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business
customer relationship management
Customer Relationship Management: Concept, Strategy, And Tools 2nd Edition Michael Pearce - Solutions
1. Explain the likely issues (as discussed in the chapter) that may come up during the Z4 campaign management process.
5. Explain the advantages and disadvantages of the various campaign budget setting methods.
4. Give examples for key performance indicators for the evaluation of campaign success.
3. Explain the ideas around the concept of campaign testing? Do you think that testing in general will become more important in the future? Why or why not?
Describe how you would go about implementing this campaign.
2. Imagine you are the manager of a chain of 25 seafood restaurants in Virginia. The restaurant has a mainstream positioning. You are planning a campaign to attract new clients and your available budget is $30.000.
1. Explain the three key steps in the management of campaigns.
3. Apply this knowledge to future campaigns. If information is not sufficient, test the important variables to fill the gaps in knowledge.
2. Model relationships between the data gathered, the controllable variables and the campaign results.
1. Record all relevant data about campaign planning, implementation and results.
If the degree of formalization of campaign management is not adapted to the diversity of operations within the company and its size, then campaign execution process won’t be effective.
If top management doesn’t take an active role in marketing planning then it will probably not be an effective system.
Separating the responsibilities of operational marketing and strategic marketing planning will lead to a divergence of short and long term objectives. Concern over short-term results at the operational level will make the company less competitive in the long term.
When the marketing planning is undertaken at a functional level and does not integrate with other functional areas of the company, then the campaign will be largely ineffective.
Tests uncover ways to reduce costs.In general, tests help maximize the performance of the campaign.
Tests minimize financial risk and avoid costly errors.
Tests protect the company’s greatest asset (the customers): By using only small samples with each test you will finally give your customers the proven offer.
Testing also stimulates creativity, since it not only provides healthy internal competition but also presents a challenge to the creative team to find ways to beat the control campaign.
Testing augments and validates research.
Testing shows real behavior, because it provides a (close to) real environment in which behavior is validated.
Retain and reward existing customers.
Acquire customers, and
Identify prospective customers,
3. How far should Starwood push its direct offerings to its program members? How can it discover the boundary?
2. What should Starwood do to attract loyalty program nonusers into the program or find out more about the behavior and preferences of this large group?
1. How can a large company such as Starwood exploit customer data while still safeguarding and respecting customer privacy?
2. What are the key objectives of loyalty programs?Which of these objectives provide the strongest competitive advantages?
1. Explain the difference between behavioral and attitudinal loyalty. Provide an example of each.
8. What are the ethical issues that surround loyalty programs? Should the gaming industry be allowed to use loyalty instruments for example?
7. Design a loyalty program for your neighborhood gas station. Describe the incentives.Determine the cost structure. Set benchmarks, and evaluate the profitability of the program across possible scenarios.
6. Would low-ticket items (coffee, candy, sodas)benefit from loyalty programs? What kind of incentives might work best?
5. How can you measure loyalty? How does loyalty relate to the profitability of a company?
4. Do companies profit by introducing loyalty programs? Is the success of a company’s loyalty program dependent on its industry category?
3. You are a consultant to a credit card organization that wants to establish a loyalty program.The CEO has just read about how most loyalty programs result in money-losing propositions.How do you alleviate the CEO’s concerns?
Ensure that your firm has the necessary capabilities to manage its LP effectively. These capabilities include data storage, data analysis, and empowerment of employees, among others.
Design the LP to achieve maximum effectiveness in marketing operations. This goal can be achieved by learning customer preferences and responding to these preferences with the offering.
Avoid withdrawing an existing LP, which can have negative consequences in the form of customer dissatisfaction and defection. Customers do not like it when LPs are withdrawn, once they have grown accustomed to the benefits.Thus, design faults will not only result in losses but haunt you later, in
Measure the predicted benefits of the LP for your organization. Although it is difficult to specify these benefits accurately, you should attempt to conduct a trade-off analysis between the cost and gains of the LP. Also consider the time horizon (short versus long term).
Manage the costs of LPs. LPs are expensive, so cost management will always be a critical component. Consider all the costs involved(e.g., opportunity cost of the time of the managers involved). Can these costs be mitigated by marginal cost rewards or contributions from manufacturers?
Align the design of your LP with the characteristics of your market, your customer base, and your firm. Knowing the customer base is important, because segments’ preferences for LP benefits vary. For example, senior citizens may not value the long-term accumulation of redeemable points as much as
Clearly determine your LP’s goals. Is its goal compatible with your marketing strategy and the positioning of your organization in the market?
