1. List the importance of advertising and sales promotion.

The fundamentals of CRM are derived from relationship marketing. To study CRM, we must know the concepts of relationship marketing. Relationship marketing is a part of CRM. It is one of the core components of CRM. So let us discuss about the concept and growth of relationship marketing There has been a shift from transactions to a relationship focus in marketing. Customers become partners and the firm must make long-term commitments to maintain those relationships with quality, service, and innovation. [1]Relationship marketing marks the paradigm shift in the marketing from the transaction based approach to the customer centric approach. Companies now focus more on the relationship with customers. They are interested in long term customer relationship. Companies are trying to keep their old customer by providing quality of services and support system and they are investing in maintaining their relationship with the customers. Sometimes companies try to focus on bringing new customers to them by providing discounts and using attracting advertisements. Companies may lose their old customers at times. The reason may be due to the lack of customer understanding or quality of service. Evolution of customers Evolution of the customer-company relationship takes time. It grows with time and requires effort and measures to develop trust. There are four stages in the evolution of customer relationship. Figure 12.1 depicts the evolution of customers.

Figure 12.1: Evolution of Customers Let us now discuss each of these stages in detail. Customers as strangers: It consists of those customers who have not done any transaction with the company. It consists of those who have not entered into any transaction in the particular domain and those who have done transactions with the competitors. The primary aim is to attract them to do transaction with the company. Various promotional offers could be used to attract the customers. Attractive promotions can bring them to do the transaction with the company if they feel they would get quality services and value for money. For example, a customer opens an account with a banking service provider. Customers as acquaintances: The customer must be aware of the products and services of the company. This creates the platform for developing a relationship. At this stage, the primary aim of the company is to provide customer satisfaction. The company should provide quality of service and value for money, which is comparable to the competitor. Once the interaction between the company and customer starts increasing, it marks the beginning of a long term relationship. For example, customer uses the banking service to transfer some amount to another account. If the money is not transferred on time, the customer will not be satisfied with the service provided by the bank. The customers begin to trust the bank depending on the quality of service provided by the bank. Customers as friends: The primary aim of the company at this stage is customer retention. This stage is marked by building trust in the relationship between the company and the customer. As the customer increasingly uses the service, the company obtains more information about the customer and can treat the customer in an individualistic manner. This will help to strengthen the relationship and develop the trust that can help the company to retain the customer for longer period of time. For example, the customer can use the same banking service provider to carry out different transaction for different services. Banking service provider can provide the customer more customised and personalised banking services like preferred banking, online banking services, and many more to gain more trust and build a strong foundation for a long term relationship. Customers as partners: As the trust between the company and customer increases, the expectation of the customer will increase. It is now up to the company to effectively use the information they have collected from the customer. This information could be useful for the company in providing more customised and personalised services to the customer. This increases customer loyalty. At this level, the firm can progress in enhancing the relationship with the customer. For example, the customer can tell other customers who are looking for banking service provider to use the services of the particular bank that he is using. This would only be possible when the customer is satisfied with the services offered by the banking service provider.

2. What are the various levels of customer satisfaction?

Customer can get the following benefits from relationship marketing: Confidence benefit: The customers are confident about the quality of service and the service provider itself. This is one of the benefit that the customers enjoy when they are involved in a long term relationship with the company. The company knows what the customer expects and

the customer knows what kind of service they can expect from the service provider. Moving from one service provider to another service provider generally involves more investment of money and time. For example, if a customer is associated for a long time with a telecom company, he would be confident about the quality of the telecom network the company is having. Social benefit: With the long term relationship with a company or firm, customer can get a social support benefit. Over the time, customer develops a feeling of familiarity with the company and the service being provided. For example, long term customer of a telecom company gets more attention and help from the staff of the company. The local staff might be more familiar with the customer. Special treatment benefit: With the long term relationship, customer can get the benefit of special treatment like benefit of doubt, special discounts, preferential treatments, special offers and special services. These services can help the companies to maintain their relationship with the customer and enhance them. On the other hand, customer feels more familiar in the environment of the company. For example, a customer can get special calling rates or can get special discounts while paying his monthly telephone bills. Companies can get the following benefits from relationship marketing: Economic benefit: Relationship based service companies tend to achieve higher overall return on their investment than the transaction based service companies[3]. These high overall returns come from reduced marketing cost, reduction in administrative cost, increase in the expense by customer, good margin in profit without reduction in price of the services. As the satisfaction of the customer increases with the service provider, service provider keeps getting more of the business from the satisfied customers. Customer behaviour benefit: The best benefit that a service provider company can get from the satisfied and long term customer is the free mouth-to-mouth publicity. This kind of publicity has more impact because they are tested by the customer. The second benefit that the company can get from the loyal customer is that they try to help the company to provide quality services and also help the company to perform better. They can inform the company about the possible low side of the services provided by the company. The third benefit that the company can get from the long-term customer is that they can share their experience with the services of the company with other customers. For example, in a health clinic, a long term customer can help the other customer to understand the unsaid code of conducts and also act as a mentor to the new customer. This way the company will get the implicit and explicit help from the loyal customers. Human resource management benefit: Loyal customers can help in making the job of the staff much easier with the previous experience with the company. It is easy to train new staff by allowing them to deal with the loyal customers as the behaviour of the customer is known. Working is easy with the long term customers and also staffs like to work for the company which has a stable customer base. This helps the company to maintain the quality of service and also to reduce the cost turnover and training of the employees. From the above discussion, we could understand that relationship marketing is crucial for both the company and the customer. Companies are putting more effort in the relationship marketing so that they can have a stable customer base, which can provide them with more benefit in the future. It also reduces the investments involved in the marketing, staffing and administering the services, while still maintaining the quality of the services and maintaining the profit of the company.

