ABSTRACT
The study observes the role of competitive intensity in
moderating the relationship between Customer Relationship Management (CRM)
capability and firm performance. The research was necessitated because of the
problem of several firms not being able to harness the full benefit of the CRM
concept mainly because there is no backing capability to ensure competitive
advantage. In order to achieve this, some specific objectives were set
including to determine the CRM capability practices among Micro, Small and Medium
scale Enterprises (MSME‟s), to measure the effect of CRM capability on
organizational performance, to investigate competitive intensity and its effect
on organizational performance in the MSME sector and to ascertain extent to
which competitive intensity affects the role played by CRM capabilities in
determining organizational performance. In order to achieve this, 400
structured questionnaires were conveniently distributed to owners, managers and
executives of MSMEs in Ashanti region. 400 responses were retrieved and
analyzed quantitatively using Stata and SPSS. Mean analysis, correlation
analysis and Hierarchical Linear Modeling (HLM) regression were the main
analysis used in deriving the findings from the research. Findings from the
research indicate that firms in the sector have the capabilities of managing
customer information knowledge and winning them back. However, upgrading
customer relationship is on the average in the sector. It was also found from
the correlation and HLM regression that CRM capabilities do have a positive
impact on firm performance whiles controlling for period of working in the
business and the type of business. The work also indicated that the
introduction of competitive intensity as a moderating variable saw a change in
performance in the effect of CRM capabilities and performance. It was
recommended that owners, managers and executives should build a stronger CRM
capabilities whiles working hard to stay above the competition in the sector.
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
The concept of Customer Relationship Management (CRM) has
brought to the attention of organizations, the need to bring stronger
relationship with customers. Several literatures on the concept of
Resource-Based View (RBV) has indicated that having varied resources including
customer relationship and rational assets like data on the preference of
customers gives a business or an organization a good source of competitive
advantage (Srivastava et al., 1998; Barney, 1991). Scanty study has however
concentrated on how the resources are used or positioned to equal the
situations of the market and as such add up to the performance of businesses
including Micro, Small and Medium Scale Enterprises (SME‟s) (Slotegraff et al.,
2003; Morgan et al., 2009).
The practice of CRM has presented to marketers including
owners of Micro, Small and Medium scale enterprises the need to keep customers
and the benefits derived in building long term relationships with customers in
today‟s competitive business environment (Ismail et. al., 2007, p.16; Jayachandran et. al., 2005). The Concept
of Customer Relationship Management (CRM) is concerned with business
interacting with their customers with the purpose of getting and analyzing the
data of customers and using the outcome or results to improve service delivery and attain marketing objectives
(Seybold, 2001, Strauβand Schoder, 2002). The concept identifies the long-term
value of potential and actual clients whiles seeking a growth in revenue,
profits and shareholder worth through the activities of marketing which are
channeled to the development, conserving and augmenting successful
organizational-customer relations (Berry, 1983; Morgan and Hunt, 1994;
Gronroos, 1990). The activities involved in managing customer relationship
include a thorough understanding and appreciation of the fundamental sources of
value derived by the firm from customers and what the customers on the other hand gives to the
organization. Organizations over the years are beginning to realize that
customers have various economic value and importance to the company, and as
such are subsequently adapting their customer offerings and communications
strategy accordingly. Because of this, organizations are gradually shifting from
a product or brand centric marketing to a customer – centric approach.
In the SME sector, a well-managed CRM program can assist in
targeting customers who really need attention and are as well profitable. This
way customized package can be designed and marketed to them to ensure customer
satisfaction and an increase in profitability of the enterprise.
CRM has the ability to perform analysis on customers with
respect to their routine processes over time. These include purchase orders,
regular visit times, and credit pattern. A proper monitoring and analysis of
these can increase customer satisfaction by ensuring proper measures and
enhanced delivery. The research amongst other things seeks to conceptualize and
operationalize the extent to which CRM processes have been implemented amongst
the SME‟s in Kumasi. This will give a clear indication on the CRM processes
among businesses and can also ensure the determination of whether higher levels
of CRM can impact on the performance of the enterprises.
The capability aspect of CRM is a multifaceted package
containing skills and learning abilities that is practiced through the
processes in the organization (Day, 1994). The work of (Morgan et al, 2004)
defined CRM capabilities as organizational activities or processes that reveal
the skills or abilities of a firm with the purpose of constantly creating,
sustaining and advancing purposeful relationships with clients. Based on
existing literature, the work adopted 4 dimensions of CRM capability. These
were, Customer Knowledge Management Capability (CKMC), Customer Interaction
Management Capability (CIMC), Customer Relationship Upgrading Capability (CRUC), and Customer
Win-back Capability (CWC) (Parvitiyar and Sheth, 2001; Reinartz. et al, 2004).
