How Office Depot Create Value for Its Customers - Assignment Example

Marketing Strategy Analysis Customer’s Name Customer’s Grade Course Customer tutor’s Name 22nd February, 2010 Question One ‘How Office Depot create value for its customers’ [5 marks] Office Depot creates value for its customers in various ways, which includes: There is the provision for delivery services There is the provision of customer care services through which customers can have their issues addressed. There is customer advising and better interaction. Getting to know the particular needs for the customers and offering them discounts. Free servicing of materials delivered. Question Two Identify the four broad target markets that Office Depot serves. [2 marks] The four major target markets served by Office Depot include organizations that need office supplies and equipments, offices and even homes and insurance companies. Are Steve and Dana the ‘right’ customers for Office Depot? Justify your answer. [1 mark] From the issue presented here, it will be agreed that Dana and Steve are not the right customers for Office Depot. This is because it is mentioned that they had been receiving supplies before from Office Depot when sometimes the person delivering them may as well leave them at the doorstep. Because of this single fact, it can not be refuted whether they are ‘right’ customers for Office Depot (Herbett & Peter, 2009). For this single fact that they have not been receiving the best services from Office Depot, it makes them not ‘right’ customers since they would deserve better services. What is THE critical element that went wrong with Steve’s order? [2 marks] With Steve’s order, two major critical elements went wrong. The first one concerns the manner in which the delivery is carried out, the delay in which the delivery is executed contrary to what was indicated on their website. The depot therefore has not been providing appropriate services. Question Three What customer satisfaction problems do you see in the case? Answer this by addressing the following two aspects: From this case, there are a number of customer satisfaction problems that can be highlighted: Product delivery; The major problems seen with the delivery of the product is that the personnel delivering the product are quite ignorant and do not give the clients the appropriate services. There is also the issue of language barrier which may not be welcome whenever delivering products to the customers. There are faulty tracks that consume most of Dana’s time in trying to call for the track to be tolled away. Steve reporting the situation to Office Depot. (10 marks) The next issue here is on the way Steve is served when trying to report his issue. It occurs that there were no personnel to handle his issue as a client of customer to the company. This means that there are quite a number of customer satisfaction problems that can be seen from the case. The issue here is that there were over ten repeated automated reply messages that he continued to get from the customer care in the company. This had wasted his valuable time but he had to hold on since he needed to have a number things addressed. The indication here is that the company had no appropriate measures in ensuring that the customers are not kept waiting for long. The other thing is that, once his phone was picked up by the customer care personnel by the name Iris, it was not quite sure whether he was going to forward the complaint so that the necessary measures can be taken in ensuring there is the necessary customer satisfaction (Pearce, 2006). Basically, the major issues he wanted to be addressed were to do with customer relationship management, customer lifetime value, customer equity, and customer value. Customer satisfaction is driven by customer expectations—what were Steve’s expectations in this case? [2 marks] From this case, it is quite clear that Steve’s expectations were that the necessary satisfactions he thought he would get from the company would be realised. This would include the rightful delivery of his order and within the appropriate time upon placing the order and paying for it, having good mannered delivery personnel who are friendly and active to ensure final customer satisfaction. The other issue what on the way the customer care people would safe their clients’ precious time by giving them priority and answering all the questions raised. We will hence say that his major expectations were that he wanted some issues to be addressed such as customer relationship management, customer lifetime value, customer equity, and customer value. Question Four Describe the concepts of customer lifetime value and customer equity. [4 marks] The concept of customer lifetime basically dwells much in satisfying customer relationships in the business through delivery, advisory means and providing them with the best services so that there can be an increased sales to the particular customers for the longest time possible. This is in contrary to the increase of sales within a short time which may not be wary of the future in terms of retaining the customer in the business. Therefore, customer lifetime value is a long time concept other than a short one. This ensures there is long time customer satisfaction. Custom Equity is another important aspect. This concept holds that the overall asset value of that organization will be dependent in the relationship existing between the customers and the organization. Customer equity will be based entirely in the lifetime value of the customer. The understanding of this customer equity will be utilised in optimizing the investment balance when the need arises for the retention and acquisition of more customers. Some schools of thought will call this customer capital. This means that increased customer equity will ensure that the company will get better returns in future from the customers and clients. How are both of these concepts incorporated in this case? [2 marks] In this case, these concepts can be integrated in ensuring that a solution is obtained to this problem. With Office Depot, the use of customer lifetime value and customer equity concepts will ensure that all the managers work hard in ensuring that a similar case like this one may never occur. This is because it is the only sure way through which customers can be retained and continue making the business grow day after day, and in the very end realise its objectives and goals. Based on the following four assumptions what is the net present value of the potential lost revenues if Steve and Dana both stop buying from Office Depot? [4 marks] 1. the average life of a customer is 4 years; 2. Office Depot’s weighted average cost of capital is 10%; 3. Dana spends $1,000 per annum on office supplies and she expects this to grow by 20% per annum over the next 3 years; and 4. Steve uses $200 per num for supplies in the office and wants this to grow by 5% per a num for the next 3 years. (4x (1000x120/100) + 3 x (200x 105/100)) x 0.1 USD Question Five ‘If you were the boss of the Office Depot’s customer service operation and get to notice Steve’s story, what particular steps would you take to:’ Assure Steve that his complaint is being dealt with; and In order to assure that the complaint was dealt with, the first thing would ensure that the issue was handed forward to the appropriate management for further actions to be taken on the matter. This would ensure that the all the delivery drivers are cautioned so that they can serve all the clients of the Company in a dutiful manner. There should as well be constant communication with the clients so that all the irresponsible delivery personnel are monitored. Get to see that the Office Depot lowers the probabilities of poor service recurrence: In order to ensure that this kind of poor service is minimized at Effort Depot, it would be necessary that a number of issues are addressed: Ensure there is responsibility attitude with all the drivers who do the delivery There should be proper monitoring of all workers in at Office Depot. There should be integrated staff development in the company (Anderson, 2007). All kinds of customer problems have to be eliminated through use of standard delivery structure and vehicles that are not faulty at all. Business Logistics should as well track all services in helping the company track, make analysis and in the very end improve the delivery performance of the company. There should be effective hiring of people who can communicate effectively with the customers and who are friendly (Robert & Deighton, 2008). There should be the integration of consulting services so that all customer deliveries are made appropriately. The other important is overall customer satisfaction in both the customer care services and in the delivery operations. The end References Anderson, H. (2007). Business market Management: Understanding, understanding and creating value: Oxford: Oxford University Press. Herbett, J. and Peter, F. (2009). Management in practice: Enhancing value in a turbulent world: Cengage: Cengage Learning. Pearce, C. (2006). Strategic Management: Cambridge: Cambridge University Press. Robert, C. & Deighton, J. (2008). Manage Marketing by the Customer Equity Test, Harvard Business Review, 74(4), 136-144. Read More