mae fah luang university school of management mba business plan thesis format guide 2013-2014

Business Plan Thesis Guide 2013-2014DR. SANGCHAN KANTABUTRA AND DR. C .C . TANSCHOOL OF MANAGEMENTMAE FAH LUANG UNIVERSITY2013-2014

2

Systems Theory Approach to Master Degree Thesis Structure, MBAEM, School of Management, Mae Fah Luang University (CC Tan, 2013-2014): Suggests that individuals cannot be understood in isolation from one another, but rather as a part of their family. The advantage of systems theory is its potential to provide a trans-disciplinary framework for a simultaneously

critical and normative explanation to the relationship between our perceptions and conceptions of the worlds they purport to represent.

Source: Adapted and Extended from Checkland, P. (1981), Systems Thinking, Systems Practice, New York: Wiley, cf. CC Tan and Arsirapongpisit (2002)

Real World Practices

Observation and Feedback

Examine Mental Models(Research Theoretical Models)

Strategy, Structure, and Decision Rule(Strategy and Business Models)

Decisions and Corrective Actions(Business Plan)

Single-Loop Learning (Adaptive)

Double-Loop Learning (Generative)

3Hedonic ValuesUtilitarian Values

Che

ap P

rice

Fre

sh C

offe

e(P

rodu

ct)

Con

veni

ence

(Pla

ce)

Foo

d V

arie

ty

(Inn

ovat

ion)

Foo

d H

ygie

ne(P

rodu

ct)

Ser

vice

Atti

tude

(Peo

ple)

Sho

p D

esig

n (P

lace

)

Leve

l of C

ompe

titio

n

The

cur

rent

ava

ilabi

lity

in th

e m

arke

t

Our new venture

Substitutes

Supplier Power

Customer Power(Target Customers)

Barriers to Entry Substitutes Power

Intensity of Competitive Rivalry

Value Curves (Customer Value Proposition):

Med

iatin

g F

acto

rs:

V

alue

cre

atio

n ac

tiviti

es i.

e.

prod

uctio

n, o

pera

tions

, pa

rtne

rshi

ps, C

ost S

truc

ture

Med

iatin

g F

acto

rs:

V

alue

-Del

iver

ing

Act

iviti

es, i

.e. C

RM

and

C

hann

els

of D

istr

ibut

ion,

Rev

enue

Str

eam

s

Sustainable Innovative Business Model Framework (CC Tan 2013-2014) – Unifying Blue Ocean Strategies and Michael Porter’s Five Forces Model – Bringing External and Internal Analysis into a Systems Approach Platform as Innovation-driven Approach to Business Planning.

Dr. C.C. Tan (2013-2014)

4

Overall Thesis Structure:

AbstractIntroductionLiterature ReviewResearch Design and MethodologyResearch Data AnalysisConclusion:

Business Plan Introduction External Analysis Internal Analysis Financial Analysis Overall Business Model Recommendation and Conclusion

References:

Note: These slides do not illustrate the details on the internal analysis and financial analysis. However, the necessary knowledge that aligned to the business model framework i.e. for the internal analysis are presented for the students to adapt and apply.

5

Establishing a Coffee Shop Chain in China

These business plan presentation slides adapt the research findings of Dr. C.C. Tan for sustainable and innovative organizational learning-enabled business model framework and the relating literature review studies (C.C. Tanc), while stimulating the new venture context using the MBA business plan format of Simon Fraser University, Canada. Cf: Xu, C. (2006), Establishing a Coffee Shop Chain in China, Master of Business Administration, Faculty of Business Administration, Simon Fraser University.

Plus Literature Review concepts that aligned to the business model framework of C.C. Tan (2013a,b) and colleagues for topics on brand equity, brand awareness, CRM, and innovative vertical downstream integration, for eco-resort start-up, cup cakes, geo-informatics knowledge products services.

6

Table of Contents

1. INTRODUCTION 1.1 An Overview of the Coffee Industry in China 1.1.1 The Booming Chinese Coffee Market 1.1.2 Current Market Segments of Coffee Consumption 1.1.3 Current Status of Coffee Consumption 1.1.4 An Overview of Target City – Shanghai 1.2 Overview of the Proposed Company 1.2.1 Vision and Mission 1.2.2 Company’s Strategy 1.2.3 Product Mix Strategy

7

This report is a business plan for establishing a coffee shop chain in Shanghai. Currently, most coffee houses in China follow a differentiation strategy, which means they spend an

abundance on store décor while creating an unique environment to build additional value for high-end customers.

This strategy turns a typical coffee shop experience into a luxurious one because of its price.

8

However, after almost twenty years of market development, the coffee consumption market in China is getting much more established and many customers want to drink coffee regularly.

There is a big market demand for fresh coffee to be a daily drink with reasonable prices. This proposal is devoted to developing a coffee shop chain utilizing a low cost strategy to offer affordable

fresh coffee to people everyday. It will also evaluate the viability of this new venture and analyze how the business will be created and

strategically developed. Due to start-up funding constraints, this report will focus on the short-term strategies for successfully

establishing a flagship store with the consideration of expanding an additional ten shops within five years. The investment will come from three project co-founders, some domestic angel investors (Note: an angle

investor is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity), and other financial lending institutions in China.

9

This business planning format is following the basic Design School Model for strategy development and management, similar to Andrews’ concept of corporate strategy (Andrews, 1971). Design School Model is recommended by Sandberg (1992) (one of the ten strategic management schools of thought posited by Mintzberg et al. 1998), which mainly considers the process of matching internal resources to external opportunities. This process-centric facilitation is useful as the input to sustainable business model (CC Tan, 2013-14) is resources and the output is targeted customers that reflect the external opportunities. As such, the end result is that:

business strategies are analytically and creatively conceptualized, which are fundamentally and factually supported by the data from applied business research effort relating to certain key success factor areas,

business model is innovatively designed and systematically evaluated for systems-level alignment and synergy, and

aligned business plan and the embedded action plans then fill in the details of the business model and thus competitively enact the strategies conceived.

Schendel and Hofer (1979, p. 11) describe strategic management as “a process that deals with the entrepreneurial work of organizations, with organizational renewal and growth, and more particularly, with developing and utilizing the strategy which is to guide the organization’s operations.”

The Basic Design School Model for Business Planning is given in the Figure below:

10

Creation of Strategy

Evaluation and Choice of Strategy

Implementation of Strategy through Sustainable Innovative

Business Model

External Analysis Internal Analysis

Threats and Opportunities in Environments

Strengths and Weaknesses of Organization

Key Success Factors Distinctive Competences

Social Responsibility Managerial Values

Research-cum-Business Enabled Business Plan, Adapted and Modified from Mintzberg et al. (1998), p. 26. and CC Tan (2013,14)

Business-Market Research

Structured Knowledge and Insight on KSFs and/or Distinctive

Competences/Customer Values/Business Model Innovation

Budgeting

11

Both social responsibility and managerial values are considered important factors of study in the social behavioral research dimension of entrepreneurship and successful new venture (Deakins and Freed, 2006).

12

1.1 An Overview of the Coffee Industry in China:

The Chinese coffee market started in the 1990s - 3-in-1 instant coffee mixes (coffee, milk powder, and sugar) in the coffee consumption market. [normal to premium]

In the late 1990s, a small number of cafes were established in grand hotels. [normal to premium] After 2000, with improvement of market acceptability, China’s coffee industry went through a rapid expansion

period.

13

An Overview of the Coffee Industry in China:

What follows we will outline China’s coffee industry development and current market segment, as well as the coffee consumption status.

The target city, Shanghai, will also be introduced. Also the world trend on coffee-tea consumption.

19

1.1.1. The Booming Chinese Coffee Market After entering the 21st century with the economic boom in China, the quality of people’s lives has continuously

increased and their daily beverages have become much more diverse. Coffee, combing vogue and Western lifestyle, is gaining popularity in China’s young generation, and presents

an enormous potential in the coffee consumption market. From 1999 to 2005, coffee consumption in China tripled, with an 18.2 percent annual increase, well above the

2 percent growth in the world (He, 2008).

20

1.1.1. The Booming Chinese Coffee Market Additionally, China has seen double-digit growth in coffee sales within the past couple of years. In 2006, sales

hit $2.4 billion and are predicted to climb to $3.6 billion by 2011 according to market research firm, Euromonitor International.

International Coffee Organization (ICO) also believes that China has 200 to 250 million potential customers that will play a critical role in the global coffee consumption market (Chen, 2008).

21

1.1.2 Current Market Segments of Coffee Consumption Currently, there are three large customer groups for coffee in China, including local urban citizens, returnees,

and foreigners (Lee, 2004). Local urban citizens: Coffee appeals to the main consumer group in China including the young,

fashionable, open-minded and well-educated local urban citizens. Although they grew up in China, they are relatively more exposed to Western influences and tend to look up to Western lifestyles. They see the consumption of coffee as a trend rather than a daily drink.

22


and foreigners (Lee, 2004). Returnees: Over the last five years, there are up to 320,000 returnees in China, and a large

proportion of returnees are also coffee consumers. Specifically, one quarter of them settle down in Shanghai (Lu, 2009). A majority of those returnees have lived in Western countries for many years and have adopted the coffee culture, visiting cafes and drinking coffee has already become part of their daily lives. Thus, upon their return to China, it is very likely that this lifestyle will continue.

23


and foreigners (Lee, 2004). Foreigners: China’s high growth economy and improved investment environment has attracted

substantial foreigners to go abroad for education, work, and site-seeing. Shanghai’s official statistics illustrates that in 2008, the number of foreign permanent residents living in Shanghai is 152,104 (excluding some 400, 000 Taiwanese) and this figure is expected to increase each year (Shanghai Statistics Yearbook 2008, 2009).

24

1.1.3 Current Status of Coffee Consumption There are current two kinds of strategies that exist in China’s coffee consumption market.

Fresh coffee is only available from expensive coffee houses that utilize the differentiation approach, because the low cost strategy focuses on using instant coffee, one that does not comprise much quality.

In this tea-drinking country, individuals are strongly attracted by coffee in terms of its image and quality. Therefore, there is a relatively unoccupied competitive niche for coffee using low cost strategy with drip coffee.

25

Olga Andrianova, Taisiya Yeletskikh, (2012) "Societal marketing: integration of European experiences into business practices in Belarus", International Journal of Emerging Markets, 7(2), pp.107 – 131.

26

1.1.3 Current Status of Coffee Consumption Price:

High retail prices in coffee houses – In China, coffee houses with expensive prices and luxurious environment bear little resemblance to the traditional coffee houses in Western counties. For example, in China, Starbucks offers coffee at 25 to 35 RMB per cup, and some local coffee houses offer coffee from 35 to 55 RMB per cup.

