competitors, as
some of our competitors ask for subcontracting of C.M.T for their branded products from
Vestia’s production capacity. This is a source of competitive ability and hence a strength for the
company.
Customer Relationship Management 57
6. Advertising and Sales promotion activities (Weakness)
The company follows poor quality advertising and promotion policies, which are far behind the
major competitors’ activities.
7. Product pricing (Weakness)
Vestia follows the traditional pricing strategy of cost plus profit percentage and the company has
never considered the right pricing strategies or even the market trends and expectations.
8. Facilities and method used to sell to customer (Strength)
The company is located in Alexandria, which is one of the biggest cities in Egypt and the
company outlets are spread in most of the main cities of Egypt. This gives a strong position to
the company to be able to access most of the targeted customer.
9. Market share (Weakness)
When comparing the production capacity of the company to its market share, the market share is
much lower and the competitors and globalization with GATT agreements has affected the
company’s market share.
B-financial resources
1. Ability to raise short -term capital (Weakness)
The company has a poor ability to raise short-term capital required because of its current cash
flow situation. The company is unable to extend credit terms to customer and meet the short-term
obligations to suppliers at the same time. Because of this inability, the company is unable to
manage its financial resources efficiently, which is a dangerous situation while the main
competitors of the company do not have any cash flow problems. The current ratio is very poor
and the company is unable to get market credit because of delayed payments to creditors for
supplies. This causes delays in shipments of finished products.
Customer Relationship Management 58
2. Ability to raise long-term capital (Weakness)
The company has zero ability to raise any long-term capital by issuing common stock, as the
company is not a listed company. The company has not accumulated any retained earnings in the
past 6 years, which reflects a poor financial situation of the company.
3. Corporate- level resources (Weakness)
The company has enough resources to produce men's classical outerwear product line only.
4. Cost of capital relative to that of industry and competitors (Weakness)
The cost of capital of Vestia is high and therefore a weakness as compared to that of the industry
and close competitors
5. Tax consideration (Weakness)
The company has high ethical standards and operates only according to the book, while most of
the competitors use other means to avid tax and this creates problems of excessive payments of
duties and taxes. Such payment of higher customs duty may lead the company to go out of
business.
6. Working capital (Weakness)
The balance sheet of the company is not impressive in respect of capital structure and flexibility,
which is a weakness for the company.
7. Effective cost control (Weakness)
Since Vestia has an excessive dependence on imported raw materials and accessories, the
currency fluctuations cause enormous financial losses to the company.
8. Financial size (Weakness)
There is no way the company can expand its capital base by further contribution from the
shareholders as the shareholders do not have enough resource to augment capital.
Customer Relationship Management 59
9. Accounting system (Weakness)
Use of ALFA programs for accounting does not give the required perfection in the accounting
report and there is the urgent need to reconstruct the system to get meaningful reports.
C-Production, operating, technical resources
1. Raw material cost, supplier relationship (Weakness)
High cost of importing raw materials with low credit terms offered by suppliers affect
profitability and cash flow situation.
2. Inventory control system, Turnover (Weakness)
The company’s inventory system is weak and as a result low inventory turnover affects the
company growth. There is accumulation of excess stock of finished goods requiring more storage
area and involving additional cost.
3. Technical efficiency of facilities (Weakness)
The technical efficiency of the company is at low ebb compared to that of the competitors and
needs updating with better equipments and an ERP system.
4. Subcontracting use (Strength)
The excess and idle capacity of the company is utilized by accepting subcontract offers from
other manufacturers to cover the fixed costs and to keep the production facility breakeven.
5. Efficiency and cost-benefit of equipment (Weakness)
The company does not use its full production capacity and this inefficient situation affects the
cost-benefits of the machines and other production equipments.
6. Operation control (Weakness)
Vestia does not have an efficient operation control system in most of the departments, which
increases the cost of production and affects profitability.
