The New Proposition To Customers Marketing Essay

The New Proposition To Customers Marketing Essay Strategic CRM focuses on the development of a customer-centric business culture. This culture is dedicated to winning and keeping customers by creating and delivering value better than competitors (Buttle, 2009, p.5). The culture is reflected in: Leadership behaviors Design of formal systems of the company (who reports to whom) Myths and other stories that are created within the firm Product-oriented One assumes that consumers choose products with the best quality, performance, design or features. Isaac Andik introduced a new concept characterized by fashion, design, image and a good price-to-quality ration. The companys goal is to dress a young, urban clientele in high quality on the latest trends clothes, at an affordable price. The main reason for the companys success is the satisfaction and loyalty its customers. Exclusive quality control at all stages of the production chain allows the company to assure certain quality standards and consequently customer satisfaction. Production-oriented Mango deals with the whole production process starting from the products design to the reaching the end customers. This process includes designing, manufacturing, distribution and commercialization. In order to keep operating costs low and develop low-cost routs to the market, Mango itself does not manufacture its products; it makes samples and prototypes and then subcontracts to suppliers-manufactures. Collections are mainly produced in China (approximately 45%), Morocco (23%) and in other countries as Turkey, Vietnam or India. Mango launches a total of 4 collections annually. Mango now reduces its products prices by 20%, in order to maintain their market position during the economic instability. Sales-orientated Mango invests in advertising, sales promotion, Public Relation and the social media in order to attract new or current consumers and persuade them to buy. Marketing expenses of Mango are reaching 4 % of the turnover, whereas the main competitor Zara spends only 0,3% of total turnover on marketing. Customer/market-oriented A customer or market-oriented company uses information from its customer and competitor to develop better value proposition. To be up-to-date with the marketplace and customer preferences Mango owns a product distribution department that is responsible for collecting the data from customer and competitor profiles. As a result it defines the most appropriate product that adapts to customer requirements and competitive conditions. One of the most essential leading factors of Mango is putting the customers need and wants at first. The most significant sustainability aspects of Mango are: New proposition to customers According to the Fashionmag (FMAG, 2011), Mango starts a large-scale project, such as Mango City in LicadAmunt that is held by the Catalan brand. This project will take nearly five year to complete and starts mid-February. The centre will consist of 333,000 square meters, where 280,000 assign for companies, 60,000 for service sector and remaining 10,000 for outlet area. In addition Mango had already invested 45 million euros on totally automated logistic center of 24,000 square meters that opened in November 2008. Due to The Hangar that is located near the head office helped the company to triple the previous distribution capacity. Innovations are always present in MANGO. One of the upcoming strategies is launching mens collections (HE by Mango). It is a limited edition (Mango VIP) and by this Mango attracts a new target market and thereby increases profits. The question that arises is whether it is possible to launch an exclusive collection with increased prices while the economy stagnates. However it is still unclear whether or not this collection will attract male customers. Loyal to original Mango exhibits clothes in comfortable stores-boutiques that are part of an international chain. Further the company wants to represent the mindset of a boutique. In order to achieve this goal, own teams of window-dressers, coordinators and supervisors travel around to ensure that all stores (own and franchises) sell the same atmosphere and image. The companys objectives are to dress a young, urban clientele in high quality clothes of latest trends, at an affordable price. The mission is To be present in all the cities of the world. Due to this mission statement Mango managed to open 1200 stores (both franchises and their own) around the world at the rate of three per week (Ceeman, 2009). By the end of 2007 Mango generated profits of 1,020 million Euros out of which exports make up 76%. At that time Mango was employing 7,786 employees (1,850 of which worked in head office). Environmentally friendly The retail engine software of Mango is completely automatic and allows to manage design, supply, manufacture, sales and after sale. The document delivery, control, space reservation and transport management can be done through the IT