3. Describe the importantance of a plan or methodology to initiate customer responses?

The fundamentals of CRM are derived from relationship marketing. To study CRM, we must know the concepts of relationship marketing. Relationship marketing is a part of CRM. It is one of the core components of CRM. So let us discuss about the concept and growth of relationship marketing There has been a shift from transactions to a relationship focus in marketing. Customers become partners and the firm must make long-term commitments to maintain those relationships with quality, service, and innovation. [1]Relationship marketing marks the paradigm shift in the marketing from the transaction based approach to the customer centric approach. Companies now focus more on the relationship with customers. They are interested in long term customer relationship. Companies are trying to keep their old customer by providing quality of services and support system and they are investing in maintaining their relationship with the customers. Sometimes companies try to focus on bringing new customers to them by providing discounts and using attracting advertisements. Companies may lose their old customers at times. The reason may be due to the lack of customer understanding or quality of service. Evolution of customers Evolution of the customer-company relationship takes time. It grows with time and requires effort and measures to develop trust. There are four stages in the evolution of customer relationship. Figure 12.1 depicts the evolution of customers.

Figure 12.1: Evolution of Customers Let us now discuss each of these stages in detail. Customers as strangers: It consists of those customers who have not done any transaction with the company. It consists of those who have not entered into any transaction in the particular domain and those who have done transactions with the competitors. The primary aim is

to attract them to do transaction with the company. Various promotional offers could be used to attract the customers. Attractive promotions can bring them to do the transaction with the company if they feel they would get quality services and value for money. For example, a customer opens an account with a banking service provider. Customers as acquaintances: The customer must be aware of the products and services of the company. This creates the platform for developing a relationship. At this stage, the primary aim of the company is to provide customer satisfaction. The company should provide quality of service and value for money, which is comparable to the competitor. Once the interaction between the company and customer starts increasing, it marks the beginning of a long term relationship. For example, customer uses the banking service to transfer some amount to another account. If the money is not transferred on time, the customer will not be satisfied with the service provided by the bank. The customers begin to trust the bank depending on the quality of service provided by the bank. Customers as friends: The primary aim of the company at this stage is customer retention. This stage is marked by building trust in the relationship between the company and the customer. As the customer increasingly uses the service, the company obtains more information about the customer and can treat the customer in an individualistic manner. This will help to strengthen the relationship and develop the trust that can help the company to retain the customer for longer period of time. For example, the customer can use the same banking service provider to carry out different transaction for different services. Banking service provider can provide the customer more customised and personalised banking services like preferred banking, online banking services, and many more to gain more trust and build a strong foundation for a long term relationship. Customers as partners: As the trust between the company and customer increases, the expectation of the customer will increase. It is now up to the company to effectively use the information they have collected from the customer. This information could be useful for the company in providing more customised and personalised services to the customer. This increases customer loyalty. At this level, the firm can progress in enhancing the relationship with the customer. For example, the customer can tell other customers who are looking for banking service provider to use the services of the particular bank that he is using. This would only be possible when the customer is satisfied with the services offered by the banking service provider.

4. Briefly explain the five factors that influence the level of adequate service
1. Business strategy development or review: Every organisation has a unique vision and mission. A new service can be developed by first reviewing this vision and mission. The new service developed should align itself with the strategic vision and mission of the organisation. The growth efforts of the organisation must also be considered while developing the new service. 2. New service strategy development: A product portfolio strategy and defined organisational structure for a new product or service development is critical for the success of an organisation. The goals, vision, capabilities, and growth plans of the organisation need to be considered while developing new types of services. A new service strategy could be defined in terms of markets, types of services, time horizon for development, profit criteria, or other factors. 3. Idea generation: Generation of new ideas is the next step in the process. The new service strategy screen screens the idea developed at this phase. Brainstorming, ideas from employees and customers, lead user research, learning about competitors are the methods used for idea generation. 4. Service concept development and evaluation: The development phase begins once the idea is regarded to fit both the business and new service strategies. For a tangible product, forming the product description and drawings and presenting it to customers would be the next step. Service being intangible, places complex demands on this phase of the process. Describing an intangible service in concrete terms is difficult. 5. Business analysis: Estimating the economic feasibility and potential profit implications form a part of the next step after development. Demand analysis, revenue projections, cost analyses and operational feasibility are assessed at this stage.

