Analysis of the Precision Marketing Technological System on CRM LI Zhihong 1, LIANG Dong 2 1, 2. Business School, Jianghan University, Wuhan, Hubei, China 1, 2. Key Research Institute of Strategies and Development in Manufacturing Industry in Wuhan of China linanwudingbang@163.com Abstract: Precision Marketing is regarded as a kind of new marketing innovation technology, but its roles in the customer relationship management(i.e. CRM) and the connotation of its technological system are still to be further studied. The paper applies the case study and the description research methods, analyzes the content, the core ideas and the operating modules of the precision marketing, thinks that the precision marketing and CRM are closely correlated, and constructs technological systems of the precision marketing based on CRM, and finally draws a conclusion that the precision marketing on CRM will better help companies solve the problem of how to focus on customers, retain the existent customers, attract new ones, raise the customer s loyalty to the firm and realize the added value of customers. Keywords: Precision marketing, Customer relationship management, Technological systems 1. Introduction Marketing technology innovation has recently developed fast at home and abroad. So many marketing professors as Zhang Weiying, Guo Guoqing, Gan Biqun, Philip Kotler, Gary Armstrong, and Michael Czinkota,etc. have contributed much to the marketing theory and practices. New marketing theories and ideas as brand marketing, perceived customer value and marketing audit and so on keep on appearing. Precision marketing, as an important marketing innovation technology, is attracting more and more attention of the theoretical cycle and of companies. To use it suitably can not only reduce the cost of the firm and bring about many competitive advantages, but also produce benefits for the customer and foster the loyalty of him. Precision marketing is presented as management ideas to give a fast response to the customer s needs and functions. It creates an atmosphere where buyers and sellers can communicate with each other timely and matches the management philosophy of customer orientation, low costs, convenience and full communication of the customer relationship so as to maximize the effectiveness of companies and customers. So, the paper does a comprehensively analysis of the technology system of the precision marketing in the angle of the customer relationship management. 2. Customer Relationship Management and Precision Marketing 2.1. Customer relationship management Customer Relationship Management (CRM) is a management system that operates for customers, of customers and around customers and that implements the managerial thoughts and patters of the company through a set of software, of which the core is embodied in the customer solution, the customer cost, convenience and communication (i.e. four Cs). It also emphasizes the active and total participation of the customer. The key of CRM is the management of the customer data by way of Internet, e-commerce, multimedia, data bank and digging, expert systems and computerized call center. Its purpose is to improve automatically the business process relating to CRM in the fields of selling, marketing, customer services and supports, etc. CRM is helpful to deeply unearth the target customer, support the development strategy of the company, carry out the management and application of the customer information, build a centralized marketing management platform around customers and realize the normalization of business and management and the maximization of benefits. 131
2.2. Precision marketing Precision marketing aims at a measurable low-cost expansion of a company by means of setting up customized communication systems with modern information technology on the base of accurate location. It includes three levels of meaning, namely, precise marketing ideas; measurable; reaching the company target of low cost and sustainable development. The main content of the precision marketing is to break through the qualitative limits of the traditional marketing location and to make marketing satisfy the demands of measurable precision in maintaining a long-term personified communication with customers by means of advanced data technology, network communication and modern logistics. It gets rid of high-cost tie of the traditional advertisement and is able to make companies grow fast in a low cost. Its systematic solution keeps a close inter-communication between companies and customers so that the customer s personified demands are met continuously. In this way, stable and loyal customer blocs are formed and the value is added with a chain-typed reaction so as to make the firm develop at a high and stable speed. The precision marketing operates in several modules. One is data management that is used to administer the inner information and data contacts so as to centralize and share the trans-region and trans-department data; another is process management that can stabilize the management process by regulating and treating the relative business; the third is smart management that can provide effective concerns and services for customers and exact decision foundation for companies by way of smart analysis. 