platforms. Firstly, these innovations help Mango reducing environmental pollution and delivery time. They are fast in use and also speed up distribution of products. Secondly, they reduce the transport costs and finally reduce the infrastructure costs, as the company is growing worldwide. Corruption Mango is against corruption and ready to fight it in all forms, including extortion and bribery. CRM strategy The CRM strategy is a sophisticated action plan that aligns people, processes and technology to achieve customer-related goals (Buttle, 2009, p.65). In order to analyze the current use of customer relationship management strategy the following points should be identified. Situation Analysis Target market Mango mainly serves one specific market segment. The only customer services Mango provides are advices, suggestions, complains and obtaining customers points for improvements. The service is directly provided in the store by specially trained sales personnel. Customer turnover In 2010 Mango has achieved 301 million euro as a domestic turnover and 1.284 billion euro as international one. Customer satisfaction In 2010 a total of 100,157 requests were handled, where 1% was Fax/Letter, 4% Via chat, 32% Telephone calls, 63% E-mail/Website. The sources of this data are consumers, stores, the head office, staff, etc. The main topics were 1% Suggestions, 1% Congratulations, 19% Complaints and 79% Request for Information (MANGO, 2010). Market share Mango is the second-largest exporter in the textile sector. Within Spain Mango has more than 2,000 stores. Moreover the franchise spreads over 140 countries with 10,000 employees working worldwide. The market share of MANGO is 2.6% whereas Zara has 9.8% and HM got 3.2%. Market Offerings The main competitors of Mango are Zara and HM. Due to different style/design offerings every company is having its own success. Channels (direct/indirect channels of distribution) As mentioned before Mango deals with the whole process starting from the products design to reaching the end customers. This process includes designing, manufacturing, distribution and commercialization. Mango itself does not manufacture its products, it makes samples and prototypes and then subcontracts external manufactures. Thereby Mango uses indirect channel distribution, since it does not provide products directly to the consumers. However Mango offers online services. Customers can order directly from the website. Thus the company sells directly by placing huge orders. Cross-sell Up-sell Mango is cross-sell, as it is cloth fashion industry. Up-sell is the sale of one product followed by an active offering of the additional one to the consumer. In contrast to this cross-sell is selling similar or related products to the same clientele. Mango offers over 2,500 styles every season. Furthermore clothes designs slightly differ in order to even more satisfied the customers with the purchase. Thereby Mango uses cross-sell where customer can choose the type, design and the cloth style in a more or less individual manner. Since 2004 Mango had implemented a new direct delivery logistics system that allows products made by suppliers be directly distributed to the stores. It does not require delivery thought the distribution center in Barcelona. Such cross-docking procedure has increased production by 30% in 2007. CRM Priorities Goal Mango requires a CRM strategy in order to reach goals such as cost reduction, revenue enhance and increased customer loyalty/satisfaction. Cost reduction Reduce marketing costs Increase supplier loyalty Increase profit margin Reduce cost of sales Revenue enhance Improve lead quality and conversation Increase acquisition of new customers Increase marketing responses rates Acquire new customers Increase sales revenue Loyalty, Satisfaction Increase customer loyalty Increase customer retention Increase customer satisfaction The overall CRM project has low costs and can result in quick wins, fast returns and if possible with the long-term priorities. Strategic benefits Mango can implement its CRM strategy by developing and improving a customer/market-oriented strategy. As a result the company will be able to provide better customer experiences, improve information flow among the business silos and customer service. Current CRM systems use E-Commerce Catalog Web Storefront Inventory Information Product Information Management Business Process Management Customer Service Community Management Contact Center/Call Center Q/A, Monitoring E-Mail Response Unified Communications Sales Sales Configuration Pricing Management Order Management Lead Management Marketing E-marketing Marketing Resources Management Analytics In-Line, Event Driven Sales, Service, Web Personal Productivity Operational CRM Operational CRM automates and improves customer-facing and customer-supporting business processes (Buttle, 2009, p.7). The main tools of operational CRM are software applications. The software enables Mango to automate marketing, selling and service functions. Marketing