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Blue Ocean Strategy - An insight into the Future of Customer Relationship Management

Seminar Paper 2011 22 Pages

Business economics - Marketing, Corporate Communication, CRM, Market Research, Social Media

Excerpt

Table of Content

List of Abbreviations

List of Figures

List of Tables

1. Introduction

2. The flexible Strategy Canvas of CRM

3. Value Innovation of CRM

4. Conclusion

Appendix: Online-Survey

Table of Literature

Table of Internet Sources

ITM Checklist: 360-degree analysis

List of Abbreviations

Abbildung in dieser Leseprobe nicht enthalten

List of Figures

Figure 1: Strategy Canvas of CRM

Figure 2: A flexible approach of the Strategy Canvas of CRM

Figure 3: The generic process of CRM

Figure 4: Revenue versus Cost for the SDGmbH

List of Tables

Table 1: Online-Survey Question 1-2

Table 2: Online-Survey Question 3-4

Table 3: Online-Survey Question 5-6

1. Introduction

This assignment applies tools of the Blue Ocean Strategy (BOS) for the market of Cus­tomer Relationship Management (CRM). Using the practical example of the Service Dream GmbH (SDGmbH), a fictional Customer Service (CS) provider, BOS has been chosen to transfer the company outside of a contested and low profit market to a market without competition and consequently higher profit margin.[1]

It is interesting to consider, that Blue Ocean (BO) is a strategy available to every man­agement expert in the industry. Although it requires a certain amount of innovation and strategic thinking, latest research assume this is a process that can be learned by every capable manager.[2] Consequently, each company of the CRM industry could use BO and come to similar innovative approaches and uncontested market space. Therefore, Chap­ter 2 applies the Strategy Canvas in a flexible way, looking for flexible alternatives be­tween the market strategy of classic Call Centers (CCCs) and the assumed strategy of the SDGmbH. Due to the constraints of this assignment, a market research in order to determine the overall market strategy could not be undertaken and has been replaced by an online-survey of four German CRM experts. The average of their responses has been used to define the market strategy of CCCs compared to the assumptions made for the SDGmbH.[3]

Chapter 3 follows the generic four action framework of BO in order to create a value innovation for the SDGmbH based on the findings of the flexible Strategy Canvas.[4] Due to the fact that BO is still a recent strategy lacking of specialist literature by a variety of authors next to its creators, the predominant specialist literature regarding CRM has been applied in Chapter 3 to create a valid value innovation to the CRM industry which can be released after the handover of this assignment.

2. The flexible Strategy Canvas of CRM

A strategy canvas analyses the overall market position regarding certain chosen charac­teristics compared to a company’s own position. This evaluation sets the basis for rede­fining market boundaries and finding new market spaces in order to make competition irrelevant.[5] The second reason for advocating the use of a strategy canvas is that you get an overview of the service offered to customers on the market compared to the services you provide and are planning to provide in the future to the same or even new custom- ers.[6]

Figure 1 demonstrates the strategy canvas of CCCs compared to the assumed strategy of the SDGmbH assuming one as low and ten as high regarding the characteristics of

- Price per a certain number of contacts
- Data Integrity of customer data[7]
- Volume Capacity regarding a certain time frame
- Quality of contacts made[8]
- Individual Service offered to customers[9]
- Meeting customers’ expectations.[10]

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Strategy Canvas of CRM[11]

Whereas the strategy canvas of the SDGmbH has been assumed for this assignment, the strategy canvas of CCCs has been created on the basis of an online-survey to four CRM experts.[12] Due to the constraints of this assignment, a relevant market research has been replaced by an efficient first insight into the positioning of CCCs by selecting the recip­ients out of the author’s network without further data collection.[13] During the online- survey, the participants had the chance to evaluate each characteristic upon a scale be­tween one and ten for CCCs excluding open questions used in a market research.[14] On the basis of Figure 1, the following conclusions can be made:

- CCCS are able to cope with high volumes
- CCCS are on the lower end of each characteristic excluding contact volume ca­pacity
- The price of the SDGmbH is slightly above CCCs
- The SDGmbH has a high position regarding price, quality, individual service of­fered and meeting customers’ expectations.