A major key in building a firm‟s competitive advantage is its capability. The
various categories of marketing capabilities are considered as a highly
significant driver of the performance of businesses (Day, 1994; Srivastava, Shervani
and Fahey, 1998). Exceptional CRM capabilities have the ability to provide
firms with competitive advantage that is very difficult to imitate and also
very sustainable (Day, 2000). If a firm is able to adequately use its
capabilities derived from the relationship with its customers through the
various activities of CRM, it can generate and convey greater worth for
customers and thus increase its performance.
A very element of the hostility of the environment is the
intensity of the competition (Barth, 2003; Kumar and Subramanian, 2000 and Dess
and Beard, 1984; Dibrell 2007, Child and Tsai, 2005). Competitive intensity is
the condition where there exist fierce competition as a result of the numerous
competitors operating within the market or industry and absence of growth
opportunities (Auh and Menguc,2005). It is suggested by Auh and Menguc (2005)
that, the outcome of the behavior of a business will change from being the
results of a firm‟s from being deterministic to stochastic. This happens
because the outcome of the firm‟s activities is affected or influenced by the
activities undertaken by the competitors. Due to this, in a market where there
is high competition, predicting outcomes reduces. Competitive intensity was
introduced as a moderating variable between the capability of CRM and the
performance of organizations. The purpose and reason for the introduction was
to test whether the prediction organizational performance from CRM capabilities
differs by the introduction of the third variable, in this case competitive
intensity. Some items that were used in measuring the level of competition
were, the number of firms offering products/services that are similar in
nature, aggressive marketing strategies by other firms, market share and
attraction of new entrants into the industry. Competitive intensity was introduced as a moderating variable because, it has been
established in some works (Kemper et. al., 2013, Lumpkin and Dess, 2001) that,
in industries or markets that have higher competition, the individual firms are
customer focused. The motivation to focus mainly on the customer was driven by
the intense competition that exists in highly competitive markets. According to
(Kemper et al 2013), the intense competition can make organizations embark on
Corporate Social Responsibility (CSR) since the CSR activity has a positive
effect on the relationship on the firms performance. On the other hand, if the
intensity of the competition is low, firms are not much concerned in the
desires of the customers as such are not customer focused. Building long-term
relationship with customers does not exist in such markets or it‟s very low.
1.2 Problem Statement
For some years now, customer relationship management in the
field of business has risen in various literatures as a significant academic
study and management practice. Several businesses now accept the fact building
a stronger relationship with customers can improve the business in several ways
(Neil 2001). Literature gathered from customer relationship management studies
has alluded to the fact that many firms are not able to successfully use the
CRM programs or activities available to them (Reinartz et al., 2004, Parvitiyar
and Sheth, 2001, Plakoyiannaki and Tzokas, 2002). It has been ascertained that
firms and businesses around the world are spending lots of money on CRM, but on
the average about 70% of CRM programs do not achieve results in boosting
business performance (Reinartz et al., 2004; Neil, 2001). It was indicated in
some of the studies that, the businesses or firms got it wrong or faltered
because the CRM capabilities they possess was not adequately deployed to ensure
building of superior capabilities in managing customer relationships in order
to achieve competitive advantage (Day and Van den Bulte, 2002; Morgan et al.,
2004; Plakoyiannaki and Tzokas, 2002). The resource based view of a firm also
shows that, poor capability of the relationship built between the firm and the clients may be
one very critical cause of the failure of CRM. It has therefore become urgent
that there should be a need for businesses to learn the ways of developing and
strengthening CRM capabilities. It is however unfortunate that very scanty knowledge
exists on what constitutes the capabilities of CRM and ways of measuring and
strengthening the capabilities to ensure enhanced outcomes or performance of
business.
Some sections of businesses and business owners see CRM to be
only technologically driven (Reinartz et al., 2004). Customer Relationship
Management however does not only work with technology. It is a combination of
activities of human, processes and technology working together at the same time
to ensure efficiency. Organizations that believe that CRM is only about
technology do not understand the concept and thus fails immensely in its
adaptation and usage. Thus this work does not look at the technological side
but the capabilities derived from the activities of the business owners, managers
and executives.
For more Marketing Projects Click here
===================================================================Item Type: Ghanaian Topic | Size: 85 pages | Chapters: 1-5
Format: MS Word | Delivery: Within 30Mins.
===================================================================
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.