automation Marketing automation applies technology which allow marketers to analyze the customer-related data in order to develop, execute and evaluate targeted communications. Event-based/Trigger Marketing Mango arranges seasonal sales for the customers in summer and winter holidays. Seasonal sale is used in order to attract more customers during these periods. Two times annually Mango sets up fashion shows and also runes competitions for young clothing designers around the world. The winners are promised to win a price of 300,000 Euro and the prestige of the collection being sold in mangos stores (Ceeman, 2009). Multichannel Environment In 2011 Mango was able to increase its turnover by 11% and announced plans to expand in 2012. Mango was focusing mainly on Eastern Europe, the Middle East and Asia including Sri Lanka and Cambodia. During that year Mango opened 644 new stores and planned to open new retail outlets 80 in China and 30 in Russia(FMAG, 2012). In order to be on track with all the new changes of the fashion world, Mango invites and cooperates with famous personalities. Mangos idea is to connect the collection with a famous person such as Naomi Campbell or Claudia Schiffer. Some of the models tried their designing skills in Mango collections such as Mila Jovivich and Penelope Cruz. Mango invites famous faces, models and actors to take part in the marketing campaigns. Further the aim is to create intangible extra glamour, beauty and a connection with the celebrities. Sale-force automation Sale-force automation software enables companies to automatically assign leads and track opportunities of selling activities. In order to maintain a constant flow of communication with different media, Mangos press office supplies all information that is needed. For instance in 2010 a total of 200 press communications were carried out and 90 media interviews had taken place (MANGO, 2010). Mango has a centralized organizational structure that means that it avoids investments in facilities and warehouses and has one central office in Barcelona. Due to this fact Mango is strongly committed to the development of new technology platforms that help to be on track with all the selling points, manufacturers and franchises around the world. By using new technology Mango can manage, make decisions and communicate very easily. The retail engine of Mango completely automatic and allows to manage design, supply, manufacture, sale and after sale. With the help of Internet and special software Mango connects with stores and gets constant information on the stock held by each store. Through the computer applications the head office can adjust changes to their franchises. The stock transfers and replacements can be done daily among the stores. The document delivery, control, space reservation and transport management can be done through the IT platforms. These innovations are helping Mango in firstly, reducing delivery time and are fast in use and also speed up distribution of products. Secondly, they reduce the transport costs and thirdly reduce the infrastructure costs, as the company is growing worldwide. In addition Mango also rolled out a system based on a B2E (Business to Employee) portal that helped improving their internal business processes. Mango uses and services its own IT department. The team consists of 200 telecommunication engineers who are responsible for innovations that are being used on a daily basis. The IT platforms are improved or changed every 2 to 3 months by both the top executives and IT department. Service Automation Service automation allows to manage its service operations through the call center, web or face-to-face (Buttle, 2009, p.9). Stores It is in the organizational priorities to provide service to customers. Every store provides advices, suggestions to consumers and is also open to consumers complaints, suggestions and opinions. Mango can therefore more efficiently adapt to the wishes of its customers. The customer service is directly provided to consumers by well-trained personnel. The employees of Mango are ready to face challenges in offering an excellent service to the customers and find the solution to their needs and wants. Central offices Central offices include specialized customer service that is ready to respond and cooperate with any enquiry issues. The customer service is offered in five different languages such as Spanish, English, French, German and Catalan. In 2010 the total of 100,157 requests were handled, where 1% was Fax/Letter, 4% Via chat, 32% Telephone calls, 63% E-mail/Website. The sources of these varied direct from consumers, from stores, from head office staff, etc. The main topics were 1%Suggestions, 1% Congratulations, 19% Complaints and 79% Request for Information (MANGO, 2010). Analytical CRM Analytical Customer Relationship Management (CRM) focuses on capturing, storing, extracting, integrating, processing, interpreting, distributing, using and reporting customer-related data in order to enhance customer