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    Services Marketing: CRM and the Music Industry Essay

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    Introduction Not many industries have seen such a dramatic change and decline in their traditional business model like the music industry has seen it in the last 15 years. The internet hugely damaged CD sales, along with the rise of AMP Players that allow consumers to store entire record collections into a device the size of their pockets. If you look at the industry in 2013, one can clearly see that the traditional business model of record labels is about to vanish and market analysts even predict a further decline.

    Subsequently record labels begin to redevelop their role as a service revived that sells emotions instead of only planning the logistics behind the delivery of physical discs. The labels now try to move their customers from Cad’s to other products. L. CD and Digital Music Sales with forecast (Mulligan, 2012) The answer on how to do this seems to be in customer relationships between labels/artists and their customers and selling their content as an experience through their web outlets and remaining serviceable, hence broadening their range of products from only music to merchandise and concerts.

    They hereby acknowledge the fact that they are selling costly intangible products (excitement, pleasure etc. ), sometimes using tangible products such as T-shirts and concert tickets as a means to deliver and are therefore more on the intangible dominant side of the service spectrum (Wilson et al, 2012). After all, fans buy a band shirt not because it is a T-shirt, but rather because it is from the musicians they admire and because they want to belong to and be identified as a member of a social circle.

    Universal Music Group (from here on referred to as JIMS) is the biggest music company in the world, having a market hare of 32,8% (Christmas, 2013) of all music sold worldwide. They have been investing heavily in digital content delivery and 360 degree deals, which means they sell the entire artist experience from concert tickets to merchandise to music and video streaming. MUG relies increasingly on digital marketing in order to sell their products as well as concerts as one of the few chances left where they can invite customers into a serviceable.

    During my research I gathered information on how MUG could behave even better in those areas. I will try to interest the Marketing Manager of MUG – UK in my Job interview for these concepts, which originate from the following articles published in the “Journal of Services Marketing”: Services Marketing: CRM and the Music Industry By Nymphomaniac relationships Ronald of Marketing Services – Volume 26 – Issue 6) This article investigates how interpersonal experiences with frontline staff affect customers. 2. Service convenience and social serviceable: retail vs. hedonistic setting Ronald of Services Marketing – Volume 26 – Issue 4) This paper shows that managers need to apply different tactics in different service tenting as consumers expectations differ in each setting. 3. ) Frequency of CRM implementation activities: a customer-centric view Ronald of Services Marketing – Volume 26 – Issue 2) This study focuses on CRM activities and how companies can avoid that such schemes drive customers away instead of the desired outcome. 4.

    The role of emotions in online consumer behavior: a comparison of search, experience, and credence services Ronald of Services Marketing – Volume 26 – Issue 7) The paper compare consumers’ online shopping behavior and how their emotions hanged their perception soft the website across three different service types. All 4 deliver new insights on how MUG could relate to customers. Paper 1 is interesting as more attention on frontline staffs behavior at concerts is needed. 2. ), shows how companies need to further understand concert venues as serviceable. 3. Is important as there seems to be room for improvement in CRM implementation in many companies. 4. ) could shed light on how consumers view Mug’s web services. In the end the papers number 2. ) and 3. ) were chosen as they both will have the most immediate effect on business. Building customer relations through CRM and serviceable When most of the music industry went digital, so did the marketing. But as the internet is an overcrowded space where hundreds of mails and headlines fight for the customer’s attention, companies have to find a way to communicate with their customers in a manner that they accept.

    Hence organizations developed Customer Relationship Management, using technology to organize sales, customer service and marketing with direct marketing via e-mail or phone calls being the feature most customers are directly aware of (Kettle, 2008). Unfortunately, somewhere down the line companies seem to have lost track of what expectations consumers have on the frequency and content of CRM efforts. This is where the paper “Frequency of CRM Journal of Services Marketing can help.

    The authors first argue that too much research has gone into the company side of CRM and not the customer side. CRM essentially is an important tool in relationship marketing and therefore they both focus on retaining existing customers and deepen the relationships with them rather than acquiring new ones (Wilson et al, 2012, Palmer 2000). The reason a lot of impasses fail at this is because they only concentrate on their side of the relationship and gain, thus creating an asymmetric relationship (Palmer, 2000).

    While it seems to be clear that CRM is a product of the ongoing technology evolution (Building et al, 2005 as cited by Kim et al, 2012) a lot of firms focus too much on the technology aspect and entirely miss the other two: value creation for both company and customer and CRM as a holistic marketing orientation across the firm. II. CRM Circle (Offenses, 2013) It is therefore no wonder that many CRM activities fail as a consequence. The authors Tate that the reason why 70% of the companies that invest in CRM see declines or no improvements in their revenue is because according to Kale (2004) as cited by Kim et al. 2012) most organizations don’t focus on the customers’ attitudes towards CRM. The paper then points out that those attitudes towards CRM and its frequency are mostly due to privacy concerns and previous experiences. They are right, as other sources suggest these are mostly deriving from insecurities about the numerous different privacy laws around and many black sheep that try to make use of this (Baker, 2008 and Baker/Hosteller, 2013). The only solution to this is to develop trust among customers that the organization will use the personal data carefully.

