Major Research Project

On

“Analyzing the effectiveness of CRM

in brand building with reference to
organized retail stores in Indore City”
As prescribed By Devi Ahilya VishwaVidhyalaya , Indore
For Master in Business Administration(2007-2009)

Acknowledgement
All the first step of professional life got transformed in to a memorable
experience while doing this study.

The most awaited moment of successful completion of an endeavor is always

a result of persons involved explicitly or implicitly there in and it is impossible
without the help and guidance of the people around.

The magnanimity shown by Mrs. Shruti Awasthi, in accepting my candidature

for the most valuable guidance and affable treatment given to me at every
stage to boast my morals. I want to thank you for all of the hours you spent
helping me carve my walking stick. You had such great patience with me,
even when I made really big mistakes. My Project would not have turned out
so well without your help.

I am thankful to Dr. A.K. Singh – Dean management and Prof. Digamber

Negi – Head of the department, for being so helpful with all the information
and explanation inspite of his busy schedule.

Their deep and insightful knowledge helped me to understand various difficult

topics and their practical aspect. Valuable suggestions have also been made
for my project, which made it integrated and readable than it might otherwise
have been. I hope that they will continue to mentor young people, because
they have so much to offer
Under Thethe
Guidence Submitted By:
Last but not least my of :
heartfelt gratitude to all those persons who knowingly
or unknowingly supported me and boosted my morale to Prayatna make thisJain
project a
Prof. Shruti Awasthi
reality.
Faculty, Shri vaishnav Institute of Management M.B.A. (Full Time) 2nd year
Indore
“I would thank you from the bottom of my heart,
But for you my heart has no bottom.”

Prayatna Jain
MBA (Full Time)IV Sem.

Certificate Of HOD and Guide

 SHRI VAISHNAV INSTITUTE OF MANAGEMENT INDORE

Research Report

This is to certify that project report entitled “Analyzing the effectiveness of

CRM in brand building with reference to organized retail stores in Indore City”
has been accomplished by Prayatna Jain, M.B.A. 4th Semester in my
guidance and supervision.

The project has been submitted by him in partial fulfillment of requirement of

awards of the degree of Masters of Business Administration from DAVV
University, Indore

To the best of my knowledge and belief this work has not been submitted by
him anywhere else for the award of any degree or diploma.

Signature Of The Guide :

Prof. Shruti Awasthi

Faculty, SVIM ,Indore

Signature Of The Head Of The Dept. :

 Prof. Digamber Negi
Dept. M.B.A.(Full Time)
SVIM , Indore
Table Of Content

S.NO. Particulars Page No.

1. Abstract

2. Introduction

3. Review Of Literature

4. Rationale Of the Study

5. Objective Of The Study

6. Research Methodology

7. Data Analysis and Interpretation

8. Conclusion

9. Suggestions

10. Limitations of the Study

12. References

13. Annexure
 Table Of Figures

S.NO. Particulars Page No.

1. Definition Of Relationship marketing at a quick

look

2. Expected CRM benefits

3. Role Of CRM in Brand Attitude Formation and

impact on Brand loyalty

4. Difference Between Traditional and Web Enabled

Approach Of CRM

5. CRM Model

6. Research Process

7. Calculation Of Sample Size

8. A Visualization Of Methodology Choices Made For

The Study

9. Result Of Chi-Square For customer Satisfaction

10. Result Of Chi-Square for Brand Loyalty

11. A Self-Developed Model Of CRM

 Abstract

Today, we are moving away from transaction marketing towards relationship

Management known as Customer Relationship Management. Relationship
Management focuses on customer retention via customer satisfaction.
Today, marketers consider retaining of customer as a much more
challenging job than acquiring customers in the context of growing
competitive forces. Customers are most concerned about the value of the
product or service that is offered rather than the price of the product. Firms
are more focused on the post-sales activity in customer service for the long-
term rather than the short term as in transaction marketing. Firms
communicate their product or service to their customers via customized
marketing efforts.

Organized retailing is spreading and making its presence felt in different

parts of the country. With increasing options in terms of formats and
increased penetration of the stores, customers will always have the option to
select from many stores. Retailers will have to devise multiple ways of
retaining their customers by bringing in events, loyalty programs, and better
customer servicing through deeper understanding of consumers'
preferences.

As far as Indore is consider it is consider to be the education hub of Madhya

Pradesh and the Best test market in whole country. From the very first
recognized, Organized retail outlet Pantaloon the ‘n’ No’s of organized retail
outlets came into existence such as BIG Bazaar , Westside , Vishal mega
mart , Salaasar , Reliance Fresh etc. In this whole project l have tried to find
out the effectiveness Of ‘Customer Relationship Management’ in Brand
building and Improved Customer Satisfaction in such kind of stores. And to
analyze and find out the role of CRM in organized retail with special
reference to Brand Management..

This research has definitely help out in understanding the Concept of CRM
in far more practical way, After completing the project one easily understand
what are the recent trends in Organized retail stores as far as CRM and
Brand Building is consider. It would also help in determining the degree of
effectiveness for CRM practices.
 DEFINITIONS OF CRM

Among many available definitions of CRM, the following comprehensive

definitions are chosen which best fulfill the purpose of this study:

CRM is a comprehensive strategy and process of acquiring, retaining and

partnering with selective customers to create superior value for the
company and the customer.
- Sheth and parvatiyar (2001)

‘’CRM is a strategic approach that is concerned with creating

improved shareholder value through the development of appropriate
relationships with key customers and customer segments. CRM unites
the potential of relationship marketing strategies and IT to create
profitable, long-term relationships with customers and other key
stakeholders. CRM provides enhanced opportunities to use data and
information to both understand customers and co-create value with
them. This requires a cross-functional integration of processes, people,
operations, and marketing capabilities that is enabled through
information, technology, and applications.’’
- Payne and Frow (2005)

Dr Robert Shaw, Shaw Consulting and author of Measuring and Valuing

Customer Relationships. The following definition of CRM is intended to
be both practical, in the sense of being process-based, and actionable,
in reflecting what goes on in the real world. It also focuses on the
business significance of the activity. "Customer relationship
management is an interactive process for achieving the optimum
balance between corporate investments and the satisfaction of customer
needs to generate the maximum profit. CRM involves:
 Measuring both inputs across all functions including marketing, sales and
service costs and outputs in terms of customer revenue, profit and value.

 Acquiring and continuously updating knowledge about customer needs,

motivation and behaviour over the lifetime of the relationship

 Applying customer knowledge to continuously improve

performance through a process of learning from successes and failures.
 Definitions of Relationship marketing at a quick look

Rank Definition Implications

1
Identifying and meeting customer needs is seen
as the primary goal of relationship marketing.
"Customer needs" Despite this high ranking, customer needs
tracking has the lowest level of usage among
measurement tools.

2
Working in partnership with suppliers and
"Partnership"
customers is the key focus, both in consumer and
business-to-business markets.
3
Maximizing customer retention and value, and so
driving up profitability, is the goal. This seems to
"Increasing profits" reflect the popularity of the findings propounded
by Frederick Reich held that increased retention
equals substantially increased profits.

4
Building loyalty with customers, usually defined
"Loyalty"
as maintaining repeat sales, is the central role of
relationship marketing.
5
Managing and enhancing the value to both
"Value"
customer and company within the relationship.

6
The focus on satisfaction received a relatively
"Satisfaction" low level of mentions, yet this is the most popular
customer measure.

(Source: Measuring and valuing customer relationships, Business Intelligence)

 Objectives of CRM

Objectives by Burnett
Burnett (2001) argues that the objectives from CRM generally fall into three
categories: cost savings, revenue enhancement, and strategic impact. He
states that the following objectives seems reasonable for a company
implementing CRM:

 Increased sales revenues results from spending more time with

customers, which results from spending less time collecting information
about the customer.
 Win rates improve since the company withdraws from unlikely or bad
deals earlier in the sales process.
 Increased margins results from knowing your customers better, providing
a value-sell, and discounting price-less.
 Improved customer satisfaction rates. The increase occurs because
customers will find that the offer is more in line with their specific needs.
 Decreased general sales and marketing administrative costs. This
decrease occurs since the company has specified and has good
knowledge about its target segment customers. Thereby the company is
using its resources better when no effort is awaste of money or time.

