The Application of Customer Relationship Management(Crm) as a Survival Strategy in a Competitive Environment

THE APPLICATION OF CUSTOMER RELATIONSHIP MANAGEMENT(CRM) AS A SURVIVAL STRATEGY IN A COMPETITIVE ENVIRONMENT (CASE STUDY OF BANKPHB) ABSTRACT This study attempts to analyze the impact of environmental factors on organizational performance. Considering that performance is the major objective of an organization, it is generally accepted that the structure and decision making in an organization is influenced by environmental complexity and volatility (e. g. , Miles and Snow 1978; May et al. 2000).

Furthermore, it is argued that the alignment of strategies of organizations with the requirements of their environment outperform organizations that fail to achieve such an alignment (Chaganti et al. 1989; Venkatraman & Prescott 1990; Beal 2000). To carry out this study a review stive competition experienced by Our analysis reveals that an effective management of environmental factors are significant in determining the efficiency, effectiveness and overall performance of an organization within the period under review.

The result provides strong support for the importance of management of environmental factors on the performance of an organization. Also, the analysis shows the relationship amongst profitability, liquidity and growth of an organization. KEYWORDS: Environmental Factors, Customer Relational Technology and Organizational Performance 1. 0 INTRODUCTION During the last years a series of studies concerning the impact of environmental factors on businesses in Nigeria have been conducted and the strategies adopted by the affected businesses and organizations.

The motivation for this study is the need to practically examine how competitive environmental has an environmental factor has affected and how the company was able to outwit the challenges possed by the factor using Customer Relational Technology. 2. 0 THEORETICAL ISSUES AND LITERATURE REVIEW 2. 1BUSINESS ENVIRONMENT The classification scheme of environmental factors developed by Aguilar (1967) has been used by many researchers, such as Keegan (1974) and Kefalas and Schoderbek (1973). Although this scheme proved to be robust in time, many researchers made minor changes to suit their specific purposes (e. . , Auster & Choo 1993; Yunggar 2005). The external environment of a business organization is the pattern of all the external conditions and influences that affects, and/or relate to, its life and development. These factors include technological, social, competitive, economic, physical, and political factors. 1. The Technological Environment: This consists of those factors related to knowledge applied in the production process, inventions, methods and ways of doing things, procedures and innovations, plus the materials and machines used in the production of goods and services.

Such factors have an impact on business policy and decision-making in an organization, on communication, infrastructural and managerial technologies. Policy-makers in corporate organization, on the technological environment, since technology, customer groups, and customer function, define the business of the organizations. Technological change can lead to relative competitive cost positions within a business; it can create new markets and new business segments; and it can collapse or merge previously independent businesses by reducing or eliminating their segment cost barriers.

Technological developments include the discoveries of science and arts, the impact of related product developments, machinery and process improvements, the progress of data processing, and the application of sciences, ideas and knowledge to industry and commerce. Technology, in its best form, is the application of the knowledge of science and art in solving problems of a given community. There has been an accelerated pace of technological development in recent years.

This had led ton unlimited innovational opportunities, and new product development. Business policy formulation must be able tom envisage how technology can meet human needs which have created business opportunities. 2. The social Environment: The social environment consists of factors related to human relationships and the bearing of such relationships on business. Factors and influences relevant in the social environment include: (a)Demographic Characteristics: These include population, its density and distribution, age groups, migration, etc.

The demographic structure could reveal the size of market, and the potential consumers and customers of the business which constitute business opportunities. (b) Family Structure: This refers to the attitudes towards and within the family, and changes in the family structure. (c) Social Concerns: These refers to the social responsibility attached to the organization, such as environmental pollution, use of the mass media, consumerism, etc. (d) The function of children and adolescents in the family and society, and also the role of women bringing up children and intervening in crisis, must have policy attention. e) Social attitudes, motives, customs, beliefs, and the effects that such factors have on buyer behavior and educational levels, conduct of workers, and many more, are part of the social factors. The social environment plays a major role in the attitude and values attached to a product or service because this is where people with spending power are predominate. Social changes might be slow or rapid and, in some cases, the impact is felt immediately, while, in others, the impacts on policy and strategic decisions cannot be overemphasized.

The social developments which business policy should address are: the changing composition of the population, urbanization, the changing patterns of work, leisure, etc. Changing societal values will lead to different expectations of the role that business should perform. Business will be expected to perform its mission not with economy in the use of resources, but also with sensitivity to other environments. 3. The Economic Environment: The close interaction of business with the economic environment is hardly surprising, since one of the objectives of business is to create economic activity.

