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THE INFLUENCE OF CUSTOMER RELATIONSHIP MANAGEMENT ON THE SALES OF PRODUCTS

CHAPTER ONE

INTRODUCTION

1.1  Background to the Study

Studies have shown that in this ever changing and dynamic business environment driven by globalization, service industry needs to develop a good product for the consumer, making the price affordable as well as interact with the customers using a friendly language (Fozia, Shiamwama and Otiso, 2014). This is pertinent because the higher the customers, the higher the sales and in turn the profitability of the company. This is because the quality of the product expected by the customers from the company is very high and it must be of higher quality. To this end, many service industries/organisation engage in stiff competition with one another with a view to satisfying customers’ needs and expectation. For this reason, companies (both foreign and local) are constantly engage in products quality, brand promotion and rendering good customer service in order make their customers remember them and place their product in a rightful position amidst a competitive market. The aforementioned stiff competition among various companies notwithstanding have cost many companies huge amount of money for advertisement and promotion which is detrimental to the profit level of the company.  

It is in this regard that many profit oriented companies are looking for a new dimension of achieving brand loyalty for its product from the potential customers in other to increase their sales patronage. To this end, Customer Relationship Management (CRM) has been identified as an effective strategy to maintain both the potentials and new customers.

Customer Relationship Management (CRM) as a concept holds that, for a company to maximize profit, it must increase its customer’s level. To do this, company must develop a relationship with each valued customers and ensure that they have acquired details information about them (Kotler, 2003). Customer Relationship Management (CRM) also presupposes customers’ needs must be identified, satisfied, and influences their behavior with the hope of reining them through effective communication (George, Emmanuel, Christiana, & Rachel, 2011). In the word of Kishore, (2009), CRM has two specific and autonomous important strategies. The first strategy is for a firm to be self-determine the cost and build a long term customer relationship, the second is  to maintain  this relationship using the following tactics; collection and analysis of accurate data, ensure recent and up to date marketing campaign as well as well as developing a problem solving ability for the customers.

Julita, (2011) opines that there is a thin line between a consumer and a customer, these words were used interchangeable in a business field and is adding to the confusion. When you are talking of a customer, this refer to someone who purchase goods and services from someone else, while a consumer busy goods and services for personal use.

Economics refers to a consumer as either a single person or an entire organization that uses a certain type of service. For instance, someone who is sells a coffee and buys a coffee from a coffee maker; this invariably means that the restaurant buys the said equipment, for the benefit of its patrons or guests. In this situation, the restaurant represents a customer and not the actual consumer. Furthermore, in a resemblance situation, where you directly go to the coffee maker and buy coffee for your family’s use, then you are the real consumer. In simple sentence, any product bought other than for personal use is refers to as a customer. The significance of a customer cannot be underestimated as he/she represents in the office, on phone as well as mail or e-mail. In another dimension, Welsh, (2008) sees customer as a person who is capable of bringing the want of an organisation to their want, and it therefore becomes the primary responsibility of the organisation to handle the customer profitably and the achievement of the organisation and customers.  Service provider or organizations that would meet the need of the targeted customers’ audience through various products and service must stay ahead of the competitive companies and forced to turn their attention to the customers  and value them as  individual customer and the development of personalized relationships. Customers must have knowledge of the products in the market and the company at the same time should adapt their products to the needs and requirement of the customers (Vogt, 2008).

               From the foregoing, the overall essence of customer relationship management is contingent upon how effectively a company can manage its potential customers.  It is easier for newly established industries with few employees and few customers to satisfy the needs of the customers and satisfy them, the moment your customers increases, you must add links to the customers’ service chain (Khwala, 2016).  This is where customer relationship management comes into play. The perception and feeling customers have towards a brand goes a long way in determining the success or failure of the brand. For this reason businesses strive to build good brand equity for their brands using various means in which good customer service is included. It doesn’t just end in good customer service; businesses have taken steps in harnessing the ‘goodness’ of customer relationship management.

