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Sales in marketing. The most appropriate customer retention strategy that Omnico Inc should adopt.
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Sales in marketing. The most appropriate customer retention strategy that Omnico Inc should adopt.
Introduction
In contemporary times, marketing is among the foundational disciplines of effectual management. Marketing is vital in all facets of a company, and customers form the rationale as to why the companies exist. Indeed, marketing efforts, including innovative services such as promotion as well as distribution usually account for approximately 50% of the product’s price. Based on the eminence of marketing, it entails deliberate exchange relationship whereby both sides ought to be willing parties. These parties should be able to communicate effectively with each other through diverse mechanisms (Brodie 381).
Therefore, in the contemporary highly competitive business environment, companies require to precisely understand their clientele. This would be particularly in regard to which customers are the most beneficial, and the most appropriate way to retain them. Studies reveal that it costs a company ten times more in generating new customers than it would cost in maintain the existing one. In the event that a company has a small customer base, losing a small number of customers would cripple the company. Alternatively, if the company has a broad customer base, a diminutive increase in the customer retention rate ought to dramatically increase the company’s profits. This paper posits to investigate the most appropriate customer retention strategy that Omnico Inc should adopt.
STATEMENT OF THE PROBLEM
In regard to Omnico Inc, the company is depicted as one that has enjoyed substantial success in the industry to an extent that it has lost track of its customer retention ratings. It is evident from the case study that the company requires to improve on customer retention. This is seen from the different opinions expressed by Buddy and Laura in regard to the strategy that Omnico should implement.
Summary of the Facts. In regard to the market research report, Omnico Inc had neglected its relationship with its customers. This is evident in that, the market report depicted Omnico’s customer retention ratings as below the industry’s average. This type of a scenario materializes if, the customers do not usually have alternative suppliers, or in the event that the rival supplies were equally poor in services and quality. It may also be caused by rapid market growth to the extent that the company takes customer satisfaction for granted. A company may loose a hundred customers per week, but acquire another one thousand customers in the same duration, and thus evaluate its sales as acceptable. This kind of a company operates on a leaky bucket theory of business (Brodie 389).
Q. 2 A company such as Omnico may believe that an adequate number of customers will always be available to replace those who leave. Omnico requires understanding that customer retention is essential to all companies since the cost of gaining a new customer surpasses the cost of preserving a relationship with an existing customer. For many companies, customer profitability may be skewed in such a manner that dropping the major profitable customers causes serious effects. For instance, in the banking industry, a bank’s the top 30% percent of customers, when rated by profitability, may constitute 100% to 150% of the entire customer profitability. This would mean that, the bottom 70% of customers may offer no profitability or, even destroy 50% of the bank’s profitability (Meindl 105).
Over and above saving the profitable customers, retention programs facilitate companies in collecting pertinent data concerning their customers. This data may be utilized to understand the target market as well as in communicating with customers. The data may also be utilized in customizing future interactions with customers. Retention programs may be a comparatively inexpensive approach of making the company’s clientele feel special, boost their purchases as well as recommend prospects (Brodie 389).
Analysis. The perspective illustrated above meets through diverse channels such as customer relationship management (CRM). This kind of information presents the company with critical competitive differentiation in order to gain market share and minimize operational costs as the company retains its customers. On the other hand, the universally accepted rationale of CRM is to facilitate a business to serve its clientele in a better way. This is through the introduction of dependable processes and interaction with customers. It is a methodology employed to learn more concerning customers’ requirements and behavior in order to develop concrete relationships with them (Meindl 162).
In the perspective of Mr. Buddy, Omnico requires to appreciate the significance of relationship selling. This perspective is informed by his follow-up strategy whereby he maintains personal relationships with his customers by playing golf with them. However, according to Laura, Omnico requires more that just the buddy-buddy relationship strategy of Mr. Buddy. With this in mind, it is important to bring the two divergent opinions into the perspective of contemporary marketing strategies. This is because both parties have similar underlying intentions, which are to improve the company’s customer base and hence increase the profitability of Omnico. In the opinion of this paper, the company requires to strike a balance between the follow-up, buddy-buddy strategy, employed by Mr. Buddy and the strategies suggested by Laura.