However, in Canada, most cafes offer fresh coffee at 1.4 to 4 Canadian dollars per cup, which roughly equal to 9 to 24 RMB per cup. Due to the expensive prices in China, consuming coffee is regarded as a luxurious experience for the middle class and students, one that cannot occur on a daily basis.

Product: Instant coffee is widely viewed as an “afternoon-

workplace-keep-everybody-awake” drink. In terms of market composition, instant coffee dominates the Chinese coffee market.

Although the drink comes with poor quality and cannot meet people’s increasing requirement for the taste of coffee, it is still popular among white-collar workers due to its inexpensive price, convenient preparation, and easy availability.

ProductPrice

Promotion

Place

27

1.1.3 Current Status of Coffee Consumption Place and Promotion– Limited access to high quality coffee:

Instant coffee is almost the only choice available for the majority of customers since many food chains and local stores only carry instant and canned coffee drinks.

In China’s coffee market, although most coffee houses employ a differentiation strategy, only some of them with high reputations can really offer high quality coffee to customers.

Several local coffee houses will spend huge sums of money in advertisement and luxurious items to label themselves as offering high-quality coffee and food, which in fact, is of poor quality with unreasonable prices, deceiving their customers.

Therefore, in China’s coffee market, high quality coffee is limited, and can be found only in selected coffee stores, expensive foodservice establishments, and hotels.

ProductPrice

Promotion

Place

28

Product Price

Promotion

Place

1.1.3 Current Status of Coffee Consumption Competitors, Competition and Company – Advantages of Coffee

in the Land of Tea and Soft Drinks. Coffee is supposed to be intrinsically competitive

compared to tea and soft drinks in terms of its price and image.

Unfortunately, both domestic and foreign retailers have set unreasonably high coffee prices in China.

Tea is of equivalence with water in this nation, yet coffee, a symbol of fashionable Western culture, strongly appeals to Chinese customers.

Therefore, there are a small number of tea companies to rival against coffee companies, provided that coffee companies offer decent drinks at a decent price.

Competitors (including Substitutes)CustomersCompany

29

1.1.4 An Overview of Target City – Shanghai [for others: Mae Fah Luang University, and Chiangrai Province]

The prospective company will open its coffee shop chain in Shanghai.

Shanghai, located in southeast China, is the nation’s commercial and financial center with the highest regional GDP per capital in the country.

It owns more than fifty universities and hundreds of leading research institutions.

As a world-class cosmopolitans, there are roughly 35,000 foreign-invested enterprises, 152,000 foreigners and 400,000 Taiwanese residing in Shanghai.

Over 4 million people from overseas enter Shanghai every year, and over 2,000 international conferences and exhibitions are held in Shanghai every year (Shanghai Statstics, 2009).

31

1.1.4 An Overview of Target City – Shanghai [for others: Mae Fah Luang University, and Chiangrai Province]

Influenced by the geographic location and historical culture, Shanghai residents have stronger initiatives to accept Western culture and the fancy Western lifestyle than other cities’ residents do.

In a survey, Shanghai people have highest acceptance of coffee in China (Hao, 2009).

White-collar workers and college students in Shanghai like to drink coffee, and middle-agers and youngers have become the main coffee consumer group.

One study has estimated that from 3005 to 2020, the coffee industry will go through a rapid development and expansion period.

Coffee companies will be doubled from 1,000 to 2,000, expanding to central business districts, industry districts, office buildings, schools and communities.

As estimated, the consumption of coffee per person will be 100 cups annually from 2020 onwards (Hao, 2009).

32

1.2 An Overview of the Proposed Company 1.2.1 Vision and Mission

The proposed company’s vision is to provide affordable fresh coffee to people everyday.

The company’s major target customers are the young well-educated professionals, returnees, and foreigners.

The coffee shops will be of convenience to consumers and be able to refresh an individual’s day by a strong and aromatic cup of coffee.

The company’s coffee shop chain will build a reputation for good quality coffee with reasonable prices. To fulfil this, the company will use fresh and high-quality raw material, keeping strict food hygiene, and cultivating employees while building on customer loyalty.

The company’s mission is to become a leading low cost strategy coffee shop chain in China owning more than one hundred outlets, known for its fresh and convenient food and drink products.

33Hedonic ValuesUtilitarian Values

Che

ap P

rice

Fre

sh C

offe

e(P

rodu

ct)

Con

veni

ence

(Pla

ce)

Foo

d V

arie

ty

(Inn

ovat

ion)

Foo

d H

ygie

ne(P

rodu

ct)

Ser

vice

Atti

tude

(Peo

ple)

Sho

p D

esig

n (P

lace

)

Leve

l of C

ompe

titio

n

The proposed company’s vision is to provide affordable fresh coffee to people everyday.

The company’s mission is to become a leading low cost strategy coffee shop chain in China owning more than one hundred outlets, known for its fresh and convenient food and drink products.

35

MIE TEABUCKS

36

1.2 An Overview of the Proposed Company

1.2.1 Company’s Strategy

The company intends to offer low priced products using a low cost strategy while focusing on customer loyalty.

As mentioned above, the coffee house industry is a high-end industry in China.

Most of the coffee shops employ a differentiation strategy and the average price for a cup of coffee is more than 30 RMB. The prospective coffee shop will control the price range for major coffee products between 10 RMB to 15 RMB, which equates to prices of fresh coffee sold in Canada by Tim Horton’s, a famous coffee shop chain in North America.

Hedonic ValuesUtilitarian Values

Che

ap P

rice

Fre

sh C

offe

e(P

rodu

ct)

Con

veni

ence

(Pla

ce)

Foo

d V

arie

ty

(Inn

ovat

ion)

Foo

d H

ygie

ne(P

rodu

ct)

Ser

vice

Atti

tude

(Peo

ple)

Sho

p D

esig

n (P

lace

)

Leve

l of C

ompe

titio

n

To focus on customer loyalty

The

cur

rent

ava

ilabi

lity

in th

e m

arke

t

Our new venture

39

1.2 An Overview of the Proposed Company

1.2.1 Company’s Strategy

To achieve this goal, the company will focus on offering good quality coffee with competitive prices to attract and maintain a high volume of customers that consume coffee everyday.

Since the store will only be 70 square meters with the capacity of 30 seats, it will also be able to save expenditure on luxurious store decorations in contrast to larger coffee shops adopting a differentiation strategy.

Additionally, the company will adopt a fast expansion strategy to capture a large portion of market share in the next five years.


Che

ap P

rice

Fre

sh C

offe

e(P

rodu

ct)

Con

veni

ence

(Pla

ce)

Foo

d V

arie

ty

(Inn

ovat

ion)

Foo

d H

ygie

ne(P

rodu

ct)

Ser

vice

Atti

tude

(Peo

ple)

Sho

p D

esig

n (P

lace

)

Leve

l of C

ompe

titio

n

To focus on customer loyalty

The

cur

rent

ava

ilabi

lity

in th

e m

arke

t

Our new venture

40

Leminen, S. and Westerlund, M. (2012), “Categorizing the Growth Strategies of Small Firms,” Technology Innovation Management Review, pp. 5-9.

41

Leminen, S. and Westerlund, M. (2012), “Categorizing the Growth Strategies of Small Firms,” Technology Innovation Management Review, pp. 5-9.

Innovation-oriented strategy matures in a counterclockwise cycle, starting from exploration and shifting towards exploitation as the offering or business matures.

However, the firm can skip phases or opt for any specific cluster at any time regardless of the cycle.

Nonetheless, companies need to start the cycle again to avoid the survival trap.

42

Table of Contents for 2. External Analysis:

2 External Analysis2.1 Unifying Blue Ocean Strategies and Michael Porter’s Five Forces Model2.2 Barriers to Entry (Weak to Medium)2.3 Supplier Power (Weak)2.4 Customer Power (Weak)2.5 Substitutes Power (Medium to Strong)2.6 Intensity of Competitive Rivalry (Medium)2.7 Overall Assessment and Key Success Factors2.8 Competitive Analysis based on Key Success Factors: 2.8.1 Opportunities 2.8.2. Threats2.9 Strategy Proposals 2.9.1 Vision and Mission 2.9.2 Strategic Goals 2.9.3 Product Market Focus 2.9.4 Value Proposition 2.9.5 Core Activities

3 Internal Analysis ----

47

2. External Analysis

Note that in our business model concept, “blue ocean strategies” and “the red ocean strategies” are fundamentally no difference.

In market economies, businesses must compete for survival and prosperity by adopting proper strategies consistent with the market forces. They succeed if their strategies addresses well to customer needs, creating competitive advantages.

External analysis, as critical step to evaluate business strategies, comprehensively analyzes the industry’s environment. It has two significant implications. The first is to assess industry attractiveness and the second is to determine industry economics, drivers of profitability and the key success factors (KSFs) (Crossan, Fry and Killing, 2004).

This chapter will employ Porter’s Five Forces Model (Porter, 1979) to analyze the environment of the coffee house industry while identifying the KSFs. Subsequently, a competitive analysis to address the business opportunities and threats will follow. The proposed strategy for the prospective coffee shop will then be finalized.

48


2.1 Unifying Blue Ocean Strategies and Michael Porter’s Five Forces Model Michael Porter’s Five Forces model is one of the earliest models used to examine industry economics and

attractiveness. It provides a framework of five forces to determine industry profitability. These five forces include:

Barriers to Entry Supplier Power Customer Power Substitute Power Intensity of Competitive Rivalry

The relationship among these forces is illustrated in Figure below:

49

Sustainable Innovative Business Model Framework (CC Tan, 2013-2014) – Unifying Blue Ocean Strategies and Michael Porter’s Five Forces Model

Dr. C.C. Tan (2013-2014)


Che

ap P

rice

Fre

sh C

offe

e(P

rodu

ct)

Con

veni

ence

(Pla

ce)

Foo

d V

arie

ty

(Inn

ovat

ion)

Foo

d H

ygie

ne(P

rodu

ct)

Ser

vice

Atti

tude

(Peo

ple)

Sho

p D

esig

n (P

lace

)

Leve

l of C

ompe

titio

n

The

cur

rent

ava

ilabi

lity

in th

e m

arke

t

Our new venture

Substitutes

Supplier Power



Intensity of Competitive Rivalry


Med

iatin

g F

acto

rs:

V

alue

cre

atio

n ac

tiviti

es i.

e.

prod

uctio

n, o

pera

tions

, pa

rtne

rshi

ps, C

ost S

truc

ture

Med

iatin

g F

acto

rs:

V

alue

-Del

iver

ing

Act

iviti

es, i

.e. C

RM

and

C

hann

els

of D

istr

ibut

ion,

Rev

enue

Str

eam

s

50

2. External Analysis In the following sections, these five factors will be analyzed respectively to identify the KSFs in the

industry.