Objectives by Newell
Newell (2000) states that the key to CRM is identifying what creates value for
the customer and then deliver it. While individual customers have different
views of value, there are many ways to satisfy the each customer. Therefore
the CRM objectives is to:
 Identifying those customer values that are pertinent to a particular
segment.
 Understanding the relative importance of those values to each customer
segment.
 Determining if delivery of those values will affect in a positive manner.
 Communicating and delivering the appropriate values to each customer
in ways the customer wants to receive the information.
 Measuring results and proving return on investments. (Ibid.)
Objectives by Kalakota & Robinson

According to Kalakota & Robinson (1999) is CRM an integration framework

and a business strategy. They have listed three objectives of the CRM
business framework that illustrate this: use existing customer relationship to
grow revenue, use integrated information for excellent service, introducing
consistent replicable channel processes and procedures.

 Use existing customer relationship to grow revenue. Enhance

profitability by identifying, attracting, and retaining the best customers.
This is done by preparing a comprehensive view of the customer to
maximize his or her relationship with thecompany through up selling
(selling more exclusive products) and cross selling (selling
complementing products).

 Use integrated information for excellent service. Use customer

information to bette serve the customer needs. By doing this,
companies save the customer time. Customer specific information
should be available to all customer contact points.

 Introducing consistent, replicable channel processes and

procedures. With the proliferation of customer contact channels, many
more employees are involved in sales. In order to enjoy continued
success, companies must have consistent, dependable, and
convenient interaction with customer at every encounter.

Benefits Of CRM :-
Implementing a customer relationship management (CRM) solution might
involve considerable time and expense. However, there are many potential
benefits.A major benefit can be the development of better relations with your
existing customers, which can lead to:

 Increased sales through better timing due to anticipating needs based

on historic trends
 Identifying needs more effectively by understanding specific customer
requirements
 Cross-selling of other products by highlighting and suggesting
alternatives or enhancements
 Identifying which of your customers are profitable and which are not

This can lead to better marketing of your products or services by

focusing on:

 Effective targeted marketing communications aimed specifically at

customer needs
 A more personal approach and the development of new or improved
products and services in order to win more business in the future

Ultimately this could lead to:

 enhanced customer satisfaction and retention, ensuring that your good

reputation in the marketplace continues to grow
 increased value from your existing customers and reduced cost
associated with supporting and servicing them, increasing your overall
efficiency and reducing total cost of sales
 improved profitability by focusing on the most profitable customers and
dealing with the unprofitable in more cost effective ways

Once your business starts to look after its existing customers effectively,
efforts can be concentrated on finding new customers and expanding your
market. The more you know about your customers, the easier it is to identify
new prospects and increase your customer base.

Even with years of accumulated knowledge, there's always room for

improvement. Customer needs change over time, and technology can make it
easier to find out more about customers and ensure that everyone in an
organisation can exploit this information.

Strategic Role OF CRM In

Brand Building
WE Know that consumers consciously or consciously search by limiting their
attention to a few familiar brands and choose to pay an average price
( George S. Day ,. Terry Deutscher, 1982). This makes it clear that a brand
attitudes can useful predictor of subsequent brand choices, if proper measures
are used and there are few intervening events between attitude measurement
and behavior. So we can say that brand attitudes are primarily built through
integrated marketing communications and in turn influence brand choice and
then could result in brand loyalty.

As far as CRM is concerned regarding Brand Building is or should be that

consumers like to reduce choices by engaging in an ongoing loyalty
relationship with marketers. This is reflected in the continuity of patronage and
maintenance of an ongoing connectedness over time with the marketer. It is a
form of commitment made by consumer to patronize selected products,
services and marketers rather than exercise market choices. When consumer
make such commitments they repeatedly transact with the same marketer or
purchase the same brand of product or services. In doing so, consumer forgo
the opportunity to choose another marketer that serves their need. Thus, from
a consumer perspective, reduction of choice is the crux of their Customer
relationship management.

Thus a vast array of academic literature in consumer behavior has grown on

repeat purchase and customer loyalty (Dick and Basu,1994). As argued by
Jacob and Keyner (1973), ‘brand loyalty is essentially a relational
phenomenon’. Hence, brand loyalty is a measure of the relationship the
consumer develop with a company’s products and symbol.

But as put forth by Sheth and parvatiyar (1995), it is important that we

acknowledge that CRM goes beyond repeat purchase behavior and
inducements. As Webster (1992) point out, repeated transactions are only a
precursor to relationships; perhaps , a greater and more valuable relationship
develops between consumer and marketers when consumers actively involved
in the decisions of the company. CRM attempts to develop customer value
through partnering activities.
Role Of CRM In Brand Attitude Formation And Impact On
Brand Loyalty
 P
U
R
C
H
A
S
E

or

U
N
A
W
A
R
E

Source : ‘Building brands in the Indian market’ by Tapan K. Panda first edition
2004.
According to some recent research (Aaker,Batra,Myers,2002), the relationship
between attitude and purchase behaviors gets stronger as consumers get
more ‘direct’ info. About the brand. Information about a brand obtained through
advertising is relatively less ‘direct’. Hence, CRM can be used to get to the
customer directly involved and thus impact a brand attitude formation that will
surely result in purchase and subsequently, Brand loyalty. CRM can play a
strategic role at various stages of consumer decision making (S Ramesh
Kumar,2002). The stages identified in this concerned are: information stage;
Pre-selling stage; Purchase stage; Usage stage; Service stage; support stage;
and repurchase stage. Therefore, CRM can be said to be impacting brand
attitude at all the stages.

There are good examples of how CRM can be used to boost brand loyalty. For
example, L'Oréal, the world’s largest beauty, skin care and cosmetics
company wanted to broaden the scope of its luxury products marketing to
focus on customers. The firm operates in a highly-competitive marketplace for
luxury beauty products where customer retention is a key performance
indicator.

It standardised on Siebel CRM and Analytics software which resulted in

greater customer loyalty. As well as improving customer brand loyalty, L’Oreal
benefited from an improved response rate and lower cost of direct mail, and
gained a consistent 360-degree view of its customers across multiple
channels. Most importantly, it can now classify ‘value customers’ more easily
and retain them, boosting brand loyalty.

There are certain questions to be asked in order to align CRM, customer

loyalty programmes and brand management.

 What is the annual and lifetime value of your loyal customers?

 How do you allocate marketing spend between loyal customers, in
revenue and profits?
 What is your brand's level of repeat purchase and how does this
compare to your industry average?
 What is the profile of your loyal customers? How do you acquire more of
them?
 How well do we reward loyal customers?
 What opportunities can you give to loyal customers to buy more, or to
recommend you?
  Have you learned all you can about the buying process from the
incoming customers eg: what are they buying, when, how important is
price as a factor and so on.
 Are there mechanisms in place to gather feedback at the end of the
sale? Eg: how was the customer experience, any suggestions for
improvement etc?
 Are you proactive enough in your customer outreach? Eg: do you
contact customers on special occasions and ask if they would like to
order as you prioritize your existing customers.

Above all, be aware that this is a long game. It’s going to take time. Don't
confuse brand awareness with brand loyalty and certainly not with brand
equity. Awareness is step one. If customers don't know you exist, they
certainly won't consider you, but that's very different to having a loyal, long
term relationship. CRM can help, but loyalty comes through experience and
time. CRM technologies must be viewed as enablers that operate within the
context of wider business strategies – valuable as a means to an end, but not
the 'silver bullet' that some might claim to be.

Relationship Marketing vs traditional Marketing

However, at its core lie major theoretical differences that have compounding
effects when practiced in the real world. Before we can understand the
advantages and disadvantages of the relationship marketing we must
understand the difference.

Traditional Marketing : Traditional marketing is focused on getting the

message out. The more people you display your message to the more people
that will purchase your product. It is a number game that says something like
1% of all visitors will purchase your product.

Relationship marketing: relationship Marketing is more about building a

customer relationship and encouraging consumer to have a higher purchase
rate and more satisfaction with their products. Typically relationship marketing
is geared towards long term growth. Let us say that business has just spent
lacs of rupees on getting people through the door.

Since the business has not thought about relationship marketing the visitors
make one purchase and are never seen or heard from again. The business
continues to spend excessive amount of money in order to attract customers
and has very little repeat business. Relationship marketing is about repeat
business.

Relationship marketing is cost-effective method that seeks to retain visitors

(Goldglantz, 2007). The advantage of relationship marketing is that it helps
retain the successes the company has already achieved.

For example, a high amount of visitors can be converted to a high amount of

return visitors. These return visitors can be analyzed for characteristics and
traits. The disadvantage is that the relationship marketing that looks inward
( to current customers) doesn’t attract new customers on a wide scale.

The advantage of traditional marketing is that it cash its net wide like a fishman
hoping to draw as many customer as possible. The wider the net the more fish
and more markets we can tap into. The disadvantage of traditional marketing is
that most businessman cannot simply keep paying high advertising cost to
maintain an appropriate customer flow.
Relationship and traditional marketing can be best used when in conjunction.
On taps new market and draws in first-time visitors while the other retains them
as long as possible.