However, the challenge from the SDGmbH’s point of view remains in creating a value innovation to escape from the so called red ocean, a contested market space.[15] E.g., this can be done by talking to dissatisfied customers in order to get a closer awareness of customers’ expectations.[16] This brings us to the question if each of the chosen character­istics is beneficial to define the market strategy, e.g. meeting customers’ expectations is a subjective item which can only be answered by customers directly. Assuming the characteristics are strategically consistent, the challenge remains that each CRM com­pany comparable to the SDGmbH could come to a similar conclusion whilst defining the market strategy canvas following the BOS process.[17]

It is interesting to consider that applying BOS would consequently eliminate the nature of uncontested market space assuming everybody would be capable of applying it to the same degree and a limited amount of available value innovation.[18] The result would be a BOS Paradox destroying Blue Oceans at all. Therefore, the strategy canvas should be used to find flexible markets using different options demonstrated in Figure 2 to create value innovation on the basis of the original strategy canvas. Partly, this could be achieved by the use of social media.[19]

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: A flexible approach of the Strategy Canvas of CRM[20]

3. Value Innovation of CRM

Recent research has claimed the buying process has changed from the original sales funnel to a consumer decision journey highlighting the importance of CRM during the evaluation phase of customers.[21] However, still manufacturers on the one hand and CS providers on the other hand aim at over exceeding customers’ expectations rather than simplifying the level of service which consequently leads to complex CS structures and inefficient management.[22]

Abbildung in dieser Leseprobe nicht enthalten

Figure 3: The generic process of CRM[23]

Contrary, companies that master the simple service and “extract value as a conscious strategy” increase their competitiveness whilst decreasing their marketing budget.[24] Generally, companies of the CRM industry follow the generic CRM process displayed in Figure 3. Following the findings of the flexible strategy canvas in Chapter 2 and us­ing BOS to avoid competitiveness by creating value innovation, the four action frame­work of CRM for the SDGmbH can be described as following:[25]

- Eliminate: Actually, the contract partner of the SDGmbH are manufacturers of a product instead of private customers. By that, service is always associated to this product. By offering service to customers on the market independent of the product directly, the contractual situation to the manufacturer is eliminated whereas the bargaining power of the manufacturer and competition is avoided.[26]

- Reduce: Companies of the CRM industry have implemented complex processes to meet the high legal requirement of data protection.[27] If customers are the con­tract partners of the SDGmbH, data integrity can be prepared by the direct cus­tomers’ willingness to share their data without complex processes.

[...]


[1] Cf. Kim, W. C.; Mauborgne, R. (2005), p. 7.

[2] Cf. Gavetti, G. (2011), p. 123.

[3] Cf. http://www.surveymonkey.com, 27.07.2011.

[4] Cf. http://www.blueoceanstrategy.com/pre/downloads/CreateBOSinFourSteps.pdf, 15.07.2011.

[5] Cf. Kim, W. C.; Mauborgne, R. (2005), p. 23.

[6] Cf. Kim, W. C.; Mauborgne, R. (2005), p. 25.

[7] Cf. http://ec.europa.eu/justice/policies/privacy/index_en.htm, 15.07.2011.

[8] Cf. Kotier, P. et al. (2011), p. 437.

[9] Cf. Ry als, L. (2008), p. 42.

[10] Cf. Dixon, M. et al. (2010), p. 118.

[11] Created by the author.

[12]Cf. http://www.surveymonkey.com, 27.07.2011.

[13] Cf. Holzmüller, H. H.; Buber, R. (2009), p. 34.

[14] Cf. Helfferich, C. (2011), p. 25.

[15] Cf. Kim, W. C.; Mauborgne, R. (2005), p. 108.

[16] Cf. Kim, W. C.; Mauborgne, R. (2005), p. 142.

[17] Cf. Gavetti, G. (2011), p. 125.

[18] Cf. http://entrepreneur.com.sg/wordpress/?p=284,15.07.2011.

[19] Cf. Wilson, H. J. et al. (2011), p. 23.

[20] Created by the author.

[21] Cf. Edelman, D. C. (2010), p. 64.

[22] Cf. Dixon, M. et al. (2010), p. 119.

[23] Created by the author according to Schumacher, J.; Meyer, M. (2004), p. 67.

[24] Cf. McGovern, G.; Moon, Y. (2007), p. 80.

[25] Cf. http://www.blueoceanstrategy.com/pre/downloads/CreateBOSinFourSteps.pdf, 15.07.2011.

[26] Cf. Porter, M. E. (2004), p. 6.

[27] Cf. http://ec.europa.eu/justice/policies/privacy/index_en.htm, retrieved 15.07.2011

Details

Pages
22
Year
2011
ISBN (eBook)
9783656008781
ISBN (Book)
9783656008576
File size
654 KB
Language
English
Catalog Number
v178695
Institution / College
University of Applied Sciences Essen
Grade
1,3
Tags
Blue Ocean Strategy CRM Customer Relationship Management Customer Relation Customer Service CSI Customer Loyalty Leadership Management Innovation Strategy FOM MBA Assignment

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Title: Blue Ocean Strategy - An insight into the Future of Customer Relationship Management