2.2 Barriers to Entry (Weak to Medium): Barriers to entry determine the ease with which a new company can enter the market. The possibility of

new companies entering the industry impacts competition. High barriers to entry provide incumbents with advantage to deter new firms from entering the

market. Low carriers to entry bring new firms opportunities to enter the industry and compete and

capture market share.

51

Barriers to Entry

Economies of Scale

Customer Switching CostCapital Requirement

Access to Distribution Channels

Product differentiation and brand identification

Competitor’s Retaliation

Figure: Structuring the Analysis of “the Barriers to Entry” (Value-Curve Competition) based on Sustainable Innovative Business Model Framework (CC Tan 2013-2014)

Val

ue-C

reat

ion

Act

iviti

es S

ide:

Val

ue-D

eliv

erin

g A

ctiv

ities

Sid

e:

52

2. External Analysis 2.2 Barriers to Entry (Weak to Medium): 2.2.1 Economies of Scale Economies of scale are a potentially important component to cost advantage. Firms that produce at larger volumes tend to enjoy lower costs per unit because they can spread fixed

costs over more units, employ efficient technology, or negotiate better terms from suppliers. However, the magnitude of this cost advantage varies across industry.

53

2. External Analysis 2.2 Barriers to Entry (Weak to Medium):

2.2.1 Economies of Scale In the coffee house industry, economies of scale are moderate. At the store level, the fixed costs that drive scale economy advantages include equipment and real estate

cost. There are also advantages in purchasing ingredients. At the corporate level (e.g., the advantage of a chain of multiple stores versus a single independent store),

economies of scale arise from purchasing (bulk buying of materials through long-term contracts and obtaining lower interest rates on financing), increased managerial specialization, financial (obtaining lower-interest charges when borrowing from banks and having access to a greater range of financial instruments), and advertising.

54


2.2.1 Economies of Scale Since local coffee houses are relatively small, independent and decentralized, it is hard for them to reach

such efficient economies of scale. However, most international coffee shop chains, such as Starbucks and Espresso Americano, can take

the advantage of economies of scale by fast expansion in some major cities such as Shanghai, Beijing, and Shenzhen in China. Thus, in these major cities, the barriers is high for new entrants.

In this respect, economies of scale are a KSF for coffee shop chain in Shanghai.

Shenzhen

55

Shenzhen:

56

Beijing:

57

Shanghai:

58

Shanghai 2020:

59

Shanghai 2020:

61

KSFs Strategies

Balanced Scorecard Business Model Business Plan

Budgeting Start New Venture

62


2.2.2 Customer Switching Cost Switching costs are fixed costs that buyers face when change suppliers. There are few (if any) switching costs for customers to experience different coffee shops. With this low barrier, it is a great opportunity for new entrants to gain new customers while earning a

competitive advantage, if they do succeed in getting the customers to switch. Switching Cost Actions:

A company could try to establish some switching costs, such as when a customer can get every 10th cup for free utilizing a store stamp card.

Another example is introducing a reloadable cash card that can be used by customers for purchases at a company’s system outlets.

63


2.2.3 Capital Requirements Capital requirement to start up a coffee shop includes the investment in coffee making equipment as well

as working capital to finance rent, labor, and food ingredient expenses before the business generates enough revenue to cover on-going expenses.

In Shanghai, this start-up capital requirement varies depending on the locations, sizes, and levels of services with the range between 500,000 RMB to over 3,000,000 RMB.

With such a wide range, new entrants will have more flexibility in customizing their businesses according to their budget.

The barrier of capital requirement in the coffee house industry is low.

66


2.2.4 Access to Distribution Channels The new entrant must secure distribution of

its products and services. Since coffee shops sell products directly to

their customers on site, the location is crucial in determining consumer traffic.

The premium store location can use an effective distribution channel to make the products readily available.

A high barrier exists to new entrants because some incumbents have already pre-empted the most favorable geographic locations, and posses relatively more experience in operational management and promotion.

Based on the above analysis, store location is a KSF for coffee shops.

67


2.2.5 Product Differentiation and Brand Differentiation Most of the coffee houses in China offer coffee to

customers as a fashion or as a Western experience. They adopt a differentiation strategy and are continuously enhancing their identification.

For example: Starbucks, the most famous international coffee shop

chain employing a differentiation strategy in China, works diligently to create strong brand recognition.

External reputation studies consistently place Starbucks at or near the top of the most trusted high-differentiated brands in China.

In China, having an iconic brand name directly translates into market share.

When Starbucks first entered the Chinese market in the late 1990s, Chinese customers had not developed enough coffee knowledge and did not have the ability to appreciate the taste of fresh coffee.

Until this day, they still believe Starbucks charges expensive prices solely because they offer the highest quality coffee in the world.

Additional revenue stream of Starbucks

68

Source: Timo Rintamäki, Hannu Kuusela, Lasse Mitronen, (2007) "Identifying competitive customer value propositions in retailing", Managing Service Quality, Vol. 17 Iss: 6, pp.621 - 634

The work suggests a framework for identifying competitive customer value propositions (CVPs) where four hierarchical key dimensions of customer value – economic, functional, emotional, and symbolic – are first identified. In the second stage, a CVP is developed on the basis of these value dimensions. In the third stage, the CVP is evaluated for competitive advantage. It is proposed that economic and also functional CVPs are more likely to represent points of parity, whereas emotional and social CVPs represent points of difference for retail companies seeking differentiation from their competition and gaining of competitive advantage.

69

Source:The original Innovation Radar too is based on Mohanbir Sawhney, Robert C., Wolcott and Inigo Arronix – Jiyao Chen & Mohanbir Sawhney, Sloanreview.mit.edu and Hbr.org & Kellogg School of Management, April 1, 2006 & 2010. According to the thinking behind the Innovation

Radar, innovation is defined as an initiative in any dimension(s) of the business system to create substantial new value for customers and the firm. This innovation definition emphasizes three points:

Originality (an initiative to create new value)

A Holistic view (An initiative in any dimension(s) of the business system

Customer outcomes (the value generated by the initiative for customers and the firm).

The Innovation Radar creates a visually compelling profile of the firm’s current innovation strategy through measuring all twelve vectors.

Helps to create better alignment on innovation strategy across functional areas.

Retrieved 17 September, 2013, from http://www.innovationmanagement.se/2009/10/12/how-to-increase-your-roi-by-measuring-and-managing-your-innovation/

70


2.2.5 Product Differentiation and Brand Differentiation

Although there is intensive competition among the coffee shops employing the differentiation strategy and a high barrier of brand identification, there is a great potential for a firm to succeed in employing a low cost strategy, because the current barrier of brand identification is low in terms of weak competition.

A low priced coffee house with a low cost strategy can take this advantage to develop its unique brand name and leverage it to capture a substantial amount of market share while generating high revenues.

Based on the above analysis, the barrier of brand identification in the differentiated coffee market is high yet, it is low in the low cost strategy segment. Brand identification is a KSF and presents itself as being the competitive advantage for coffee houses.

71


2.2.6 Competitor’s Retaliation Currently, there are more than 1,000 coffee houses

in Shanghai. Except for some international coffee shop chains,

most of the local coffee houses are small, independent, decentralized, and cannot reach certain economies of scale.

It is hard for incumbents to unit together and retaliate against new entrants.

On the other hand, China’s coffee consumption is relatively new with only 10 to 15 years of development.

To prosper in this market, all parties within the industry should be aware of the importance and benefits of reciprocal promotional activities, collective efforts to create coffee culture in the society, and also educating customers the reasons to consume.

Considering these two aspects, the threat of retaliation among the competition is weak for new firms entering the market.

72


2.2.7 Summary The above analysis suggests that the barriers to

entry in the coffee house industry are low, and it is favorable for new firms to enter the market.

New entrants will face some challenges on economies of scale, access to distribution channels (in the form of store locations), product differentiation, and brand identification.

Nevertheless, they will have opportunities to gain customers on issues such as low customer switching cost, flexibility on capital requirements, and immunity from competitor retaliation.

Listed in the following are some KSFs retrieved from this section (which become the key stimulating factors to design and develop business model) :

Store location Economies of scale Effective marketing Brand identification

73

KSFs: Store location Effective marketing Brand identification

Economies of Scale

Business Model:

74


2.3 Supplier Power (Weak) The evaluation of supplier power will examine supplier-

buyer relationship in the industry. If supplier power is strong, buyer will be in a weak position.

During the bargaining process, the supplier will seize such an opportunity into gaining more profits from the buyer in the industry.

2.3.1 Labor As a developing country with the largest population in

the world,, Chin’s low labor is one of the main attractions for industry investment.

In comparison to high-tech companies, coffee shop chains do not need many specifically skilled employees.

In comparison to manufacturing companies, coffee shop chains possess a lighter workload and provide better working environment and benefits. This favorable working opportunity will bring intensive competition in the labor market. Therefore, labor, as one of the main suppliers, has low power in its relationship with the coffee shop chains.

75

Some cautionary trend that may affect the overall labor workforce’s commitment to work for new ventures i.e. the aging trend of labor workforces such as we are seeing elder Singapore serving in restaurants nationwide. This should be monitored and be taken into consideration when the situation arises in the future.

78


2.3 Supplier Power (Weak) 2.3.2 Food Suppliers Coffee beans and other raw food materials are sufficient

and readily available domestically and abroad. On the one hand, with China in the World Trade

Organization (WTO), the foreign coffee beans (non-roasted bean or green bean) import tariff has dropped from 10.4 percent to 8 percent.

On the other hand, coffee beans are widely grown in south China such as Yunnan and Hainan province.

Both quality and quantity for domestic coffee beans are able to meet coffee shop chain’s requirements.

80


2.3 Supplier Power (Weak) 2.3.2 Food Suppliers Starbucks China, for example, decided to use domestic

coffee beans from Yunnan Province instead of imported coffee beans from South America and other areas in 2008.

Therefore, it is not difficult for coffee houses to purchase good quality coffee beans with competitive pricing.

If coffee shop chains can reach certain economies of scale, they will not only have a wide selection in different coffee bean suppliers, but also occupy a strong position in the relationship with other food suppliers such as milk, snacks, and sugars.

Therefore, the KSF here is the coffee shop chain’s size relative to competitors.

82


2.3 Supplier Power (Weak) 2.3.3 Equipment One of the major equipment investments for coffee

shops is espresso coffee machines and roasters. In China, the price of that equipment ranges from

10,000 RMB to 20,000 RMB depending on the country of origin.

However, various kinds of coffee business websites and exhibitions offer help to coffee shop entrepreneurs to purchase those equipment in an effective and efficient manner.

To sum up, the bargaining power for equipment suppliers is weak.