Customer Relationship Management 60
7. Patents, trade mark (Strength)
Vestia is one of the few manufacturers that have a trademark registration and a company logo
legalized and certified
D-Human resources
1. Management personnel policies (Weakness)
The managerial capabilities of Vestia are poor compared to that of the competitors. The
managers do not possess required managerial skill to discharge their functions effectively.
2. Employees skill and morale (Weakness)
Vestia has a group of highly skilled employees whom the company is trying to sustain. Newly
appointed workers based on the recommendation from top management do not possess required
skills.
3. Worker wage levels (Weakness)
The low wages paid to the workers and employees result in a low labor cost but lead to loss of
good employees to the competitors.
4. Employment turnover and absenteeism (Weakness)
There is high employee turnover due to lower salaries, wages and benefit to employees and
workers
E-Quality management resources
1. Relation with suppliers, customers (Strength)
The company keeps a good relationship with its customer especially in the M.T.M section in a
very professional way and with the suppliers. This helps the company to sail through with a
minimum level of production and profitability. However, the company is unable to fill up its
capacity to increase the turnover.
Customer Relationship Management 61
2. Procedures for monitoring quality (Weakness)
The performance of the quality control system of late is not up to the expected levels and is
unable to meet the customers’ requirements.
F-Information system resources
1. Timeliness and accuracy of information about sales, OP, Cash and suppliers (Weakness)
Presently the information system available in the company does not produce the required and
reliable information, which makes decision-making difficult. There is the need for the
implementation of the ERP system to improve the.
2. Relevance of information for tactical decisions (Strength)
Absence of ERP system affects better decision-making or tackling issues.
3. Ability to people to use information (Weakness)
A lot of training is required to prepare the management and employee to use the new system and
access information easily for better performance.
4. Ability to utilize internet and Ecommerce (Strength)
The company is able to implement E Marketing, and to move towards E-Business and benefit
from the internet through activating its web site.
G-organization and general management resources
1. Organization structure and strategic planning (Weakness)
Vestia follows a traditionally rigid organizational structure and the company is not able to accept
changes and not flexible enough to adapt improvement. The company has not implemented any
strategic planning but used only traditional way of planning based on figures of production and
sales. This does not help the company to make long-term plans for the future business growth
and improved organizational performance.
Customer Relationship Management 62
2. Firm image and prestige (Strength)
Vestia Co. still have a good reputation in the local market, with a large segment too and keeping
its image.
3. Firm record in achieving objectives (Weakness)
No strategic planning any measurable tools clear to identify the real objectives, just driven by
problems to solve it as the main objective.
4. Top management skills (Weakness)
Only four out of sixteen representing the top management had some managerial skills the others
lack behind from qualification to skills.
5. Organization of communication system (Strength)
Implementing the ERP system, intranet and internet is very important for the company readiness
for future strategic planning.
Strengths
Factors
1-Marketing recourses
-Customer satisfaction with products/services
-Ability to gain customers versus the competition MTM
-Product quality in terms of function CMT
-Facilities and method used to sell to customer.
2-production, operating, technical recourses
-subcontracting use
-patents, trade mark
3-quality management recourses
-Relation with suppliers, customers
4-information system recourses
-ability to utilize internet and Ecommerce
-relevance of information for tactical decisions ERP
5-organization and general management recourses
-firm image and prestige
-Organization of communication system
Impact
Probability
Importance
80%
70%
90%
90%
80%
90%
90%
60%
64%
93%
81%
54%
90%
100%
90%
100%
81%
100%
60%
100%
60%
70%
100%
100%
100%
70%
100%
80%
70%
90%
80%
72%
56%
Customer Relationship Management 63
The major Strengths are;
1- Product quality in terms of function CMT
2-Subcontracting use
3-patents, trade mark
4-relevance of information for tactical decisions ERP
Weaknesses
Factors
Marketing recourses
-Knowledge of the market
-Product line breadth and depth
-Advertising and promotion activities
-Product pricing
-Market share
2-financial recourses
-Ability to raise short terms -capital
-Ability to raise long terms -capital