The better the relationship, the better the sales results (Hunter & Perreault,
2007). Thus the companies should consider developing their marketing
programs so that it makes sales on the front end and the back end.

Future of CRM in Organised Retail Stores

(Web and Internet)

Figure : Difference Between Traditional and Web-Enabled Approach OF CRM
There is no magic answer to this question. However, one can make some
educated guesses based on established best practices and how Indian
conditions will modify or replace conventional wisdom. Let’s consider some of
the factors that could affect the future of organized Retail in India.

Consumers – Who understands the Indian consumer the best will win in the
end. What do we mean by the Indian consumer? Is it the teenager in Mumbai
who commutes by local train, buys fashionable clothes from Linking Road and
watches movies at the multiplex? Or is it the housewife who buys vegetables
from the sabzi mandi and saves up money for chicken on Sundays. Or is it the
fisherman out at sea who uses a cellphone to communicate his catch to the
market on the shore? The Indian consumer is hard to pin down. As someone
wisely said, the Indian consumer shifts loyalties with every 25 kilometers and
with every 10 Rupees. The dimensions to deal with include class, education,
language, caste and local customs in addition to the standard marketing
dimensions used in the West.

Merchandising – Merchandising is what retailers do. This aspect has not

received much media attention in India. However, this is often what
differentiates a successful retailer from a flash in the pan retailer. Examples
that come to mind include Zara, 7-Eleven and Wal-Mart. Put simply,
merchandising is the art-science of deciding what to sell where, at what price
and when. The retailers that understand the Indian consumers and provide the
right products at the right price will beat the competition.

Talent – This is already becoming a bottleneck for several Indian retailers.

Experienced corporate professionals as well as fresh talent at the store level
are hard to come by. The retailers that are able to retain their talent and
provide them with growth opportunities could easily gain an upper hand in
running a successful operation in India. Real Estate – This is a huge concern
in India where quality real estate has become too expensive for many retailers
to run a successful operation in cities. This is especially true for mass
merchandise/discount retailers who operate on razor-thin margins. The
acquisition of cheap leases in prime areas could decide whether a retailer
becomes profitable at all or not. Another strategy is to expand in smaller towns
and villages where real estate is still affordable and purchasing power is not as
bad as one might think.
Supply Chain – This often quoted but not-so-often understood term basically
refers to the back-end operations of a retailer. This includes the entire network
of suppliers, warehouses, distribution centers and logistics operations.
Effectively getting products to the right place at the right time is a lot tougher
than it sounds when there are thousands of items and hundreds of stores
involved. The supply chain infrastructure needs to be built from the ground up
in India. This could easily affect the balance sheet of any retailer planning to
start operations in India.

Policy – Although most people agree that FDI in Retail is just a matter of time,
what this means is that till FDI is allowed, we will see our domestic players like
The Future Group and Reliance Retail leading the way. What will happen
when FDI is eventually allowed is anyone’s guess. If the examples of Brazil or
China are taken into account, we will see a lot of consolidation with a few (6-8)
large players remaining and several smaller niche players. Retail is a highly
localized business (local preferences, local talent), so there is no guarantee
that a foreign player will do better than an Indian player, as evidenced by
Walmart’s failures in Germany and Korea. Surely, there are interesting times
ahead!

Organized Retail In India

"We believe that India is a rising star at the beginning of a growth cycle, with consumer spending
increasing at a strong rate, and people seeking and demanding a better quality of life. India is going
to be one of the fastest-growing regions of the future. All conditions are right to invest in India." 1

- Jeff Immelt, Chief Executive, GE

The retailing industry has been present in our country through history and is
considered as one of the largest sectors in the Indian economy, contributing to
around 14% to the GDP, and employing around 7% of the total population..
For decades, retailing in India has been highly fragmented, i.e., unorganized,
due to the presence of huge number of small mom-n-pop stores. While
retailing industry is present for centuries, it is only in the recent times that it
has witnessed so much dynamism and corporate attention. As a result , today
retail industry is much updated and organized. It is the latest bandwagon that
has witnessed hordes of big players like TATA, Birla, Reliance, Pantaloon
Group, etc., leaping into it. The entry of big players in retailing has caused a
major revolution in its marketing strategies and innovations. Now retail sector,
being considered as the most dynamic and attractive sector in India, is going
through a transition phase. For a long time, the corner grocery store was the
only choice available to the consumer. This is slowly giving way to
international formats of retailing. The Indian organized retail industry is valued
at about $300 billion and is expected to grow to $427 billion in 2010 and $637
billion in 2015. Retail Market India today is the second fastest growing
economy of the world after China. Indian economy will grow larger than
Britain's by 2022, Japan by 2032 and by 2050 will become the second largest
economy of the world after China. Indian market has become the most
lucrative market for retail investment in the world. Some of the factors which
have contributed to the growth of organized retail in India are: increase in the
purchasing power of Indians, rapid urbanization, increase in the number of
working women, large number of working young population. Today people look
for better quality product at cheap rate, better service, better ambience for
shopping and better shopping experience.

The recent years have witnessed rapid transformation and vigorous profits in
Indian retail stores across various categories. This can be contemplated as a
result of the changing attitude of Indian consumers and their overwhelming
acceptance to modern retail formats. Asian markets witness a shift in trend
from traditional retailing to organized retailing driven by the liberalizations on
Foreign Direct Investments. For example, in China there was a drastic
structural development after FDI was permitted in retailing. India has entered a
stage of positive economic development which requires liberalization of the
retail market to gain a significant enhancement. Domestic consumption market
in India is estimated to grow approximately 7 to 8% with retail accounting for
60% of the overall segment. Of this 60%, organized retail is just 5% which is
comparatively lesser than other countries with emerging economies. In
developed countries organized retailing is the established way of selling
consumer products. Despite the low percentage, Indian textile industry has
grown noticeably in organized retailing of textile products. The negative phase
in exports may have compelled the Indian textile retailers to explore the
opportunities in the domestic market substantially causing the outstanding
growth in the concerned segment. These indications give a positive notion that
organized retailing has arrived in the Indian market and is here to stay. It is
expected to grow 25-30 per cent annually. India is on the radar screen in the
retail world and global retailers and at their wings seeking entry into the Indian
retail market. The market is growing at a steady rate of 11-12 percent and
accounts for around 10 percent of the country’s GDP.

A vast majority of India's young population favors branded garments. With the
influence of visual media, urban consumer trends have spread across the rural
areas also. The shopping spree of the young Indians for clothing, favorable
income demographics, increasing population of young people joining the
workforce with considerably higher disposable income, has unleashed new
possibilities for retail growth even in the rural areas. Thus, 85% of the retail
boom which was focused only in the metros has started to infiltrate towards
smaller cities and towns. Tier-II cities are already receiving focused attention
of retailers and the other smaller towns and even villages are likely to join in
the coming years. This is a positive trend, and the contribution of these tier-II
cities to total organized retailing sales is expected to grow to 20-25%.

Organized Retail In Indore

Indore with an expected 40 lacs + population making it the most populous city
in Madhya Pradesh. Indore is one of the fastest growing Tier III cities in India.
It already is the Commercial Capital of Madhya Pradesh. Its a favored test
market for industries owing to the diversity of its population. With pace of
growing diversity and industrial developments, Indore is also growing with a
higher rate. As a result in past few years it is also being recognized as one of
the hot prospective market for the organized retail stores and the major retail
players. And this can be supported by the fact that around 20 shopping malls
have been constructed in the city in fast 4-5 years, including M2K The Mega
Mall, Indore, Globus City Mall, Pakiza Shopping Mall (3 branches), Treasure
Island, Orbit Mall, Mangal City Mall, Pro Mart, C 21 Mall, Indore CENTRAL,
Satyam Shopping Mall, Luv Kush Mall, Onam Plaza Mall etc...

As a result Indore’s organized retail market is being served by ‘n’ no’s of small
and big organized stores in the form of Supar Bazaars , Mega Stores or Hyper
Markets all over the city. Today, almost all the major brands are available here
and including more than 50 brands having their own exclusive outlets . Few of
the giant retail stores which are doing well here are Big Bazaar & Food Bazaar
(6 stores) , Vishal (5 outlets) , Reliance Fresh (13 outlets), More megastore ,
Pantaloons, Provogue, Koutons and the list is uncountable.