and company value (Buttle, 2009, p. 11). Mango currently does not keep track of the customers, as other companies do. At first Mango was only distributing one product line of classic female clothes. As mentioned earlier they have opened a new line of HE, which is a male clothes line. They do not use different approaches and systems to analyze customer behavior, but they have established a successful operational and strategic campaign to win more customers and keep the companys identity within them. Competitors ZARA The biggest competitor of Mango is the Spanish retailer Zara. The current largest retail exporter in Spain dominates the retail market. This success comes from different business decisions made. Zara was founded in 1975 by Amancio Ortega and Rosalà ­aMera. It was the first chain store of the holding company Indetex group. The international break-through was going rapidly in the 80s and soon Zara became a pioneer in the affordable fashion industry. Today the brand has a total of 1,671 chain stores all over the world. What makes Zara distinctive is that until now the no commercial policy is still applicable. The manufacturing and distribution of the products is also unusual. Zara designs, manufactures and distributes its products unlike most retail stores for example Mango. Management autonomy Chain stores have usual little autonomy in deciding which products to display or to put on sale. However the Zara chain stores are given the opportunity to decide themselves which products to display or even put on sale. The headquarters can then ship the quantity of the products demanded. The shop managers of each facility are deliberately chosen for their business knowledge. Because of this autonomy each chain store has a unique product assortment. CRM strategy The customer relationship management of Zara uses the Infor ERP software system. This system creates growth and loyalty through continuous customer dialogue. The Infor software system is chosen because it increases the chances of customer retention, increasing revenue, building loyalty and improving the chances of making new offers. The Infors ERP software system stands for enterprise resource planning. The usage of internet is required for several programs for example: e-business systems. This software has the following characteristics: An integrated system that operates in real time (or next to real time), without relying on periodic updates A common database, which supports all applications. A consistent look and feel throughout each module. Installation of the system without elaborate application/data integration by the Information Technology (IT) department The information Technology department uses IT- implementation and models to collect a large database of made sales. Zara uses the database information for customer profiling and analyzing the purchasing patterns of customers to target more accurately. The sales data are copied and given to the headquarter. Each terminal of each outlet has a floppy disk where all the sales data are saved. With the help of statistical calculation the IT department can also determine the average customer visit during a year. The outcome was that an average Zara customer visits the store on average 17 times a year in comparison of  ¾ of the customers of competitors. The purchasing patterns of customers can fluctuate and their demands. The purchasing department can quickly respond because of the customer tracking. Zara makes also usage of the Geographic information System (GIS). This system gives multiple access from varied geographical locations simultaneously. Conclusion Zara uses all these customer relationship management tools to gain competitive advantages over competitors. Considering all the different elements it can be concluding that the CRM strategy review is positive. These implementations had been introduced years ago and the results are still influencing the profit. HM Another direct competitor is HennesMauritz (HM). The company was founded by ErlingPersson in 1947. The company expanded their offers in 1960 by adding menswear. HM is the second largest global retailer. The brand owns 2629 outlets worldwide. Just like Zara HM is known for its fast-fashion clothing for women, men, teenagers and children. Customer experience HM makes usage of loyalty cards and a customer club to enhance the customer experience. Every customer can get a loyalty card and over an amount of time a certain discount can be earned. The company also launched a recent mobile marketing campaign that include SMS coupons and advertisement of sales as add banner. Customers can also win a free gift card with a mobile competition. CRM strategy HM uses collaborative customer relationship management to fulfill the customers demand. The company collaborates with several freelance designers to create a wide assortment. HM also uses analytical CRM by collecting customer related data. A few examples are the web shop and ordering a catalogue. Contact information is gathered and saved in