Building Customer Relationships

Customer relationship management (CRM): The overall

process of building and maintaining profitable customer
relationships by delivering superior customer value and
satisfaction.

Ch 1 -32 Copyright © 2011 Pearson Education

 Building Customer Relationships

Customer relationship management (CRM): customer is

calling his bank, so what appears on the CRM system?

Offer a new
product or service

Big Deposit
Update
customer data

Deposit
renewal
reminder

Ch 1 -33 Copyright © 2011 Pearson Education

 Building Customer Relationships
Relationship Building Blocks: Customer Value
and Satisfaction

Customer- Customer
perceived value satisfaction
• The difference • The extent to
between total which a
customer value product’s
and total perceived
customer cost performance
matches a
buyer’s
expectations

Ch 1 -34 Copyright © 2011 Pearson Education

Building Customer Relationships
Relationship Building Blocks: Customer Value and
Satisfaction
 Building Customer Relationships
Customer Relationship Levels and Tools

Basic Full
Relationships Partnerships

Ch 1 -36 Copyright © 2011 Pearson Education

Building Customer Relationships
Customer Relationship Levels and Tools
 Building Customer Relationships
The Changing Nature of Customer Relationships

• Relating with more carefully selected

customers uses selective
relationship management to
target fewer, more profitable
customers.

• Relating more deeply and

interactively by incorporating more
interactive, two way relationships
through blogs, websites, online
communities and social networks.

Ch 1 -38 Copyright © 2011 Pearson Education

 Building Customer Relationships
Partner Relationship Management

Partner relationship management involves working closely

with partners in other company departments and outside the
company to jointly bring greater value to customers.

Ch 1 -39 Copyright © 2011 Pearson Education

 Building Customer Relationships
Partner Relationship Management

Partners inside the company refer to every function area

interacting with customers:
• electronically
• cross-functional teams
Partners outside the company refer to how marketers
connect with their suppliers, channel partners, and competitors
by developing partnerships.

Ch 1 -40 Copyright © 2011 Pearson Education

 Building Customer Relationships
Partner Relationship Management

Supply chain is a channel that stretches from raw materials

to components to final products to final buyers:
• Supply management
• Strategic partners
• Strategic alliances

Ch 1 -41 Copyright © 2011 Pearson Education

 Capturing Value from Customers
Creating Customer Loyalty and Retention

Customer lifetime value is the value of the entire stream

of purchases that the customer would make over a lifetime
of patronage.

Ch 1 -42 Copyright © 2011 Pearson Education

 Capturing Value from Customers
Growing Share of Customer

Share of Customer is the portion of the customer’s

purchasing that a company gets in its product categories.

Ch 1 -43 Copyright © 2011 Pearson Education

 Capturing Value from Customers
Building Customer Equity

Customer equity is the total combined customer lifetime

values of all of the company’s customers.

Ch 1 -44 Copyright © 2011 Pearson Education

 Capturing Value from Customers
Building Customer Equity

• Building the right relationships with the right customers

involves treating customers as assets that need to be
managed and maximized.
• Different types of customers require different relationship
management strategies.

Ch 1 -45 Copyright © 2011 Pearson Education

 So, What Is Marketing? Pulling It All Together

Ch 1 -47 Copyright © 2011 Pearson Education

 Marketing Exchange & Marketing Integrated
offering relationship Myopia Marketing program

Societal Marketing
Value Proposition

48
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Dissemination or sale of any part of this work (including on the World Wide Web) will
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and to honor the intended pedagogical purposes and the needs of other instructors who rely
on these materials.