Challenges facing the Organized Retail Industry

Despite the rosy hopes, some facts have to be considered to positively initiate
the retail momentum and ensure its sustained growth. The major constraint of
the organized retail market in India is the competition from the un-organized
sector. Traditional retailing has been deep rooted in India for the past few
centuries and enjoys the benefits of low cost structure, mostly owner-operated,
therein resulting in less labor costs and little or no taxes to pay. Consumer
familiarity with the traditional formats for generations is the greatest advantage
to the un-organized sector. On the contrary, organized sector have big
expenses like higher labor costs, social security to employees, bigger
premises, and taxes to meet.

Availability and cost of retail space is one major area where Government
intervention is necessary. Liberalizing policy guidelines for FDI needs focus as
well. Proper training facilities for meeting the increasing requirements of
workers in the sector would need the attention of both Government and the
industry. Competition for experienced personnel would lead to belligerence
between retailers and higher rates of attrition, especially during the phase of
accelerated growth of the retail industry. The process of avoiding middlemen
and providing increased income to farmers through direct procurement by
retail chains need the attention of policy makers. Taking care of supply chain
management, mass procurement arrangements and inventory management
are areas that need the focus of entrepreneurs.

India is now on the radar of global retailers. Accelerated development of

organized retailing industry in the country and building brand value of domestic
products is essential not only for marketing our consumer products more
efficiently, but also for the development of our own retailing industry.

The Troubles Of Indian Organized Retail

(Current Perspective)
Few years ago, there was a hue and cry over the entry of organized retailers
like Subhiksha, Reliance Retail and Wal-Mart. Oh, how things have changed!
Subhiksha has downed its shutters for many months now and financial results
of Reliance Retail are flat.

The global recession cannot be blamed for this debacle, because organized
retailer Wal-Mart is doing quite well in these times in the United States, which
is the epicenter of the global recession. The sales of Wal-Mart are reported to
have increased by eight per cent even though profits are a trifle down. If the
troubles of organized retailers were due to global recession, Wal-Mart too
should have shown signs of distress.

Indian organized retail is in trouble because, unlike in the United States, it

faces competition from low-cost kirana shops. Indian organized retailers cater
mainly to the upper middle class while Wal-Mart caters to the lower end. The
USP of Indian retailers is not low cost. Rather it is comfort and temptation. The
USP of Wal-Mart, on the other hand, is low cost. This makes a decisive
difference. The upper middle class in India moves away from high-cost
organized retail towards low-cost kirana shops in times of economic distress.
On the other hand, the middle class in America moves away from high-cost
branded stores towards low-cost organized retail in the same times of
economic distress.

Why have organized retailers in India not been able to cater to the lower
classes? The reason appears to be much greater spread of business capacity
among the Indian people. The capacity required to run a kirana shop is
available aplenty in India. Organized retail is not able to compete with these
shops. According to a study undertaken by leading economic research
organization ICRIER, our kirana shops have many special abilities. They are
located near the consumer who is provided with the required goods in his
vicinity. He saves the cost of going to the air-conditioned shop of the
organized retailer located far away. One can see the shopkeepers making a
note of an item that is not in their stock. Then they locate the supplier and get
that item. This ability to provide desired goods takes away the attraction of
going to the organized retailer.

Kirana shopkeepers provide goods on credit. They have the ability to keep a
record of credit given, to remember the date when the borrower gets his salary
and to make collection of the dues. Kirana shops are able to sell items in
pieces. One can obtain one sheet of A4 paper from the street corner stationary
shop. The shopkeeper has such low cost of service that he makes profit from
selling one sheet of paper for 50 paisa ! The overhead costs of the organized
retailer prohibit such small sales. One would have to buy a whole ream from
the organized retailer. Kirana shops are open from 6 am to 10 pm. Often
owner husband and wife take turns. Both have capacity to manage the shop.
Kirana shops make home delivery. They have the ability to extract various
types of work from one employee. He sweeps the shop, arranges goods in the
window, undertakes home delivery, brings goods from the transporter and
recovers outstanding loans. Organized players have to employ a number of
persons for each of these functions.
The buyer likewise appears to have greater capacity in India. She can easily
compare the price offered by competing stores, to calculate the cost of
travelling to a cheaper store located far away, and the benefits from special
schemes. She is not lured by the temptations. The combination of high-
capacity kirana shops and high-capacity buyers has enabled the shops to face
competition from organized retailers.

The underlying factor that operates behind all these is mental capacity. Small
shops in the United States seem to lack this ability. It is noteworthy that
Gujaratis own a large number of small retail shops in the United States. They
have the business capacity to manage these shops. But the American
consumer appears to lack the ability to make these various calculations. Thus
the same Gujarati is successful in India and not so in America.

Mainstream economists think otherwise. The main reason being suggested for
the failure of Subhiksha is rapid expansion at breakneck speed. This
explanation is not acceptable. If this were the case, other organized retailers
like Reliance that have expanded at a slower pace should have done well.
That is not the case. All organized retailers in India are in trouble. Another
explanation being offered is that organized retailers relied on special schemes
to tempt the customer to buy goods that he may not truly need. This appears
to be true. But why did they have to rely on such schemes? Because they
were not able to sell the goods in routine conditions, it would seem.

The ICRIER study points out that the average price realization for cauliflower
farmers selling directly to organized retailers is about 25 per cent higher than
their proceeds from the mandi. So far so good. The question, however, is this:
Were the organized retailers able to successfully sell those cauliflowers to the
consumers? Obviously not. Otherwise they would not be in trouble. The higher
price paid by organized retailers to the farmers should, therefore, not be seen
as an advantage that they have. Rather it may be that farmers are unwilling to
sell to organized retailers at the same price as in the mandi. Perhaps
organized retailers have more stringent quality specifications. They would
specify the minimum size of the flower, maximum number of leaves, length of
the stick, etc. In comparison the middleman in the mandi will help the farmer
sell his goods of varying quality. Organized retailers are perhaps paying higher
price because the farmer is unwilling to sell to them at the lower price! It is
their inability to manage variation in quality that forces them to buy at higher
price.

The crisis of organized retail in India is not because of global recession

because Wal-Mart is doing well in recession-ridden America. The crisis is also
not due to rapid pace of expansion because other slow movers are equally
affected. The true reason of their troubles is that the business capacity of the
kirana shop owners and buyers is high in India. Organized retailers are unable
to provide services that match the price offered by kirana stores and quality
expected by buyers.

Role Of CRM In Retailing :-

Levy and Weitz, authors of "Retailing Management", define CRM as, "A
business philosophy and set of strategies, programs, and systems that
focuses on identifying and building loyalty with a retailer's profitable
customers." It is based on the business philosophy that all customers are not
profitable in the same way and retailers' can increase their profitability by
building relationships with their better customers. The goal is to develop a
base of loyal customers who patronize the retailer frequently.

Maureen Johnson of communication services group

WPP’s retail consultancy, The Store, meanwhile called customer relationship
management crucial and that “CRM has been key…it is very powerful” in the
rise of organized retail in India. In today's environment, retail companies need
to practice customer relationship marketing to gain a competitive edge. This is
feasible if CRM becomes an integrated part of the marketing management
paradigm. Indian Retail Industry is ranked among the ten largest retail markets
in the world. The attitudinal shift of the Indian consumer in terms of "Choice
Preference",& "Value for Money" and the emergence of organized retail
formats have transformed the face of Retailing in India. CRM is an iterative
process that turns customer data into customer loyalty through four sequential
activities shown in the CRM Model (Exhibit 1).

CRM is quite a new phenomenon in retailing industry. It is only big retailers

who have installed CRM systems to identify and track customer purchases
and take appropriate management decisions, especially on managing
customer relationships. Now, organized retailers like Big Bazaar, Westside,
Shoppers' Stop, etc., have started concentrating on providing more value to
their valuable customers using targeted promotions and services to increase
their share of wallet, i.e., the percentage of the customers' purchases made
from these retailers with these customers. Almost all of them have started
Loyalty Programs, i.e., frequent shoppers program in order to reward the
existing customers. These programs help the retailers in increasing the
number of footfalls as well as enhancing their sales revenues and profits. For
example, Shoppers' Stop, one of the leading apparel retailer in India, had net
sales of Rs. 1.6 Billion, increasing net profits by 96% with the company's
loyalty program, First Citizen Club (a CRM program) accounting for 63% of the
sales. (Source: Economic Times, August 12, 2006).
 Review of the Literature

The goal of this review is to identify research and articles published over the
past ten years related to CRM with relevance to sales management. The ten-
year time frame was chosen because it encapsulates the rise to prominence of
CRM and much of the technology that aids in implementation of CRM
concepts. The review includes both empirical studies and conceptual articles.