The economic structure of a country (capitalist, socialist, or mixed economy), the privatization or commercialization of business enterprises, economic planning system, economic policies (e. g. fiscal and monetary policies), indices (e. g. national income, per capita income, disposable income), and infractural factors(such as financial institutions), are various economic factors which the management of an organization has to evaluate. Economic environment also includes the economic system which shows how goods and ervices are produced and distributed in a given society. It also includes business cycles of boom, recession, depression and recovery. The economic environment also covers levels of business activities, such as the the price level, productivity level, real income level, interest any employment rate. All these will have effects on business- how much is saved and invested in the country will an effect on spending pattern of the population. The value of import s and exports and the economic situation prevailing in a country also have a far-reaching impact.

For example, a depressed economy might do not take time to analyse the factors predominantly responsible for the depression. Economic Environmental factor refers to the economy in which the organization is operating. Managers must endeavor to study and understand the complexities of their business environment. For instance, wage rates in Nigeria, for several years, have been rising faster than productivity per man-hour. Also, competition is becoming tougher (both at home and abroad), and business profits have been varying substantially.

On the other hand, the size of the Nigeria market, for instance environment also includes the economic system which shows how goods and services are produced and distributed in a given society. It also includes business cycles of boom, recession, depression and recovery. The economic environment also covers levels of business activities, such as the price level, productivity level, real income level, interest and employment rate. All these will have effects on business – how much is saved and invested in the country will have an effect on the spending pattern of the population.

The value of imports and exports and the economic situation prevailing in a country also have a far-reaching impact. For example, a depressed economy might pose problems to the managers of an organisation if they do not take time to analyse the factors predominantly responsible for the depression. Economic environmental factor refers to the economy in which the organisation is operating. Managers must endeavour to study and understand the complexities of their business environment.

For instance, wage rates in Nigeria, for several years, have been rising faster than productivity per man-hour. Also, competition is becoming tougher (both at home and abroad), and business profits have been varying substantially. On the other hand, the size of the Nigerian market, for instance, provides opportunities for profit-making through mass production and marketing of products and services. Nigerian governments are becoming less involved. in direct business operation. Also, there are new profit prospects for. ifferent businesses from government’s growing expenditures aimed at solving some major socioeconomic problems such as transportation, housing and technological development, among others. Njgerian corporate managers should endeavour, however, to provide for the future in their policy/strategy formulations. It is known precisely what the future holds for business as an institution, but there will be growing challenges to managers to adapt properly to rapidly changing economic environmental forces.

Business enterprises have to take into consideration the economic environment in formulating policies in order to achieve objectives. 4. The Legal-Political Environments: In recent years, developments in the political environment have increasingly been affecting decisions in the operation and management of business enterprises. The political system is a broad term covering the forms of institutions and the structure by which a nation is governed. It consists of an interacting set of laws, government legislations and agencies that influence and constrain the conduct of various organisations and individuals in the society.

In Nigeria, there are three tiers of government – the federal, the state and the local government. Each tier of government has its powers and limitations. There are also three arms of government, viz: The executive, the legislative, and the judiciary. Each arm of government has been assigned constitutional roles to perform in the country. Business enterprises should be aware of the laws and regulations that guide the operations and management of organisations in the Nigerian legal political environment. Policies that will contravene or contradict the laws and regulations should be avoided. . The Sociocultural Environment: The sociocultural environment consists of the beliefs, the values and norms of a given society. People usually grow up in a particular society with some cultural settings which shape a world-view that defines the way and manner of living of the people. This world- view dictates and determines the consumption norm of the society and the type of product or service that an organisation can offer to the market concerned. Policy-makers should try to understand the cultural setting as it affects business decision- making. . The Competitive Environment: Corporate organisations operate in an environment that is full of competition. The nature of competition actually influences the performance of these organisations. 2. 2 THE GENESIS OF CUSTOMER RELATIONSHIP MANAGEMENT (CRM) To understand the current state of CRM, we must understand its history. The story of customer relationship management is clearly older than the term itself. Its philosophical roots can be traced in ideas from service management, relationship marketing and the total quality management movement.

Quintessentially, these are all management paradigms that make the customer the focus of any activity that the company sets out to perform. Throughout the 1990s, these philosophies were supported by numerous research findings on the importance of customer satisfaction, loyalty and retention for the long-term success of any consumer service operation. Gradually, more and more organizations gained insight into the strategic imperative of investing in what we now call CRM capabilities. This research focuses mainly on continuous relationships, or contract based relationships of PHB Bank mainly within consumer services.

The strategy involved in this industry tends to share a number of characteristics and challenges: •They deal principally with relatively low involvement products and services; •It takes several years to pay back the costs of acquisition and break even in many such customer relationships, thus an initial sale is not always a guarantee of profit; •Retention and share of wallet are key diverse of business success; •They operate in markets that are becoming increasingly important and where competition is intensifying; •Product and/or price differentiation provide limited means to long-term success.

Upon application of CRM, the bank has witnessed an unprecedented explosion of channels over the last decade. Moreover, during this same period, early initiatives aimed at better management of the cost base of the sector (and refocusing management on its core business) also included the adoption and development of many different outsourcing opportunities. The consequences of these and other developments in the bank have left it with the significantly increased challenges of firstly, managing its customer base through many more touch points, and secondly, having to draw on an increasingly diverse range of data sources.