-Corporate- level resources
-Cost of capital relative to that of industry and competitors
-Tax consideration
-Working capital
-Effective cost control
-Financial size
-Accounting system
3-production, operating, technical recourses
-Raw M. cost, supplier relationship
-inventory control system, Turnover
-technical efficiency of facilities
-efficiency and cost-benefit of equipment
-operational control
4-human recourses
-management personnel
-labor relation cost
-efficiency of personnel policies
-employee turnover and absenteeism
5-quality management recourses
-Procedures for monitoring quality
Impact
Probability
Importance
90%
70%
60%
80%
80%
80%
80%
80%
70%
80%
72%
56%
48%
56%
64%
90%
90%
80%
70%
70%
80%
70%
80%
70%
80%
70%
70%
80%
80%
90%
90%
80%
80%
72%
63%
56%
56%
56%
72%
63%
64%
56%
80%
90%
70%
80%
80%
80%
90%
70%
90%
70%
64%
81%
49%
72%
56%
90%
80%
70%
70%
80%
80%
80%
80%
72%
64%
56%
56%
90%
80%
72%
Customer Relationship Management 64
6-information system recourses
-Timeliness and accuracy of information about sales, OP 90%
Cash and suppliers
-ability to people to use information
90%
7-organization and general management recourses
-Organization structure and strategic planning
100%
-firm record in achieving objectives
90%
- top management skill
90%
80%
72%
90%
81%
90%
80%
90%
90%
72%
81%
The major weaknesses are:
1-Inventory control system, Turnover
2-Ability to people to use information
3-Organization structure and strategic planning
4-Top management skills
SWOT Analysis
In this highly competitive business environment, it is important for the successful managers and
executives to look for the possibilities beyond the traditional ways of functioning. The innovative
business leaders consider strategy as a ‘thinking process’ rather than a planning process.
The strategies to meet the competitive challenges are to include the marketing strategies and
various other internal strategies of pricing, product differentiation, branding, and optimal product
mix. There are different management tools available to the managers to identify the strengths,
weaknesses and the core competencies of the organization. The SWOT analysis enables the
managers to make a meaningful assessment of the internal strengths and weaknesses of the firm.
This analysis also brings out the potential opportunities available to the firm as well as the threats
the industry is facing which may have an impact on the sales and profitability of the firms.
Customer Relationship Management 65
Dual SWOT analysis
Internal environment
External environment
Opportunities
1-GATT new fabrics
resources
2-ERP system for strategic
planning
3-Skilful workers with low
cost
4-M.T.M service
(tailoring)
Threats
1-GATT (sever
competition )
2-Hostile tack over
3-Fabrics smugglers
4-Suppliers bragging
power
Strengths
1-Product quality in terms of
function CMT
2-Subcontracting use
3-patents, trade mark
4-relevance of information for
tactical decisions ERP
-We can use the new fabrics
resources to match our
competitor advantage and
develop the company export
activities through CMT
contracts that could use the
excess production capacity and
subcontracting agreements
depending on our trademark
and skilful workers.
-Concentrate on the M.T.M
PROCESS as it in the cashcow stage.
Weaknesses
1-Inventory control system, Turnover
-sever international
competition could be
surrounded with sources that
help the company in reducing
its production cost
-fabrics smugglers by the end
of implementing the GATT
agreements their will not be
conceders as threats.
- More suppliers will be
available too.
-Strategic planning is necessary and
will but the company in the right track
so it will be able to recover its losses in
the last six years.
-if we are able to succeed in our plans
hostile tack over won't be a real threats
from our competitors
2-Ability to people to use information
3-Organization structure and strategic
planning
4-Top management skills
-Using ERP system we help to improve
people ability to use information and
will have a good impact on the
company performance and eliminate
these weak points as it will impact on
the strategic planning.
-Training to all level of management
top to mid to employees for
improvement
-ERP will help in the inventory control
system and the company should sell the
stock for any price in the following
year.
Customer Relationship Management 66
4.2.5 Conclusion on Strategic Analysis
It follows from the strategic analysis that Vestia must choose “Stability –Turnaround” company
strategy. Time of distress presents special strategic management challenges to Vestia. Under
such circumstances, there is the danger of Vestia facing bankruptcy or nearing bankruptcy.
Turnaround consultants will be able to devise and execute a plan of corporate renewal and the
firm has enough potential to make it worth saving. Before a viable turnaround strategy can be
formulated, it is important to identify the root cause the crisis. Frequently encountered causes
include:

