Building Brand Equity and Brand Loyalty in Srt Industry - Research Proposal Example

Using Customer Rеlаtiоnshiр Маnаgеmеnt and Consumer Bеhаviоr to build brand Equity and Brand Royalty in Sроrt Industry: The Case of Nike Company Managerial Problem In today’s highly competitive market, businesses have understood the importance of satisfying their customers as customer retention ensures constant demand for goods and services. Building brand equity and enhancing customer loyalty have been deemed as the most sustainable means towards long-term profitability and competitiveness. Customer relationship management (CRM) is termed as a multidimensional process where various information technologies are applied. CRM focuses on a proper understanding of client’s needs, wishes, wants and behavior and thereafter addressing them effectively. It helps businesses or companies understand the present and future needs of their clients, which allow proper planning (Injazz & Popvich, 2003). The importance of CRM is that it lowers the costs that could have otherwise been incurred in mass marketing. Other factors that have increased the importance of CRM in the contemporary times are the increased importance of the concept of ‘customer share’, as opposed to ‘market share’. Additionally; one to one marketing, customer satisfaction, customer loyalty and information technology developments, promote CRM. Availability of information regarding the various products offered in the market in the face of cut throat competition sees organizations refocus their strategies to remain profitable (Russell, 2001). Combining modern technology in CRM programs promotes accurate planning both in the short, as well as, long term. Understanding the customer behavior, wishes and needs while developing effective means to sufficiently address them promotes customer satisfaction. Satisfied customers are long term buyers; they buy more new products or more quantities of existing products and services, advertise or praise the products and bring in, more business. They are also, insensitive to prices, and will remain indifferent regardless the influx of other competitors. Furthermore, they help organizations improve on their products by giving suggestions or advice on products and services delivered. Customer loyalty can be defined as the long and uninterrupted retention of the relationship by offering services that meet or surpasses the customers need. In other words, customer satisfaction promotes customer retention and subsequently, loyalty. Customer loyalty is measured by the frequency of buying a certain good or service in the face of increased information about varied brands giving similar outputs (Chaudhuri, 1999). Some methods used to ensure customer loyalty include the quick response to customer queries, appreciation cards, rewarding for referrals made, and making them feel that they matter a lot to the organization (Allaway et al, 2011). According to the Marketing Science Institute a brand equity refers to the ‘set of associations and behavior on the part of a brand’s customer, channels members and parent corporation that permits the brand to earn greater volume or margin than it could without the brand name’ (Leuthesser, 1988). According to Allaway et.al. (2011), customer equity, which is defined as the value of consumers to a brand, promotes consumer loyalty. CRM programs have a direct effect in promoting an organization’s brand equity. Many organizations today are striving to uphold sustainable brand equity (Chaudhuri, 1999). Aims and objectives The core aim of this task is to establish how Nike, a sports industry brand can remain competitive in the face of global competition using the customer relationship management and consumer behaviour to build client loyalty and brand equity through primary and secondary research. Research question How best can a sports industry such as Nike use consumer relationship management to enhance a long term and sustainable global brand equity and client loyalty? The objective of the project -To establish how customer relationship management programs affects and enhance brand equity in the sports industry. -To analyse the effects of customer relationship management in promoting customer satisfaction and hence client retention. -To explore how the sports industry, in this case Nike, uses the information to develop customer relationship management programs tailored to address customer’s needs. Evidence of pre-reading The traditional marketing that targeted the conversion of new clients as well as wooing the competitor’s clients has been replaced by a customer retention approach. Various research studies on customer retention have established that it is more profitable to enhance, customer retention, as opposed to seeking new customers. Reichheld, a researcher, established that 5% customer retention translated to a 95% value delivered to the customer. Consultant Mckinsey backed this finding when he revealed that retained customers yields approximately double the profits new customers yield (Buttle, 2012). This realization increases the role of CRM in promoting sustainability in today’s highly competitive market. CRM is a combination of the people, technology and processes with the aim of better understanding the customers. It is focused on the management