Although marketing is based on relationships, Relationship Marketing (RM) is considered as a new phenomenon in the marketing arena. The dawn of mass marketing as well as mass production obscured the concept of RM for a long time. Vicious competition, erosion of brand loyalty, dirty price war amongst competitors and heightened customers’ expectations have been helpful for the recent prominence of RM. conversely, RM as a marketing technique that still unclear to numerous practitioners. Accordingly the general rationale of relationship marketing is to facilitate as well as maintain durable customer relationships. This leads to modification of focal points as well as adjustments in regard to the marketing management process. The common objectives of all customer retention strategies are enduring distinctive relationships with customers, which would be replicated by competitors and hence present sustainable competitive advantages. One particular notion regarding relationship marketing is that, it is the expansion of basic transaction marketing or simple seller-buyer-relationship. However, relationship marketing supersedes the transaction marketing theory, although several scholars consider relationship marketing as the reverse of transaction marketing (Brodie 390).
Transactional marketing emphasizes on focuses on distinct, point of sale transactions. The focus in this strategy is on capitalizing on the volume and efficiency of individual sales instead of developing relationships with the client. This is the perspective of Laura in the case study. The transactional marketing methodology is based on the four conventional elements in marketing, usually known as the four P’s. The four P’s are product, pricing, promotion and placement. Product in this case represents generating a commodity that meets the needs of the customer. Pricing refers to the establishment of a commodity price that would be profitable even as it attracts customers. Placement refers to the establishment of an effective distribution chain for the commodity. Promotion refers to the creation of a visible product profile that makes it attractive to customers (Taylor 62).
It is appropriate to draw a comparison between some available customer retention strategies in order to draw an appropriate balance between Mr. Buddy and Laura’s perceptions. This is in regard to the most suitable customer retention strategy that Omnico should employ. ,
A comparison between the two concepts is presented in the table below:
Comparison between relationship marketing and transaction marketing and some implications
The strategy continuum
Relationship marketing
Transaction marketing
Time perspective.
Focuses on the long-term. Focuses on the short-term.
Dominating marketing function. Interactive marketing that is supported by activities of the marketing mix. Marketing mix.
Price elasticity.
Customers are usually less price sensitive. Customers are usually more price sensitive.
Dominating quality dimension.
Quality of interactions. The functional quality dimensions develop in significance and may become dominating. Quality of output. The technical quality dimension is usually dominating.
Measurement of customer Satisfaction. Managing the clientele base. Utilizes a direct approach. Monitoring the market share. Utilizes an indirect approach.
Customer information
Systems.
Customer feedback systems are real-time. Utilizes ad hoc customer satisfaction surveys.
Interdependency amongst
operations, personnel and
Marketing. Interface of considerable strategic importance.
Interface of no or limited strategic significance.
Role of internal marketing. Internal marketing of considerable strategic significance to success. Internal marketing of no or limited significance to success.
(Meindl 201).
RECOMMENDATIONS AND CONCLUSION
Building on these postulations, Omnico must emphasize increasingly on retaining the existing clientele than attracting new ones. With time Omnico will realize that relationship marketing is the appropriate approach for the 21st century. However every business has its distinct characteristics. Therefore, drawing on the comparison between relationship marketing and transaction marketing, Omnico requires to exploit the strong points in each methodology as befits its characteristics. This approach would provide the key in establishing the success of enterprises in the contemporary highly competitive business environment.
Works Cited
Coviello, Brodie. “Contemporary marketing: Developing a Classification Scheme”, Marketing Management, 9. 4 (2009). 381-93. Print.
Meindl, M. Supply Chain Management, Upper Saddle River, NJ: Pearson Education, 2007. Print.
Taylor, R. Operations Management: Quality & Competitiveness in an International Environment, New Jersey: John Wiley & Sons, 2009. Print.
Room Movie Erickson’s Theory
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Room Movie: Erickson’s Theory
Room is a movie that teaches us a few things on psychology. The plot of the movie revolves around a mother and son that are confined in a space for years. The two are in a claustrophobic shack which is located in a suburban backyard. The woman who is Ma and his five-year-old son Jack were imprisoned by a man who had constructed a shack so that the two stayed there locked up like his personal possession. Jack is so profound of the movie characters including Dora the Explorer and Bob from Bob the Builder and although the characters are actually not real, he believes that they actually are real. One can pick up his naivety as he narrates the book because he has never been outside the room. This paper uses Erickson’s theory of psychosocial development to analyze the movie.
Erickson’s theory of psychosocial development is among the most discussed theory when it comes to child development. He argued that during child development, a personality had to be established in the early life of their child and this personality would be established in their whole life. He also argued that the conflicts that we encountered in our lives during development were not all unconscious rather, most were conscious because of the development process. His argument on the child development was based on the fact that a child’s development was contributed by social relations. His theory had eight stages of development that concentrated on series of development and the conflict occurring through the lifespan (Sokol, pg. 14). The crisis that occur in each stage, one ought to be resolved as it helps one get psychological strengths. The eight stages are; trust vs. mistrust, autonomy vs. shame, initiative vs. guilt, industry vs. inferiority, identity vs. role confusion, intimacy vs isolation, generativity vs. stagnation and integrity vs. despair.