83


2.3 Supplier Power (Weak) 2.3.4 Real Estate Lease Compared to weak bargaining power from other input

suppliers, the real estate suppliers possess a strong position in this supplier-buyer relationship.

Since price is dependent on traffic and customer’s purchasing power, the good locations in the business center districts are very costly and have rare vacancy.

Thus, the bargaining power for real estate suppliers is strong for good locations.

84


2.3 Supplier Power (Weak) 2.3.5 Switching Costs The coffee house industry participants face low

switching costs in changing suppliers. Because suppliers such as food and equipment

manufacturers do not highly differentiate their products, shifting suppliers is not difficult for coffee shops.

However, for new entrants with limited budgets and small order quantities at the start-up stage, shifting suppliers frequently will bring an unstable supply system and high business risks.

85


2.3 Supplier Power (Weak) 2.3.6 Supplier Resources Most suppliers are not willing to have a vertical integration to open a retail coffee shop. For the coffee beans and equipment suppliers, coffee shops are their major customer and revenue

source. Therefore, the bargaining power for suppliers is low in terms of supplier resources.

86


2.3 Supplier Power (Weak) 2.3.7 Summary The bargaining power for coffee shop suppliers is low overall. The coffee house industry participants are in a better position to choose various alternatives of the inputs such

as labors, raw food materials, or equipment. Coffee houses should acquire sufficient funding and develop their scale to lower purchasing prices from

suppliers.

87


2.4 Customer Power (Weak) Powerful customers can capture more value from suppliers by forcing down prices, demanding better quality or

more services (thereby driving up costs), all at the expense of industry profitability. Buyers are powerful if they have negotiating leverage relative to industry participants, especially if they are

price sensitive, using their clout primarily to pressure price reductions. Currently, there are three different groups of customers with strong preferences and purchasing power for low

priced fresh coffee as a daily drink.

88


2.4 Customer Power (Weak) The first customer group is the young, fashionable, open-minded, well-educated local urban citizens.

After more than ten years of market cultivation, this group is already mature and most of them are professionals.

They are currently the major consumers for the high priced differentiated coffee shops yet cannot afford the expensive coffee to freshen up every working day.

Thus, they are going to shift from fashionable coffee drinkers to daily coffee drinkers.

89


2.4 Customer Power (Weak) Another large proportion of coffee consumers are those returnees who have finished their studies in Western

countries and returned back home for work. In the recent five years, the number of returnees dramatically increased. Merely in Shanghai, there are

over 80,000 returnees working and living there today. This figure is expected to increase drastically every year.

Many of these returnees have lived in Western countries for many years, and have become accustomed to the coffee culture. Visiting cafes several times a week and drinking coffee during breakfast is a habit for these consumers.

Upon their return to China, they have carried to living in this fashion. However, they are not content with the price of fresh coffee in China, which is much more expensive than in Western countries.

90


2.4 Customer Power (Weak) The third group is foreigners who are studying, working or visiting in China.

Most foreigners are from coffee-drinking nations and are used to having coffee on a daily basis. Therefore, they expect to get fresh coffee in China just like at home. However, China’s coffee houses only target the tipping-point market with high-end customers, thus unable

to satisfy this group’s needs.

91


2.4 Customer Power (Weak) In relation to consumer power, although consumers face low switching costs to change vendors, there are

several factors that limit a buyer’s bargaining power to coffee suppliers. First, the coffee house industry is a retail industry that directly deals with individuals that are end

customers. These customers usually only buy one or several cups of coffee at a time for personal consumption and thus, there is little to none negotiating leverage for them to bargain with coffee houses.

92



several factors that limit a buyer’s bargaining power to coffee suppliers. Second, although fresh coffee vendors are profitable, buyers do not threaten to integrate backwards and

produce the industries’ products themselves. Although Chinese customers find fresh coffee appealing and want to carry on Western café life style, they

are still not a coffee-drinking nation. If the fresh coffee’s price is very expensive, individuals can just decrease their coffee consumption and go

for other soft drink substitutes such as bubble tea or green tea. Additionally, it is difficult for individual consumers to conduct backward integration because of the lack of

experience, funding, and other necessary capabilities, and most importantly, it makes no sense for an individual to make an effort to integrate backward for the sake of consumption.

93



several factors that limit a buyer’s bargaining power to coffee suppliers. Third, although the majority of fresh coffee customers are price sensitive and the differentiation strategy

dominates the coffee house market, customers cannot easily find equivalently low-priced products to play one vendor against another.

Based on the above analysis, customer’s bargaining power is weak and low priced coffee shops with low cost strategies can seize such large potential market demand.

94


2.5 Substitutes Power (Medium to Strong) A substitute performs the same or similar function as an industry’s product by a different means. When the threat of substitutes are high, industry profitability suffers. Substitute products or services limit an industry’s profit potential by placing a ceiling on prices. If an industry does not distance itself from substitutes through product performance, marketing or other means,

it will suffer in terms of profitability, and often growth potential. There are a large variety of substitute products for the coffee house industry in terms of functionality.

Large variety of substitute products for the coffee house industry in terms of functionality

95


2.5 Substitutes Power (Medium to Strong) 2.5.1 Instant Coffee Instant coffee has a first mover advantage and dominates Chinese coffee

market by its low price, ready-availability and convenient preparation. Along with the increase in consumers’ coffee tastes, the poor quality of

instant coffee will not satisfy Chinese customers anymore and this market share will shrink in the future [unless instant coffee products are innovatively re-developed].

However, for the white-collar workers that can fully appreciate the taste of coffee, sometimes they have to turn to instant coffee because the availability of fresh coffee is highly limited, and also the 30 RMB per cup of coffee is not affordable for daily life.

Nevertheless, if there is a low-cost strategy coffee house offering low price fresh coffee with reasonable quality, customers will much more likely consume fresh coffee rather than instant coffee that comes with poor quality.

Therefore, instant coffee, a major fresh coffee substitute, poses a strong threat for those coffee houses adopting a differentiation approach. It is however, not a threat for the firms that utilize a low cost strategy.

96


2.5 Substitutes Power (Medium to Strong) 2.5.2 Coffee in Fast Food Restaurants Fast food restaurants, such as Pizza Hut, KFC and McDonalds, offer coffee

with relatively low prices. All of these restaurants entered China as symbols of Western culture and

gained tremendous economic success within the country. Coffee is only one small product in their food menu that has more than thirty different kinds of food and drinks. The single taste and long-waiting time cannot meet some professionals’ needs for fresh coffee.

Also, because public media attached labels of unhealthy food to these fast food restaurants, the major coffee consumers, the well-educated professionals with economic capability, avoid consuming food in these restaurants.

Consequently, the threat of coffee in fast food restaurants is weak, especially for a low cost coffee store offering good quality coffee with competitive prices.

97


2.5 Substitutes Power (Medium to Strong) 2.5.3 Tea and Other Soft Beverages China is traditionally a tea country. The wide range of prices

gives tea a competitive advantage to be daily drinks for individuals.

Often soft beverages such as bubble tea, energy drinks, fruit juices, sodas, and milk-flavored drinks are available at supermarkets, restaurants, coffee shops or food stands.

Although these beverages hold a major market share in the soft beverage market, coffee, a modern symbol of Western culture, cannot be replaced in terms of its characteristics such as the function (of providing a stimulant) and taste.

If there is a low cost strategy coffee shop which makes good quality coffee, has competitive prices, located in the central business district for the convenience of consumers, the substitute threat of tea and other soft drinks will be weak, at least from the standpoint of the target customer segments described above.

98

Market Needs for Healthy Drink: (Market Green Ethics in Small Venture)

Healthier Bubble Tea available in China: Bubble tea, a drink that originated in Taiwan and is today

sold throughout China and parts of the American west coast, is a sweet milk tea beverage containing tapioca pearls. In China, it is usually sold in small street shops where tapioca pearls are mixed with ready-made milk tea in a plastic cup and served immediately, warm or cold.

Recently, bubble tea has become available in supermarkets. The brand Xiangpiaopiao offers prepackaged versions of the drink in five different flavors – green tea, black tea, chocolate, coffee and purple yam.

Xiangpiaopiao recently also introduced to the market a new version of the drink that leaves out tapioca in favor of nata de coco, a translucent jelly made from coconut water. To make it easier for consumers on the go to sip through a straw, the nata de coco is cut into thin strips. As nata de coco is high and dietary fiber and lower in fat and cholesterol than tapioca , this innovation might make the beverage more popular among young Chinese who are increasingly concerned with their health.

99


2.5 Substitutes Power (Medium to Strong) 2.5.4 Summary Although fresh coffee has a wide range of substitutes, it still strongly

appeals to customers because of its unique competitive advantage including Western culture image and special taste.

For a low-cost strategy coffee store in the central business district offering good quality coffee with competitive prices, the substitute threat is weak.

There are several KSFs addressed from the above analysis: Competitive prices Reasonable coffee quality Good store location

100


2.6 Intensity of Competitive Rivalry (Medium) Competitive rivalry is the most important factor that

influences the attractiveness of the industry. If the intensity of competitive rivalry is weak, new entrants

can secure profits easier. However, if the intensity of competitive rivalry is strong, new firms face difficulties in becoming established and to be profitable.

There are more than 1,000 coffee shops in Shanghai in 2009, and this figure is expected to double by 2020.

Because most shops employ the differentiation strategy, competition within this market segment is becoming more and more intense.

On one hand, international coffee giants with years of experience operating in China became market leaders. They have acquired premium locations and gained brand awareness from customers.

On the other hand, local coffee houses boost to seize market share and benefit from industry profits.

Usually, they are relatively small scale, independent and flexible.

101


2.6 Intensity of Competitive Rivalry (Medium) Currently, there is not much competition in low-cost

strategy coffee shop markets because few to none exist in this segment.

However, whether it is the low cost or differentiation strategy that the coffee shop employs, there are only two kinds of coffee store in terms of their different operations models – international coffee shop chains or local coffee houses.

102


2.6 Intensity of Competitive Rivalry (Medium) 2.6.1 International Coffee Shop Chains International coffee shop chains sped up their progress to enter into

major cities of China by opening more and more outlets in the past years.

Starbucks has already expanded their outlet locations from first-level cities to second-level cities. Until 2009, Starbucks owned 360 retail stores across 26 cities in China.

Other international coffee shop chains, such as Segafredo from Italy, CITE from France, and Kohkan from Japan, joined this battle and opened their outlets in Shangai, Beijing, Guangzhou and Shenzhen.