Ch 1 -49 Copyright © 2011 Pearson Education

50
51
52
53
 Company Case Abou Shakra Restaurant: Creating
Customer Value the Old-Fashioned Way
Abou Shakra is a chain of restaurants in Egypt well known for charcoal cooking—
grilled meat, kebabs, and kofta. In 1947 Ahmed Abou Shakra opened his first
Abou Shakra restaurant in El Kasr El Einy, a famous central district in Cairo. The
first restaurant was not in a consumer-attractive neighborhood, but that did not
stop Abou Shakra, who believed that offering healthy, tasty, and wellmarinated
food was more important than location in attracting customers and having them
return time and again—if they received a good meal, the location of the
restaurant would not have much bearing on their future dining decisions. Initially
the restaurant’s menu was very simple; it mainly consisted of basic traditional
Egyptian dishes, which was the standard menu offered in similar establishments
at the time. Abou Shakra decided to keep his menu simple and traditional to
avoid the risks associated with offering unfamiliar dishes to consumers. As a
result, he focused on providing well-known traditional dishes of exceptional
quality.
Succeeding in a Competitive Market When the first Abou Shakra restaurant was
established, there was not a wide variety of cuisines featured at restaurants, such
as Indian, Chinese, and Italian, which are widely available today.
As noted, Abou Shakra’s competitors at the time also offered traditional oriental
Egyptian food, and due to a lack of other cuisines, he was essentially competing
with the whole market. It was thus very challenging to start up a business in a
highly competitive market, and it was necessary for Abou Shakra to ensure that
he could offer something that would give him an advantage over his
54
 Company Case Abou Shakra Restaurant: Creating
Customer Value the Old-Fashioned Way
competitors. This advantage turned out to be the great customer value offered by
Abou Shakra, which was not offered by the majority of his competitors. Abou
Shakra restaurants have maintained the persistent focus on customer well-being
and satisfaction that originally gave them an advantage over their competitors,
and this is one of the reasons for their success. The importance that the company
places on elegant dishes, prepared with passion, and providing a memorable
experience to their guests has endured right from Abou Shakra’s establishment.
We will now take a closer look at how Abou Shakra applies the philosophy of
offering customer value.
Abou Shakra owns its own factory, which supplies all branches and outlets with
their daily requirements of fresh meat and poultry.
The meat is of high quality—only the best beef and lamb. Meat is delivered to the
factory daily, and a governmental veterinary inspection is performed to ensure
that the meat is fresh and of good quality. The factory is equipped with the latest
technology to guarantee that the meat is stored at the correct temperature to
ensure its freshness.
The fruits and vegetables are also delivered daily and are specially stored to
maintain freshness up to the time of serving.
Abou Shakra’s quality control department ensures that all finished products are of
outstanding quality, and oversees practices that prevent any of the ingredients
from being contaminated. The company has signed a contract with SGS Egypt to
supervise its health, safety, and hygiene practices, ensuring that they are of the
highest standard.
55
 Company Case Abou Shakra Restaurant: Creating
Customer Value the Old-Fashioned Way
The Abou Shakra menu has changed very little over the past 60 years, maintaining the
simple offering of traditional Egyptian dishes with a particular focus on grilled dishes, which is
now Abou Shakra’s speciality. The primary aim of Abou Shakra is to keep the menu simple so
as to wholly master the dishes offered. This has encouraged customer loyalty, as customers
often choose their favorite dishes every time they eat at Abou Shakra.
This has also led to Abou Shakra being one of the most popular places for oriental food in
Egypt.
Keeping the menu simple also limits the costs of purchasing different ingredients from
several suppliers. If this was not the case, the recruitment of more managers would be
required to contact the suppliers and follow up on the orders. There would also be more
supervisors needed to ensure that the delivery and storage processes take place smoothly
and that each outlet receives its supplies on time. In addition, more chefs who are
specialized in the new dishes added to the menu would be necessary as well.
Abou Shakra’s managers pay attention to every small detail; they ensure that each
restaurant is spotless and that the kitchen is held to the highest cleanliness standard. All
utensils and cutlery go through a sterilization process to ensure their sanitation and
safety. The tables are wiped with a special detergent so that customers feel they are eating
in a hygienic environment.
Focusing on Customer Service Abou Shakra restaurants do not rely solely on their food to
please their customers, but also on well-trained employees who deliver extraordinary
customer service. They hire energetic, friendly, and passionate employees. Abou Shakra
restaurants realized the significance of educating their workers as to the importance of
customer satisfaction, and this led to the establishment of their own training center. The
center has a proficient team of trainers who ensure that employees will have the necessary
skills to provide the guests with the best kind of service. Abou Shakra relies on continuous

56
 Company Case Abou Shakra Restaurant: Creating
Customer Value the Old-Fashioned Way
training to provide employees with the necessary confidence and skills to provide
the utmost customer satisfaction.
The company believes that its greatest asset is its employees, and Abou Shakra
thus invests heavily in recruiting and training them in order to maintain the
company’s reputation in the competitive market. One of the core principles of the
company is that by taking good care of the employees, the employees will take
good care of the customers.
International Expansion Abou Shakra’s solid customer base is not only due to the
quality of the food and the service offered, but also its slow-growth expansion
strategy. Abou Shakra restaurants cannot be found on every corner; even after
65 years only 13 outlets are operating throughout Egypt. Abou Shakra decided to
stay small and focus on having a few outlets that provide outstanding service
rather than have many outlets with average service. A new outlet is only opened
when the required employees have been trained and are prepared to offer the
outstanding service that is associated with Abou Shakra. It took the company 56
years to open its first branch outside Cairo, which debuted in Alexandria in 2003.
The popularity of Abou Shakra has extended far beyond Egypt, with the company
receiving many requests to open international branches from customers living
abroad who had tasted Abou Shakra while on a holiday. The opening of a branch
in Saudi Arabia in 2005 and another in Kuwait in 2007 are great milestones in the
history of Abou Shakra.