In 1960s, Theodre Levitt suggested that the purpose of every business was
to create and keep customers. He suggested that corporations should view the
entire business process as consisting of closely held integrated effort to
discover, create, arouse and satisfy customer needs.
Berry (1983) defines customer relationship management as attracting,
maintaining and enhancing customer relationships in multiservice
organizations. Berry stressed that the attraction of new customers should be
viewed only as intermediate step in the marketing process. Solidifying the
relationship, transforming in different customers into loyal ones and serving
customers as clients should also to be considered as marketing. He outlined
five strategy elements for practicing customer relationship management:
developing a core service around which to build a customer relationship,
customizing the relationship to the individual customer, augmenting the core
service with extra benefits, pricing services to encourage customer loyalty and
marketing to employees so that they, in turn, will perform well for customers.

Lovelock (1983) points out that many services by their very nature require an
on-going membership (e.g. insurance, banking etc). Even when membership
is not required, customers may seek on–going relationships with service
providers to reduce perceived risk in evaluating service characterized by
intangibility and credence properties. Customers are more likely to form
relationships with individuals and with the organizations they represent than
with goods. Services are performances where the employees play a major role
in shaping the service experience. The service setting is especially conducive
to customers forming relationships with individual service providers.

Desatnick, 1988; Stone et al., 1996; Bitran and Mondschein, 1997;

Chattopadhyay, 2001; Massey et al., 2001 Research suggests that
customer satisfaction, fundamental concept of relationship marketing, is
important in achieving and retaining competitive advantage. Organizations and
research studies have discovered that retaining current customers is
much less expensive than attracting new ones. The best way to retain
customers is to keep them satisfied, a number of studies have shown that
customer satisfaction can lead to brand loyalty, repurchase intention and
repeat sales, in short customer retention. Customer retention, in turn,
seems to be related to profitability.

Simon Caufield (1999) in his research paper Does CRM really pays?
Concludes that “Customized to your specific business and applied with insight.
Judgment and precision of focused objectives, CRM initiatives pay –off by
changing, or taking advantage of. Customers behavior and profitability, and
how these differ be segment n his research paper says that Customized to
your specific business and applied with insight. Judgment and precision of
focused objectives, CRM initiatives pay –off by changing, or taking advantage
of. Customer’s behavior and profitability, and how these differ be segment ”

Anderson (1996); Ingram, LaForge, and Leigh (2002); Leigh and Marshall
(2001). Further, each stresses the effect that CRM-related strategies and
technologies will have effect on the sales organization. Anderson (1996)
recognizes that SFA and electronic sales channels dramatically reshape not
only the role of the salesperson but the role of personal selling within the firm.
While not couching such trends in terms of CRM, Anderson's (1996) "blending
of sales and marketing" notion closely parallels the relationship management
activities prevalent in CRM. Sales force roles that are touted as irreplaceable
by advanced technology include anticipating new customer needs and
developing long-term strategies in partnership with customers.

Gefen, 2002; Reinartz & Kumar, 2003; Rowley & Dawes, 2000 The benefits
of customer loyalty to a provider of either services or products are numerous,
and thus organizations are eager to secure as significant a loyal customer
base as possible Recent developments in Internet technology have given the
Internet a new role: to facilitate the link between CRM and customer loyalty.
This has also been argued by Fournier (1998) who stated that, committed
customers can be viewed as organizational assets who are likely to be a
source of favorable word-of-mouth referrals and are resistant to
competitor’s offers.

Glazer, R. (1997) focuses that CRM seeks to provide a strategic bridge

between IT and marketing strategies aimed at building long-term relationships.
This requires `information-intensive strategies’ which contain information about
and from customers and which we term `information-enabled relationship
marketing’. CRM is important because it provides enhanced opportunities for
using data better in order to understand customers and implement improved
relationship marketing strategies.
Hoffman and Kashmeri (2000) stated that, the strategy and objective of CRM
was not just to be cost-reduction oriented but to them CRM means better
management of customers and the relationship with them that enable
information flow, such as pricing, inventory and planning, in both directions.

According to Newell (2000), CRM is a useful tool in terms of identifying the

right customer groups and for helping to decide which customers to jettison.
Again he lamented that, relationship customers have far more potential for
loyalty as they are often prepared to pay a premium price for a range of
reliable goods.Moreover Newell (2000) adds that, one of the benefits is that,
it makes existing customers more cost effective than new customers because
they are already familiar with and also requires less effort to convince them to
buy the company’s products and services (ibid).

Leigh and Marshall (2001) highlights that the sales function will increasingly
be viewed as the firm's means of "partnering" with customers. This redefines
the sales function whereby strategic account management will be the
objective, which will require CRM-related processes and technologies such as
lifetime customer value analysis.
Customer Relationship Management is the establishment development,
maintenance and optimization of long term mutually valuable relationships
between consumers and the organizations. Successful customer relationship
management focuses on understanding the needs and desires of the
customers and is achieved by placing these needs at the heart of the business
by integrating them with the organization’s strategy, people, technology and
business processes (Fox & Stead, 2001)

Patton (2001) argues that, the strategy and the objective of CRM
initiative and software is to help organizations keep track of their customers
and boost revenue by increasing customer loyalty. He went on to say that,
another strategy of CRM is to develop customer loyalty and sales per
customer to increase the bottom line.

Scullin, Allotra, Lloyd and Fjermestad (2002) amended that CRM can
bring greater efficiency and cost reduction in an organization. For
example, they indicated that, the integration of customer data into a single
database by an organization allows the company to do marketing teams,
sales force and other departments within the company to share information
and work toward common corporate objectives by using the same underlying
statistics. They further state that, CRM helps improve customer service
and support. They argue that for instance, it helps the organization to
receive more accurately, update and close even the very remote orders.
Again they lamented that, it also helps to view customer service
agreements, search for proven solutions and best practices, and subscribe to
products-related information and software patches and access knowledge
tools useful in completing service orders.

One of the benefits that Scullin, Allotra, Lloyd and Fjermestad (2002)
believe can be derived from CRM initiatives is increased customer loyalty. This
they say can be seen in this aspect, for example, information captured by CRM
system helps a company to identify the actual costs of winning and retaining
individual customers. Also having the data allows the firm to focus its time
and resources on its most profitable customers. Moreover, they say that,
classifying one’s best customer in this way allows an organization to manage
them more efficiently as a premium group, with the understanding that it is
neither necessary nor advisable to treat all customers in the same way
because each customer is different and has his or her own unique needs and
demands. Further more, Scullin, Allotra, Lloyd and Fjermestad (2002)
hammered that more effective marketing can be realized as a result of CRM
initiatives. They argue that, for example, having detailed customer satisfaction
from an eCRM system can allow a company to predict the kind of products
that a customer is likely to buy as well as the timing of purchases. Again they
continue to say that, CRM allows for more targeted campaigns and also
tracking of campaign effectiveness. Moreover, they add that, customer data
can be analyzed from multiple perspectives to discover which elements of a
marketing campaign received the greatest impact on sales and profitability.

Sawhney, Balasubramanian and Krishnan ( 2004 ). The ultimate goal is to

transform these relationships into greater profitability by improving the
effectiveness of CRM programs, increasing customer loyalty and purchase
probability, and lowering the cost of serving, thereby increasing profitability.
Realizing the increasing importance of customer orientation, companies from
all types of industries, ranging from manufacturing to information, are exploring
relationship building as a promising means of differentiation, competition, and
revenue growth opportunities

Badrinarayanan, Vishag (2005) suggests that the use of Customer

Satisfaction teams is likely to continue into the future (Macy forthcoming). By
examining their ability to enhance the development of a knowledge
management competence and a relationship marketing competence, our
study explicates further their value to the firm. As the demands placed on
selling organizations increase in the future, more firms will embrace customer-
needs--driven CRM strategies; firms that understand the role that CS teams
play in these strategies will have a competitive advantage over their rivals.

Charles W. Jaeger (May 2005) says that, in today's business environment

companies cannot afford to lose a single profitable customer. By effectively
leveraging results from a customer satisfaction survey an organization can
respond to their customer's needs in ways that increase revenue as well as
improve customer and employee, satisfaction and loyalty.

Charles W. Jaeger, Ph.D. “Relationship Marketing and CRM” – ( 2005 )

“Relationship marketing is one of today’s most powerful business marketing
techniques. It is an extension of “1 to 1 marketing,” where you satisfy each
individual customer’s needs and wants. You can make more money, save
time, and deliver outstanding customer service. You gain a larger share of
each customer’s business, and you benefit from their referrals.

Prof Arun Saxena (2006) in his research paper CRM in service sector
today’s customer is empowered by information and choice. This presents new
challenges to companies, who in their quest to acquire retain and service
customers are adopting CRM in a big way, and changing their business
approach from being ‘product centric’ to ‘customer centric’. The role of CRM is
to provide a wide range of touch-points through which a customer can interact
with the company. The objective of this paper is to explore the efficiency and
effectiveness of CRM in the service sectors, (with special reference on), which
calls for a more personalized service than ever before.

