Customer Relationship Management (CRM) Essay Example | Topics and Well Written Essays - 3250 words

Customer Relationship Management (CRM) - Essay Example It is achieved when a company is able to provide similar benefits as their competitors but at a lesser cost, or deliver benefits that are better than those of the competing products. The two types of competitive advantage therefore are cost advantage, which offers lower cost and differentiation advantage, which offers better benefits. Competitive advantage helps the company gain higher profits and aids it in creating superior or excellent value for its customers. Companies offer products to customers with the aim of continuous and growing patronage and positive feedback directed to possible customers. They aspire to maintain a solid customer base while aiming to increase that number by active marketing and selling of the products. Products may be classified into different kinds. Products may be physical objects or tangible goods, people, services, ideas or concepts, places, organizations and activities. All these material and non-material products are offered by the companies to their existing and prospective customers with the promise that the customers will benefit from their products in greater ways than if they support the competition. In order for the companies to offer the appropriate products to specific customers, they have to first identify the needs and wants of the customers. No two customers are exactly alike in their preferences. Each person differs from another. Focusing on the individual needs and wants of a multitude of customers is not feasible and practical fro companies. The cost will be too much to handle. The strategy used is to segment or group customers into clusters. Members of clusters share common characteristics which may be concluded as leaning towards a support, need or want of specific products. This way companies may determine the approaches they need to apply for specific customer groups or clusters. Aside from the actual selling techniques of companies, marketing strategies propel organizations to higher profits and bigger market share. According to the American Marketing Association, "Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders" (AMA Adopts New Definition of Marketing). Marketing revolves around the theory that customers use a product or a service because they have a need or a want for it or the product offers a perceived benefit. Thus, determining the actual needs of customers is the very basic strategy for marketing. Markets today are very competitive in that the players more often than not have products of the same quality and similar sales and marketing strategies. This homogenous quality of markets makes it difficult for customers to choose a preferred company and establish loyalty with that company. Since the kinds and qualities of products are similar, prices of goods and services are often at the same level. Same levels of pricing do not give the companies cost advantage, so they resort to gaining differentiation advantage. They gain differentiation advantage by the provision of excellent customer service which translates to customer loyalty and creation of customer value. Customer Relationship Management is a vital element in the provision of