SPECIAL TOPIC IN IMC (DELIVERING SUPERIOR CUSTOMER VALUE) CUSTOMER ORIENTED VALUE ANALYSIS: CASE STUDY OF ROBINSON DEPARTMENT STORE

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1 SPECIAL TOPIC IN IMC (DELIVERING SUPERIOR CUSTOMER VALUE) CUSTOMER ORIENTED VALUE ANALYSIS: CASE STUDY OF ROBINSON DEPARTMENT STORE MISS NATTHA NOPPACHART (KWANG) ID MISTER SUDCHAI RUKCHAROEN (TONY) ID MISTER SUEBPONG RUKCHAROEN (TED) ID MISS MANATSANAN KAMPREANVONG (AEY) ID The Assignment Submitted in Partial Fulfillment of the Requirements For the Degree of Master of Arts in Integrated Marketing Communications Dhurakij Pundit University International College Academic Year

2 CUSTOMER ORIENTED VALUE ANALYSIS 1. Introduction company and its major products and markets served. Robinson, a well-known department store in Thailand, was operated by Robinson Department Store Public Company Limited since It is the first department store in the country that registers to the stock market with Central Retail Corporation is the biggest shareholder. The department store currently has 21 branches; 10 branches in Bangkok and 11 branches in province, throughout Thailand. Figure 1: Various brand under management of Central Retail Corporation 2

3 The company offers merchandises as well as innovate the store format and services to best fit customer lifestyle and satisfy them as much as it can. Thereby the company can reach its vision as a leading retail operator: the most preferred department store with wildest market coverage in Thailand. Figure 2: Branches of Robinson throughout Thailand Source: Robinson offers two lines of products which are soft line and hard line 1) Soft line products mainly focus on current trends. The products in this line should have properties like brand names, good quality, wide selection, and fashion. Soft line products can be divided into three categories as follow. men s fashion and ladies fashion cosmetics and accessories leather products 2) Hard line product focus on product quality, functionality, feature, variety and modernity. The products in this line include, home and kitchenware automobiles accessories and equipments toys and gifts 3

4 Apart from two lines of products as mention earlier, Robinson differentiates itself from other competitors by developing its own products with outstanding label This label informs customers that they cannot find such products in other department stores except Robinson. These products can be divided into three categories which are private label products, exclusive brand products, and one-price products Just Buy Private label products: The company will carefully selects the products that best suit with customer demand and offer them with the good product quality and reasonable price. Products in this category can be group into the following table. Table1: List of Private label products group and brand name Source: Exclusive brand products: Products in this categories includes both products that produce domestically and imported from other countries. The table below shows the group of products as well as the list of brand name of the products in this category. Table2: List of Private label products group and brand name Source: One-price products Just Buy : Products in this category includes accessories, cosmetics, stationary, gifts and home products that are sold at Baht 35 and Bath 52. Just buy products are created for teenagers and young professionals. 4

5 The target group of Robinson can be divided into two groups: physical group and psychology group. Physical group includes Gender : Female 70%, Male 30% Income : Baht 10,000 50,000 Age : years Education : Bachelor Psychology group can be further categorized into two groups: mainstreamer and aspirer. Mainstreamer is the group of people who love family, sacrificed to family, carefully use money, less ambitious, do not like risky, and be considerate. The mainstreamer will buy product that has been quality proved and has the reasonable price. Aspirer is the group of people who extravagant, stimulate easily, trendy and fashion lover. The aspirer will buy products immediately if they found that the products will make them outstanding from other people. Although Robinson carefully categorized its target group, the mainstreamer is the important one the company focuses. Robinson will fulfill mainstreamer life by adding aspirer shade. In sum, the target customer of Robinson is the person who wants to have social status, need encouraging and motivating, has self-esteem, and has style Quality of your environmental analysis refer to Customer Value Funnel, ; also make sure you conduct a SWOT at the end of your environmental analysis Robinson s environment concerns on creating innovative style of working environment which allow employees freely communicate with each other. For instance, Robinson designs a working space by setting up table where every employee can see each other. Furthermore, Robinson locates the General Manager s room at the end of working room so the manager can see how employees perform their work. Moreover, the company sets Intranet system for 5

