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1、Customer Relationship Management- A Winning Customer StrategySeminar presentationApril 2004AgendaCustomer Relationship Management Presentation8:00-9:15Break9:15-9:30Case 1 San Fabian Supply Company9:30-10:30Case 2 Solo Mobile Phone Company10:30-12:00.What is CRM in your mind?What is customer relatio

2、nship management?What does CRM bring to companies?A survey on senior marketing executives at Fortune 1000 companies indicates a widespread frustration about the return on CRM investmentsCRM in not a technology term, but instead, a strategy driven holistic management approachSource: Booz Allen Hamilt

3、on Survey, 2001.CRM is a customer- and value-based management approach to increase the company valueCustomer Relationship Management is a customer- and value-based company orientation with the goal of building up and fully benefiting from lasting and profitable customer relationships through holisti

4、c and individualized marketing, sales and service concepts using state-of-the-art technologiesCRM definitionIdentifying the top customers and exploiting the maximum share of their expense budgetsRaising the efficiency of customer managementEstablishing customer loyalty and lifetime relationshipsFull

5、y exploiting the potential customer segments by acquiring new customersThereby increasing the company valueCRM objectives.Customer Relationship Management differs from classical marketing in many waysTraditional marketingCustomer relationship managementObjectivesGenerate salesCreate a loyal customer

6、FocusAcquisition phaseTotal customer life-cycleTimeframeShort termMedium to long termPerformance indicatorsMarket share, salesShare of wallet, customer profitability, customer valueCustomer knowledgeDemands from customer segmentsIndividual preferences and needsProductStand-alone productIntegration o

7、f products and servicesPriceGeneral discountsPrice differentiation on the basis of customer loyaltySales channelsTraditional sales channels (multi-level)Disintermediation, multi channel managementCommunicationUnidirectional communicationInteractive dialog with customers and communities, 24 hrs./7 da

8、y availability.CRM is the holistic approach to a customer-value based company orientation four enablers set up the frame .CreateGainUnderstandRetainORGANIZATIONSTRATEGY CULTURECRM-StrategyHolistic approach/ top-management issueDefinition of target segments and customersValue-based prioritizationOrga

9、nizationand processesCustomer-oriented structures and processesCustomer process/touchpoint innovationOrganizational anchoring of the CRM responsibilityTECHNOLOGYTechnologySystem integrationUse of e-technologiesSelection of system/ technology partnersCulture and change managementConsolidating the cus

10、tomer value orientationManagement processes and incentive systemsContinuous change management and improvement processesCustomer valueCRM enablers.CRM creates lasting strategic competitive advantagesUnderstand markets and customersCreate superior customer offersRetain profitable customersGain profita

11、ble customersBuilding up superior customer knowledgeIdentifying target segments and developing target customer specific marketing, sales and service conceptsFocusing on the highest-valuecustomersRaising the entry barriers for competitors by building up lasting relationships with the customersDevelop

12、ing a learning relationship in long-term customer relationshipsRaising the entry barriers for competitors through specific product and service offersHigher competitive barriers by covering all sales channels Lowering conflict potential through the proactive integration of the various channelsRaising

13、 customers costs of changing suppliers by covering all needsCreateGainUnderstandRetainORGANIZATIONSTRATEGY CULTURETECHNOLOGYCustomer value.Marketing-Mix are core elements of customer relationshipstrategyMarketing-MixTarget MarketproductplacepricepromotionMarketing-Mix provides a decision-making meth

14、od for deciding howto manage the customer relationshipDifferentiated product targeting different customer segmentProduct customization: design, function, packagingService levelPrice strategy: e.g. charge price premium for valuable customer segment Payment termsSpecial discountsSelect of Marketing Co

15、mmunication vehicle to better reach target customer: TV ads, PR, SponsorshipEvents for valuable customersVIP clubEffective channel strategy: one-to-one visit, call center, storesVarious channel combination to more efficiently serve target customers.The three main application areas of CRMOperational

16、CRMAnalytical CRMCRMcomponentsCollaborative CRMcampaign managementAutomatically distributionERP-integrationCustomer serviceData Mining/Data WarehousePurchase probability Forecasting Customer segmentation Cross-selling-potential Regional-purchase-behavior Channel-managementFace-to-FaceCall-CenterBrie

17、f/FaxWeb/Mail.There are quite a few obstacles to effectively apply CRMLack of marketing fundamentalsLack of clear value proposition and failure to target customersTechnology is introduced before companies master marketing fundamentalsReliance on mass marketingPoor data qualityIncomplete informationI

18、naccurate informationInadequate data collection systemsLimited external sources of data (e.g., no or few list-rental companies)Poor direct marketing skillsLack of experienced statisticians and marketing program developersLack of outsourcing resources, such as direct-mail or telemarketing agencies He

19、avy emphasis on academic and overly sophisticated analysesOrganizational weaknessesNo strong centralized marketing or product groups to drive CRMCRM regarded as a small, low-priority marketing areaFlawed performance measurements; limited support resources, e.g., call center operators; little or no c