databases. In case of sale customers get a notice or receive a new catalogue with the discounts. Collaborative CRM The collaborative part of CRM is used to describe the strategic and tactical arrangement of separate departments of a company, to attract, interact and develop the customer service. Collaboration ensures that people, processes and technologies are used in the most efficient and effective way to serve the customers in the most satisfactory way and maximize the profitability and revenues (Buttle, 2009, p.11). Mango is committed to creating and maintaining a team of people who are professional, motivated, flexible and capable to adapt changes in order to get Mango as close as possible to the maximum number of customers. The average age of staff within the organization is 29 years. Managers take care of personnel service such as internal promotion and continuous trainings. The stores in general have high staff turnover due to the fact that workers are mainly students/temporary workers, although the structural personal is very stable. Within the departments of Mango elections for representatives take place. The elected person is responsible for collecting all ideas and suggestions during the meetings. Afterwards they pass on and debate proposals in the meeting with the management, shareholders and administrators. The news are published and communicated to all the employees via the companys internal newsletters. As statistics shows that 95% of proposals lead to specific changes, that can vary from modification in working hours, increase and improvement of services, security improvement etc. There are as well other ways of contributing ideas within the company such as brainstorming or the suggestion box which can lead to the improvements in the company. Financial situation Financial Introduction Mango is a for-profit organization with the huge potential and the strong present situation. Financial situation highlights the successfully chosen CRM strategy, by focusing on maximizing profits and minimizing costs. Turnover http://www.mango.com/web/oi/rcs/mangoMundo/grafica1.jpg : Revenue for the consolidated group MANGO/MNG in (MANGO, 2010). Since 2002, Mango increases its revenues, last year the Group registered an increase of 11%. Indeed, in 2011, The Mango chain enjoyed revenues of 1 620.7 billion euro. The consolidated Group (Mango Holding) revenues were 1  240 billion euro. Forecasting : Turnover Mango Chain (Millions à ¢Ã¢â‚¬Å¡Ã‚ ¬) Forecasting is rather favorable. The group is expected reach the threshold of 2 000 billion by 2014.That representing approximately an increase of 23%. http://www.mango.com/web/oi/rcs/mangoMundo/grafica2.jpg : Turnover for MANGOschain store The figures of the graphs above show the weight of franchises in the Groups total sales. More than 70% of sales are made through franchises. The expansion of Mango abroad has donated smoothly. Today the group has more than 2400 stores across 140 countries. The franchise system Mango plans to enter countries which represent a market of the future such as China, where leaders see a potential 1,000 stores. The main objective of Mango is to be present in all the cities in the world. The President, IsakAndic, stated in 2010, the aim to double in size by 2014. And in the world, this is 3000 stores that leaders want to exploit in 2020. The project launched in 2011 seems promising, 644 stores were opened around the world. In 2012, the group plans to open 400 to 500 stores internationally, but especially in Europe where the brand intends to strengthen its position (LeFigaro, 2012). And this is the franchise system which is often used in some countries as management systems are different from those of the group. The choice of deductibles allows people to remain independent in their management while maintaining consistency at a global level. International sales already account for 82% of the activity according to the latest figures. Internet sales Internet sales are not to be overlooked either. In 2011, Internet sales reached 36.2 million à ¢Ã¢â‚¬Å¡Ã‚ ¬, representing an increase of 72%, the figure expected to double by 2012. The group expects a net sales growth of over 30% in 2012 due to the expansion of its network (LesEchos, 2012). Staff and distribution To support the expansion of its chain, the group plans to hire more staff. Mango outsources 40% of production in China and Vietnam, 20% in Morocco and the rest of Europe. Distribution system in place (SLM) can manage 5-7 times faster than the competition. The system incorporates the principle of responsiveness (speed, technology and information) at any time to have the goods needed, on the basis of sales forecasts. It allows you to sort and distribute 30,000 items per hour. This is how Mango ensures the production and distribution of 90 million items per year. Mango also takes a new turn and continues its development strategy by diversifying its offers. After the woman, the man (HE) (LSA, 2008) and accessories (Touch) lines and sports