6 all employees thereby they can easily communicate with each other and within each department. Besides, Robinson offers facilities such as microwave, coffee maker, and snack room for their employees. Also, Robinson regularly conducts a research to collect the data of their need so the company will immediately solve any occurred problems within organization as well as properly serve what they want to satisfy them. With these environments, employees will satisfy and feel comfortable to work on their work space. I. Domestic Business Community Society, Subcultures Economic Natural/Physical Political/Legal Technological II. Market Collaboration Competition Suppliers Regulators III. Organization Stakeholders Business Culture Organizational Structure Strategies Value Providers (people) IV. Customers Business Performance Sales, profits, market, share, image Process Metrics, Customer Retention Measure, NPV,VOT 6

7 SWOT analysis of Robinson Strength (S) Robinson is managing by Central Retail Corporation (CRC) which considers the most successful organization in Thailand. Employees feel secure and want to work with this organization. Top management treats all employees equally, so there are fewer turnovers rate. Training Center, Service Center and the 1 Card Departments will be provided by the company. Intranet system will be used within the organization. Robinson joint with Super Sport and Central Department Store to exchange the data of customers. Weakness (W) Robinson uses Top-Down management style so blue collar workers will not have a chance to give their opinions. Old company reputation. Due to Robinson s expansion, the company has difficulties to control. Opportunity (O) Global expansion (China) Group Tour (China, Middle-East) Internet Information technology keeps improving and advancing so making use of the technology will increase business potential and profit. Threat (T) Traffic Jam Political revolution Terror

8 3. Quality of your strategic analysis generic strategies (cost leadership, focus, differentiation); value disciplines (operational excellence, product leadership, customer intimacy); competitive-based strategies (leader, challenger, nicher) Generic Strategies Robinson strategies focus on both cost leadership and differentiation; however, the company will focus more on differentiation. Cost leadership Since Robinson targets its customer on middle income to lower income; therefore, the company has to pay a lot of attention on cost. For example, when Robinson purchases products from supplier, mostly in China, the company has high power to negotiate the great deal with supplier because Robinson has large amount of products purchasing. Differentiation Robinson tries to differentiate itself from competitors by offering own private label and unique brand which available only at Robinson. For instance, the company produces the sport outfit for women under the Vivienne brand, using similar material and design with leading import brand but sell to customers at lower price. This is a Robinson s differentiate strategy. Value Disciplines Robinson uses the combination between product leadership and customer intimacy to manage within department store. For example, according to differentiation concept, Robinson has developed the products under its private label to match with its customer segment. Customer intimacy To build customer intimacy, Robinson realizes that employee is the vital key so the company provides best practices/training for all employees, hoping that professional employees will satisfy customers. Minimum service standard, for example, is a training program that company provides for advising employees how to interact and/or deal with customers. Robinson employees, like Starbucks s, have to make eyes contact and greeting with 8

9 customers immediately to let customers know that they are welcomed. Product knowledge, another example, is a monthly training program that the company offer to employees to update what is going on in the organization as well as introduce and give information of new products. Competitive-based strategies Robinson has the most branches throughout Thailand; therefore, the company is the leader retail store which planning to expand more than six branches in Northeastern area within a year Conduct a Quality Analysis (Note: use the results of your Quality Audit) The results of Robinson quality analysis can be discussed in seven areas which are 1) leadership, 2) business definition, 3) strategy development, 4) intelligence gathering, 5) organizational structure, 6) human resource management, and 7) measuring and rewarding performance. 1) Leadership Figure 3: Results of quality audit of Robinson in term of Leadership According to the result of quality audit, Robinson has top-down management style, using bureaucracy system which sometime there is an interference between top management and 9

10 employees. Also, Robinson is a family business which sometime there interferes from other person that does not in the organization. 2) Business definition Figure 4: Results of quality audit of Robinson in term of Business Definition The business definition of Robinson is quite clear because the company emphasizes on providing and serving what customer does want in order to satisfy them. It does not only simply defined business in terms of products but also offer outstanding services. Moreover, the target customer is clearly identified. Robinson uses customer database to categorize its customers as well as to understand their lifestyle, product perferences, and amount of money they spend in the business. 3) Strategy development Figure 5: Results of quality audit of Robinson in term of Strategy Development 10

