Question 1: Case Study

Read the following case study and then answer the question that follows. Emma and her husband Oliver are the owners and managers of a small unisex hairdressing salon at a local shopping centre. The salon operates Monday to Saturday from 9am to 5.30pm. The salon employs four full-time staff (including Emma and Oliver). A new competitor opened its doors three months ago, and Emma and Oliver are very concerned about the subsequent 20% reduction in the turnover of their business. A few of Emmas close friends suggested that they establish a relationship marketing programme to try to turn the business around. While this sounded like a good idea, Emma had to admit that she knows very little about relationship marketing except for its association with loyalty programmes. Emma is a member of a loyalty programme run by her local cafe. Every time she purchases a coffee her loyalty card is stamped. After obtaining 10 stamps, she receives a coffee for free. Emma is also aware that airlines, hotels, and supermarkets run loyalty programmes. Emma and Oliver spend an evening conducting some online research on relationship marketing. They find an article of relationship marketing that explains what relationship marketing is and the benefits of adopting a relationship marketing programme. The article says that, in many ways, relationship marketing is like going back to the old days when business owners knew each of their customers individually and were able to cater to their unique tastes and preferences. Much of the article focuses on the importance of creating a relationship culture within an organisation, using databases to develop old-fashioned relationships with customers, using loyalty programmes to reward profitable customers, and establishing switching-costs to minimise defections. After further consideration, Emma and Oliver decide that a relationship marketing programme may be just what their struggling business needs. However, as they do not have any formal marketing training, they decide to elicit the help of a local marketing consultancy firm. In conversation with their marketing consultant, Emma and Oliver explain that: their major target markets are females aged 18-45 years (50% of sales), males aged 18-45 years (30% of sales), children up to 12 years of age (10% of sales) and teenagers (10% of sales); and they are willing to spend a few thousand dollars on some basic customer relationship marketing software. Question Assume that you are the consultant hired to help Emma and Oliver establish a relationship marketing programme for their hairdressing salon and you have been given one month to write a business report for your new clients. In your report address:

a) the grounds for, and appropriateness of, a customer relationship marketing programme in the context of Emma and Olivers hairdressing business; and b) the key components of a customer relationship marketing programme suitable for Emma and Olivers hairdressing business. Develop the relationship marketing programme using the three customer retention strategies framework