Revenue downturn caused by a weak economy in Egypt

Overly optimistic sales projections

Poor strategic choices

Poor execution of a good strategy

High operating costs

High fixed costs that decrease flexibility

Insufficient resources

Highly successful competitor

Excessive debt burden

Inadequate financial controls
While each case is unique, the turnaround process frequently involves the following stages:
(i)
Management change - consultants may help to manage the turnaround of the firm.
(ii)
Situation analysis - a situation analysis may be performed to evaluate the prospects of
survival. Assuming the firm is worth turning around, depending on the root causes of the
Customer Relationship Management 67
distress one or more of the following turnaround strategies may be selected and
presented to the board:

Change of top management

Divestment of certain assets

Reformulation of strategy

Revenue increase

Cost reduction

Strategic acquisitions
(iii)
Emergency action plan – to achieve positive cash flow as soon as possible by eliminating
departments, reducing staff and by taking other necessary actions
(iv)
Business restructuring - once positive cash flow is achieved, the strategic plan is
implemented, improving continuing operations, adjusting the product mix and
repositioning products if necessary. The management team begins to focus on achieving
sustained profitability.
(v)
Hoping the company returns to normalcy - the company becomes profitable and the
changes are internalized. Employees regain confidence in the firm and emphasis is
placed on growing the restructured business while maintaining a strong balance sheet.
4.3 Analysis of the Findings from Market Survey
In order to identify the areas where the company needs to strengthen its efforts to increase the
marketing thrust and customer relationship, a survey was conducted distributing a detailed
questionnaire (See Appendix for the specimen of the questionnaire) to internal and external
customers of Vestia. The following section discusses the findings of the survey and makes
appropriate recommendations for improving the marketing efforts.
Customer Relationship Management 68
Question 1
No. of cases respondents Who wear classic who wear casual
200
100%
65%
35%
Results indicate that 65% of samples wear classic clothes as a targeted customer from the
company, the 35% remained are casual wear oriented but still buying suits or jackets
occasionally (at least once a year).
Recommendation
To consider revise the marketing policy to attract more customers for casual wear, by meeting
their needs in the jackets and trousers. This can be a new segment to cover in the production
planning of the company as targeted new segment.
Question 2
No. of cases
Respondents Once a year Twice
Four times Monthly
Occasionally
200
100%
11%
13%
27%
49%
-------
The findings of the survey indicate that
1. The customers’ ability to repurchase is reduced to twice a year and that could be related to
many factors such as environmental elements (inflation in the economy) and reduced
customer-buying bower.
2. If these figures are related to the occupation, one can find that 49% who buy twice a year
with top or affordable income more than the rest of the customers.
3. The price does have an effect in the customer purchase decisions (will be elaborated in the
discussion on Question 8).
Customer Relationship Management 69
Recommendation
Vestia should concentrate on the targeted segments in the Marketing plan taking the price as a
factor influencing the customer buying decision.
Question 3
No. of cases
200
Respondents
100%
First time
1%
always
66%
Some times
33%
Never buy
------
First time customer percent shows clearly that, the company have a weak point in attracting new
customers & in the same time, it does have a very good customer loyalty.
Recommendation
More effort is needed to asses this situation in the promotion campaign to sustain customer
loyalty & attract new ones.
Question 4
No. of cases
Respondents
200
100%
Poor
collection to
choose from
63%
Satisfied
Very good
Superb
----
22%
15%
Findings provide a red alarm to the planning –production & marketing departments that they are