of customer retention, as well as, relationship development. (Jha, 2008). The need for a customer-centric approach to enhance sustainable profitability in the face of competition, as well as advances in the information, creates a platform for CRM. However, not all organizations succeed in the effective application of CRM due to their failure to understand that CRM requires an overhaul in the entire organization as well as in the customer focused processes. (Campbell, 2003). Collection of information used in developing CRM also plays a vital role in determining the effectiveness of CRM. A brand can be defined as the collection of perception in a consumer’s mind and, therefore, suffices to say that brand management is perception management. A positive relationship with a brand promotes customers loyalty (Allaway et al, 2011). Consumer based brand equity involves the collection of memory based associations to a specific brand that exists in a consumer’s mind (Light, 1997). This could be from what the customers has felt, learnt, heard or seen. Brand equity refers to the outcomes that accrue to a product with its trade name name compared with those that would accrue if the product did not have a brand name. (Hu, 2011). Brand equity can be assessed through the customer mindset, the product market as well as the financial market. (Stahl et al, 2012). Notably, CRM has varied meanings to varied people and hence the application of varied approaches to ensure client satisfaction. To effectively develop CRM programs, organizations must properly understand their customer and collect accurate information. (Hadzagas, 2011). Upon the development of CRM programs, it is noteworthy that the practices are well interpreted. Marketing managers may opt to separate their staff where one party focuses on customer retention while the other specializes on customer acquisition. Organizations or companies must, however, ensure regular cost benefit analysis to establish the profitability of CRM (Russell, 2001). The sports industry precisely Nike must remain focused on maintaining a brand. This will be possible through offering quality value products, effective communication with clients on both complaints and inquiries, faster service delivery as well as offer personalized products and services. (Bultema, 2000: Injazz, J & Popvich K, 2003). Rational and Data Planning Many organizations and companies in business have embraced the need for CRM programs towards promoting a sustainable yet profitable competitive edge. Effective CRM requires use of customer knowledge and enhances customer loyalty. CRM is viewed as a management tool for managing organizations relations with customers (Madhoushi et al, 2011). CRM to Galbreath and Rogers streamlines business activities in an organization with the aim of identifying, qualifying, acquiring and developing as well as retaining more loyal and profitable customers by developing the right product and service, to the right customer through the appropriate channel at the right time and the right cost (Galbreath & Rogers, 1999). Chen and Popovich (2003) further argue that CRM is a grouping of people, procedures and expertise with the aim of understanding a company’s customer. Through this approach, the quality of services offered improves enhancing competitiveness. For CRM programs to operate effectively, the information collected must be accurate, and the response adopted should be customer focused. The employees of the organization must be well trained on its implementation. The collection and interpretation of information is also critical in ensuring the correct data is collected and properly applied. Incorrect information would lead to the development of inappropriate strategies thus losing the real meaning of CRM. Nike is a global sports company that has managed to transcend various cultures of the world to develop strong relationships with consumers. Primary, as well as secondary data will be used to analyze how it can use CRM effectively to maximize associated benefits. The company which founded by Phil Knit and Bill Bowerman in 1967 adopted Blue Ribbon Sports to Nike in 1972 (Larson, 2011). It has recorded remarkable growth since inception, and in 2009, its revenues, were estimated to be $19.2 billion, a 3% increment from the previous year. Nike produces sports equipment, shoes and apparel. Nike owns other brands such as Converse, Cole Haan, Hurley International and Umbro. According to the BrandDynamics TM pyramid there are five levels in which the history, growth, as well as the sustainment of a brand, are analyzed (Larson, 2011). They include presence, relevance, performance, advantage as well as bonding. Presence of a brand entails the point of awareness by the customer with the product through personal use or through someone who has used it. (Hu, 2011). The product moves to relevance when customers positively identify themselves with it and deem it of value to them. A product then moves to performance after customers believes in its ability to deliver its promises while at the advantage level customers are emotionally satisfied with what the product offers (Hollis, 2008). To remain competitive in the global market, Nike must apply effective CRM practices or programs. The current position where it uses its customers in value