2.3. Linkage between the precision marketing and customer relationship management First, the customer relationship management emphasizes the customer solution and all the activities of the firm should be guided by consumers demands and needs. Also, the precision marketing highlights the expectancy and satisfaction of the target market. To reach this aim, the nearer the firm approaches the consumer, the better. In one hand, information may be distorted naturally because of a multi-link transmission and filtration; on the other hand, a man-made distortion may happen because the interest bodies in different links might exaggerate or lessen the information owing to their own benefits. The precision marketing cuts the complicated links and directly communicates with consumers with various modern information spreading tools, which avoids the information distortion and is able to precisely understand the consumer s demands and needs. In the meanwhile, the customer relationship management pays much attention to the customer cost while the precision marketing reduces the consumer s satisfaction cost. The precision marketing is the shortest of all the marketing channels. Its marketing expenditure is greatly cut due to the reduction of circulation and of the shop rents. Also, the satisfaction cost of the consumer is much reduced for the sake of the perfect ordering and distributing systems. The customer relationship management cares for convenience and communication, too. The precision marketing often offers large quantities of commodity and service messages and the customer can get what he wants to buy at home, which lessens the do-shopping trouble of the customer and enhances the convenience. Besides, the precision marketing realizes the bi-way communication with customers. Traditional marketing concerns market shares while the precision marketing more cares for the customer s value and the added value. The core of the latter is CRM. As an effective means of CRM, the precision marketing attracts more and more attention and is widely used by the firm. 3. Analysis of the Precision Marketing Technology Systems on CRM Among the precision marketing technology system on CRM, the customer value-added service is the center of the system. Accurate market location functions around the center. Personified communication serves the location and product development and design. Integrated sales network is an important approach to make the customer service value added (see Figure 1). 132
Personified Communication Integrated Sales Network Accurate Market Location Product Development and Design Customer Value-added Service Figure 1 Precision Marketing Technology Systems 3.1. Customer value-added service The target of the precision marketing is to retain customers and add value after sales. Perfect quality and service are usually shown after sales. Only by accurate customer service systems can the existing customers be retained and the new be attracted and the customer s loyalty be fostered. The loyalty is the main origin of the firm s profits. To realize the added value of the customer, the firm must retain existing customers and attract the new and raise the customer s loyalty to the firm. The customer delivered value becomes the crucial way of the added value. The precision marketing is an effective tool of getting the customer delivered value. The customer delivered value, first put forward by Professor Philip Kotler, means difference between the customer s total cost and value. The total cost includes the expenditure of money, time and energy, etc. The total value consists of the benefits obtained by customers such as product value, service value and image value and so on. In buying, customers always tend to maximize the customer delivered value. So the firm must provide more customer delivered value than its rivals. The precision marketing raises the customer s total value. Its point-to-point marketing approach is helpful to fully consider the consumer s personified demands, which strengthens the adaptability of products and creates more benefits for customers. At the same time, the precision marketing pays more attention to the creation of service and to offering consumers perfect service. In addition, the precision marketing strives to upgrade its image by way of series of marketing activities in order to foster the consumer s preference and loyalty to the firm. The precision marketing reduces the customer s total cost. Consumers care for not only the price of commodity, but also the relative goods information as convenience and service, etc. Therefore, to be more competitive, the firm must take it into consideration whether the price can be accepted or not by consumers and how much time and energy should be spent in buying commodity. The latter expenditure is named as transaction costs that directly affect the possibility of transaction and the marketing result. So the reduction of transaction costs becomes the key agent of reforming marketing approach. The precision marketing cuts down the commodity selling cost and the customer s money cost, and especially reduces the time and energy cost of consumers in searching goods information, so does the transaction cost. Therefore, with the rise of the customer s total value and the fall of customer s total cost, the customer delivered value increases. The precision marketing is becoming a