lingerie, youth will emerge by the end of the year. Customer Relationship Management Recommendation Customer Relationship Management is one of the critical and essential key aspects of developing a profitable customer relationship. Enhancing consumers applies assessing customers satisfaction, maintaining company open to consumers, two-way communication, being aware and being able to adapt to the consumers changing wants and wishes (Buttle, 2009, p. 127). Dissatisfied customers negatively affect the company in two different ways. On the one hand they represent direct losses in revenues, but on the other hand their dissatisfaction spreads via word of mouth which consequently damages the image of the company. Therefore it is essential to keep customers happy and satisfied. As a result of properly managed customer relationship, CRM brings a number of benefits. First of all an increase in market share as they have a positive attitude towards the company. As a consequence of customer satisfaction the customer long-term relationship will be established. This will lead to companies long-term profitability and sustainability, known as customer lifetime value (CLV ) (Buttle, 2009, p. 141). CRM recommendation Mango has a strong market position and profitable current financial situation. The following recommendations are given in order to enforce the image of Mango and lead the competitors. Mango should value their customers and it is significant to know, that the lost customer could cost 10 times as much to get back. Thereby building profitable customer relationships is more important even when it costs 5 to 6 times more money to attract new customers than to retain old ones. Keep track of consumers Since Mango does not have a database of customers, it is difficult to keep track of the customer flow and their purchasing preferences. Because it is very important to know exactly what customers want, Mango is recommended to use the IT system that allows to identify the general needs and wants of their customer base. It will help in to improve and will make customers taken care of by Mango. Loyalty cards Aside from the advanced IT system Mango can make regular clients feel special by identifying and treating them in a superior way. Therefore Mango should introduce loyalty cards. With the help of such techniques not only the CLV will be increased. Further the implementation of these benefits will attract current customers to be loyal and will tract new ones. Treating loyal and current customers in an efficient way can create a positive image of the company and can result in positive word-of-mouth promotion. Closer to consumers Mango can also offer an opportunity to customers to give feedback. This can be done via the official Mango website, so every form will be automatically proceeded. No extra costs are involved since it is online form. In addition to feedback concerning the quality of service, customers can share their wishes upon new design and style ideas for the upcoming collection. This will strengthen Mangos customer relationships and improve a two-way communication. Active-go public Customers are always interested in taking part in variety activities of their favorite companies. By arranging more fashion weeks that are either organize or sponsored by Mango even closer customer relationship and loyalty can be enforced. Also customers can organize events such as flash mobs, via social media -Facebook groups, buzz marketing, photo shootings in new collections and winning prices etc. CRM four stages Strategic The mission, vision and strategic goals are to be closer to consumers by creating a positive image and two-way communication. The customer-centricity focuses on customer needs and wants. Operational New customer operating system will allow to serve consumers fast and efficient. Analytical New communication techniques will allow the company be closer to customers and will provide enhance and efficient communication flow. This can be done mainly through the loyalty systems both online and via public events. Collaborative Since the major communication with consumers will take place via the online services, the communication flow would not cost as much. Online feedback forms and an IT customer database system will serve this purpose. Reference Literature Book: Francis Buttle (2009). Customer Relationship Management:concept and technologies (2nd ed.) Published by Elsevier Ltd, Oxford. Annual report: MANGO(2010), Sustainability Annual Report [Online]. Available: http://www.mango.com/web/oi/servicios/company/IN/empresa/rsc/memoria2010.pdf [2012, Oct. 15]. Hyperlinks: Ceeman (2009), MANGO, populazing fashion [Online]. Available: http://www.ceeman.org/data/files/Teaching_cases/teaching_case__ricart_kordecka_mango_popularizing_fashion_2009.pdf [2012, Oct. 15]. FMAG (2011), Mango to build a Mango City [Online]. Available: http://uk.fashionmag.com/news-150520-Mango-to-build-a-Mango-City [2012, Oct. 15]. FMAG (2012), Mango reduces its prices by 20% [Online]. Available: http://uk