far beyond the customer need and not able to meet his expectations as a part in providing quality
service.
Recommendation
1. Company should asses the idea of producing what customers want and not carrying on
the same old production system and sell.
2. Searching for new fabrics source for more choice of collections to the customers
Question 5 & 6
Open ended to find what customers does not like and like in Vestia’s products and their opinion.
1. Poor men’s & ladies’ collection-repeating colours- designs similarity
Customer Relationship Management 70
2. Pricing announcement with the taxes, not clear enough to the customer.
3. No development
4. Availability of big sizes
5. More discipline required in the delivery
6. Trousers zipper should be of a better quality.
These points can be as recommendations to avoid negative opinions of the customers.
Question 7
No. of cases
200
Respondents
100%
Very poor
-----
Poor
----
Satisfied
29%
Good
41%
Very good
30%
Still 70% of customer opinions define the company service less than the best quality, which
implies that the competitors can step in this area and Vestia will lose its customers.
Recommendation
More studies needed to cover and improve service to the customer. Customer service
department has to close this gap to sustain the company image.
Question 8
No. of cases
200
Respondents
100%
Low
----
Average
22%
Very expensive
78%
Findings indicate that the prices of Vestia are very expensive and effect the customer decisions
and this criteria is related to Question 2 on the number of purchases during a year
Recommendation
To reconsider the pricing policy of the Company and to look for cheaper accessories to reduce
prices. However, quality of the final product standard and appearance need to be taken in to
account. In products of the garment industry, cost alone cannot the prime consideration as the
quality and appearance of the final products influence customer buying decisions.
Customer Relationship Management 71
Question 9
No. of cases
200
Respondents
100%
Very poor
.05%
Poor
.05%
Satisfied
32%
Good
48%
Very good
19%
Respondents are of the opinion that the way of presenting the products of Vestia is not the ideal
way and has many weak points. It does affect the sales volume.
Recommendation
Redesign the company show rooms (outlets) to present the product in a way that it does meet
customer expectations and help him to surf easily among the collections.
Question 10
Packaging the product have a problem could easily affect the sales and is a weak point against
the competitor in the market
Recommendation
Asses this point in the marketing plan, Vestia should offer the suits covered as a gift in the
promotional plan, which can be considered as a factor of sales promotion.
Question 11
No. of cases
200
Respondents
100%
Very poor
.05%
Poor
9.05%
Satisfied
39%
Good
23%
Very good
28%
Sales representatives and their better performance in sales is not what the company currently
needs in this severe competitive situation. The Company should be looking for to provide the
recommended service to the customers to enhance customer satisfaction.
Recommendations
Training courses to the sales rep team required to be implemented in the marketing plan on
improving the service quality.
Customer Relationship Management 72
Question12
No. of cases
200
Respondents
100%
Very poor
-----
Poor
----
satisfied
30%
good
46%
Very good
24%
After sales service and adjustments in a low percentage then what is ideal and needed to sustain
customer loyalty.
Recommendation
The customer service department should be geared to start solving the mentioned problems so
that CRM strategies can be successfully implemented.
Question 13
Responses to this question clearly show that the company loses its market share in the very
important segments of youth aged between 18-27 years and the average income people, which
may affect the company growth in the long term.
Recommendation
Vestia should enter the field of casual wear and to asses this idea, through the production plan
capability to add new market share and to attract new target segments.