willingly accepted marketing approach by the firm. 3.2. Accurate market location Market segmentation and location is quite imperative in modern marketing activities. Only by an exact segmentation can an effective location of market, products and brands be maintained. After an exact measurement and analysis of the consumer buying behavior, data systems are erected. Then based on the systems, a selection of customers is implemented and the effectiveness of the market segmentation and location is proved through the market test. For example, Winner Union has succeeded in realizing its product precision location with the aid of the marketing test system of Market Location Technology. The systems are built on the complex figure theoretic module. The real experimental data are obtained in a simulated actual marketplace. The simulated markets include goods shelves, network experiment and visiting users, etc. 3.3. Personified communication The precision marketing needs accuracy, so mass media are not quite suitable for it. Its communication 133
tools mainly consist of telephones, short messages, DM, EDM, customer participation advertisement, and network popularization, etc. DM means mails and EDM refers to network mails. The customer participation advertisement, different from the traditional promotion such as allowance, and discount, etc. aims at designing some activities that can attract the interest and attention of customers for the purpose of his participation. Its designing emphasis is laid on the conception of activity agents. Its principles are presented as follows: make the accurately positioned groups be interested in the activities so as to reach the aim of their participation, then communicate with them one by one. The activity agent means something that can attract the attention of the special customer groups and more concerns the study of consumption psychology, and of consumer buying behavior. For example, Dongfeng Citroen Automotive Co. Ltd (DPCA) is quite successful in its after-sales service communication (see Figure 2). By way of personified contacts, it gives its customers family-like concerns and has established harmonious relations among customers, cars and nature. Appointment User Visit and Welcome Trouble Check and Diagnose Repair Quality Check Repair Cars Repair Quotation and Sign Task List Explain Repair Items And Present Invoice Deliver Cars User Revisit Figure 2 After-sales Service Process of DPCA 3.4. Product development and design To match the precision location and communication, the precision marketing needs personified products and services based on different consumers and demands to satisfy the market needs. Customization is an important tool to hit its target. Take Dell for example, using the advanced supply chain management, process control, call centers and e-commerce, etc, Dell has succeeded in the production according to the customer s needs. Accurate, personified product and service systems are based on modern production and process management as supply chain management, ERP, BPR, etc. BMW has been operating in precision production module of car assembling and delivering timely according to the customer s order. 3.5. Point- to- point integrated sales network The sales organization of the precision marketing includes comprehensive reliable logistic distribution and payment systems and call centers of customized communication. Convenient and fast logistic distribution and reliable payment systems are the key parts of the precision marketing. Winner Union has applies the governmental post network to realize its goods distribution and payment. Call centers are platforms of customer-to-customer communication which are carried out by network technology and telephones. Their main functions lie in settling the customer s order, answering the customer s question and maintaining the relationship with customers with the concerns to them. Basically, the precision marketing is independent of the marketing channel and hierarchy of the traditional marketing systems. 4. Conclusion In the times when customers are becoming major players in the market, how to focus on customers, retain the existent customers, attract new ones, raise the customer s loyalty to the firm and realize the 134
added value of customers is the key issue of the marketing. The precision marketing, well known for its capacity of fast, precise, low-cost, high-efficient and comprehensive satisfaction with the customer s personified demands, will be more and more popular in solving the above issue in the market. The paper makes an analysis and study of the technology system of the precision marketing around the customer relationship management, which gives an idea and approach of the firm marketing practices. References [1]. C. K. Prahalad, V. Ramaswamy. Co-opting Customer Competence. Harvard Business Review, 2000(1-2): P79-87 [2]. Chen Rongqiu. Management Based on Customers. Management Journal. 2005(2): P133-139(in Chinese) [3]. Philip Kotler, Gary Armstrong. Principles of Marketing. Eleventh Edition. Tsinghua University Press. October, 2007. P13 [4]. Michael R. Czinkota, Ilkka A. Ronkainen. International Marketing. Eighth Edition. Peking University Press. October, 2007. [5]. Warren J.Keegan. Global Marketing Management. Seventh Edition. Tsinghua University Press. November, 2006. 135