57
 Company Case Abou Shakra Restaurant: Creating
Customer Value the Old-Fashioned Way
This expansion was not an easy step for the company, and a great deal of
research was undertaken beforehand to find the correct locations for the
restaurants. First, Abou Shakra needed to find suppliers that could deliver fresh
ingredients on a daily basis; this was an important factor for Abou Shakra to
succeed; it had to be ensured that the quality of food provided in any new
outlets would equal that of the Egyptian branches. Employees also needed to be
recruited and trained in the same manner as the employees in Egypt, to make
sure that they provide their customers with the same outstanding service.
Along with other aspects of its simple but focused strategy, Abou Shakra does not
spend a great deal on advertising. Only a small proportion of its budget is set
aside for advertising in newspapers and on television, as the company relies
heavily on wordof- mouth recommendations between customers and their friends
and families. Abou Shakra believes that the main objective is to take care of
customers, and to provide them with high-quality food and service is better than
spending money on advertising, as satisfied customers will be the best
advertising tool. They will tell their friends and family members about their
positive experiences at Abou Shakra, and consumers are more likely to follow
the advice of people close to them than promotional ads. This is also a strategy
the company uses to reduce expenses. Instead of spending a large amount of
money on advertising, which may not generate profitable returns, more money is
spent on increasing the quality of food and service provided.

58
 Company Case Abou Shakra Restaurant: Creating
Customer Value the Old-Fashioned Way
Many have questioned whether Abou Shakra’s 65-year legacy can be sustained.
Its restaurants are run by co-founders and owners Ahmed and Hussein Abou
Shakra, who have drawn up an efficient blueprint for all of their employees to
follow. They believe that if desirable employees are recruited and trained
correctly and provided with the appropriate working environment, then success is
inevitable. Ahmed Abou Shakra, the company’s chairman, played a critical role in
the formation of the strategy that the company would follow. He detailed the
long- and short-term goals in a manner that is easy for all involved to
comprehend. The daily operations are organized and controlled by him, and he
has developed an efficient system to ensure that managers report to him. This
system was developed when the business began to grow, as one person could not
manage the daily operations of every restaurant efficiently.
Hussein Abou Shakra is the vice-chairman of the company, and he ensures that
the financial goals and objectives of the company are being met. He supervises
the preparation of the financial statements and the budgets of the company. In
the same manner as the chairman, he has set up a structure by which all the
finance managers report to him with daily updates.
The legacy of Abou Shakra is expected to continue with or without its founders.
This is because Abou Shakra has become a corporation that was established with
strategies and objectives that, if managed correctly, will lead to a successful
business. This business legacy, so long as the business objectives are met and
customers are continued to be placed first, is expected to last.

59
 Company Case Abou Shakra Restaurant: Creating
Customer Value the Old-Fashioned Way

Questions for Discussion

1- Describe Abou Shakra in terms of the value it provides for

customers.
2- Do you think Abou Shakra should develop a high-growth strategy?
Why or why not?
3- Should Abou Shakra spend more on advertising than what is
currently expended?
4- Do you think the legacy of Abou Shakra will continue with an
increasing number of consumers disposed toward nontraditional
cuisine? Why or why not?
5- Suggest other methods by which Abou Shakra can provide value to
its customers.

60
 Principles of Marketing,
Arab World Edition
Philip Kotler, Gary Armstrong, Anwar Habib, Ahmed
Tolba
Presentation prepared by Annelie Moukaddem Baalbaki

CHAPTER THREE
Analyzing the Marketing
Environment

Lecturer: Hany Labib

Ch 3 - 1 Copyright © 2011 Pearson Education

1Ch 1 -1 Copyright © 2011 Pearson Education
 Chapter Learning Outcomes
Topic Outline

3.1 The Company’s Microenvironment

3.2 The Company’s Macroenvironment
3.3 Demographic Environment
3.4 Economic Environment
3.5 Natural Environment
3.6 Technological Environment
3.7 Political and Social Environment
3.8 Cultural Environment
3.9 Responding to the Marketing Environment

Ch 3 - 2 Copyright © 2011 Pearson Education

2
 The Marketing Environment

The marketing environment

includes the actors and
forces outside marketing that
affect marketing
management’s ability to build
and maintain successful
relationships with customers.