103

China (High Speed Train connecting all the big cities)

104


2.6 Intensity of Competitive Rivalry (Medium) 2.6.1 International Coffee Shop Chains International coffee shop chains have sufficient funding, a professional management team to ensure efficient operation,

ability to acquire business center locations, and they provide standardized service and food quality. In terms of coffee and food, international coffee shop chains usually offer more than fifteen different tastes with cakes,

and other foreign food to customers. They differentiated their products by using high quality coffee beans and other raw food materials. In terms of brand identification, except Starbucks and a few other companies that entered China over ten years ago,

many international coffee shop chains are new entrants with fewer than three years. These new businesses are still immature and thus, their brand is not well recognized among customers. However, all international coffee chains emphasize their own brand and spend a lot of money on advertisements

through different media channels.

106


2.6 Intensity of Competitive Rivalry (Medium) 2.6.2 Local Coffee Houses Local coffee houses are usually small and independent. They are following current major market trends which are led

by international coffee shop chains to benefit from industry profits. Usually, local coffee houses are located in some residential area near school, public transit and other big institutions. These areas are not the best but still have a lot of traffic.

Local coffee houses offer a range of food and drinks, such as coffee, tea, noodles, rice and other Chinese food.

The prices of coffee in these local coffee houses are higher than international coffee shop chains because there are relatively fewer customers and they provide customized person-to-person service.

Compared to international coffee shop chains, local coffee houses differentiate themselves by luxurious shop décor and environment, and not in terms of coffee quality.

Some local coffee houses exploit such advantage and offer poor quality coffee products with expensive prices.

107

一个集装箱里的大秘密。如此一个咖啡馆，一定是让大家震惊的，咖啡馆营业状况下的空间肯定大到超乎你的想象！ Creative Coffee House in China.

113

上海多伦路老电影咖啡馆

115


2.6 Intensity of Competitive Rivalry (Medium) 2.6.3 Summary In China’s fresh coffee shop market, both international coffee shop chains and local coffee houses employ

differentiation strategies, thus, the rivalry among competition is strong for the differentiation segment but not for the low cost segment.

International coffee shop chains offer good quality coffee along with high prices, yet, some local coffee houses offer poor quality coffee associated with high prices as well. Thus, such coffee houses are attempting to reap in the profits without offering the benefit of good quality coffee.

As a result, the competitor with a low-cost approach that offers good quality coffee without inflated prices will succeed. The KSFs include:

Competitive Prices Reasonable coffee quality Store location

Differentiation Strategy Low-Cost Strategy

State of Competition: Overly crowded Open Space (Opportunities exist)

Utilitarianism (Functional) Values

116


2.7 Overall Assessment and Key Success Factors Porter’s Five Forces Model provides a perspective in assessing the attractiveness within the coffee house

industry. Through the analysis of the five external forces, some KSFs of the coffee house industry in China have been

identified. This section will summarize the overall industry assessment and all KSFs previously discussed.

2.7.1 Overall Industry Assessment The overall attractiveness of the coffee industry in China is favorable, especially to the low-cost strategy

coffee shop offering good quality coffee with competitive prices. The barriers to entry in the coffee house industry are weak to medium.

This is favorable to new firms entering into this market not only because it encompasses low customer switching and minimal threat from competitor’s retaliation exist, but also because of its flexible capital requirement and economies of scale.

Moreover, it is not easy for existing coffee companies to defend against new participants. This is because existing firms have to leverage KSFs such as choosing different premium store locations, enlarge economies of scale, and also strengthen their brand identification to further raise the barriers against other participants.

117


2.7 Overall Assessment and Key Success Factors 2.7.1 Overall Industry Assessment The bargaining power for the coffee shop suppliers is overall low, which is favorable to a coffee company’s

development. Since China comprises two of the most significant industries in terms of its size and reputation, the agriculture

and manufacturing industries, coffee house industry participants are in a better position to select various alternatives to inputs. These inputs can include labor, equipment and raw material.

For example, the coffee bean supplier is one of the most important suppliers for coffee shops. After China joined the WTO, the tariffs of imported coffee bean dropped from 10.4% to 8%. The growth of domestic coffee plant is also favorable to coffee shops since good quality coffee beans are

widely planted in Yunnan Province and Hainan Province selling at competitive prices. It is easy for coffee houses to lower their purchasing costs.

118


2.7 Overall Assessment and Key Success Factors 2.7.1 Overall Industry Assessment The bargaining power for the coffee house customers is overall weak.

Individual customers have little selection for fresh coffee in shops that have the differentiation approach. As a result, low priced coffee houses with the low cost approach poses a huge potential for economic success given the current market demand.

There are multiple substitutes in China’s market with a wide range of prices. These include items such as instant coffee in the supermarket, drinks from fast-food

restaurants, tea and other soft beverages. Such substitutes pose a strong threat for differentiated coffee houses in terms of low prices, variety, convenient preparation, and easy availability.

However, if low cost strategy coffee houses can offer good quality coffee with competitive prices, it can weaken the substitute’s threat in terms of a coffee’s fundamental values such as taste, quality, and image.

In terms of competitive rivalry, since the differentiation strategy dominants the coffee house market, intensive competition exist between international coffee shop chains and local coffee houses. Hence, it is favorable for low cost strategy coffee houses to enter this market and seize this business opportunities.

The overall assessment is summarized in Table below.

119


2.7 Overall Assessment and Key Success Factors 2.7.2 Key Success Factors Coffee shops’ development in China is at a fast growth stage in the industry life cycle and this directly

translates into a rapid increase of market share. This presents opportunities for new entrants to enter, and market leaders aim to expand in order to secure this gain in market share.

The overall attractiveness of the coffee house industry in China is favorable which implies there is a great potential in the market, especially for coffee houses adopting the low cost approach.

123

Five Forces: Strength Impact to Coffee House Industry

Barriers to Entry Weak to medium Favorable to new entrants

Supplier Power Weak Favorable

Customer Power Weak Favorable

Substitute Power Medium to strong Unfavorable to differentiationFavorable to low-cost strategy store

Intensity of Competitive Rivalry Medium Unfavorable to differentiationFavorable to low-cost strategy

Overall Rating Favorable

124


2.7 Overall Assessment and Key Success Factors 2.7.2 Key Success Factors The previous overview of this industry suggests several KSFs that are listed below ranked in order by

descending importance (note: Criterion of important here is how many times a KSF was identified in Five Forces Analysis).

High B

rand R

ecognition

Good store

location

Com

petitive P

rices

Reasonable

Coffee Q

uality

Econom

ies of S

cale

Effective

Marketing

Enable to establish brand awarenessThe Qualifiers – Functional NeedsIm

port

ance

Lev

el o

f KS

Fs

125


2.7 Overall Assessment and Key Success Factors 2.7.2 Key Success Factors Store location is the most important issue in the coffee house industry. As a fresh coffee retailer, the

targeted customers are the well-educated young professionals, returnees, and foreigners. A good store location for coffee houses includes central business districts, high-traffic shopping malls, or

other suitable transportation centers such as airports and subway stations near the business districts. Store location is a direct determinant for a coffee shop’s success and has been previously identified as a

KSF in the sections of barriers of entrants, substitute power and rivalry competition.

Store location: Well-educated

young professionals, returnees, and foreigners.

126


2.7 Overall Assessment and Key Success Factors 2.7.2 Key Success Factors Competitive prices and good quality are KSFs on the second level in terms of its importance.

In the current coffee house market in China, the differentiation strategy dominates with fresh coffee priced to be unreasonably expensive.

Differentiated coffee houses spend high amounts of money to build up a luxurious brand image, justifying their inflated prices.

Some local coffee houses follow this market trend and profiteer from this by offering poor quality coffee with high prices.

Competitive prices and reasonable coffee quality are thus imperative in matching market demand and weaken the threat of substitutes. Both factors have been identified as KSFs in the substitute power and competitive rivalry sections.

127


2.7 Overall Assessment and Key Success Factors 2.7.2 Key Success Factors Economies of scale are another vital KSF in the coffee house industry. This can be depicted when

international coffee shop chains, such as Starbucks, rapidly expanded their outlets in some major cities in China.

Economies of scale not only conserve a firm’s operating cost, but it also increases their bargaining power with suppliers. Since the coffee houses are usually located in high traffic areas, it enhances their brand recognition due to its ease of visibility. It has been identified as a KSF in the barrier to entry section.

Economies of scaleValue Visibility

Channels of Distribution (Economies of Scale)

Reduce Cost

128


Che

ap P

rice

(Val

ue

for

Mon

ey)

Fre

sh C

offe

e(P

rodu

ct)

Con

veni

ence

and

C

hain

(P

lace

)

Foo

d V

arie

ty

(Inn

ovat

ion)

Foo

d H

ygie

ne(P

rodu

ct)

Ser

vice

Atti

tude

(Peo

ple)

Sho

p D

esig

n (P

lace

)

Leve

l of C

ompe

titio

n

The

cur

rent

ava

ilabi

lity

in th

e m

arke

t

Our new venture

Substitutes

Supplier Power



Intensity of Competitive Rivalry:


Med

iatin

g F

acto

rs:

V

alue

cre

atio

n ac

tiviti

es i.

e.

prod

uctio

n, o

pera

tions

, pa

rtne

rshi

ps, C

ost S

truc

ture

Med

iatin

g F

acto

rs:

V

alue

-Del

iver

ing

Act

iviti

es, i

.e. C

RM

and

C

hann

els

of D

istr

ibut

ion,

Rev

enue

Str

eam

s

Dr. C.C. Tan (2013-2014)

Economies of scale and Brand AwarenessValue Visibility and Relationship

Reduce Cost and increase partnership

Channels of Distribution and CRM (Economies of Scale and

Brand Relationship)

Store location: Well-educated

young professionals, returnees, and foreigners.

129


2.7 Overall Assessment and Key Success Factors 2.7.2 Key Success Factors Marketing is an effective way to keep a coffee house distribution channel flowing and is also an important

KSF in the industry’s barrier to entry section. International coffee shop chain’s emphasis is on creating and building their brands. Coffee in China is not a highly differentiated product to consumers, thus, brand recognition plays an

imperative role for coffee houses to differentiate themselves to increase consumer traffic. It is a KSF and is addressed in the barrier to entry section as well.

130


2.8 Competitive Analysis based on Key Success Factors Based on the above analysis, the following performance evaluation of the two

major kinds of competitors is scored over a five-point scale (see Table below). A score of 1 indicates the lowest perceived performance while a score of 5

suggests the highest level of performance in the area. The table indicates the international coffee shop chains have a score of 25 out of

30. The international coffee shop chain model is more successful in comparison to the local coffee house model.

There is an inherent nature for this industry to be attractive. The reasons are because of China’s magnitude in sizes both geographically and demographically, and the high profit margin that exist for fresh coffee. This possess various opportunities for new entrants to succeed in this market.