Bob Thompson, (2007) founder of CRMguru.com says that relationship

management (CRM) is a business strategy to select and manage the most
valuable customer relationships. CRM requires a customer-centric business
philosophy and culture to support effective marketing, sales, and service
processes. CRM applications can enable effective customer relationship
management, provided that an enterprise has the right leadership, strategy,
and culture".           

Conrad Chang (2007) it is still all about the customer. At the end of the day,
the end-to-end solutions need to satisfy what really matters – the customer. It
is vital that enterprises know their corporate objectives and directions and
invest accordingly in the relevant CRM solutions that match their needs.
Enterprises in fast growing and niche areas would require a different set of
solutions than those that serve mature and slow-growing markets.

Rationale of the study

All companies are facing massive challenges in today’s highly competitive

market and strive to acquire the maximum possible market share in an
overcrowded market. There are certain threats which companies are facing
such as:

 The nature of competition which is going global.

 The rate of change is accelerating out of control.
 Margins are being eroded.
 Customers are becoming more demanding and getting less loyal
 Customer churn is increasing.
 Product life cycles are decreasing.
 Industry barriers are collapsing, major brands entering new markets.
 The internet is transforming the business landscape.
are compelling for a designing of CRM Solutions and comprehensive
strategies by integrating people, process and technology to maximize
relationships with all customers.

The field of customer relationship marketing can be viewed as a sub-area of

“market focused management.”At the most simple level, CRM strategy
prescribes that it is more effective to invest in long-term customer interactions
than to rely on a series of potentially unrelated, one-time exchanges. In
practice, however, CRM is not that simple to implement. There are multiple
stakeholders to consider, and organizations must make certain that value is
provided for all members of a potential partnership. Here, we consider several
strands of relationship marketing, including the concepts of: customer
relationship management, stakeholder theory, affinity marketing, promotional
incentives, strategy, and leadership.

Although many researchers have been conducted worldwide regarding CRM

in Organized retail sector, still looking at the dimensions of the Indian market,
CRM stands to be the survival mantra. For sales, CRM is an especially
important research domain. As a strategy, organizations pursue CRM for a
variety of reasons, including information sharing between departments to
improve customer service or simply to stay abreast of the competition.

Managing customer relationship effectively and effectively boots customer

satisfaction and retention rates. Organizations have discovered and
research studies have shown that retaining current customers is much less
expensive than attempting to attract new ones. Companies have come to
realize that in order to develop successful long-term, relationship with
customers they should focus on the “economically valuable” customer, while
keeping away and eliminating the “economically invaluable” ones. Proper
CRM practices can potentially impact customer satisfaction rating and can
potentially lead to increase customer retention.
This study responds by underscoring the criticality of performing a deep
analysis of a firm's readiness to undertake a CRM initiative. This assessment
provide detailed answers to the questions like: What is a firm's current CRM
capability? And what changes must be in place embarking on a CRM initiative,
for increment in the sales volume?

The purpose of this research is the study of Customer Relationship

Management process in Customer Satisfaction and Brand Building. We
describe the objectives of Customer Relationship Management (CRM) in
sales increment, which is very important for the survival of companies in
today competitive environment.

Objective Of Research

 To study the effectiveness of CRM in brand building.

 To study the effectiveness of CRM on customer satisfaction and retention.

 To study the conceptual framework of CRM in organized retail.

 RESEARCH METHODOLOGY

Research can be performed in many different ways. However, what all

research has in common is that it involves a sequence of activities that are
highly interrelated and that together constitute the research process. It’s not
possible to state that the activities in the research process always follows a
straight order, but it’s however possible to describe a common pattern,
which is visualized in figure 22 (Zikmund, 2000).

The research process is cyclical since conclusion from the study often
generates new problems and new ideas that need to be further investigated.
(Ibid) In this study the research process presented above has been followed to
a quite great extent. However, some adaptations had to be made in order to fit
to the specific situation for this research.
 Research Design

Type of Research

In the research we have gone with two types of research. Before conducting
the interviews with the objects, knowledge within CRM had been obtained.
Thereby, descriptive research was used when asking questions about the
CRM approach. However, since there still was interest in identification of new
variables regarding CRM systems, exploratory research was used when
asking questions about CRM requirements and CRM functionality. Exploratory
research was performed since little knowledge about the problem area
existed. In order to increase the knowledge about CRM and CRM
systems secondary data was studied, as well as literature regarding
theories relevant for the problem area.

Research Approach

When conducting research there are two different approaches to

consider, the deductive approach and the inductive approach. The deductive
approach implies that a conclusion is derived from a known premise or
something known to be true. In contrast, the inductive approach implies that
general propositions are established on the observation of particular facts.
(Zikmund, 2000)
In this study a deductive approach was chosen. This since the research
starts with a literature overview which later on is compared with the
empirical findings. In addition, the purpose with the study is not to produce
any new theories based on the observations made, which is the major purpose
of an inductive approach.

Qualitative vs. Quantitative Research Approach

When collecting information, either qualitative data or quantitative data

can be collected. Qualitative data implies “soft” data, such as “atmosphere at
work”, and is often presented as words and observations. Quantitative data
implies “hard” data, like information on profits gained and order size, and is
often presented as numbers that will determine the quantity or extent of
some phenomena. In this study, a lot of data has been collected during the
interviews performed. Primarily, qualitative data has been collected since the
answers to the questions asked are in words and not just numerical findings.

Research Strategy

There are several different techniques to perform research, such as

experience surveys, secondary data analysis, case studies, and pilot studies.

For this study, In the first phase of the research Experience Survey was the
most appropriate strategy to be used, As per the literature Experience survey is
a technique in which individuals who are knowledgeable about a particular
research problem are surveyed. The purpose with the experience study is to
help formulate the problem and clarify concepts, rather than develop
conclusive evidence. (Zikmund, 2000). Similarly In our study, it helped in
understanding the basic elements and functionality of CRM software and tools
and their impact over the administration.

Parallel to the experience survey, another strategy which supported the

analysis in later stage was the Secondary Data Analysis. As per the literature
secondary data analysis is nothing else but a review of data collected for
another purpose to clarify issues stages of research effort. In addition, the
purpose with a Secondary Data Analysis is to generalize the findings, which
is in accordance with the purpose of this study.

The Sample Design Process

# Define the population :

Initially, the target population has to be identified. The target population

is the specific group relevant to the research project, the group that posses
the information relevant to the researcher. The target population for this study
is Owners of the retail outlets ( including both Organized and Unorganized
retail stores).
# Determine the sampling frame :

After the target population has been defined it’s time to identify the sampling
frame, which is a representation of the elements of the target population. The
sampling frame for this study is the list of retailers in various malls and the
directory listing the firms in an industry.

# Select a Sampling Technique:

When taking a sample there are two major techniques to choose between,
these are probability versus Non-Probability sampling.

In this study, the Non-Probability sampling technique have been used.

Convenience sampling is the Non-Probability technique that was used in the
study. This sample technique was used since the time frame and economical
aspects implied restrictions on the geographical area where the samples were
situated. However, many of the samples Were situated within the reach, thus
the restrictions of the graphical area did not affect the selection noticeably.

When selecting which persons to interview the judgment sampling was

used, this since it was very important to find the most suitable
respondents with good knowledge about their company, as well as about the
CRM approach.

# Determine the sample size :

In this step the sample size is selected, implying that the number of units
included in the study is selected. According to Zikmund (2000) it’s difficult to
determine the size of the sample, and in order to make the right decision
different factors must be considered. The nature of the research is such a
factor. For exploratory research, using a qualitative approach, the sample
design is usually small. Limitations of money and time also influence the
selection of sample size.

However, in this research where in accordance with exploratory research , the

descriptive research have also been conducted, which need a detailed
description of the subject matter , so a moderate size of 100 retailers was
selected for the study from various geographical and economic segments.

For determining the optimum sample size we have used the sample size
calculators , which gave the following result on 95% level of confidence for the
population size of 10000 retail stores ( both organized vs unorganized) and the
confidence interval of 10.

Figure : Calculation Of Sample Size

Type of Data Collection

The data collected can be classified as primary versus secondary data.

Primary data is gathered and assembled specifically for the research project at
hand. Secondary data has allready been collected for purposes other than
the problem at hand. (Malhotra, 1996) Secondary data is often found
inside the company, in the library, on the Internet, or it can be bought from
organizations providing information on different subjects The data collected for
this study was from both secondary as well as primary sources.

