Free Marketing Dissertations - This Type Of Learning Relationship Can Be Used To Refine A Company’s
This type of learning relationship can be used to refine a company’s understanding of the consumer (Muther 2002).
An example of a company using such knowledge to provide individualised service to its customers is the online retailer Amazon. In purchasing certain items from a set up account, Amazon’s software provides a returning customer with recommendations based on prior activity. The company has built up a database of its customers which provides information on a whole range of behaviours, such as purchase frequencies or product tastes, allowing them to construct a profile of that customer. Using reinforcement techniques such as customised email newsletters and special offers, the company is able to provide genuine benefits to its customers, explored in further detail later in this essay.
Benefits of Individualisation to the Organisation
The benefits that the accuracy of this kind of relationship with customers has to an organisation are wide ranging, on strategic, business and functional levels (Muther 2002). It is argued here that companies are able to make better decisions when moving into new markets due to the knowledge accrued from existing customers.
The kinds of databases which can be extrapolated from the utilisation of CRM can be used to build up sophisticated understanding of the consumer. Dodds (2000), cited by Egan (2004), suggested that companies can become truly knowledge rich. Such knowledge gives the company many strategic advantages such opportunities to better target their marketing. Stone et al. (2000) acknowledge the importance of knowledge in the modern market, where it is not only importance from a customer and market perspective, but is also a tangible financial asset on the balance sheet.
By developing greater ties with the consumer, retention and loyalty can be better maintained. Interactivity increases a customer’s familiarity with a particular brand, increasingly the likelihood that they will use the product again in future due to a positive experience gained from the relationship. It would be arguably valid to suggest, from a consumer behaviour perspective, that CRM compliments the kind of reinforcement and cognitive based buying processes referred to by East (1997).
In the case of reinforcement-based learned behaviour, the simple act of using a service again due to the observed convenience of using the individualised nature may increase purchase frequencies or loyalty. By refining a customer’s opinion of the service by personalisation and individualisation, their cognitive purchasing processes can be altered to rationalise, for instance, that it is easier to find relevant information on purchase options using this service than that of the competition. Hence, both extrinsic and intrinsic purchase loyalties can be facilitated from the implementation of CRM systems.