131

Marketing and Operations Mix KSFs: Price Product Place Promotion/Relationship

Key Success Factors:

Total 25 15

Price 3 1

Quality 5 3

Location 5 4

Economies of Scale 4 2

Marketing 4 3Branding 4 2

International Coffee Shop Chains

Local Coffee HouseBusiness Model

Opportunities resulted from

their Relatively undeveloped

Potential Threat Zones

132

2. External Analysis 2.8 Competitive Analysis based on Key

Success Factors 2.8.1 Opportunities Firstly, new entrants have a great

opportunity to gain customers by offering fresh and good quality coffee at a lower price.

International coffee shop chains offer premium coffee at 25 to 35 RMB per cup while local coffee houses offer lower quality with an even higher price.

With the coffee beans costing between 1 and 3 RMB per cup of coffee, opportunities exists for new entrants to offer between quality coffee than local coffee houses yet cheaper than international coffee shop chains.

Secondly, local coffee houses are fairly undeveloped in terms of economies of scale, branding, and marketing. Thus, it is easier for new entrants to surpass them by reaching certain economies of scale, building a strong brand name while promoting through marketing campaigns.

133

2. External Analysis 2.8 Competitive Analysis based on Key Success Factors 2.8.2 Threats The first challenge for new entrants is that some competitors are already located in the most favorable geographic locations.

Most of the international coffee shop chains are located in crowded shopping malls or other business centers. The high real estate lease cost and infrequent vacancy associated with these favorable locations are threats to new entrants.

The second challenge is that some international coffee chains have already been established in China’s market for more than ten years. They have build up a reputable brand name to customers as can be seen by Starbucks, a symbolic word used by those that live a luxurious lifestyle.

The third challenge is the economies of scale for the international coffee shop chains. Most international coffee shop chains have several outlets within the same city, decreasing their business risks while lowering their operating costs.

But not least, there is a potential threat coming from international coffee shop chains with low cost strategy. Although the prospective company can leverage its first mover advantage including establishing a stable and low-cost supplier chain, building high brand recognition up, etc., low cost international coffee shop chains still will be strong competitors by their substantial management experience, huge financial resources and economies of scale to obtain volume discounts on ingredients.

134

Opportunities Threats

2. External Analysis 2.8 Competitive Analysis based on Key

Success Factors 2.8.1 Opportunities Firstly, new entrants have a great

opportunity to gain customers by offering fresh and good quality coffee at a lower price.

International coffee shop chains offer premium coffee at 25 to 35 RMB per cup while local coffee houses offer lower quality with an even higher price.

With the coffee beans costing between 1 and 3 RMB per cup of coffee, opportunities exists for new entrants to offer between quality coffee than local coffee houses yet cheaper than international coffee shop chains.

Secondly, local coffee houses are fairly undeveloped in terms of economies of scale, branding, and marketing. Thus, it is easier for new entrants to surpass them by reaching certain economies of scale, building a strong brand name while promoting through marketing campaigns.

2. External Analysis 2.8 Competitive Analysis based on Key Success Factors 2.8.2 Threats The first challenge for new entrants is that some competitors are

already located in the most favorable geographic locations. Most of the international coffee shop chains are located in crowded shopping malls or other business centers. The high real estate lease cost and infrequent vacancy associated with these favorable locations are threats to new entrants.

The second challenge is that some international coffee chains have already been established in China’s market for more than ten years. They have build up a reputable brand name to customers as can be seen by Starbucks, a symbolic word used by those that live a luxurious lifestyle.

The third challenge is the economies of scale for the international coffee shop chains. Most international coffee shop chains have several outlets within the same city, decreasing their business risks while lowering their operating costs.

But not least, there is a potential threat coming from international coffee shop chains with low cost strategy. Although the prospective company can leverage its first mover advantage including establishing a stable and low-cost supplier chain, building high brand recognition up, etc., low cost international coffee shop chains still will be strong competitors by their substantial management experience, huge financial resources and economies of scale to obtain volume discounts on ingredients.

External Analysis:

135

Strategy Proposals: Vision and Mission Strategic Goals (implementing through establishing Balanced Scorecard Systems) Business Model:

Product Market Focus (Targeted Customers) Value Propositions (Products and Services, the Value Curve) Value-creating activities (Cost-leadership driven) Value-delivering activities (CRM driven to establish brand relationships) Cost Structure (Cost-leadership enabled) Revenue stream (Store bounded)

External Analysis: KSFs Opportunities Threats

The External Analysis Structure:

136

2. External Analysis 2.9 Strategy Proposals In the previous sections, we made an overall assessment of China’s coffee industry and outlined the external

environment for the industry as a whole. We now propose a strategy for the prospective coffee shop chain.

2.9.1. Vision and Mission The company’s vision is to provide an affordable fresh coffee while making coffee a daily drink and not a luxurious

experiences in China. The company’s mission is to become the leading low-cost strategy coffee shop chain in China, initially with one store

but expanding to own more than one hundred outlets, highly recognized for its fresh and convenient food and drink products.

137



2.9.2 Strategic Goals (Implementing through establishing a Balanced Scorecard Systems) The strategic goals of the company are fulfilling the company’s vision, achieving its fast expansion and revenue

growth, and making fresh coffee a part of people’s daily lives. In the short term within five years of development, the company’s number of outlets will increase from 1 to 10, and the

company’s market share will reach at least 30% in the coffee house industry in Shanghai. In the long run, the company will be a leading low-cost fresh coffee shop chain, and be able to develop its business to

all the provinces in China.

Vision and Mission

Fast expansion and revenue growth

1-10 outlets within 5 years

Market share at least 30% in coffee house industry in Shanghai

Short-Term:

Long-Term:Leading low-cost fresh coffee shop chain in China

Implement cost-leadership strategies across business model

Financial:

Customer:

Operations:

Learning and Growth: Implement HRM Policies and Continue to learn and fine-tune business model

138



2.9.3. Product Market Focus Shanghai has a large population of professionals, returnees, and foreigners. There is a great potential for these three groups of customers to consume fresh coffee as their daily drinks. Therefore,

the product market focus will be on these three consumer segments in Shanghai.

139



2.9.4 Value proposition The vision of the prospective coffee shop chain is offering affordable fresh coffee to people on a daily basis. Therefore, the value proposition of the company is being a leading low price fresh coffee shop chain in China, to

“provide the customers with a fresh quality cup of coffee for them to accomplish success in each day’s works.”

140



2.9.5 (Business Model) Core Activities The prospective company will employ a cost leadership strategy. This strategy requires that the cost of providing the

product or service to the company is low, by gaining efficiencies, reducing costs and controlling overhead. The company’s customer strategy is three-fold. First, it will acquire new customers. Second, it will try to retain existing

ones. Third, it will seek to increase the number of times that existing customers visit the shop. The company’s product strategy is to offer a mix. The main products are comprised of roughly ten different tastes of

coffee. The supplementary drinks will be fresh fruit juice, and hot chocolate. The company’s supplementary food will encompass the classic Western snacks such as cakes, bagels, breads, and also some special Chinese easy-to-go food such as rice rolls and congees.

Value-creating activities Efficiency

Value Curves (Value

Propositions)Value-delivering activities

Targeted Customers

Cost Structure Strategy: Cost Leadership Strategy

Customer and CRM Strategy: Acquire new customers Retain existing ones Seek to increase the number of

times that existing customers visit the shop.

141

Internal Analysis

142

3. Internal Analysis The recommended strategy proposal for the prospective coffee shop chain has been presented at the end of

the last chapter based on the evaluation of the coffee house industry’s external environment. This chapter will develop a conceptual proposal of the company’s flagship store and provide a Business

Model framework analysis to determine whether the company’s internal capabilities are sufficient to implement the proposed strategy or what internal capabilities we need to build to implement the proposed strategy.

143

3. Internal Analysis 3.1 Conceptual Proposal of the Company’s Flagship Store As an independent start-up company, the prospective coffee shop chain will first centralize its funding and

resources to develop a successful flagship store.


Value Curves (Value

Propositions)

Value-delivering activities

Targeted Customers

Cost Structure Strategy: Cost Leadership

Strategy

Customer and CRM Strategy: Acquire new

customers Retain existing ones Seek to increase the

number of times that existing customers visit the shop.

Resources Centralizing Structure

and Funding

144

3. Internal Analysis 3.1 Conceptual Proposal of the Company’s Flagship Store 3.1.1 Structure and Funding The prospective flagship store will adopt a centralized organizational structure, which means the company

can consolidate power and decision-making abilities at the top of the organizational chart. Top managers making the organization’s key decisions will be beneficial for the low-cost strategy

start-up retailer because of its easiness for control and coordination and efficiencies through economies of scale.

The funding consists of private capital and lending from some financial institutions. Private capital funding comes from the company’s co-founders, encompassing over 50% in the

total required capital. It will be able to provide the company more flexibility for development rather than being driven by the initiative of maximizing profit to pay off borrowed money as soon as possible.


Value Curves (Value

Propositions)


Targeted Customers


Strategy

Customer and CRM Strategy: Acquire new

customers Retain existing ones Seek to increase the

number of times that existing customers visit the shop.

Resources Centralizing Structure

and Funding

Flexibility for development

Adaptability in decision

Easiness for control and coordination

Efficiency through EOS

145

3. Internal Analysis 3.1 Conceptual Proposal of the Company’s Flagship Store 3.1.2 Location A premium store location is the most important KSF in the coffee house industry. The target customers of the

company are the young professionals, returnees and foreigners who have the potential to consumer coffee everyday. For the flagship store, it is ideal to be located in the central business district. It is better than shopping malls because the area can provide a steady flow of traffic while bearing the potential to cultivate regular customers that may visit the store several times a weak.


Value Curves (Value

Propositions)

Value-delivering activities i.e. CRM and Channels of Distribution. Location,

Business Area.

Targeted Customers


Strategy

Resources

Target second-tier commercial districts of Shanghai

To-go customers Sit-in customers

Matched – Aligned – Enabled.

146

3. Internal Analysis 3.1 Conceptual Proposal of the Company’s Flagship Store 3.1.2 Location Shanghai has a large population and encompasses many business districts. As a result, there are a lot of

options for the prospective company to reside that vary in terms of intrinsic and extrinsic values. Some first-tier business districts such as Nanjing Road and Huaihai Road are too expensive for the start-up

store while customers there usually not price-sensitive. Low-cost strategy companies, therefore, cannot fully leverage their advantages in comparison to the

differentiation strategy companies.

147

3. Internal Analysis 3.1 Conceptual Proposal of the Company’s Flagship Store 3.1.2 Location The second-tier business districts such as Wujio Square in Yangpu are good for the prospective company

because of several advantages: First, real estate lease is cheaper for the second-tier business centers in comparison to the first-tier ones. Second, it also comprises of a big population that includes professionals, returnees, and foreigners for whom

coffee appeals but more importantly, who are price sensitive. Third, it is a high-traffic commercial zone located near public transit centers such as the subway stations and

buses. Lastly, it is near some famous universities such as Fudan University and Shanghai Jaitong University.