11 The company develops the strategies to create superior customer value by emphasizing on providing high quality products and serving them with excellent services. Answer the following three questions is the company guideline to bring the great value to customers. The questions are, What do customers want? Why do they want? How do they want? However, the strategy development of Robinson is not significant as its business definition because the strategy comes from top management (top-down), without listening bottom-upemployees. Developing strategy with this way is not a good idea because front line employees is the person who mostly contact with customers and know what their truly wants, therefore, ignore these bottom-up voices might cause mistakes in managing business. 4) Intelligence gathering Figure 6: Results of quality audit of Robinson in term of Intelligence Gathering Robinson collects customer data from The 1card. With this member card, the company can get both demographic data (name, address, , etc.) and psychographic data (purchasing behavior, amount of spending, etc.) However, the company should find other effective ways to gather customer data, apart from using the card. For example, setting the small event for registered member to updated customer s information and learn customer insight might be helpful. Focus group can be another way to examine customer s thought before launching new products. 11

12 Although the company has a limited tool in collecting data, it has a good internal management. The company has a special department to analyze the obtained customer data and make effective use of it to develop company s products and services. Figure 7: Robinson the 1card 5) Organizational structure Figure 8: Results of quality audit of Robinson in term of Organization Structure The figure as shown below presents the organization chart of Robinson. It depicts how each department cooperates within the organization. 12

13 Figure 9: Robinson s organization chart Source: 6) Human resource management Figure 10: Results of quality audit of Robinson in term of Human Resource Management Robinson pay attention not only on increasing customer satisfaction, it also focuses on developing employees satisfaction so the Power of Voice survey is internally conducted twice a year to examine employee s opinion towards their works and colleagues. Besides, it is a powerful tool to check the level of relationship among employees. 13

14 Apart from the survey, the company has the Service Center to provide service practice guidelines to employees so they can properly serve customers. Moreover, the company also has Training Center to provide knowledge of products and services to new employees so they will have the same understanding towards company products and services. The company also assign that every employees have to annually attend at least two seminars of different topics otherwise they will have no chance to get promote. All of the mentioned above clarify that Robinson has a good human resource management and gives an important matter on satisfying, training and developing its employees because the company believes that the good attitude and qualified employees will increase customer satisfaction and bring tremendous revenue to the business. 7) Measuring and rewarding performance Figure 11: Results of quality audit of Robinson in term of Measuring and Rewarding Performance Robinson has measuring and rewarding performance annually. For example, the company has a contest among cosmetics counters. The counter that has high customer purchase volume will receive extra percentage of their commission. Moreover, employees who have outstanding performance will receive more money or increase salary on a New Year bonus. All incentives and/or rewards will encourage employees to work hard and work smart to their work which results for both customers and owners

15 5. Conduct a Service Offering Analysis 5.1 What are customer expectations of service in this industry? e.g.,what are the minimums to compete? Examples: customers might expect free shipping, no more than a 30 minute delay and online account status. Most customers who come to the department store want high quality products and extremely excellence services, personal attention, convenience, free trial and guarantee time waiting when they order products. Moreover the company offer private label (differentiate brand) to customers who want to have luxurious style but has limited budget. 5.2 What bundles of benefits are typically received by customers? These are the extras that distinguish the firm s offering. Provide examples under social, psychic (emotional) ownership and tangible benefits. Robinson add value to its service by offering special services that differ from other competitors such as valet parking for VIP customers or top spender who carry valet parking card, Relax Corner for customers who want to relax, drink water or read newspaper after shopping. The company also launch private brand (differentiate brand) to fulfill customers who want to buy high quality products at lower price than brand name. 5.3 How do the 5 service quality dimensions (e.g. reliability, responsiveness, empathy) apply to firms in this firm? Reliability Robinson focuses on service reliability because the company wants to create good experience for every customer. For example, every product that has shown in the catalogue must be at least thirty items in department. Moreover, the company spend large amount of money in inventory system because with this system the company will immediately know the product s stock. In other words, the company will not face the problem of out of stock products that might disappoint the customers. 15