          Consequent upon the above, many service industries were aggressively implementing the CRM to increase their sales; food industry is not an exception. Food is seen as the third most essential element for life apart from air and water. In fact, in Abraham Maslow’s hierarchy of human needs, food occupies the number basic need of life for human survival. Food in this regard represent an essential factor in living a healthy life, providing pleasure as well as reducing stress for human survival (source 30). Because of the immeasurable benefits attached to food consumption, production of food has become safer, delicious, varied, convenient and readily available for consumption at all times. To this end, the report by La Trobe University (2009) shows that the food sector is one of the biggest sectors as compared to traditional industries. Thus, cultivation, processing, and production of food must be adequately managed by the food industry (Ejaz, Ahmed, & Ahmad, 2013).

However, despite the increasing demand for food restaurant, customers are becoming more educated and conscious, therefore, they compare the nutrition and quality to the price of the menu and the services rendered to them. In this case, small restaurant with limited resources would find it difficult to compete vigorously with large enterprise in terms of advertisement and public relation tecniques in order to increase customers’ patronage. Consequent upon the above, the only way for a small restaurant to get sustainable growth is to adopt different marketing strategy through the effective use of customer relationship management. Based on this understanding, an explanation on how the use of good customer service has been translated to sales for businesses will be given using KFC outlets in Ikeja City Mall and the Palms Lekki both in Lagos as reference point.

1.2 Statement of the Problem

      With the increasing demand and patronage of Quick Service Restaurants, the role and value of customer relationship management cannot be over-emphasized. Neglect of customer relationship management has led to reduced traffic to the stores in recent times. By implication, the sales and profitability of the company reduces which might undermine the sustainability of the company if not collapsed out rightly.

Against this backdrop, the thrust of this research is to determine if KFC as food industry has adopted CMR, if yes, what influence doe it has on the sales of KFC products; hence the study.

1.3   Research Objectives

The specific objectives are:

·         To establish the influence of customer relationship management on the sales of KFC products in shopping malls in Lagos.

·         To identify the ways in which customer relationship management influences the sales of KFC products in shopping malls in Lagos.

·         To establish the level of influence of customer relationship management on sales of KFC products in comparison with other factors.

1.4 Research Questions

      The following research questions will be used in determining the influence customer relationship management has on the sales of KFC products in Lagos shopping malls. 

·         How does customer relationship management influence the sales of KFC products in Lagos shopping malls?

·         What is the influence of effective customer relationship management practice on the sales of KFC products in Lagos shopping malls?

·         What level of influence does customer relationship management have on sales of KFC products in comparison with other factors?

1.5   Significance of the Study

       This study will examine the role of customer relationship management on the sales of KFC products. The various significance of this study will be divided into three categories; educational, media enterprise/practitioners and scholarship.

Ø  To students: The proposed study will serve as a reference or guide to students in understanding ‘Customer Relationship Management’ and how it translates to sales.

Ø  To the management of KFC: The proposed study will help them understand the role good customer relationship management plays in the sales of their products.

Ø  To competitors: It will educate them on the importance of CRM in the management of their businesses.

Ø  To scholarship: The proposed study will benefit and serve as guide to the future. The study also opens up opportunity for further research in this area of study.

This study will serve as an eye-opener to the influence that good customer relationship management has on sales on businesses or organizations and various ways of measuring and managing relationships with customer or clients.

1.6            Scope of the Study                  This study will focus on understanding the concept of Customer Relationship management and its influence on sales of products using KFC product as the case study. This study will ascertain how CRM positively or negatively impacts sales of products in KFC stores.  

1.7       Limitations of the Study

There are some anticipated hiccups which may serve as limitation to the credibility of this reserch.  Some of the anticipated limitations may include time and fund availability, limited sample, newness of the concept of CRM, as well as financial constraints in carrying out the research. These above challenges notwithstanding, the researcher attempted to elicit honest responses from the focus group discussion participants and findings would be reported objectively.

1.8          Operational Definition of Terms In other to ensure clarity as well as avoiding ambiguity, attempt shall be made to define the following terms the way it is used in this study.  ·         Influence:  This simply refers to an extent to which someone’s decision and behavior can be changed through persuasion and lobbying. ·         Customer Relationship Management: In the opinion of the researcher, CRM means responding to the needs of customers timely, make the satisfaction of the customer your priority, and interact with them in a polite manner. ·         Sales: In simple term, a sale is what transpires between a producer and a customer in exchange for money.

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