149

3. Internal Analysis 3.1 Conceptual Proposal of the Company’s Flagship Store 3.1.3 Business Area The company will occupy 50 to 100 square meters as its flagship store’s business area. In contrast to the

differentiated coffee houses that spend huge sums of money on 200 square meters of business area, the prospective firm is not focused on creating a luxurious atmosphere but simply to offer affordable fresh coffee to mature coffee consumers.

Such consumers are not craving for the Western experience, but want coffee to freshen up their busy schedules. Thus, most customers will take coffee to-go.

The business area will be divided into two sections, one for sit-in guests and the other for take-out orders. Recognizing that the business entails high traffic, the two sections will be separated, free of interruptions, while the staffs can accommodate for both the needs of sit-in and take-out customers. This tactic will effectively save some fixed costs for the company while satisfying different customer groups.

150


Value Curves (Value

Propositions)


Targeted Customers


Strategy

Resources Centralized

structure and Funding.

The name, Logo and Corporate Identity

Branding


3. Internal Analysis 3.1 Conceptual Proposal of the Company’s Flagship Store 3.1.4 The Name, Logo and Corporate Identity Brand is another significant KSF for the start-up coffee house. The business image such as the name, logo and corporate identity are critical in making a concentrated and

compact marketing statement for the company. The primary corporate identity will be much like an international coffee chain’s. The brand and logo will be simple to remember and fit suitably well with the company’s vision and mission, and reflects the customer value proposition and the nature of value-creating and delivering activities i.e. CRM. Store décor will be elegant yet simple.

Location and Business Areas: Target second-tier

commercial districts of Shanghai


151


Value Curves (Value

Propositions)

Value-delivering activities:

Targeted Customers


Strategy




Branding





Revenue Streams

3. Internal Analysis 3.1 Conceptual Proposal of the Company’s Flagship Store 3.1.5 Reloadable Cash Card The company will promote reloadable store cash cards to customers. This reloadable cash card will require

customers to deposit initial sums of money that can be used at any of the company’s outlets for the ease of convenience. The cash holders will enjoy several benefits such as the ability to order food via internet or the self checkout machine, point collections for a free coffee, and other membership promotion and awards.

Reloadable Cash Card

152

3. Internal Analysis 3.1 Conceptual Proposal of the Company’s Flagship Store 3.1.6 Operating System The prospective company will employ an integral operating system to improve efficiency, reduce cost, and

provide convenience to customers. The target customers for coffee shops are the professionals that are rushed for time and want to

acquire a cup of coffee through a relatively quick and easy process. It is imperative for this operating system to keep an accurate inventory record, daily sales, and

other supplementary information such as employee and customer information. The advanced operating system not only offers check-outs by cashier quickly, but it also allows

customers to conduct self-checkouts in store or via internet easily. The coffee shop will select such an advanced operating system that meets all the requirements

described above to better satisfy a customer’s tangible and intangible needs.

153

Value-creating activities Operating

System for Efficiency

Value Curves (Value

Propositions)


Targeted Customers


Strategy




Branding





Revenue Streams


Operating System: Self-Checkout

Operating System matching value-creating-and-delivering

154

3. Internal Analysis 3.1 Conceptual Proposal of the Company’s Flagship Store 3.1.7 Products The company will deploy a strategy of having a wide product mix to provide a comprehensive nutrition menu

while satisfying different consumer food preferences. Such the company is competing by selling coffee on price, the different product lines will balance the company’s profit and cater to more customer groups.

The main beverage for the firm is hot and cold fresh coffee with different tastes. Other beverages include hot chocolate, milk, and some fresh juices. In terms of food, there are some classic

Western snacks such as cakes, bagels, and sandwiches, and also some Chinese classic snacks such as rice rolls, soups, and meatballs.

The mediating forces of value-delivering and revenue stream activities

Originally targeted customers

Extended segments

• Variety of hot and cold fresh coffee

• Variety of healthy food menu and snacks

Product-Mix Strategy

155

3. Internal Analysis 3.1 Conceptual Proposal of the Company’s Flagship Store 3.1.7 Products Thus, to better fulfil such product-mix strategy, the company will promote different combinations of food and

drinks with attractive price. On one hand, combinations can help customer select food based on different nutrition preferences. On the other hand, sales through combinations can directly increase the company’s revenues.

156



Value Curves (Value

Propositions)


Targeted Customers


Strategy




Branding





Revenue Streams







159

3. Internal Analysis 3.1 Conceptual Proposal of the Company’s Flagship Store 3.1.8 Services The company will place emphasis on the convenience of customers. There will be traditional staff services for

both sit-in and take-out customers. All the staffs in store are well trained in providing professional customer service and it is their first priority to ensure customers are fully satisfied throughout the entire shopping process.

Additionally, the company will offer different kinds of services for a consumer’s convenience. First, the company will promote a self-checkout system. Customers can use self-checkout machines in the

store to purchase a product quickly via the company’s reloaded cash card. Subsequently, they can obtain the food directly in the picking-up area.

Second, if customers that are in close proximity to the store order more than 200 RMB, they can use the internet check-out service and receive free delivery.

Third, the prospective company can offer catering services for particular business meetings or other various business events.

161



Value Curves (Value

Propositions)


Targeted Customers


Strategy




Branding





Revenue Streams







Services: Self-Checkout Internet checkout Special events

162

3. Internal Analysis 3.1 Conceptual Proposal of the Company’s Flagship Store 3.1.9 Open Hours and Staffing At the start-up stage, the flagship store will be scheduled for daily operation from 8.30 am to 8.30 pm for a

total of 12 hours. In Shanghai, most coffee houses open after 10.00 am and close at 10.00 pm because they focus on

customers’ leisure time. However, the prospective company focuses on customers’ working time, and thus, the open hours should be earlier than China’s legal start-work time of 9.30 am, and later than the end-work time of 5.30 pm.

The shop will provide fresh breakfast to customers as such are rare occurrences in the current coffee house market.

Fresh Breakfast

163

3. Internal Analysis 3.1 Conceptual Proposal of the Company’s Flagship

Store 3.1.9 Open Hours and Staffing The flagship store will employ both full-time and part-

time staff to save costs and ensure effective operational requirements.

Staff loyalty is of significance to any business and as such, the company will adopt a flexible, respectful, and trust-based working environment for them.

All employees will be treated equally and an effective award system will be established.

164



Value Curves (Value

Propositions)


Targeted Customers


Strategy




Open hours and staffing

Branding





Revenue Streams







Services: Self-Checkout Internet checkout Special events

165

3. Internal Analysis 3.2 Sustainable and Innovative Organizational Learning-enabled Business Model In the previous section, some concept proposals of the flagship store were introduced. This section, the sustainable and innovative organizational learning-enabled business model

framework (CC Tan, 2013a, Chetsopit et al. 2013) identifies key competencies and business architecture that a company must achieve to be successful.

In addition, it defines the interconnection between them while providing a road map to examine whether the business model components i.e. value-creating activities, value-delivering activities like customer relationships management (CRM) and the customer value proposition are consistent.

High consistency will lead to successful performance, while inconsistencies will lead to poor performance. A consistency model is shown in the following.

166

Bases of competitionIn

tens

ity

Design Value: Products and Services

Customer Value Propositions

Deliver ValueProduce ValueResources Targeted Customers

Earn Value

Vision

Strategies

Regenerate Resources, Continuous Improvement and Learning, Innovation

Customer-facing activities

Business Model

Figure: Sustainable Innovation-cum-Learning driven Business Model Framework (Source: Tan, 2013a)

167

Innovation-Value-Driven Supply-Side Competency-and-Customer-side Opportunity Bridging Business Model introduced (C.C. Tan, 2013b) – Consistencies across the Business Model

Resources Resources Partners

Activities

Innovation Value Curves(Customer Value Propositions)

Customer Segments

Revenue StreamCost Structure

CRM

Channels of Distribution

Margin Break-Even Cash Flow Equity Growth

Resource Velocity

3 Levels of Characteristics on Activities: Consistency Reinforcing Optimization

3 Levels of Characteristics on CVP: Parity Points of Differences Resonating

5-Forces Competitive-Advantage Characteristics on Resources: Not easily

purchased Durability Difficult to

imitate Not readily

substituted Competitive

superiority

ConsumesGenerates

3 Levels of Characteristics on Customer Equity: Value equity Brand equity Relationship equity

Resource Regeneration or Recycle

168

3. Internal Analysis 3.2 Sustainable and Innovative Organizational Learning-Enabled Business Model The following sections will apply this business model framework to assess the alignment of the

prospective coffee shop chain’s strategy, resources, value-creating activities, value-delivering activities, customer value propositions, targeted customers, cost structure and revenue streams.

It also defines the gaps that the company needs to focus on the business plan.

3.3. Resources Resources include:

Management preference analysis (cf. Diamond E Framework of Crossan, Fry, & Killing, 2004)

Management values Management decision criteria Current management experience Managers’ specific functions Gap in management experience

Organization Analysis Structure Systems: Information technology system, recruiting system, training system,

reward system Organization Culture

Resource Analysis Human Resource Operational Resource Financial Resource

CRM is a relationship-cum-knowledge based practice to help organization realizes its strategies. However, to be effective, the preconditioning factors or mechanisms have to be effective themselves, in particular business strategies and the business models.

In response to many research findings that still the majority of the companies, as high as 93% for tourism industry have either no or unorganized innovation (Nilsson-Andersen and Andersen, 2012), researchers like Johnson (2010) proposed that innovative business model thinking may be the next solution, which challenges for new set of customer value propositions, profit formulas, the key resources that value proposition requires, and the key processes needed to deliver it.

The similar concept, rooted in learning-enabled closed-loop systems, is first proposed by Tan (2013a), first published at a national research conference in Thailand by Tan and colleagues and research students (Chetsopit Trongsawat et al. 2013), which further be extended to incorporate theories of creativity, innovation, and resource regeneration or higher level of greenness ethical and sustainability concepts in Tan (2013b). The later version is given in the Figure below.


tens

ity




Earn Value

Vision

Strategies



Business Model

Figure: Sustainable Innovation-cum-Learning driven Business Model Framework (Source: Tan, 2013b; Chetsopit Trongsawat et al. 2013

Bases of competition

Inte

nsity

Our products Competitors and new entries Substitutes

Strategic Centric

Customer-lifecycle centric

Technology Centric Systems or

technology to enable production of CRM

Albeit the fact that definitions of CRM are still diverse there are generally three key components or directions for the definition (Kellen, 2002):

Strategic centric – to enable the organization to compete successfully in the market and build shareholder value (Kellen, 2002)

Technology centric – i.e. digitization of business products and services, and functions, and an efficient and effective way to transmit and exchange information and knowledge to customers and stakeholders. Examples: Digitization of products i.e. news, research, books, photography, instructions (Kellen, 2002, p. 5), Digitization of functions e.g. sales force automation (that includes lead generation, forecasting, and closing business) and marketing automation (based on intelligent analytics systems); Digitization of the execution of strategies.

