In this chapter the readers will be provided with the theoretical body of the study. The purpose of this chapter is thus to clarify some specific terms and concepts which will be touched upon in this paper later. These theories will be later employed in the data collection and the analysis section.
Customer Relationship Management (CRM)
Organizations seeking sustainable development in the current high-competitive business environment need to transfer their business strategies from product-oriented to customer-oriented. Muther (2002) has encouraged organizations to not only look at the quality and price differentiation, but also to identify their customers’ requirements and offer innovative market services in order to stand their ground against competitors. Park and Kim (2003) believed that organizations which focus on obtaining and retaining more customer share rather than market share, will be more capable in cost reduction since as Kotler, Wong, Saunders and Armstrong (2005) stated, the cost of attracting a new customer is five times more maintaining an existing one. This transformation towards the customer-orientation has been interpreted by Romano and Fjermestad (2003) as a shift from “transaction-based economy” to a “relationship-based economy”, implying a movement from economies of scale to “economies of interactions” or “economies of relations” which are the key value drivers for customer-centric economy.
Customer Relationship Management (CRM) as one of the most efficient customer-oriented business approaches can be utilized by organization to facilitate their transition from product-oriented to a customer-centric strategy. CRM is literally concerned with establishing customer relationships. The relationships here can be emerged in different shapes such as business-to-business relationships, customer lifecycles, different customer segments, customer life time value and customer profitability (Rollins & Halinen, 2005). Williams and Curtis (2006) have defined CRM as a subset of relationship marketing indicating that, while relationship marketing encompasses all relationships with customers, suppliers and intermediaries, CRM focused on the management of customer relations only.
According to Saren (2006), there is still nonconformity among experts about the exact definition of CRM. However, while some specialists view it as a pure information technology solution for data collection and analysis, and some consider it as a marketing philosophy planned to achieve long-term business gains, an integration of two perspectives can generate better outcomes for organizations (Saren, 2006).
Saren (2006) further put a moderate interpretation on CRM definition by calling it as an “IT-enabled organizational process that places the customer at the heart of the firm’s strategy and operations” which is illustrated in figure 3.1
Many scholars (Goldenberg, 2003; Anton & Petouhoff, 2002; Shanmugasundaram & Munusamy, 2008; Gupta, Sharma & Rashid, 2009) have characterized CRM as the integration of mainly three crucial components of people, process and technology to satisfy customers’ needs as displayed in figure 3.2 Goldenberg (2003) has asserted that successful implementation of CRM relies on the right combination of these aspects to touch the targeted customers from any point in an organization.
Within this classification, people refer to the staff members of an organization since CRM is designed and implemented by this people. The extent to which people in an organization are sharing the same vision and willing to actively participate in CRM operations, has a positive relation with CRM success. Besides, innovative ideas and solutions that can turn the wheels of CRM better, come from the minds of an organization’s staff members. According to Fuglsang (2008), innovation is not something that can take place in laboratory or can be planned by management, rather, it is an activity that involves many interacting people. Thus in a collaborative operation, CRM enables its users to build up interactive relationships with their customers in order to discover their present needs and requirements and on the other side, innovative users can predict and satisfy the future desires and behaviors of their customers accordingly. Kotter, (2002) has also mentioned another issue about the people aspect in CRM stating that since CRM deals with a lot of change management processes in an organization, it is imperative to not only get personnel to see the need for change, but also to feel so emotionally engaged that they want to change (cited in Buttle, 2009).
CRM processes encompass all processes that help organizations to their manage customer relationships in consistent, efficient and effective ways, stated Bailey (2008). While it seems that different authors (Kalakota & Robinson, 2001; Buttle, 2009; Payne, 2005; Saren, 2006) have classified CRM processes in different forms, all these classifications share many similarities in nature. As one of the comprehensive study in this case, Saren (2006) has clearly classified CRM processes into four interrelated sub processes as “strategic planning process”, “information process”, “customer value process” and “performance measurement process”. In this classification, strategic planning process is the cornerstone for all customer-centric operations in an organization by paving the path for development, implementation and monitor of all customer-oriented activities in the organization (Saren, 2006).