Customer Relationship Management 73
Chapter 5 Conclusion and Recommendations
5.1 Conclusion
CRM act as a tool in helping to increase customer loyalty, which is one of the key drivers for
enabling the manufacturer capture increased market share. CRM is a vital business asset to the
manufacturer. CRM is how the manufacturer can find, get to know, keep in touch, connect to
customer, and ensure customers get what they want, check and ensure customers getting what
manufacturer promised to deliver. It is important because the cost of acquiring new customers
usually is more expensive than retaining the customers. CRM is an essential concept to be
present in direct marketing. The real success of business is the ability to have customer loyalty in
this tight competition. The most achievement in business is how to build loyalty and profit
making customers. CRM strategies focus on how to win heart and mind of customers.
For achieving and fulfilling such a strategy, the core of the organization must be ready to adapt
to this idea and willing to implement the CRM business strategy plan in all ways, internally and
externally. CRM strategy should also be aligned to the organization’s mission and purpose in
order to bring about a sustained achievement of business objectives and profitable customer
relationships. CRM strategies are often realized from the achievement of specific CRM
objectives. To be successful, it is imperative that objectives are thorough, measurable and
directly attributed to supporting the overall strategy. Several common CRM objectives include
for example shared customer knowledge where it ensures that each customer interaction is
handled with the same degree of care while leveraging the same information across all
departments, geographies and channels and the 360 degree consolidated customer view which is
the achievement of a single, enterprise-wide view of the customer relationship.
Customer Relationship Management 74
At its core, CRM is a business strategy and underlying that strategy is a number of CRM
software applications, including marketing and customer service. Companies use these
applications to make their customer management more efficient, more customer-centric to satisfy
their customers' service requirements. What form the business strategy takes can be different
depending on the type of organization and the objectives to be achieved. Generally, sales,
marketing and customer service teams use CRM initiatives extensively.
Historically, CRM started as a contact management application, a repository to hold customer
details and some activities such as telephone calls, meeting times and a rudimentary record of
notes. Linking people within companies was also an important step in the evolution of CRM.
Sales force automation however realized the value of putting actual sales information into the
database to establish sales management activities such as sales pipelines and forecasting
opportunities. Today, CRM has migrated itself to being a relationship management tool. It is
very different to what was the traditional use of CRM with access to customer details through a
customer database. Marketing department in the company is responsible to find prospects and
make them fully loyal customers in Vestia, hence verifying the offensive strategy of Vestia,
which focuses on the conquest of the market share, constant acquisition of new customers and
ridding oneself quickly of any competition. The company has to grow its manufacturing size as
well as its customers simultaneously.
After targeting the customers and agreeing with the new customer on execution of a certain type
of order, the order is transmitted to the Logistics and Production Planning department. In this
department, the researcher’s role as exports manager comes in place, which is to ensure the last
step of quality and safe arrival of the product arrival to the customer resulting in direct customer
relationship as being the last step in the process of the whole supply chain.
Customer Relationship Management 75
In commercially successful companies, the CRM Strategy encompasses three ‘value disciplines’,
which are