co-creation is commendable. Customers’ opinions are sought while developing new, as well as existing brands (Ramaswamy, 2008). Project Timeline Week Task Due date 5 Consult with supervisor Study previous research about CRM concept focus on sports industry Work on literature review Work on case study of CRM in sports industry 6 Consult with supervisor Write literature review Prepare to research by design questions to survey 7 Consult with supervisor Finish and submitted literature review 8 Consult with supervisor Study theory suit for case study 9 Consult with supervisor Work on case analysis 10 Consult with supervisor Writing summary and conclusion Review the paper edit and grammar proofread 11 Consult with supervisor Final edit and grammar proofread 12 Project due date References: Allaway, A. W., Huddleston, P., Whipple, J., & Ellinger, A. E. (2011). Customer-based brand equity, equity drivers, and customer loyalty in the supermarket industry. The Journal of Product and Brand Management, 20(3), 190-204. doi:http://dx.doi.org/10.1108/10610421111134923 Bernd, H. 2006. Are brands forever? How brand knowledge and relationships affect current and future purchases. Journal of Product and Brand Management. 15(2): 98-105. Buttle, F. (2012). Customer Relationship Management. Routledge Publishers Bultema, P. (2000), "Getting the big picture on operational CRM", Proceedings of DCI Customer Relationship Management Conference, Boston, MA, 27-29 June. Campbell, A. J. (2003). Creating customer knowledge competence: managing customer relationship management programs strategically. Journal of Industrial Marketing Management. 32(1): 375-383. Chaudhuri, A. (1999). Does brand loyalty mediate brand equity outcomes? Journal of Marketing Theory and Practice, 7(2), 136-146. Retrieved from http://search.proquest.com/docview/212201459?accountid=45049 Chen, IJ. (2001), "Planning for ERP systems: analysis and future trend", Business Process Management journal, Vol. 7 No. 5, pp. 374-86. Christopher, M., Payne, A. and Ballantyne, D. (1991), Relationship Marketing, Butterworth- Heinemann, Oxford. Galbreath, J., and T., Rogers, 1999. “Customer Relationship Leadership: A Leadership and Motivation Model for the Twenty-First Century Business”, The TQM Magazine11 (3), pp. 161-171. Hadzagas, C. (2011). Applying Customer Relationship Management Systems for Customer Satisfaction: An Empirical Approach for Small-and-Medium-Sized Companies. European Journal Of Economics, Finance & Administrative Sciences, (40), 59-73. Injazz, J. C., & Popvich, K. (2003). Understanding customer relationship management (CRM): People, process and technology. Business Process Management Journal, 9(5), 672-688. Retrieved from http://search.proquest.com/docview/220298439?accountid=45049 Jha Lakshman. 2008. Customer Relationship Management: A Strategic Approach. Global India Publications, Larson, D. (2011). Global brand management - nike's global brand. The ISM Journal of International Business, 1(3), 14-1D,2D,3D,4D,5D,6D,7D,8D,9D,10D,11D,12D,13D,14D. Retrieved from http://search.proquest.com/docview/921620384?accountid=45049 Leuthesser, L. (1988), "Defining, measuring and managing brand equity: A conference summary, " Cambridge, MA: Marketing Science Institute. Light, L. (1997). Brand loyalty management: The basis for enduring profitable growth. Direct Marketing, 59(11), 36-43. Retrieved from http://search.proquest.com/docview/212806474?accountid=45049 Madhoushi, M., Saghari, F., & Madhoushi, Z. (2011). Survey of Customer Knowledge Management Impact on Customer Relationship Management: (Iranian study). International Journal Of Business & Social Science, 2(20), 215-226. Ramaswamy, V. (2008). Co-creating value through customers' experiences: The nike case. Strategy & Leadership, 36(5), 9-14. doi:http://dx.doi.org/10.1108/10878570810902068 Russell, S. W. (2001). A framework for customer relationship management. California Management Review, 43(4), 89-105. Retrieved from http://search.proquest.com/docview/216146994?accountid=45049 Robert, P. L., Vithala, R. R., Kevin, L. K., Anita, M. L., & al, e. (2006). Linking brand equity to customer equity. Journal of Service Research : JSR, 9(2), 125-138. Retrieved from http://search.proquest.com/docview/210509750?accountid=45049 Steven, A. T., Celuch, K., & Goodwin, S. (2004). The importance of brand equity to customer loyalty. The Journal of Product and Brand Management, 13(4), 217-227. Retrieved from http://search.proquest.com/docview/220594301?accountid=4504 Stahl, F., Heitmann, M., Lehmann, D., & Neslin, S. (2012). The Impact of Brand Equity on Customer Acquisition, Retention, and Profit Margin. Journal Of Marketing, 76(4), 44-63. doi:10.1509/jm.10.0522 Yu-Jia Hu. (2011). Exploring the relationship between customer involvement, brand equity, perceived risk and customer loyalty: The case of electrical consumer products. International Journal of Organizational Innovation (Online), 4(1), 111-127. Retrieved from http://search.proquest.com/docview/905852288?accountid=45049 Yu-Jia Hu. (2011). How brand equity, marketing mix strategy and service quality affect customer loyalty: The case of retail chain stores in taiwan. International Journal of Organizational Innovation (Online), 4(1), 59-73. Retrieved from http://search.proquest.com/docview/905852281?accountid=45049 Read More