Another important development path is grounded in the business process re-engineering movement of the mid-1990s and the consequential focus on why and how activities were conducted, not only for whom. Initially, re-engineering initiatives focused on processes upstream in the value chain. But as the dust slowly settled after the enterprise resource planning (ERP) and supply chain management (SCM) turmoil, organizations put an increased focus on developing IT-supported solutions aimed at increasing efficiency in the customer interface.

The channel developments within retail financial services provide a good example of how CRM has a critical role to play in developing customer relationships. In the past, the principal channel for relationship development was some form of branch. Now, customers can ‘enter’ the institution through many different channels to access many products. This has added greatly to the matrix of complexity that large-scale CRM programmes are meant to be supporting. Diagram 1: The changing CRM landscape Diagram 2: key factors influencing CRM . 0METHODOLOGY 4. 0FINDINGS AND DISCUSSIONS The findings from the data analysis from the study are as follows: Firstly, from the review of the activities and operations of BankPHB Plc, it is very clear that ICT plays a significant role to development, growth and survival of corporate organization as regards customer relationship management (CRM) particularly in this 21st century. It was also observed that application of ICT projects are increasingly becoming managerial challenges rather than technical ones.

Success in the application of ICT requires the intelligence and commitment of the marketers to the achievement of their sales objective Furthermore, factors that fosters on the business competitive environment are both external (environmental dynamism in terms of technological inventions) and internal (Marketers capability to exploit the technological inventions). Secondly, it was also observed that ICT brought a revolution to Habib Bank Plc. in the following ways: (a) It was discovered that through ICT, Networking i. e. internet, e-mail, fax and phone) have been made easy for people to communicate with one another, allows them to interact, experiment and relates with customers conveniently (CRM). (b) It was also found out that ICT facility, facilitates collaboration, it allow marketers to work with clients conveniently and workers to work together on a single network. (c) It also helps in redesigning business processes and standardization of work flows. (d) Finally, it also helps in monitoring activities and event efficiently, allows marketers to get accurate up-to-date picture clients’ situation and what is happening throughout the enterprise.

Advances in technology have played an important role in improving service delivery standards in the banking industry. In its simplest form, Automated Teller Machine (ATM) and deposit machines (in view) now allow consumers carry out banking transactions beyond banking hours. With online banking customers of BankPHB can check their account balances and make payments without have to go to the bank. This is gradually creating a cashless society where consumers no longer have to pay for all their purchases with hard cash.

For example bank customers can pay for airline tickets and subscribe for initial public offerings by transferring the money directly from their accounts, or pay for various goods and services by electronic transfers or credit to the sellers account. As people own mobile phones, banks have also introduced mobile banking to cater for customers who are always on the move. Mobile banking allows individuals to check their account balances and make fund transfer using their mobile phones.

One can also control his/her bank accounts using either computer or telephone banking channels which involve the use of passwords to access your accounts. Generally therefore, IT is a service that allows customers to use some form of computer to access accounts specific information and possibly conduct transactions from a remote location such as home or at a work place. Using these methods, banking transactions can be accessed 24 hours a day. If customers don’t know what they are paying for, and the managers don’t know what they are charging for, it’s almost impossible for companies to identify their competitive position

Also E. marketing allows marketers to relate with their prospects, clients, facilitates customer relationship management (CRM) and assists an individual or organization to view recent transactions, print out statements and transfer funds between accounts and make payments. 5. 0CONCLUSIONS Though environmental factors can be detrimental to the life of organizations; however, it has also made some organizations to do better than what they could have done in a situation where there is no competition. Technologies can be used to differentiate product from competition or may even become the basis for new product or services.

Technologies can also add to the quality of relationships with customers and to the quality of life for employees. Customer relationship management (CRM) enables company to provide excellent real time customer service through the effective use of individual account information. Based on what they know about each valued customers, banks can customize market offerings, services, programs, messages and media. CRM is important because a major driver of company profitability is the aggregate value of company’s customer base, and next sales are generally a result of satisfactory services performed in connection with the previous sale

Together, marketing and IT serve business. The purpose of business is serving the market place in a way that is profitable to the enterprise. Marketing and IT are, by nature and by discipline incapable of doing that alone. IT alone, so process oriented, so internally focused can only shave the bottom line. Which far too often means not success, but reduced failure. Marketing alone, so results oriented, so externally focused, so perpetually tuned into statistical increases in market share and competitive position, can only increase sales, top lne.

Which far too often means not success, but increase revenue. But together, this alliance of process and results, of bottom line and top line, technology and creativity, can harness and deploy unstoppable powerhouse of market success. In the course of the research work it was also observed that organizations are facing challenges in coping with the environmental challenges. The most significant things are not that the rules of the games are changing, but the environments in which the economic and financial components are being played are also changing.

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