3. From the firm’s perspective, is the LP design aligned with desired goal(s)?
2. From the consumer’s perspective, are rewards relevant?
1. From the consumer’s perspective, are rewards attainable?
3. Describe some of the key CRM software applications and their functions.
2. What are the various ways to deploy CRM? What are their advantages and disadvantages?
1. Practicing CRM without technology is not possible. Do you agree with this statement?
2. How are databases classified based on the information they contain? Are these different classes of databases complements or substitutes?
1. What are the various ways to categorize databases?
Create a new valuable management resource.A marketing database could be used to support not only the traditional marketing practices, but also a wide range of other business functions such as advertising, product R&D, distribution, customer service, and so on
Integrating the marketing program. A complete and integral marketing database can track all marketing efforts toward a customer.Marketers will be able to avoid duplicate, supplemental, and misdirected communications.It also helps marketers determine any overlapping between marketing programs
Conduct product and market research. In a customer-centric company, product, and market research must focus on customer needs.Marketing databases provide a unique resource of information on customer needs.
Increase effectiveness of distribution channels.Customers’ transaction data and customer service data can tell how existing distribution channels work and how to make them more effective.
Maintain brand equity. Match brands with customers who fit the brand profile and keep communicating with those customers using specially designed brand-building messages.
Research potential opportunities
Contact the decision maker best suited to hear their sales pitch, and
Qualify developing sales leads,
Why are they inactive?
How they were initially acquired?
How much did they spend?
What was their purchasing pattern when they were active?
How long have they been active?
How long have the customers been inactive?
Other relevant information: inquiries and referrals, satisfaction, loyalty In addition to firms collecting data at the point-of-purchase, some companies buy large amounts of data from third party affiliates.
Transaction history: What transactions have the customers conducted? How frequently do they purchase? How much did they spend?How were they acquired?
Psychographic information: values, activities, interests, preferences, etc.
Demographic information: age, gender, marital status, education, number of people in household, income, and so on
Basic information: name, address, ZIP code, and telephone number
Scoring data. Used for model-based prediction.Typically, this data set is large as compared to the previous ones.The data sets must be carefully examined and designed to assure statistical significance of the results obtained.
Test set. Used for out-of-sample tests of the model quality and to select the final model candidate.
Train set. Used to build the models.
5. By applying these weights to individual characteristics of prospective customers, we can arrive at a value for each customer which indicates how likely it is that the customer will purchase a product, or how much profit the customer will generate, if exposed to the tested marketing campaign
4. With that information, develop a regression scoring model to obtain a series of weighted variables that either predict which prospects are more likely to become customers or the value of profits that each customer is likely to provide, based on their individual characteristics.
3. Initiate a marketing campaign directed at the random sample, and record the individuals who become customers.
2. Obtain data from the sample that profiles individual consumer characteristics. The R, F, and M scores are variables which profile behavioral characteristics of a customer and are typically used in this procedure, along with other relevant variables.
1. Draw a random sample from the overall population of prospective customers.
3. Is there a way to move established clients accustomed to receiving a large number of ancillary services for free to paying for these services?
2. What types of systems and processes are needed to document client profitability in a systematic and ongoing fashion?
1. How can an organization compute client-level profitability?
5. What is the link between customer lifetime value and the profitability of an organization?
4. Describe three business situations where you would consider using logistic regression as the preferred technique for analysis and decision making.
3. How will you use lift charts to determine future marketing action?
2. Whatever RFM analysis can do, regression analysis can do as well. Evaluate this statement.
1. A hotel chain wants to analyze its customer base with RFM. Describe the data fields (variables)in the database necessary to do this.
OR predicted response rate based on the model for each decile: computed by dividing the predicted number of buyers by the number of customers for each decile
Actual response rate for each decile: computed by dividing the number of buyers by the number of customers for each decile
Cumulative number of buyers: The number of buyers up to and including that decile
Cumulative percentage of customers: The percent of total customers up to and including that decile
Whether a person bought a car or not These observed values for the dependent variable take on only two values and are usually represented using a 0–1 dummy variable.
Whether a customer responded to a marketing campaign or not
3. Do you think Catalina’s practice (which is entirely legal) is ethically acceptable?
2. Discuss the role of traditional metrics (such as market share) in this new CRM environment.Should they be discarded?
1. Explain why Catalina’s approach is superior from a retailer’s perspective vis-a-vis the traditional mass media approach.
What are some specific marketing actions you would take in the four quadrants?
5. How would you implement the recommended strategies
4. How will you determine if a customer is still your customer in noncontractual settings?
3. Try to predict retention rates using (5.13).
2. How will you calculate the acquisition cost per customer? Consider a mail-order catalog company, an IT services company, and a retail store. What are the underlying assumptions in each case? How precise are your calculations?
1. How would you calculate the retention rate of your company’s customer base? What assumptions do you need to make?
write it down the
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