Secondary sources like journals, Published or unpublished reports and articles

and various available thesis on the related subject area were used for the
study.

Data collection from Primary sources was through Structured questionnaire/

Schedules and Personal Interviews. The data was directly collected from
various prospects regarding what they think about various aspects covered in
research.
Data Collection Method

As far as data collection method is concerned, there are several options

available for the collection. In the beginning secondary data were collected
through various sources for having proper knowledge related to CRM and the
functionality. In the later stage primary data was collected from various
retailers through personal interview, Structured questionnaire and the
schedules.

Data Analysis Methodology

According to Miles & Huberman (1994) there is two types of analysis, the
within-case analysis and the cross-case analysis. As said in the title, the
within-case analysis is performed within a case and the data collected will
be compared to the theory included in the frame of reference. The cross-
case analysis is performed between several cases, where the purpose is
to enhance generalizability and to deepen understanding and explanation.
In this study, a within-case analysis was used for the investigate the effects of
CRM and need for CRM functionality.

As far as test is concerned, I have used here one of the Non- parametric test i.e.
Chi-Square test. Chi-Square (x2) is a test which describes the magnitude of
difference between observed frequencies and the frequencies expected under
certain assumptions. With the help of x2-test, it is possible to find out whether
such differences are significant or are insignificant and could have arisen due to
fluctuations of sampling. Here we have calculated the expected frequencies as
per the Normal theoretical frequency distribution.

The basic reason behind using this test are :-

1) As per the requirement of the research , we need to test goodness

of fit.
2) The Sample size for the test is fairly large in number.
3) No expected frequency is less than 5.
4) The distribution is not in percentage or proportionate.
Research Methodology Problems

A number of methodological problems were faced during the carrying out

of the study. The problems were of various difficulties and have affected the
result and the quality of the study to a various degree.

The first problem occurred already when defining the research problem and
when formulating the research questions, and it showed to be one of the most
difficult tasks during the research. It is very important to make an appropriate
problem definition since it has great impact on whether the result of the
study will be in line with the purpose of the study. The research problem and
the research questions were thereby revised several times during the study
and were finally approved by the guide.

It was also difficult to find appropriate firms to interview and it proved to be a

time consuming work. To make sure that the firms were suitable, I based
the selection on recommendations from people having a lot of knowledge
about the firms and the market. I also made sure that they fulfilled the
criteria’s, describing the defining of target population.

Another methodological difficulty occurred when performing the analysis of the

CRM systems. It became clear that the functionality included in the CRM
system was sometimes termed differently than in theory .
 Summary of Research Methodology

Figure : A visualization of the methodology choices made for this study.

Data Analysis And Interpretation

Result of Chi-Square test for Customer Satisfaction ( H0 –There is no significant

relationship between CRM and Customer satisfaction)

Original Expected
(Oi –Ei) (Oi – Ei)2 (Oi – Ei)2/E
(Oi) (Ei)
Answer no.
1 132 200 -68 4624 23.12
2 157 200 -43 1849 9.245
3 223 200 23 529 2.645
4 277 200 77 5929 29.645
5 211 200 11 121 0.605
Total 1000 1000 65.26

Calculated Value 69.26

Level of Significance 5%

Degree of freedom
(5-1) = 4
(n-1)

Tabulated value 9.488

From the above we can see that the calculated value of the chi-square through
the test is 69.26 which is greater than the tabulated value of chi-square for 5%
level of significance and 4 degree of freedom (as per the rule) considered to be
standard is 9.488. So our null hypothesis ( H0 ) is rejected. And the alternate
hypothesis (H1 ) is accepted i.e. H1 = There is significant relationship between
CRM and Customer Satisfaction.

In other words, CRM plays a vital role in affecting customer satisfaction. So if

CRM will be used in any organized retail store it will definitely result in higher
level of customer satisfaction.

Result of Chi-Square test for Brand Building ( H0 –There is no significant

relationship between CRM and Brand building)

Original Expected
(Oi –Ei) (Oi – Ei)2 (Oi – Ei)2/E
(Oi) (Ei)
Answer no.
1 200 150 -50 2500 12.5
2 200 166 -34 1156 5.78
3 200 212 12 144 0.72
4 200 263 63 3969 19.845
5 200 209 9 81 0.405
1000 39.25

Calculated Value 39.25

Level of Significance 5%

Degree of freedom
(5-1) = 4
(n-1)

Tabulated value 9.488

From the above we can see that the calculated value of the chi-square through
the test is 39.25 which is greater than the tabulated value of chi-square for 5%
level of significance and 4 degree of freedom (as per the rule) considered to be
standard is 9.488. So our null hypothesis ( H0 ) is rejected. And the alternate
hypothesis (H1 ) is accepted i.e. H1 = There is significant relationship between
CRM and Brand Loyalty.

In other words, CRM plays a vital role in affecting Brand Loyalty. So if CRM will
be used in any organized retail store it will definitely result in higher amount of
Brand Loyalty amongst the customers.
 Conclusion

After completion of the research study, It seem to be that the objective of the
study have successfully achieved. The results and the findings of the study
favors the theory of the literature which supports CRM’s effective role in Building
Brands and increasing Customer loyalty , Customer lifetime value , and further
result in higher customer satisfaction.

To have a check over the theory’s concepts a chi-square test was also
conducted on the raw data collected from the market. And as a result our null
hypothesis 1 - There is no significant relationship between CRM and Brand building and
our null hypothesis 2 - There is no significant relationship between CRM and Customer
satisfaction. were rejected as their value 39.25 and 65.26 is much higher than
the expected tabulated value 9.488, which simply proves that there is a
significant relationship between CRM and brand building and CRM and
Customer Satisfaction.

Also our third objective ‘To study the conceptual framework of CRM in
organized retail’ is also fulfilled by the study with the help of primary and
secondary data collected during the study. It clearly gives us the information
related to past, present and expected future of both CRM as well as Organized
retail in this market not only in combined form but also in isolation.

With respect to all the activities performed during the research starting from
research design to data analysis and interpretation, one can easily conclude
that CRM and Organized retail both are the emerging fields of today’s
dynamic environment and both keeps a high amount of potential and scope in
nearby future too. And the role of CRM in supporting and developing
Organized retail cannot be ignored at all.
 Suggestions

Suggestion I :- “Simple Matrices Power Insight”

It is a completely a myth to consider that implementing CRM gives far more
better results than having simple approach. A simple approach can also do
wonder. For this I have developed a model which can be followed to achieve
better results in the form of higher customer retention and improved brand
building. It talks of few simple matrices and their metrics which can be followed
and one can have powerful competitive edge in the market in the terms of
CRM functionality. It is the solution against those complex models which are
not only difficult to understand but seems impossible to implement.

Figure : A Self- developed Model of CRM

i) Functional Areas of CRM

It works with the nine strategic elements of CRM , or in other words nine
aspects of CRM performance and functionality. It comprises of the following :-

CP = Customer Prospecting

RC = Retention With Customers

IM = Interactive Management

CE = Customer Experience

PS = Partnership With Suppliers

PZ = Personalization

LP = Loyalty Progress

PLS = Product Level Satisfaction

NPS = New Potential Products & Services

ii) Multiplied by Technical Support

In today’s competitive and dynamic world nothing is untouched by technology.

Technological developments and upgradations playing a vital role in
improving functionality of each and every element in this world. It is the only
thing which not helps one to reach pinnacle but also set standards for others
to show the competitive edge over others.

As I said earlier technology and its applications are universal in nature, So is

the case of CRM too, With new improved networking technology CRM’s
functionalty is becoming more smoother and better day by day. Although in
countries like India, it still needs to be developed and to be introduced at mass
level, but wherever it is being adopted, it is doing well. So In the model, lets
multiply two major elements of technical support of CRM :-

E-CRM = Electronic Customer relationship management

SFA = Sales force automation

These two not only simplify the work at the seller’s side but also provide easy
interactive interface to the customers resulting in higher customer satisfaction
and their effective participation. In other words, despite of proper mgmt. of the
nine elements (mentioned above) of CRM functionality, there should be a
proper utilization of technology in the form of E-CRM and Sales force
automation.

iii) Better results :-If a manufacturer or service provider act as watch- dog
over all the activities in an optimum way and keep eye over the proper
implementation of the model’s element, it would result in higher customer
satisfaction due to the proper approach made by the seller in form of
customer prospecting (CP) , Interactive Management (IM) and the
personalization (PZ) with an easy Industrial customer interface through
technological tools like Electronic customer relationship management (E-CRM)
and sales force automation (SFA).