Trust vs. mistrust begins from birth to around the age of 12 as infants begin to realize if adults can be trusted. If a child is able to meet their basic needs of survival, then they know that they can trust the adult. In the movie Room, this stage is completely evident as we see Jack completely in love with her mother. He is angle to identify his mother’s true love and knows that the mother would do anything to protect him. For most infants if the feel they are being treated cruelly then they may decide not to trust the adult in their life.
We can also see the autonomy vs. shame from the movie as we see Jack developing a preference on certain cartoon characters that he feels he can interact with and also feel that they are his friends. This stage begins when a child is 1-3 yeas as children begin to learn how they can interact with the environment and begins to develop preferences on certain elements such as toys and food. Her favorite characters are Dora and Bob (Hunt). At this stage, a child often tries to create independence and this stage is often referred to as the “me do it” stage. In the movie we can see Ma letting Jack be independent and be his own person. If a child is denied the opportunity to be their own person and make their own decision a sense of doubt and shame may develop in them. This at a later stage in life may contribute to self-esteem issues. When Ma is able to escape from his captor, we see Jack able to catch up in the outside world pretty easily because her mother had established confidence in him.
The next stage in Erickson psychosocial stages of development is the Initiative vs. Guilt and occurs in children around the age 3-6 years. During this stage the children can be able to initiate activities and assert a control over their world by social interactions such as play. Ma plays with her child from time to time including doing exercises. During play time Jack appears to be a very happy girl. Her mother also engages her in her cooking for example breaking the egg and cleaning the dishes after they are done. She is however not in a position to interact with other school going children because she is locked up.
From the movie, the eight stages of Erickson theory only go until the third stage because Jack is five in the movie. Despite this we are able to witness child’s development even in a situation that is quite traumatic. It is evident that a mother’s or guardian love is important in helping a child grow. A child’s understanding of a traumatic situation at a young age is also completely different, with reassurance from the parents that they are okay then they believe that they are okay. The only attachment that Jack has in his life is his mother and the objects around him. One way that people deal with seclusion is creating imaginary friends. Jack has an imagination with inanimate objects that surround him including wardrobe, chairs and skylight and tries to make sense of them (Klickstein).
In conclusion, Jack’s development can be seen throughout the movie The movie looks into the life of a child who does not really seem to understand the meaning of trauma as the mother as shielded him. This portrays the understanding that most children tend to have had the trust they put on their parents for most children they knew that with a parent who loves and care for them is around, then they have nothing to worry about as everything will be okay. Age is an important factor in how we react to adversity. Jack who is 5 does not understand the situation he is. The doctor actually recommends Ma for being able to escape while Jack was only plastic and thus becomes easier to recover from the trauma.
Works Cited
Hunt, Nate. “‘Room’ Is an Excellent Study of Human Psychology.” Calvin University Chimes, https://calvinchimes.org/2015/12/13/room-is-an-excellent-study-of-human-psychology/.
Klickstein, Mathew. “What Room Teaches Us About the Psychology of Fandom.” Wired, Conde Nast, 3 June 2017, https://www.wired.com/2016/02/room-fandom-psychology/.
Sokol, Justin T. “Identity development throughout the lifetime: An examination of Eriksonian theory.” Graduate journal of counseling psychology 1.2 (2009): 14.
Role of Governments in Assuring that Developing Countries Obtain a Fair and Adequate Share of the Benefits of International G
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Role of Governments in Assuring that Developing Countries Obtain a Fair and Adequate Share of the Benefits of International Grade
Developing countries have often been overlooked in terms of having a decisive role in international trade and benefits associated with the process. It is obvious that such policies have an effect on trade volume between the developing countries. The movement of goods and services from the domestic to the local market necessitates the participation of the government to ensure protection of both the good sad services. The international trade sector has seen many governments in the developing countries experience artificial obstacles and challenges against free trade between them and other countries. The difficulties and obstacles in the international trade are the import duties together with tariffs imposed on the flow of goods and services, which enter the international market. Other issues are quantitative restrictions in terms of the amount permitted to enter the market, industrial safety, health, safety, and certificates of origin. Systems characterization because of administrative imposition has resulted to commodities becoming expensive. In most instances, the products are produced locally and sold expensively in the local market. Other barriers to trade in the international market for instance are the quota system, which determine the quantity to be imported. Presumably using such a system the importer mostly has to acquire a license before any government is given permission to export any commodity to o another country.