5. Describe the various service quality dimensions with the help of relevant examples
The need for service development arises from the fundamental goal of every organisation to satisfy customers. With a highly competitive marketplace, where every firm tries to attract customers, it is necessary for firms to develop new services. Services never remain constant. This main characteristic of services gives way for the development of services. With the single aim of customer satisfaction, firms work on developing their services. Attracting customers and retaining them is the most important reason for service development. The development of new and better services results in the production of loyal customers. Customers value the service given to them and their loyalties are based on their satisfaction. The basic reason for the need of service development is due to the shift in economy from being manufacturing based to a service based economy. The service sector is now a major contributor to the global economy. To be competitive internationally it is necessary to be competitive in the service sector. For example, the advances in product technology have resulted in rise in demand for services. Another example would be the increase in medical services due to increased life expectancy. Examples of health related services are diet centres, fitness centres and nursing homes. Excellence in service is one of the key marketing tools for achieving a competitive advantage. Developing new services offers a competitive advantage to firms. Firms that develop new services are able to attract new customers and increase their market share. For a service firm to survive in the global market, the services offered should in some way be superior to that of its competitions. Thus new services need to be developed. Sustainable competitive advantage is achieved by providing superior service. A new service that has been developed must fulfil four basic requirements in order to achieve competitive advantage. Firstly the new service developed must be valued by customers. Secondly the new service developed should be unique such that it cannot be substituted. Thirdly the service firm must be equipped to provide the new service. Lastly the service must be sustainable. Service Quality Dimensions

The service quality and customer satisfaction is measured by comparing expectations and perceptions. Service quality is the comparison of perception with the expectations of customers from an organisation that delivers high quality services. The SERVQUAL scale is used to measure service quality. The SERVQUAL is a diagnostic tool, and this is based on the five service quality dimensions. The five dimensions are tangibles, reliability, responsiveness, assurance, and empathy. The SERVQUAL is a 44 item scale that measures customer expectations and perceptions regarding five service quality dimensions. Let us now discuss the five dimensions of service quality. Tangibles The representation of service physically is known as tangibles. The physical facilities, equipment, personnel, and communication material involved in service are known as tangibles. Customers can evaluate quality by the picture presented by these tangibles. Tangibles are associated with those services in which the customer visits the establishment. Examples of these establishments are hospitals, restaurants, and retail stores. Reliability Reliability is considered as the most important service quality dimension. Reliability is defined as the ability to perform the promised service dependably and accurately. In simple terms reliability means that a firm delivers the promises made to customers. Customers prefer to be associated with firms that keep their promise especially with respect service outcomes. Responsiveness Providing prompt service and the willingness to help customers is known as responsiveness. Customer requests, questions, complaints and problems need to be solved promptly. Responsiveness can also be defined as the time taken to respond to customer problems, answers to questions, or attention to problems. Assurance Assurance is defined as instilling trust and confidence in the customers. Services that are of high risk, perceive the dimension of assurance with a lot of importance. Examples of these services are banking, insurance, medical and legal service. Empathy Companies need to provide customers with individualised attention and this is known as empathy. Customers need to be treated as unique and special this has to be done by offering them custom

6. List the differences between flexible services and standard services.

The mix is a bundle of variables that are offered to the customer. The mix includes the service (its advantages); its availability (the place where and when, it is delivered or distributed); its image (its promotion) and the price (the charge that should be taken). In 1960, Jerome Mc Carthey presented the 4Ps. Since then there has been a constant application of these 4Ps by the managers all around the world. In the marketing mix, we use 7Ps, which has already been discussed in detail in unit 3. The 7Ps include: Product: this means the service or product being offered to the customer. The organisation must consider the quality, functions, features, and benefits of its design plus support service. Choices can be made about any of these aspects. Price: includes recommended prices offered to customers, distributor's trade prices, cash discounts, terms of credit and so on. Place: means where and when the customer consumes the service. Place is sometimes referred to as the marketing channels, physical distribution, logistics or location. Promotion: means the promotions mix or the communications mix. This mix includes advertising, sales promotions, public relations publicity, direct mail, exhibitions, display and even word-of-mouth. People: an essential ingredient to any service provision is the use of appropriate staff and people. It represents the people involved in the process of service system. Process: refers to the systems used to assist the organisation in delivering the service. Physical evidence: is the element of the service mix, which allows the consumer again to make judgments on the organisation. In 1961 Albert Frey suggested categorising the service marketing mix in the following two categories: The offering: This consisted of product, packaging, service, brand and price. Methods and tools: This comprised of distribution channels, personal selling, advertising and sales promotion.