As a part of this strategy, organizations most often try to develop a customer segmentation strategy in order to improve their interactions by focusing on a particular market segment or a customer segment. Payne (2005) believes that market segmentation (or customer segmentation) is a key aspect in CRM and it involves dividing a potential market up into a series of sub-markets based on customer characteristics. Johnson, Scholes and Whittington (2009) also have defined a market segment as “a group of customers who have similar needs that are different from customers’ needs in other parts of the market” (p. 46). They believe that it helps organizations to identify their strategic customers who have the most influence on the organizations’ revenue.
As another category of CRM processes, Saren (2006) pointed to the information processes. These processes encompass the generation of customer knowledge based on a series of information processes including “information acquisition”, “information dissemination” and “information use” (Saren, 2006). All these efforts emphasize on the processes of collecting, storing, managing and utilizing key customer information from different sources for further usage including customer segmentation, developing customer strategies and identifying and satisfying customers’ needs. In addition, it is imperative to gain a customer insight in an organized way since it will help organizations to, as Payne (2005) has stated, recognize what the best channels for reaching individual customers are and what channels individual customer prefer to use for different tasks and how they use them currently and how their future expectation may change.
As another process in CRM, Saren (2006) has put forth the customer value process. According to Saren (2006), this process can demonstrate the level of organizations’ commitment in listening to customers’ needs and that how they respond to these needs by producing high-quality and innovative products and services. In other words, Saren (2006) emphasized on how organization can create value out of their customers’ perceptions about a particular product or service by incorporating their voice into the design and delivery of a product or service in a way that addresses their needs. Saren (2006) later has called this operation a “value co-production”.
Buttle (2009) has called this process customization indicating that it is a fundamental approach to customize the value proposition in order to attract and maintain targeted customers. According to Buttle (2009), customization implies that organizations must be attentive and responsive to their customers’ differing needs. In this regard, Croteau and Li (2003) also described CRM as “a customer-focused business strategy that aims to increase customer satisfaction and customer loyalty by offering a more responsive and customized service to each customer” (cited in Seeman & O’Hara, 2006, p 2).
Last but not least is the process of performance measurement of CRM which embodies the abilities of organizations to measure and improve their corporate performance based on the feedbacks obtained from their customers across different channels and sources of interaction (Saren, 2006).
According to Khurana (2010), CRM is often mistakenly assumed as mainly software. It can be, though, the idea behind it is that CRM is basically an approach that organizations take to initiate and retain their relationships with customers (Khurana, 2010). Such approach then can be driven by technology and data that organizations set out in order to manage their relationships, continued Khurana (2010). Williams and Curtis (2006) have asserted that 55 to 75 percent of CRM projects fail since, organization often confuse CRM strategy with technology implementation. They then defined CRM as a broad business concept in which technologies act as enablers.
Many authors have pointed to the role of technology as an enabler in CRM mainly for the purpose of systematically handling information about customers for further use such as needs’ satisfaction, product or services customization or even for finding different channels and sources for establishing relationships with customers. However, technology tools in CRM do not necessarily refer to software, but can be any tools to store and manage customer information. Payne (2005) implicated that since CRM processes demand analysis of a considerable amount of customer data, the existence of data repositories or data warehouses which has significant implications regarding the collection and organization of these data, seems to be necessary.
To sum up, a successful CRM is an outcome of an effective and proactive management of the right integration between three components of people, process and technology with a particular aim of satisfying segmented customers’ needs.
CRM in Higher Education
The emergence of CRM applications in colleges and universities refers back to mid 1980s and the late 1990s when educational institutions started to restructure and reengineer their operating processes to reduce costs while raising efficiency (Grant & Anderson, 2002). The efforts made such universities turned to the use of enterprise resource planning (ERP) applications in automating business processes in areas including finance, enrollment and human resources. However, since ERP could only serve internal customers’ needs (faculty staff members), there was a need for satisfying external customers’ demands (students). This need, therefore led to introduction of CRM into higher education.