Operational excellence

Customer intimacy

Product leadership
In Vestia, the organizational goal is to be the leader of operational excellence in the textile
industry by offering the best quality to their valued customers, and at competitive prices ensuring
ease of purchase and door-to-door logistics services. The customers of Vestia are located in wide
geographical range from Egypt to England to the United States and Argentina. The Company is
desirous of building intimate customer relationship as the individual wishes of the customers
count for the success of the company. A great deal of the company’s attention is focused on the
development of the desired customer base. The company’s business at the same time is built up
based on the knowledge of individual customers and their preferences as products and services
are continually adapted to customers’ wishes without asking for excessively high prices for
doing so and thus creating a partnership between the company and its customers.
5.2 Recommendations
For a successful implementation of CRM, the following are some of the strategies Vestia has to
adopt.
 Developing a corporate culture
All the key people need to be involved in the CRM implementation. The role of the key people
includes assessing the business objectives, setting CRM strategies, making corporate level
policies and issuing the necessary directives to the subordinates involved in the implementation
process. Communicating CRM initiatives to the organizational members through well-defined
Customer Relationship Management 76
policies, directives and well-planned training go a long way in making the CRM initiative a
success.
 Establishing a CRM strategy
Implementing CRM is not just installing or using software. It is critically important to identify
the relationship between the overall business goals and CRM implementation strategy. It is also
imperative that the relationship between CRM implementation strategy and the business
processes, people and information and communication technology tools is identified.
Establishing key performance metrics in the areas like sales, marketing and customer support and
comparing them with previous metrics or with those of competitors wherever possible is another
important factor for ensuring a successful CRM implementation.
 Defining CRM objectives and prioritizing CRM requirements
Since every department within an organization will have its own needs and priorities, these
should be identified and a priority evolved for meeting such requirements. If the organization
does not fix the priorities for CRM requirements, it will quickly lose focus of the CRM
objectives. There are several other factors like structure of the organization, hierarchical roles,
cultural difference within the organization, resistance to change and authority roles need to be
considered for a successful implementation of CRM.
Based on the above recommendations on best practices for implementing CRM the CRM
strategies of Vestia include building a model with the four following pillars:
Pillar #1: Servant Relationship
The Company’s paradigm must be one of servant, and not a personally equal relationship.
There are three key dimensions of a servant relationship:
a. You have to know whom you are serving.
Customer Relationship Management 77
b. You have to lead those you are serving.
c. You have to prove that you are really a servant to them and not just out to get money from
them. Further, this servant mentality must be heartfelt throughout the organization and be a real
part of the corporate culture.
Pillar #2: Communication
Constant communication with the customer is a very important element in the CRM strategy of
the company due to any changes that can happen in the order according to customer needs and
due to any modifications or suggestions that can be made in the exporting of the finished goods
to the customer.
Maybe the packaging of the product preferred by the customer is not suitable according to the
size and variety of the order of the customer and there is a better way to do it. Can that decision
be made without informing the customer or without communication between the logistics
department of our company and the customer’s? Of course, not, and that is the reason, why there
always is a multi-channel environment should exist in the company to ensure direct and various
ways of communication with the customer.
Pillar #3: Customer knowledge
It always starts with the customer, processed for the customer, and ends with the customer…
Customer knowledge is essential ultimately to develop a long-term relationship and to supply
customization. Although Vestia has already developed this type of individual customer
knowledge for a large number of customers, it should be ensured that all the databases are filled
with correct and current data, which can be checked and analyzed anytime. This will facilitate
making all the information regarding the customers is transparent. This also enables any of the
two main departments in the CRM model, which are marketing and logistics, in this case; can
Customer Relationship Management 78
have full access to any information regarding the customer to be able to know what the customer
wants before the customer even asks for it and even to meet/surpass the customer’s expectations.
Pillar # 4: Deserve that trust
From the CRM point of view, Vestia is in the position of having close relationship with large and
popular enterprises such as Lacoste, Prada, Aramani, Ralph Lauren and others. This was possible
because the qualities of customer loyalty, customer commitment and above all, the trust that
Vestia could create enabled the company to sustain the relationship. Thanks to the logistics
system of the company, which provides excellent customer service by fulfilling the six “rights”:
ensuring that the right goods, in the right quantities, in the right condition, are delivered to the
right place, at the right time, for the right cost. However, the company can still do better by
improving the service quality and delivery, which is the main thrust of this paper. This will
enable Vestia achieve operational excellence as well as customer intimacy at the same time
Vestia can follow the business strategy perspective on CRM that a successful company such as
Filmar (Italy) follows. The following figure represents a CRM strategic approach. This approach
comprises of key phases and contextual factors affecting the key phases. Therefore, this model
can be considered as a hybrid model and is one of the popular approaches to CRM, which helps
any organization to strengthen its marketing efforts. The key phases include (i) process of