    Hence Kim et al split costumers into two main groups: Customers that are either favorable or unfavorable of CRM and direct marketing. Based on this they, develop three hypotheses. L. The attitudes towards CRM affect costumers’ opinions on the frequency. They either demand a) more frequent efforts if they are favorable of CRM or b) less frequent efforts if they are unfavorable of CRM II. Depending on which group they are in, customers react as follows to the scenarios low if their perceived optimal timestamp is not achieved. ) Frequency between CRM efforts too short: Customers in favor of CRM efforts are more likely to stay with the company while those unfavorable of CRM efforts are more likely to leave the relationship. B) Frequency between CRM efforts too long: Customers in favor CRM efforts are more likely to stay. Ill. Customers and Companies have different expectations on the frequency of CRM. These hypotheses were then tested with a survey that involved both CRM personnel and customers from two major banks in South Korea. The survey focused on the two main CRM activities that were used by the banks: e-mail and phone calls.

    Participants were asked which of the two they prefer and how often they feel contact is appropriate. Furthermore both CRM personnel and customers alike were asked how they feel about three given intervals of implementation. The results were the following: Ill. Results of the study Furthermore there is no noticeable preference for either phone calls or e-mails within all three groups and favorable customers tend to tolerate too frequent CRM activities more if they perceive the information as valuable but unfavorable customers don’t tolerate excess of CRM, even if they find the information provided valuable.

    Based on the results Kim et al propose that companies identify the customers’ attitudes towards CRM and act accordingly. Also CRM can only yield good results if customers perceive the CRM efforts as valuable to them, which means companies should focus on dual value creation for both the company and consumer. The basic assumptions the study makes were very well developed and are backed up by other literature as well. Many firms seem to damage the relationship with their customers if they don’t keep dual value creation in mind.

    By applying so called “dark side behaviors” for example spamming or even tying customers to the company via questionable legal practices they create asymmetric relationships. (From et al, 2012). There is a need for more personalized marketing as the effectiveness of mass marketing seems to be further decreasing in the age of social media, (Barb, 2011). Also, the importance of understanding CRM properly cannot be understated as even though CRM is a time consuming and costly process that needs constant monitoring, it is very likely that improvements in this field will lead to higher revenue and ensue from a financial point of view.

    The main focus of the study is timing and this is a really innovative point of view. Here the study delivers insights that haven’t been delivered in comparable studies before. A potential shortcoming of the paper though is that Kim et al only tested their hypotheses on a very specific kind of customer group: bank customers are more likely to be in contact with their banks as financial markets are an ever changing business and therefore more personal support is needed. One can assume that due to this, bank customers are in general more favorable of CRM as other consumer groups, where a phone call often would be perceived to be very intruding.

    Also results that were gathered in South Korea might not be fully transferable to other cultures (Schaeffer, 2013). Kim et al. Also only distinguish between two customer groups. In reality further differentiation might be needed to truly offer CRM that aligns with people’s expectations. A flaw of the paper is the case that it only focuses on push marketing techniques and completely neglects pull marketing. The authors don’t look closer at the fact that there are customers who don’t want to be part of active CRM implementation at all.

    The solution of contacting this group within a longer frequency range therefore seems inappropriate. Here companies should also implement pull marketing (Sodden, 2000). The findings on how call centers apply this strategy should be easily applicable to websites and e-mail contact as well. The findings of the authors work are relevant for MUG in many ways. First, MUG needs to collect more data about their customers in order be able to put customer’s in different groups. The results clearly show that miming is the key for success with CRM and the more Mug’s databases are accurate, the more effectively can MUG time the implementation.

    Only this will allow MUG to develop a CRM strategy that then suits each group. As mentioned in the study, there is certain reluctance among consumers to share their data. A way to overcome this for MUG is to remember that CRM only works if dual value and trust is created. They could for example give out songs for fans’ e-mail addresses and postcodes, offer prices if customer’s fill out questionnaires or can set up local fan clubs that they then look after. There always needs to be an incentive.

    The closer the dialogue, the more MUG will understand the customer, the more specific data MUG will receive. The postcodes for example are important in order to deliver further valuable CRM content. There is no use in advertising concert tickets for a show in New York to customers based in London. Having more data like age, gender etc. Will then allow MUG to further target their products at consumers. Furthermore dual value doesn’t necessarily mean that MUG should try to sell every time they make a CRM effort, as this might create the asymmetric relationships marketers should try to avoid.

    A dialogue and the insights gained can be of value for the company as well. Especially in the music business, avid fans can be seen as talent scouts. They often spot trends sooner than the mass market. If MUG has identified avid fans and is in a close dialogue with them, this will give them a huge competitive advantage. If MUG is in doubt of how often to contact customers, the study has shown that in those cases less is more, as both favorable undo unfavorable customer groups are more likely to stay in the relationship when the frequency between efforts is too long.

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