CRM in higher education mainly focuses on automation and improvement of institutional processes associated with managing student relationships in areas such as recruitment, marketing, communication management and service and support (Grant & Anderson, 2002, p. 24). Thus adoption of the CRM in universities and colleges mainly improve the interactions between the admission, registration, financial aid and accommodation offices and students. Further, Grant and Anderson (2002) posited that the use of CRM applications can lead to improved customer responsiveness by increasing effective practices of the universities’ staff members who directly deal with students and provide an actual “cradle-to-grave” customer life cycle. According to Buttle (2009), nowadays, universities employ CRM to manage relationships with their students and alumni. He supports his idea by giving an example that, if a student enjoys his or her experiences at a university, he or she might recommend it to his/her personal networks afterwards.
Nonetheless, as stated earlier, the purpose of the study at hand is to depict a knowledge-based CRM framework that can be contributed into the marketing efforts of Swedish universities as a means for managing relationships with international students. Based on a comprehensive discussion presenting in the coming section, one critical aspect in building up effective relationships with students rests on the extent to which universities possess students’ knowledge. It is however notable that since “students” have been assumed as main “customers” of universities, this discussion has been put forward on the basis of the importance of customer knowledge in CRM. As Seeman and O’Hara (2006) have stated, having a customer-view about students provides a competitive advantage for educational institutions and improve their capabilities to attract, retain and serve these customers more.
Table of Contents
1.2 PROBLEM DISCUSSION
1.3 PROBLEM STATEMENT
1.4 RESEARCH QUESTION
1.6 INTERESTED PARTIES
1.8 DEFINITION OF TERMS
2.1 RESEARCH APPROACH
2.2 STUDY DESIGN
2.3 DATA COLLECTION
2.5 ANALYSIS OF DATA
2.6 RESEARCH QUALITY
3 THEORETICAL FRAMEWORK
3.1 CUSTOMER RELATIONSHIP MANAGEMENT (CRM)
3.2 CRM IN HIGHER EDUCATION
3.3 CUSTOMER KNOWLEDGE
3.4 KNOWLEDGE MANAGEMENT
3.5 KM IN HIGHER EDUCATION
3.6 COLLABORATION OF KM IN CRM
4 EMPIRICAL FINDINGS
4.1 GLOBAL MARKET
4.2 COMPETITIVE ADVANTAGES AND/OR STRENGTHS
4.3 GOALS OF INTERNATIONAL MARKETING STRATEGY
4.4 MARKETING EFFORTS REGARDING ATTRACTING INTERNATIONAL STUDENTS
4.5 MARKET SEGMENTATION /CUSTOMIZED MARKETING EFFORTS
4.6 RELATIONSHIPS WITH INTERNATIONAL STUDENTS
4.7 SYSTEMATIC WAY TO MANAGE STUDENT KNOWLEDGE
4.8 MARKETING PLANS, STRATEGIC INITIATIVES AND PREPARATIONS CONCERNING INTRODUCTION OF TUITION FEE
4.9 CONTRIBUTION OF IT TOOLS IN MARKETING EFFORTS
4.10 THE MOST IMPORTANT FACTOR IN EMPLOYING AN IT-BASED MARKETING STRATEGY
4.11 WEAKNESSES AND NEGATIVE FACTORS AFFECTING INTERNATIONAL MARKETING EFFORTS
5 ANALYSIS AND IMPLICATIONS
5.1 INTERVIEWS’ INITIAL IMPLICATION
5.2 THEORETICAL ANALYSIS
6 CONCLUSION AND REFLECTIONS
6.2 REFLECTIONS AND LIMITATIONS
6.3 FUTURE STUDIES
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Exploitation of Customer Relation Management (CRM) for Strategic Marketing in Higher Education