Customer Relationship Management and Business Relationships

The car industry has seen a huge growth, especially from the overseas market, such as Hyundai, as low cost economies and the use of new technologies are rapidly changing the way in which this sector meet customer demands. This assignment looks at MG Rover and the concepts of customer loyalty, Customer relationship marketing and the market in which they operate.

Customer Relationship Management and Business Relationships

Customer relationship management has become an important focus in the marketing of the car industry. Customer acquisition and retention has become top management priorities in this sector. The introduction of e-commerce and the Internet has brought new channels for sales and another means of gathering customer information.

CRM however has always been important as a marketing concept and has emphasised the importance of building a long term relationship with customers, there has been a shift from transactional marketing to relationship marketing which focuses on issues such as customer and brand loyalty, along with the importance of customer lifetime value which is key to marketing planning and strategy. MG Rover realised the importance and value of creating customer satisfaction.

Facing numerous new makes and models, they were no longer unable to recognise or differentiate. Make, quality, functions, price and after-sales services had all become important factors to consider.

MG Rover developed a strategy for enhancing customer service and improving sales force performance, which utilises improved database and communication systems. Large companies such as Rover would receive large amounts of enquiries by phone, mail and e-mail. Much of the internal personnel’s time was taken up sorting these enquiries. By enhancing the companies database the speed at which they acting on enquiries increased which benefited the customer, product, stock and also that marketing is better able to analyse promotional activity and customer response.

The use of one to one marketing and mass customisation are an extension of traditional target marketing and product differentiation and requires a culture that is dedicated to treating each customer as the complete focus of the company. MG Rover had developed a database and an interactive media site, training was given to dealerships on how to interact with each customer as a individual and a system was set up to support mass customisation, this was however not carefully managed and resulted in a breakdown in communication.

Consumers need to rationalise their consumption while manufacturers need emotional promotion to sell their cars, consumers cannot simply stop using the vehicle or simply swap out the product when they do not feel good. A vehicle is a high-end consumer product in which users demand the realisation of brand value as well as nice practical functions, including power, fuel-economic design, wide-range of accessories, personalised design and price.

MG Rover also reviewed their current sourcing strategy and used SRM (Supplier relationship management) to manage suppliers, particularly if they were locked into long-term relationships. MG Rover used five international purchasing offices (IPO’S) including Istanbul, Seoul and Shanghai, before they began SRM they had to try and understand their own needs from suppliers in terms of quality, cost, logistics, design and development and management.

MG Rover realised that they needed to present a positive image of the company even though management problems were beginning to arise, in order to look attractive to the supplier and to become a preferred customer. They needed to build up trust and understanding of different cultures in order to understand the global differences and how other countries operate. People within the organisation however had some internal resistance to the change, which was resolved by clear communications and highlighting the need for this change.