20、ross-functional effort.Ability to differentiate productBuying transaction frequencyAccess to customer informationAppropriate programDifferent industries have different demand on CRM program Example industriesValue of customerLowHighNoneProgram choiceWeakStrongNoYesNoYesData captureChange behaviorDif

21、ferentiation Data capture, differentiationData captureNoneReal estateCommodity trading, non-branded goodsNewspapersTheme parks, museums, playhousesAirlines, hotels, credit cards, telecoms, bankingMembership services (e.g., travel), mail-order clubsDepartment stores, retailersGrocery, gas stationsHig

22、hLowHighLow.Main objectives of CRM in German top companies %1)Increase sales for existing product/service rangeVery important/importantEmpirical results confirm the main objective for pursuing a CRM strategy is to increase customer loyaltyMediumLess important/not importantIncrease sales by cross-/up

23、-sellingWin new customersIncrease customer retention/loyaltyIncrease efficiency/reduce costs in marketingIncrease efficiency/reduce cost in salesIncrease efficiency/reduce costs in serviceIncrease efficiency/reduce costs in IT utilization1)Cross-industry study, 200 top companies in GermanySource: Ro

24、land Berger Research 2001771495825175920219343542917582715543115433522.CRM application examplesHotelAirlineTelecomLoyalty club membership: Points collection and rewardCustomer database to support quick check-in and customized service (Newspaper in the room, fruits and welcome notes)Proactively drive

25、 sales leads by combining upcoming trade show and conference information with consolicated customer data to better serve high value customers: corporate account and business travelerMileage card: mileage collection and rewardAirport special lounge for valuable customersDifferentiated service for dif

26、ferent value customersVIP club: VIP customer can get fast and personalized serviceUse multi-channel to approach customers and to fulfill customer service: call center, VIP customer representatives, Stores, website, etc.Leverage customer database to do up-sell and cross-sell, and more importantly, to

27、 reduce churnIndustry (B2B)Global Account management: account profiling Key account manager for A-class customersDifferentiated payment practice: e.g. extended term of payment.Up-sell and cross-sellCustomer FeedbackData collectionChannel mix to approach potential customersFriendly customer interface

28、Multi-channel serviceVIP customer value-added serviceInformation on the BillNews LetterCall center to collect feedbackUnderstand reasons to churnLeverage customer database to build churn warning systemProactive promote to customers with inclination to churnLoyalty programAcquisitionChurn reductionCu

29、stomer ServiceVisit our shop ! Great deal on MMSCall center product recommendationProduct/service demonstration at storeProduct information on the billExample: Mobile Operator applies CRM levers in each customer life cycle stageMobile Operator Example.For consumer goods companies, channel partners a

30、s well as consumers are both their customersMobile Phone Company ExampleMobile Phone CompanyChannel: wholesaler/ retailerOperatorServiceEnd-user(consumer)SellHandset subsidySellSellUnderstand customer needs is the basis for a successful customer relationship managementEnd-user/consumer is the main c

31、ustomer, whose demand must be analyzed in depth and be well-segmentedAt the same time, CRM also needs to be used to foster relationships with channel partners.Consumer goods companies should apply different CRM strategy and actions to different customer typesChannel: wholesaler/ retailerOperatorEnd-

32、user (consumer)Mobile Phone Company Disguised ExampleCustomer DemandsCRM leversHigh distribution margin and large volumeIn-time delivery and low stock costGood technology and service supportHigh customer satisfaction rateGolden-channel award: offer award to best performance wholesaler/ retailerBette

33、r product offeringsTechnology call center to timely support channels request on tech supportIncorporate channels supply chain system to Mobile Phone Companys supply chain system to realize just-in-time supplyHigh ARPUMore new subscriber and lower churn rateHigher customer satisfaction rate Incorpora

34、te special mobile operator functions/programs into product designCarry operator logo on the product Technology call center to offer timely tech supportOffer special discounts to Mobile VIP customersHigh price performance ratioBetter quality guarantee and customer serviceFeeling of ownership and care

35、 by mobile phone company Better product design to serve a specific customer segmentCustomer database and targeted promotionConsumer club more value-added functions to club membersService network and call center.Case StudiesWe will do two cases in the next hours. One is an industrial goods company, a

36、nd the other is consumer goods companyLets see how customer relationship can work in these companies.Case Study & Exercises San Fabian Supply CompanyBrief Introduction SituationComplicationResolutionDemand for construction material has decreased since MacDowell expanded its production capacityPhilip

37、pine is still a relationship driven business world and the way to do business is differentWealth is concentrated in Phil marketOne of the largest suppliers of building materials in PhilippineThe exclusive distributor of MacDowell products in PhilippineHas good reputation for well-trained and aggress

38、ive sales forceA manufacturer of noncombustible, chemically-resistant materialIs currently plagued by plant overcapacity and eager to boost salesMarketSan FabianMacDowell (MD)MacDowell (MD)Wish to increase sales by having more dealers carrying their productsWant to take upon itself the whole sale di

39、stribution role San Fabian had been fillingTherefore, it wants to terminate exclusive distributor agreement with San FabianWont take a non-exclusive contractBut MD products contributes a lot to San Fabian sales and net incomeIt is not easy to get exclusive agreement with other supplierSan FabianWhat