Also, once there is higher customer satisfaction , it can be encashed in the

form of higher customer retention ratio and higher loyalty of the customer
towards the product, which is important for the benefits of seller because “It is
much better to retain 1 customer than creating 100 new customers.”

In totality we can say there would be longer Customer life cycle and higher
customer lifetime value which improves the achievement of the objectives of
both- the firm and the customer providing higher satisfaction.

Advantages of Model In Nutshell :-

a) Build up customer retention and loyalty.

b) Deliver a single, informed view of the customer.
c) Improved customer acquisition rates.
d) Improved cross-selling and up-selling.
e) Improved the effectiveness of field services.
f) Understand the need of employees and maintain a sound relationship
with them
g) Establish personalized relationship with the customer with a view to
improve customer satisfaction maximize the firm’s profit.
h) Streamline the quote to order process.

Suggestion II :- “SMART CRM is Good Business”

As you consider how to be successful with CRM, use the acronym SMART to
take advantage of what I have learned from studying numbers of literatures and
doing the research projects.

 S Define your Strategy for customer value, including both the value
you deliver to customers and what you expect to receive in return.

 M Use appropriate Metrics to guide your customer-centric journey.

Don’t forget to include the emotional side of relationships in your
measurement process.

 A Ensure proper organization Alignment with the visions and

objectives of your CRM program. People must be motivated to do the
right jobs to serve customers. Are they?
  R If necessary, Redesign business processes to change how work
gets done, before you spend time automating to improve efficiency.
Don’t “pave the cow paths.”

 T Finally, use Technology. Easy-to-use and affordable software

options abound. Just make sure you’re a good “carpenter” before buying
the latest “hammer.”

Putting customers first is good business. If you work at CRM, it can deliver the ROI
and differentiated relationships you’ll need to succeed in today’s competitive
marketplace

Suggestion III :- “Recommendations for Management”

After concluding this research, I have come up with a number of issues I feel
can be beneficial to the company manager interested in receiving knowledge in
this area. These recommendations are listed below:

 Success factor : Managers must understand the importance of customer

relationship in their operations and view CRM as a vital tool to become
successful. The first step is to understand that the CRM framework is
something that involves the whole company’s organization and business, and
not just the marketing and sales function.

 Continues learning processes: Many companies rely on old business

frameworks and claim that they are customer focused and use clichés like
“with the customers best in our mind” as a way to state their position. In
becoming truly customer focused they need to create a process that
enables the organization, as a whole to continuously learn from its customer.

 Customer information: To be able retain a true picture of the

customers need and wants; it is necessary to have an information system
that register all interaction. More over, this system must enable the transfer
of customer information across distribution channels and country borders.
 Customization: The integration of production and logistic functions
into the marketing process is almost a prerequisite for a customer centric
handling of customer interactions and customization in a company.

 Organizational change. Independently of how far a company has got in

there strive towards a customer centric handling of customer relations; it is
necessary to create awareness for organizational change. This is due to that
the company sooner or later will face the need for an reorganization as a
response to the gained customer knowledge and to the new business
opportunities that it enables.

Suggestion IV :- “Recommendations for Further Research”

While conducting this research, some interesting subjects for further

research have turned up. Firstly, it would be possible to make an investigation
based on quantitative data. To do a quantitative research would make it easy to
get a clear picture of what direction the CRM framework is striving towards in
a larger setting. Another data collection method that could be used is
participant observation. To participate in a company’s interaction process
for a certain time period could provide the investigator with an in-depth
understanding of how customer relationships are processes are managed
in practice.

Another topic for further research it would be interesting to study the outcome
of CRM in a customer relationship in terms of satisfaction, trust, value, and
loyalty.

In writing this research, a number of different issues has come up, which I
feel would be interesting to see future research done upon. Hence, I am
presenting a list of suggestions for future researches that we think are suitable
topic for a future thesis.

 To perform a study on the organizations inclination to change due

to a more customer focused approach.
 To perform a study focusing on how the organization structure are
transforming to become more customer centricn
 Limitations Of the Study

Despite of taking care of all the minute details during the study. There are few
limitations I have gone through during the study, which was uncontrollable and
may affect the study knowingly and unknowingly. I have listed all the limitations
which might affect the study:-

 The Population size was very large and seems to uncountable , hence
after studying few major areas and through consultations of few experts it
was assumed to 10000 (an approx. figure).

 While collecting Data the major problem which was found that almost
95% of small retailers were now aware about the term Customer
relationship management. Although many of them knowingly or
unknowingly were using few techniques favoring CRM functionality. It
arose difficulties in data collection.

 While collecting Data, it was found that many of retailers were unable to
answer all the question on their own, either they understand the questions
or they were not sure about their answers.

 Many of the retailers showed an unfavorable reaction toward the

questions as it was considered by them as to share secrets of their
business with me while answering the questions.

 Non availability of the executives for the interview, result in leaving few big
retailers which might have been important for the study.
 References

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 Annexure 1 : Questionnaire
“Analyzing the effectiveness of Customer Relationship Management in
increasing the sales volume with special reference on Organized Retail
Stores in Indore City. “

Dear respondent,

I am conducting a research on the above subject and we would be thankful if

you could fill this questionnaire.

Name:-…………………………………………………………………………………
Occupation:-…………………………………………………………………………..
Contact No:-……………………………………………………………………………
Scales to measure

5. Always True 4.Most True 3.Sometimes True

2.Rarely True 1.Not at all True

S.No Questions 1 2 3 4 5
1 With the CRM practices were you able to attract, and
convert more customer visits into deals during the
seasonal promotions as compared to previous years?
2 With the practice of CRM have you been able to better
use the details of the customer database for promotion
of specific products and services to focused targets?
3 Has the practice of CRM, helped the store in improved
value selling and reduced price sell during seasonal
promotions?
4 With the CRM practices were you able to segment or
class customers by key value criteria?
5 Were you able to communicate the product features,
benefits, discounts, schemes etc to your customers
well in time and achieved the sales target?
6 Once visiting the store does your customer feel an
emotional connection / attachment to the store?
7 Has the customer been spending more, less or prefer
maintain current spending levels?
8 Does the customer plan to buy the product again in
future from the store?
9 Has the customer purchased the product consistently
in the past from the store?
10 Does the customer consider himself as a positive
reference for the store?
11 Do you agree that CRM has enabled to identify
customer trends with CRM practices?
12 Were you able to identify individual customer
deviations, after implanting CRM system?
13 Were you able to distinguish the best and/or most
profitable customers with the database formed with the
CRM system?
14 Has CRM enabled you to identify unique customer
attributes or characteristics?
15 With the CRM system the Business processes are
regularly simplified to enhance customer experience?
16 With the CRM has your retail store created a joint
venture with the customers?
17 Has CRM enabled you to identifies the most profitable
customers for the organization?
18 Is there any enhancement into the management of the
leads after practicing CRM?
19 Does you policy include customer satisfaction goals?
20 Does the company uses customer satisfaction surveys
to understanding customer needs?
 Annexure 2 : Chi-Square Distribution ( Table )

Degrees of Probability, p
Freedom 0.99 0.95 0.05 0.01 0.001
1 0.000 0.004 3.84 6.64 10.83
2 0.020 0.103 5.99 9.21 13.82
3 0.115 0.352 7.82 11.35 16.27
4 0.297 0.711 9.49 13.28 18.47
5 0.554 1.145 11.07 15.09 20.52
6 0.872 1.635 12.59 16.81 22.46
7 1.239 2.167 14.07 18.48 24.32
8 1.646 2.733 15.51 20.09 26.13
9 2.088 3.325 16.92 21.67 27.88
10 2.558 3.940 18.31 23.21 29.59
11 3.05 4.58 19.68 24.73 31.26
12 3.57 5.23 21.03 26.22 32.91
13 4.11 5.89 22.36 27.69 34.53
14 4.66 6.57 23.69 29.14 36.12
15 5.23 7.26 25.00 30.58 37.70
16 5.81 7.96 26.30 32.00 39.25
17 6.41 8.67 27.59 33.41 40.79
18 7.02 9.39 28.87 34.81 42.31
19 7.63 10.12 30.14 36.19 43.82
20 8.26 10.85 31.41 37.57 45.32
21 8.90 11.59 32.67 38.93 46.80
22 9.54 12.34 33.92 40.29 48.27
23 10.20 13.09 35.17 41.64 49.73
24 10.86 13.85 36.42 42.98 51.18
25 11.52 14.61 37.65 44.31 52.62
26 12.20 15.38 38.89 45.64 54.05
27 12.88 16.15 40.11 46.96 55.48
28 13.57 16.93 41.34 48.28 56.89
29 14.26 17.71 42.56 49.59 58.30
30 14.95 18.49 43.77 50.89 59.70