Ch 3 - 3 Copyright © 2011 Pearson Education

 The Company’s Microenvironment

A microenvironment consists of the actors close to the

company that affect its ability to serve its customers, the
company, suppliers, marketing intermediaries, customer
markets, competitors, and publics.

The complexity of internet providers in Egyptian market – WE-data is a

supplier and competitor in the same time
Ch 3 - 4 Copyright © 2011 Pearson Education
 The Company’s Microenvironment

Ch 3 - 5 Copyright © 2011 Pearson Education

 The Company’s
Microenvironment

How marketing intermediaries faced the Publics and customers to help

Click and Mobinil defend their image in the eyes of the publics
Ch 3 - 5 Copyright © 2011 Pearson Education
 The Company’s Microenvironment
1. The Company

• Top management
• Finance
• R&D
• Purchasing
• Operations
• Accounting

Ch 3 - 6 Copyright © 2011 Pearson Education

 The Company’s Microenvironment
1.The Company
• Jack Welch was heralded by
many as the greatest leader of his
era. As CEO of General Electric
from 1981 to 2001, Fortune
named him the manager of the
century in 1999.
• Under Welch's leadership, GE
increased market value from $12 Jack
Welsh
billion in 1981 to $410 billion
when he retired
• He implemented the infamous
“rank and yank” GE under the leadership
program through which of Jack Welsh achieved
the company fired the bottom 10 1.5 Billion Return on
percent performing managers Investment – ROI after
every year, regardless of whether applying the 6 sigma
they performed well or not.
• When he retired from GE he
received a severance payment of
$417 million, the largest such
Chpayment
3-6 in business history
Copyright © 2011 Pearson Education
 The Company’s Microenvironment
1.The Company

Ch 3 - 6 Copyright © 2011 Pearson Education

 The Company’s Microenvironment
2.Suppliers

• Provide the resources to produce goods and services

• Treated as partners to provide customer value

Ch 3 - 7 Copyright © 2011 Pearson Education

 The Company’s Microenvironment
3.Marketing Intermediaries

Marketing Intermediaries help the company to promote, sell

and distribute its products.

Wholesalers & retailers

Ch 3 - 8 Copyright © 2011 Pearson Education

 The Company’s Microenvironment
4.Competitors

Firms must gain strategic

advantage by positioning their
offerings against competitors’
offerings.

Ch 3 - 9 Copyright © 2011 Pearson Education

The Company’s

Microenvironment

4.Competitors

Ch 3 - 9 Copyright © 2011 Pearson Education

 Porter’s 5 Force Model – Vodafone Egypt

THREAT OF NEW
BARGAINING POWER OF THREAT OF NEW ENTRY-LOW
SUPPLIERS - LOW •Already 4 players

ENTRY
•Government is the main •No intentions from the
supplier for connectivitiy government to offer 5th licensce.
and internet.
•Hauwei is the main
technological supplier with BARGAINING POWER
best prices in the market. OF BUYERS - HIGH
•Variety of Suppliers are •Low prices
available in the market SUPPLIER COMPETI BUYER
TIVE •Easy moving from one
POWER POWER
operator to another
RIVALRY
•Multiple SIMs
customers
THREAT OF SUBSTITUTES -
HIGH
SUBSTITUTION
THREAT OF

•Dramatic change in technology. COMPETITIVE RIVALRY- HIGH

•New mobile applications
causing revenue •Very tough competition among the
4 players
loss.(WhatsApp Vs SMS – Viber
•Group pressure for 3 players to
vs. local & International calls)
generate more profits.
•Customer expectations are
increasing.
 The Company’s Microenvironment
5.Publics

Publics are any groups that have an actual or potential interest

in or impact on an organization’s ability to achieve its
objectives. They include:
57357
• Financial publics Heliopolis
NTRA Caritas
• Media publics
• Government publics
News Public
• Citizen-action publics paper

• Local publics
• The general public inside
Banks &
• Internal publics Insurance

Ch 3 - 10 Copyright © 2011 Pearson Education