Mohammed Shalabi Student ID: 201810028

Assignment 3
Based on your reading on chapter 4 (CRM, Database Marketing and
Customer Value), answer the following:
 
1- Several benefits can be achieved by using Customer Value to assist
Marketing Decisions. Explain how? (4 Marks)

Marketing has got many different dimensions and different areas to

concentrate on to earn the profitability needed for the firm. One of these
areas is the Customer Value that will be returned towards the firm.

There are a couple of benefits of using the customer value towards the
marketing decisions. Starting off for the marketers to make good
decisions they sometimes use lower costs where that would attract a
higher amount of customers towards their products, decreasing the costs
would also decrease the price and get a better customer value. That
would happen through a couple of variables which are the higher the
amount of customers I have for the firm the higher amount of products I
need to produce and when we have a higher amount of production the
prices towards each product would decrease massively.

Another benefit would be the maximization of revenues. Maximizing

the revenue would be one of the most important variables a firm would
look for. When a customer value is achieved the revenues would start
growing where the profitable customer would be loyal and that would
increase the firm’s revenues day by day.

When using the customer value for marketing decisions we would

retrieve a good improvement in the profits and in the return of investment
(ROI). When a marketer makes a profitable decision that would get the
highest revenues available from the customer that’s how he returns the
cost of the firm’s investments through his marketing decisions.

Most of the marketer’s decisions aim to get the highest acquisition and
retention from their profitable customers. Getting the customer
acquisition would process to attract and build a profitable customer base
and with that said the firm would then develop a decision to target the
customer’s acquisition and retention and improve their lifetime value from
these customers. The firms aim to keep retain the profitable and loyal
customers since it’s easier to keep them than gaining a new customer
and here comes the marketing decisions to do so.
Mohammed Shalabi Student ID: 201810028

Customers have values that benefit the firms in many ways, and that’s
why firms and organizations tend to always try to retrieve their dormant
customers. Marketing decisions sometimes target the dormant customers
in their strategies where their first and only goal is to reactivate them and
get them back after they have left. This would gain more profitability for
the firm and gain a better customer value from them.

2- A direct link between CRM and Customer Value exists. Explain this link
between them on your own words. (4 Marks)

There is a common link between 2 factors in the business sector which

are the Customer Relationship Management (CRM) and the Customer
Value. The customer value is the economic impact of the partnership
between the client and the business represented on the basis of the
investment margin or net income. And on the other hand CRM is a
technique of evaluating and leveraging marketing systems and
communication tools to define business strategies and approaches that
can optimize the lifetime benefit of each potential client for the company.
Therefore from my point of view these 2 factors rely on each other where
the Customer Value would grow a higher net profit if the CRM is managed
well.
Mohammed Shalabi Student ID: 201810028

3- “CRM is a response to changes in marketing function”. Discuss and

clarify this sentence from your own perspective. You need to give
examples to support your discussion (7 Marks)

Firms get changes through towards CRM in different dimensions which are
the Consumers, Marketplaces, Technology, and Marketing Functions. The
changes in these 4 variables have an effect on the CRM area in a firm and
these effects could be an advantage or a disadvantage.

Starting off with the consumers. The changes on the CRM with respect to
consumers are as follow. Firstly the growing consumer diversity which could
be towards the change in behavioral trends that are happening in their
demographical state. That could happen by the increase of populations in
countries and the diversity in ethnicity of these populations. Secondly the
time scarcity which would be affected by the activities where firms are
competing on gaining the consumers time to have a customer value from
them. Some changes that happen on the CRM is the satisfaction, where the
customer expectations would increase and that would have a reflection of a
decline in the customer satisfaction levels. Another example would be when
the consumer is bored from the activities the firm is promoting or giving the
consumer loyalty would decrease eventually and that would have an effect
towards the firms CRM section negatively. A good example to explain the
change in consumer when it would lead to damage of the built CRM in the
firm would be when a consumer has some problems with a firm and his
loyalty is decreasing, here the firms CRM database would be losing some of
its loyal customers.

The change in marketplace also has an effect towards the firms CRM
system. When the marketplace is intense between firms to gain the
customers to their sides, here the CRM system would be most useful where
we can read our targeted consumers and know how to gain them to our side
than losing them to our competitors. The fragmentation of markets has a
negative response towards the CRM where the firms are leading to nowhere
in this segment of the market towards the customers since there is a tough
Mohammed Shalabi Student ID: 201810028

competition between the firms. Here the companies wouldn’t know how to
use their CRM systems to win the marketplace competition against their
competing firms. A good example on how the CRM is a response to changes
through the marketplace is the diminishing product quality differentiation,
where some companies are releasing a variety of products to the
marketplace and that would gain and lose some customers and that’s not
how a firm needs to place its role towards gaining the customers through the
use of their CRM system.

Technology is one of the most important and fast growing factor in the
business world currently, where it has its advantages and disadvantages on
many factors. Technology has an effect on the CRM system where better
technology gives us a cheaper and larger units of data to store in the CRM
database and the huge increase in demand for data storages is a positivity of
the change in the technology towards the CRM systems. Technology is
upgrading and becoming a better day by day and therefor since the
popularity of the data warehouses are increasing the demand from the CRM
system towards the targeted consumers is also increasing. I will give an
example of a technology upgrade which has its advantages and
disadvantages on the CRM system. When we upgrade a technology in the
firm it will give us better information about the customers and their
behaviors or attitudes and this will lead to better preditctions from the CRM
system towards the customer buying behavior. One disadvantage is the fact
that when we have a larger amount of data this will lead to misapplication
which will lead the CRM system to produce a wrong analysis to work with.

The last point to talk about from my point of view is the changes of CRM
with respect of the marketing functions. First of all the marketing functions
are as follow, the product management, pricing, distribution, promotion,
financing, marketing information management, and selling. These functions
have effects on the CRM system where as each one of the functions has a
different effect and its own advantages and disadvantages on the changes
towards the CRM system. But let’s talk about the media strength and
multiplication of channels. If the increase of communication media was
focused on the customer then here would have a direct consumer channels
which are by the use of email and telephone and those details are stored in
the CRM database. And if the interactive media was used which are the
internet and the interactive TV’s then we would be looking for a connection
to the consumer to get the information to him from the information stored in
the CRM database, for example if we are selling kids products then we would
look through the CRM database to see what channels the children are
watching to advertise our products on these specific channels to gain and
attract the targeted consumers through it. One other point that effects the
CRM system is the loyalty programs. For example if a company wants to
keep its loyal customers with them for a life time then they would do a
loyalty program where the loyal consumer could benefit from at the same
Mohammed Shalabi Student ID: 201810028

time the firm will gain profit from it. For example a car wash shop has a
loyalty program where if you was your car 5 times in the same month you
earn a free car wash, in this way the company is gaining good profit from
one consumer and they gained the consumer as a loyal consumer for a life
time.

CRM is one of the most important variables in a firm and that’s why it is
the gateway for a firm to get its connection with the consumers that have
and the targeted ones. Therefor any change that happens in the business
sector and marketing sector it will have a huge effect towards the firms CRM
system in many different ways and each change has its own advantages and
disadvantages. Therefor the firms always aims on upgrading and updating its
CRM systems to keep them ready and up to date for their marketing
competitions with their own competitors.