16 Responsiveness Every customer service staff and sales person in Robinson will be train by manager of service center. The sales person will be train in selling technique, minimum service standard and product knowledge. Besides, everyday before store open time, general manager will brief the employees about present promotion and special event of the company. By doing this every service staff can provide prompt service to customers, and has the great response to all customers. Credibility The customers can be trust in quality of every product in company, Robinson Department Store providing consignment products that have high quality and famous brand such as Polo, Dior, and Playboy etc. Moreover the company also produces private label such as FOF WEEKDAY, FOF LUXURY, FOF JEWELRY, ALLURE, BEOND BASIC and PACIFIC UNION, The company emphasizing in credibility and build trust to customers by put guarantee card on every private label products, Robinson Department Store will refund or change products in case of customers don t satisfy in quality or product damage. Empathy Sales person and customer service staff always pay attention to every customer. Robinson has particular policy to provide high service standard together with running Customer Relationship Management (CRM) program. Therefore, every sales person can serve high standard service: using minimum service level such as eye contact, smile, and welcome speech to customer. Besides, by using the data from Robinson member card, the staff can offer customize and personalize service to them thereby customer will feel that they are value customers. Understanding/Knowing customers Robinson emphasizes on following customer needs. The company uses database marketing to collect data both demographic (name, address, income, career, etc.) and psychographic (product preference, shopping behavior, lifestyle, etc.) By doing this, company will understand customer s insight as a result the company can use these data to create suitable promotions that match to their customer wants. 16

17 5.4 Which might be most/least important? Actually there is no most or least important in service quality because in order to meet customer expectation the company must use the combination of five factors. However, reliability seems to be the most important factor in the company while empathy is the least important. 5.5 What is the customer s involvement in the service delivery? (in other words, to what extent to customers co-create the service experience) According to Robinson survey, the company emphasizes on customer convenience which the company creates a special service those customers do not have to carry any bags by themselves. Customer just only asks for one stop shopping. 5.6 Complete an assessment of how effectively the firm performs on perceived service/product quality, price and image using the Customer Value Assessment Tool (CVAT) [see pp in textbook]. Perceived Image Although Robinson threat its employees as same as its customers because the CEO realizes that satisfied employees will dedicate to their work which lead to company profit at last, the company still face the problem of perceived image in customer perspective. Most shoppers perceive that Robinson is the department store for adult age 40 up. Therefore, if Robinson want to expand its target to young generations, repositioning the store need to be done. Perceived Service Quality PC is the company front line employee who contact directly to the customers. The level of customer satisfaction depend on how great performance these PC do. For this reason, Robinson put its effort on training these employees. Service Center has formed as an employee training center to teach how to fulfill customer with the company services. Perceived Product Quality Robinson focuses not only good customer service but also make a point of high product s quality. Therefore, the company, regularly, examine the quality of the products with its 17

18 competitors by sending mystery shopper to other store and keep data for company future improvement. Robinson has to benchmark with its competitors consistently Conduct a Customer Loyalty Analysis 6.1 What does it mean to be a loyal customer in this industry? i.e., What measures are used for loyalty (e.g., long-term commitments) To be a loyal customer in the retail department store means that customers impress in company products and services. Then they keep repeat purchasing at the department store again and again, and finally introduce their families, friends, and so on to be customer of Robinson. The cycle like this can create a lot of profit to any businesses not only Robinson. 6.2 How is customer loyalty defined by the firm? (e.g., market share, after-sales business, referrals, etc.) by the customer? (e.g., brand preference, repeat purchases, after-sales business, referrals, etc.) The customer loyalty defined by the firm can be reviewed in term of increasing of sale volumn, extracting from the 1card data, and customer transaction. On the other hand, the customer loyalty defined by the customer can be detected from repeat purchases and aftersales service. 6.3 What is done to encourage customer loyalty and retention in this industry? (e.g., use of loyalty programs) The significant tool that Robinson uses to increase customer loyalty and retention in this industry is membership program like the 1card. Moreover, arrange a small event as well as road show to keep interact and collect customer s data is employed, thereby, the company can customize special promotion to best serve for its value customers. 18

19 6.4 What is currently done to build customer relationships in this industry? (e.g., online customer communities) The company provides the following categories to build customer relationships in this industry. Hotline receive customer feedback, complain, and response Online customer communities create interactive and relationship between customers and employees Personal adviser give advice for customer who wants to update themselves in fashion, household decorating and so on. 6.5 What could be done to build customer relationships in this industry? Apart from currently methods that Robinson has been used to build customer relationships in this industry, the company can develop new programs as follow. 24hr shopping online customer can order or make purchasing online even at late night and pick up the ordered products at the department store in the next day. IT development for the 1card Robinson can improve its member card by develop the new technology into the card so the company will immediately recognize whenever value customer come in the store Evaluation of Value Proposition and write a value proposition if one does not exist (or rewrite if deficient in your view) The value proposition of Robinson consists of four main points as shown below in figure