There is a need for developing countries governments embracing policies to ensure an increase of rates of economic growth to protect the international markets or the import substitution policy. It is obvious that domestic savings are inadequate thereby an adoption of aid such as foreign loan from foreign countries to developing countries has been implemented to achieve growth in the international market (Abbott, 234). Any system that is implemented has to serve two main purposes which are the ability to encourage more imports and limited financial resources. Conversely, the economic policy, which depended on import substitution, has failed to attain growth, therefore, necessitating the need for replacement of policies that promote exports. The adoption of such a policy is essential in terms of eradicating the segregation and discrimination in international trade and non-application system protection. Developing countries governments have to establish an integrated financial system and implement prudent economic policies (Reinhart, 250).
Developing countries effectiveness can be enhanced with better coordination among the various governments. The coordination exercise need to begin from the identification interests stage to positions and stands formulation. There is a need for smaller groups in the informal Group of Developing Countries associated with the WTO based on certain issues as well as interests (Narlikar, 267). The formation of such a group is helpful in encouraging full transparency and communication with the other developing countries who are a member of an informal group. At the same time, there might be sharing of the burden in specific areas and information exchange, which will curb efforts duplication and ensure proper utilization of scarce resources. There is a need for coordination, linkages besides networking among the various developing countries governments to ensure active participation in relation to the challenges in the international trade, which involves burden-sharing arrangements among them. Government efforts of developing countries have to be coordinated with those of multilateral central assistance strategies. Such policies and procedures will lead to exports increase to GDP in relation to comparison of economic growth rates. Countries, which have applied the policy’s economy, have achieved economic growth because of the openness’s of the entire process (Abbott, 345). Perhaps the latest trend towards globalization has contributed to the attainment of such policies transparency.
The global level, which is the international trade, has to embrace openness and investment as the main factors to ensure economic growth. It is obvious that the trade barriers often results to a reduction of goods prices trade exchange volume between the developing countries, which has increased consumers goods prices. The aspect has often been a barrier for such countries to take full advantage of trade exchange benefits between them. Despite this, many developing countries often place many barriers and obstacles among themselves for varied reasons such as inefficient companies, which are local producers producer competing with the commodities from other countries associate with high efficiency( Narlikar,345). Such a scenario puts pressure on governments of developing countries to protect goods produced locally from foreign competition.
Developing countries need to endeavor to embrace changes in the process of negotiation in the internal trade to bring greater transparency and extensive participation for them during the process. Various governments from such countries need to come together ad discuss proposals by international trade market and persuade other countries to take into consideration their views to encourage a healthy trade. At the same time, there is a need for wider participation in discussion of barriers and obstacles experienced by developing countries in the international market. Although, there can be challenges negotiating in large groups balance has to work out to embrace efficiency and complete direct participation by developing countries in the negotiating process. Developing countries may deliberate on this issue and make specific proposals for an improved method of negotiations in the WTO (Reinhart, 310). The international trade agreements have a profound impact on developing countries’ economies hence imperative for them not to remain indifferent, but actively take part in negotiations as well as other activities in the forum and ensure they are efficient in the decision-making process.
Conclusion
The developing countries seem to be in a very weak position in terms of negotiations in the international trade market. The weakness has been manifested in different ways, such as them getting less equal treatment in different areas. Developing countries have made noteworthy concessions to developed countries without any benefit with important provisions touching on special and differential treatment not properly implemented. These WTO agreements have manifested larger propositions for the financial system of the country. There is a need for developing countries governments to play a key role in the internal trade process because of its significant effect on the production process. Developing countries need to exhibit political determination and not allow other countries to push them around during WTO forum. At the same time, they need to be resolute and make usage of the forum serve their interests and reduce impacts on them. The countries have to confident, identify their negotiating strengths, and apply them effectively. The biggest negotiator strength in a multilateral negotiation is based on enjoying of full support of their countries in relation to the stance taken by them. Developing countries have to enhance and strengthen their machinery of decision-making and change their negotiation strategy to prepare them comprehensively in the WTO negotiations. Conversely, they need to fight for a total change in terms WTO negotiating process.
Works Cited
Abbott, Philip C. Developing Countries and International Grain Trade. , 1976. Print.
Narlikar, Amrita. International Trade and Developing Countries: Bargaining and Coalitions in the Gatt and Wto. London: Routledge, 2003. Print.
Reinhart, Carmen M. Devaluation, Relative Prices, and International Trade: Evidence from Developing Countries. Washington, D.C.: International Monetary Fund, 1994. Print.
Trends in Developing Countries: Economic Growth, International Development Finance, and International Trade. Washington: World Bank, 1968. Print.