40、 will MacDowell do with customer relationship with San Fabian?How will San Fabian react facing the change from MacDowell.Case exerciseTask: After reading through the case, you are required to answer following questionsWhat does San Fabian do for MacDowell? What does MacDowell do for San Fabian?What

41、change is MacDowell proposing and why?What benefits and risks MacDowell will get from this change?If you are the management of MacDowell, how will you treat this exclusive distributor relationship?What are San Fabians alternatives if you are invited to give advice to San Fabian?How can San Fabian co

42、me to an agreeable solution with MacDowell?20 minutes reading and discussion.Key takeawaysIt is always a hard decision related to channel models: exclusive vs. selective vs. mass distribution, which we can often see in daily business operationThere is an inevitable love/hate relationship between cha

43、nnel members. Both want product to be sold, but each wants more of the sales marginChannel profits are maximized when cooperation overcomes conflict. Therefore, how to achieve win-win becomes the critical topicDistributors provide a variety of activities on behalf of their manufacturers. Exclusive d

44、istribution model can stimulate distributor to make great effort to push the sales.Case Study & Exercises Solo Mobile Phone CompanyCase background*Solo is a European mobile phone company whose product are all GSM mobile phones. It is among the top three largest mobile phone manufacturer in the world

45、. Solo has entered China market in 1995 and performed quite well in China before year 2000. It is the third largest player on China market, only after the global mobile giant AA and BB. Solo enjoys good reputation of high quality and business people targeted design. It had quite sound customer base

46、in China and its brand awareness is high.* Disguised case, all data and company name in this case are disguisedSolo MobileSuccess in 1990sChallenge and threat since 2001China mobile phone market is still growing quickly, but more and more dominated by young and trendy products. Young people tend to

47、change their mobile phones more frequently. Therefore, Solo decided to change its focus and brand image since 2001, putting more emphasis on young peopleBut the effort of changing brand positioning seems to weaken Solos brand image. In a recent market survey, consumers responses show their confusion

48、 of the brand image of SoloFast growth of local brand TL, BD, AM, KK, etc. formed huge threat to global players on the market. Under the competition pressure, Solos market share decreased from 15% in 2001 to 5% in 2003What Solo should do to regain the lost market share?.The Chinese mobile phone mark

49、et is the fastest growing mobile phone market* ProjectionCAGR +18%China Mobile Phone Market Size (all standards, mio. units)GSM CDMA 334 523 551628697774*FY 759810812.Trendy, Fashionable and Multi-function mobile phones become the mainstream in competitionMore fashionable designColor display and Pol

50、y-phonic ring toneImbedded camera, games, MP3Compete on trendy design and more functionsVarious form factors: Clamshell, block, slider, flip, rotateWhile price is going down and downSolo Mobile.No one had expected the fast growth of local mobile manufacturersSolo MobileLocal manufacturers gain marke

51、t share much faster than expectedWinning factors of local mobile phone manufacturersLocal brand market share%Channel coverage and control: local manufacturer use more sales people and tend to build own channel instead of using agentsHigh penetration in 2nd-3rd Tier cities and rural areas (where inte

52、rnational players are weak)More aggressive advertisementBetter understand most local consumers taste for design and offer luxury design and package phones (e.g. put diamond on the cover)Cheaper price Local brands channel coverage and penetration is most distinctive from international players.Channel

53、 structure is changing, which give Solo new challengesSolo MobileChanges in channel structureSolo (and other international players) use National Distributor for distributionSoloNDCMCC(Operator)RDRetailerConsumerCurrent channel structureQuick development of KRC (key retail chains) in Tier 1 cities, s

54、uch as Guo Mei, Su Ning, who sell directly to consumers.Mobile operators (CMCC and Unicom) become more aggressive in handset business by heavily using handset subsidyLocal mobile phone manufacturers success in own channel business model call market attention. People tend to aware that ND model invol

55、ves too many levers in the channel structure, thus lowering distribution efficiency and market response and increasing channel cost.International players are thinking of using provincial/regional distributors instead of National distributors in some area.Solo is under heavy pressure of losing market

56、 share and lowering brand awareness and imageSolo Senior ManagerMobile OperatorNational DistributorConsumerOur market share decreased from 15% three years ago to 5% last year and we still saw a downward trend this yearWe plan to put more emphasis on handset subsidy and play more role in handset dist

57、ribution. Mobile manufacturer M, N, S are all approaching us for cooperationWe have launched some good products last year and we invest in advertisement, but our presence in retail stores are low and consumers cannot see our products in a lot storesSolo Marketing ManagerWe carry quite a lot brands.

58、What we care is which brand can give me best profit. We are also under pressure of lower margin and the emergence of KRCsI know Solo brand, but I cannot tell whether I like them or not. I dont see their new products much.Solo Mobile.Solo is thinking of a customer relationship strategy to help recover the businessWe noticed that in the past we put too much emphasis on Sell, Sell and Sell, but miss the real customer relationshipWe are launching a new phone and we want to incorporate more customer relationship strategy into the selling of this productWe need s

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