20 Figure 12: Value Proposition of Robinson 1) Continuously improve all that we do. The company is ready for changing because changing, in Robinson s perspective, is the challenging that create a good opportunity for better company improving. The company is eager to seek for new things, new knowledge, and new technologies, and so on from both internal and external of the company because the company realizes that keep going and keep moving is the significant thing that any company need to do to avoid business failure. The company keeps measuring what the company has been done to verify the company s performance. If it is found that the performance has less potential than the company s expectation, the changing and improving will be immediately done. 20

21 2) Give the customers our best, always. The company has to know what customer s truly want thereby the company can properly provides both products and services to serve them properly as well as to satisfy them. The company realizes that customer is the most important person for any businesses so make them happy and bring them great experiences with company s products and services is the vital duty for retaining customer with the business as longer as possible. The company is willing to solve any customer s problems, aiming to build good relationship with customers. 3) Maintain honesty and integrity in all aspects of our business. The company runs business under the honesty concept and respect to social rules. The company will take responsible for any mistake that company has done. 4) Respect the value of individual. The company has an open-mind in listening and sharing other opinion because the new idea can be derived from the distinct opinions. The value proposition of Robinson is quite clear. It presents not only how the company care its customers, it also show how it eager to develop the business. However, it would be better if Robinson put the key benefit on its proposition like Robinson - Royal Road to Delightful Life or Robinson Everything you can find to delight your life Moving the value needle (how to build greater value - - focus on Product, Service, Price, Innovation, Intangibles, Image) Robinson plan to focus more on value needle which concern product, service, price, innovation, intangibles, and image. Robinson offer varieties of product which segment on individual target. For example, Robinson segments their target into four main targets such as office workers, families, tourists, and investors. These products will set for individual targets. 21

22 Moreover, Robinson gives importance to services. The company provides employees with all the training that needed for customers. For example, employees will train to remember their customer name and order. Therefore, customers feel comfort when shop at Robinson. Price is separate individual for each target. Therefore, customer will be shop for his or her products with reasonable prices. Therefore, all targets could com and purchase products at Robinson. Moreover, the company tries to bring innovative to the organization. For example, the company will plan to invest on Internet to sale and advertise the products. Also, this process also will concern word of month to expand the good reputation for the company. Also, company concern on intangibles such as service and value that customer could get. Last, Robinson is keeping their reputation in good way. The company tries to please all employees Plan of action recommendations and action steps to building greater value (Note: don t play it safe and simply confirm what firm is already doing) Robinson tries to manage plan of action to lead the organization to the highest profits. Company tries to follow the strategies to earn the profits annually, so the company will be success yearly. Robinson now enjoys profit from domestic market. In addition, the company needs to expand their market globally. Therefore, the company need to do research and outsourcing for best alternatives. According to the research, the company increases their foreign targets such as Chinese and middle-east customer, so there is a good potential to do the market globally. Therefore, the company will focus and study customer behavior and cultures in order to understand and plan the market. Moreover, the company might want to consider repositioning the image of the company as the time pass by. Trends will rapidly change as the time go by, so the company need to catch up the trends all the time. Robinson is known as old fashion department store, so if the company needs to follow up the trends, so Robinson will gain more customers and will enjoy the profits more

23 10 Evaluative measures how will you determine whether the plan is successful The company needs to evaluate and measure the plan, so the company will know how well the company will be success on the plan. There will be several ways that company could evaluate the plan. First, customer feedbacks are important to the process of evaluate. For example, Robinson get complaints form the cosmetic department, so there might continue to a huge problem if the company ignores the complaints. Therefore, the feedbacks will stimulate the employees and management team to deal the problems and come up with the best solution. Furthermore, Robinson could use survey strategy to evaluate the plan. For instance, the company plans to expand the market globally such as China, and the company need to do the survey while their customers come shop at Robinson. Therefore, the company will know how success they are by survey and research. Also, the company could evaluate the plan by seeing the total sales of the company. For example, the company now enjoy the profits from domestic, and Robinson tries to achieve the success by go globally