acquitting customers, (ii) process of retaining customers and (iii) process of extending the
business with the existing customers. The contextual factors include (i) orientation of the
organization towards a better marketing approach, (ii) process of value creation and (iii) use of
innovative information and communication technology aids to facilitate the processes of the
three key phases mentioned above.
Customer Relationship Management 79
1. Process of Acquiring Customers – Under this phase the organization initiated efforts to attract
new customer towards purchasing the products/services of the company for the first time. At the
end of this phase, the organization has successfully attracted the customer towards its
products/services.
Increase in the number of new customers acquired – By the contextual factor of orienting the
firm towards better marketing approach and use of latest information technology measures the
firm achieves the objective of increasing the number of new customers who make first time
purchases of the firm’s products/services. The customer value creation-efforts of the firm attract
more number of first time customers.
2. Process of Retaining the Customers – In the second phase of the CRM strategy, the customers
who purchased the products/services of Vestia make the decision to purchase the products of the
firm again, based on their satisfaction level. In this way, Vestia is able to retain them as
customers. During the second time purchases, the customers are expected to purchase similar
product/service. Alternatively, they may decide to venture into buying of products/services,
which are at the next level.
Customer Relationship Management 80
Increase in the Ratio of Customers Retention – In the second phase of the CRM Strategy also,
the company can make use of the contextual factors of improved marketing approaches and use
of up to date technological aids, the company can increase the ratio of retained customers. If the
company is able to provide a better customer value, there is likely to be drastic increase in the
ratio of retained customers, who mostly will return for purchasing Vestia’s products more
number of times.
3. Process of extending the business with the existing customers – Under the third phase of the
CRM strategy, the customers start regular buying of Vestia’s products/services. Vestia on its part
increases its product offerings to repeat customers. The new products/services introduced by
Vestia will largely differ from the original products/services purchased by the customers. These
products and services in fact will supplement the original products/services. The objective of
Vestia is to ensure higher retention ratio of the customers by improved and different product
offerings, which can be considered as the extension of the original ones.
Increase in the number of customers for Extended Products/Service – new marketing ideas with
the support of information technology tools the company can strive to increase the number of
repeat customers to whom the extended products and services are offered. Here again, the
customer value creation by Vestia from the extended products and services play a key role in
increasing the number of customers for extended products/services.
4. Orienting towards New Marketing Approaches – This contextual factor implies gearing the
entire organization towards meeting the preferences of customers. The firm strives to satisfy the
customer wants by enabling the customer to enjoy the benefits of acquiring the tangible product
along with the core product other augmented benefits attached to the product like warranties and
after sales service. In the process of orienting the organizational members towards improved
Customer Relationship Management 81
marketing approaches, the firm has to take into account the tangible, core and augmented levels
of a product that need to be offered to the customer.
5. Customer Value Creation – implies the creation of additional value for the customer for the
money the customer pays to purchase the product or service from the company. Customer value
creation is at the base of customer satisfaction.
6. Information Technology Aids – implies that the firms should periodically update its
information technological capabilities so that it can efficiently gather data and information on the
changes in customer needs and preferences. Even though latest information technological
support does not cover the implementation of the entire CRM strategy, it is vitally important for
the success of CRM. Therefore, it becomes imperative that the firm has the support of latest
information and communication technological equipments, software applications and tools to
gauge the customer choices on a real time basis.
Customer Relationship Management 82
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Customer Relationship Management 86
Appendix – Questionnaire
Questionnaire
1. What kind of clothes you usually wear?
A-casual
B-classical
2. How often do you buy suits?
A-once a year
B-once every six month
C-once every three month
D-once every month
E-occasionally
3. Do you purchase Vestia product?
A-first time
B-always
C-sometimes
E-never
4. How do you find our product availability and models in the market?
A-Poor collections to choose from
B-Satisfied collections to choose from
C-Very good collections to choose from
E-Superb collections to choose from
5. What you did not like in our product?
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
6. What do you want to find in our product?
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------7. What do you like to find in our product?
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Customer Relationship Management 87
1-poor
8. How do you define our services?
2-satisfied
3-good 4-very good
5-perfect
1-poor
9. Level of cleanliness
2-satisfied
3-good 4-very good
5-perfect
1-poor
10. Sales representative performance
2-satisfied
3-good 4-very good
5-perfect
1-poor
11. Packaging color and designed
2-satisfied
3-good 4-very good
5-perfect
1-Low
12. Price range
2-average
4-very expensive
1-poor
13. In what level you define after sales services and adjustments
2-satisfied
3-good 4-very good 5-perfect
It is important to our study to fill the following information
1-Name; ---------------------------------------------------------------------2-Gender
M
F
3-Occupation ---------------------------------------------------------------4-Age
From 18-27
28-37
38-47
47-57
57-more
5-Monthly income
500 & more
1000& more
1500 & more
2000& more
Any comments
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