Customer-lifecycle centric – Kaplan and Norton (2004, p. 107) identified 4 generic processes of customer management namely select customers, acquire customers, retain customers, and grow relationships with customers.

CRM is a business strategy or management practice: to enable one to understand, identify and anticipate the needs of one’s current and

potential customers and stakeholders (i.e. to obtain a clearer insight into what direction the market and customers are headed)

to nurture their exchange and communication processes, to understand and influence customer behavior through ongoing communication

strategies, and an effort to acquire, retain and satisfy the customers and to embrace and influence

relevant stakeholders and the communities (i.e., cf. Amoaka et al. 2012; Kellen, 2002)


Inte

nsity

Strategic Centric Customer-facing activities: An effort to acquire,

retain, and satisfy customers

Actively and profitably engage in each phase of the customer lifecycle i.e. attracting, transacting, servicing and supporting, and enhancing

Technology Centric

Targeted Customers Understand,

identify, and influence customer behavior

Revenue Streams Extracting business values

Design Value:Design to meet customer needs: Identify customer needs Identify broader

stakeholder needs

The scopes of CRM span across the entire business model. CRM Data so, customer behaviors can be researched, and in enabling organization to figure out

ways of leveraging the product portfolio to sell more of their brands to their customers (Kellen, 2002, p. 6).

Resources: Data/Information Materials People: Co-

creation, Co-Production, and Co-Consumption such as predominantly in the service industries.

Environment: Beauty, Diversity, Culture


Inte

nsity

Design to meet Customer Needs: Our products Competitors and new entries Substitutes

Strategic Centric

Customer-lifecycle centric Deliver values

Technology Centric Systems or

technology to enable production of CRM i.e. Data warehouse, data mining, data analysis

Produce values

Revenue Streams Extracting business values Example: Electronic commerce

Benefits of CRM from the technological perspective (Teo et al. 2006, pp. 1623-1625): Shift of emphasis from product/transaction to customer experience/relationship – CRM gets the

organization to view services from the customer perspective. Reduced cost of service deliver – Use of web-based transactions lowers customers’ transaction cost. Improved customer service – CRM system includes a customer service portal, which allows

consolidation and constant updating of customer information. Improved operational efficiency – the integrated customer service portal contributes greatly towards

reducing the overall workload of staff. Facilitation of business planning – CRM system allows for greater ease and simplicity in gathering data

on customers. Ease of maintenance – provided with the flexibility and responsiveness in making adjustments and

changes to the system when the need arises.

Customer Relationship

Transaction

Product Customer Experience

CRM

The dimensions of CRM benefits articulated in Teo et al. (2006) reflect also the two generic approaches of CRM, as shown in the Figure below, given in Bruhn (2001)

Approaching Clients

Through offers: Product quality Service quality Clients based process quality Flexibility in production

By interaction: Receptiveness towards clients’

requests Receptiveness towards clients while

managing the information Customer relationship building by

other departments than marketing and sales.

In order to manage effectively, one must measure (Kellen, 2002, p. 6). Then why we need to measure? A concise response is given by Spitzer (2007) into numerous scopes or dimensions of benefits as follows:

Measurement directs behavior Measurement increases the visibility of performance Measurement focuses attention Measurement clarifies expectations Measurement enables accountability Measurement increases objectivity Measurement provides the basis for goal-setting Measurement improves execution Measurement promotes consistency Measurement facilitates feedback Measurement increases alignment Measurement improves decision making Measurement improves problem-solving Measurement provides early warning signals Measurement enhances understanding Measurement enables prediction Measurement motivates

But how an organization can develop an effective performance measurement i.e. CRM. Kaplan and Norton (2004) identify that measurement must align and reflect the strategies.

In view of Kaplan and Norton (2004) we propose that CRM measurements must generically embrace the dimensions and scopes of the business model, so that valid and reliable picture or story of the CRM effort can be obtained. Surprisingly, these propositions match with the research finding of Kellen (2002, p. 7).

Resources Produce Values

Value Curves/Products

and Services

Deliver Values

Targeted Customers

Revenue Streams

Must measure and monitor competitive assessment and

customer value analysis

Measure economic value delivered to/and derived from a customer (deliver business benefits from customers)

Cost Structures or Investment

Monitor ROI that reflects the actual benefits to the

company

Measure the two most important intangible assets (brand equity and

knowledge capital i.e. clearer insight into the markets) to help

correlate to future company performance

CRM analytics capability i.e. manage customer information

To deliver customer benefits i.e. improved customer experience, higher customer satisfaction

Customer value analysis (CVA) – CVA and the corresponding five forces of competition, customer value propositions profile and operations management KPIs (Key Performance Indicators) are best captured and depicted using value curve concept of the blue ocean strategy (Kim and Mauborgne, 2005), which helps companies to answer four basic questions (Kellen, 2002, p. 14):

Where are we now? (Current or As-is Value Curve) Where do we want to go? (Intended or To-be Value Curve) How we do want to get there? Are we there?

Essentially, CVA or the value curve states of insight become a bridge that connects both the supply-side activities and the customer-facing activities, and thus, according to Kellen (2002, p. 14) it has a continuous improvement component or an operational component that helps companies:

Understand the root cause of delivery failure Improve the value delivery systems Enhance team development across all improvement initiatives Establish customer recover or intervention programs to keep and enhance profitable

customers and Shed unprofitable ones.

In short, CRM helps to influence or validate decision making, guide ongoing activities or tactics, and predict future states. In short, CRM must facilitate the entire strategic planning and implementation processes as outlined by Ryan (2008) in 3 stages: Analytics Review, Strategy Formulation and Implementation.

Analytics Review:External – PESTLE AnalysisInternal – SWOT Analysis

Strategy Formulation: Define vision Competitive analysis (Blue Ocean, 5-Forces, Diamond Model) Develop and research options



and Services

Deliver Values

Targeted Customers

Revenue Streams


Long-term Shareholder and Stakeholder Values,

ROI

Business Model: Implementation

To enable a realistic insightful CRM measurement, CRM must build the business model capabilities.

Value Production Capabilities

Customer Insight Capabilities

(Value Curve, Customer Value

Proposition, the 5-Forces Structure)

Value-delivery Capability

Customer Behavior, Mindset

Innovative Value Earning

Capability

Innovative Lean Investment Portfolios and Cost Structuring

Capability

Resource Regeneration

Capability

Organizational Learning and

Innovation Capability

In conclusion, we have presented CRM as a holistic approach to managing customer relationships to create shareholder and relevant stakeholder values, and which matches with the definition of CRM advocated by Payne and Frow (2005, p. 168).

“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.

Along the business model framework rationality, CRM can be referred to as a management approach that seeks to create, develop, and enhance relationships with carefully targeted customers in order to maximize customer value and corporate profitability (Shang and Lu, 2012).

The holistic requirement of CRM is also actively advocated by Kaplan and Norton (2004), that for measuring CRM performance, a balanced scorecard approach that “combines a variety of measures based on the defined purpose of each program (or each cooperative and collaborative relationship is recommended.” (Parvatiyar and Sheth, 2001).

References: Amoaka, G.K., Arthur, E., Bandoh, C. and Katah, R.K. (2012), “The Impact of Effective Customer Relationship

Management (CRM) on Repurchase: A Case Study of (GOLDEN TULIP) Hotel (ACCRA-GHANA),” African Journal of Marketing Management, 4(1), pp. 17-29.

Bruhn, M. (2001), Orientarea Spre Clienti. Temelia afacerii de success, Ed. Econbomica, Bucuresti, p. 20. Kaplan, R.S. and Norton, D.P. (2004), Strategy Maps: Converting Intangible Assets into Tangible Outcomes,

Boston, Massachusetts: Harvard Business School Press. Kellen, V. (2002), CRM Measurement Frameworks, Research Report, DePaul University. Kim, W.C. and Mauborgne, R. (2005), Blue Ocean Strategy: How to Create Uncontested Market Space and

Make the Competition Irrelevant, Boston, Massachusetts: Harvard Business School Press. Parvatiyar, A. and Sheth, J.N. (2001), “Customer Relationship Management: Emerging Practice, Process, and

Discipline,” Journal of Economic and Social Research, 3(2), pp. 1-34. Payne, A. and Frow, P. (2005), “A Strategic Framework for Customer Relationship Management,” Journal of

Marketing, 69, pp. 167-176. Ryan, R. (2008), Leadership Development: A Guide for HR and Training Professionals, Oxford, UK: Butterworth-

Heinemann. Shang, K.C. and Lu, C.S. (2012), “Customer Relationship Management and Firm Performance: An Empirical

Study of Freight Forwarder Services,” Journal of Marine Science and Technology, 20(1), pp. 64-72. Spitzer, D.R. (2007), Transforming Performance Measurement: Rethinking the Way we Measure and Drive

Organizational Success, New York, NY: AMACOM. Teo, T.S.H., Devadoss, P. and Pan, S.L. (2006), “Towards a Holistic Perspective of Customer Relationship

Management (CRM) Implementation: A Case Study of the Housing and Development Board, Singapore,” Decision Support Systems, 42, pp. 1613-1627.

References: Tan, C.C. (2013a), “Strategy-driven Approach to Creating Business Model and Business Plan,” Interim Research

Report, School of Management, Mae Fah Luang University.

Chetsopit Trongsawat, Prapun Treewattanawong, Nang Poe Hnin Phyu, Kanuengnij Sattayadit, Supakarn Ammartmanee, Chaw Su Kyi, Parinda Treewattanawong, Songkwan Nakinbodee, Sangchan Kantabutra, C.C. Tan, and Pratsanee Na Keeree (2013), “Making Business Model alive for Innovative and Competitively Advantageous Enterprise: A Theoretically Robust Formulation,” presented to the 29th National Graduate Research Conference, Mae Fah Luang University, Thailand, 24-25 October.

Tan, C.C. (2013b), “Sustainable Innovation-cum-Learning driven Business Model Framework,” Interim Research Report, School of Management, Mae Fah Luang University.

Johnson, M. (2010), “Seizing the White Space: Business Model Innovation for Growth and Renewal,” Harvard Business Press.

Brand Equity

To meet customer expectations and motivate customer retention, that is to build brand equity, high levels of customer awareness and service need to be present throughout the product service delivery process, and to enable this, CRM is an effective means.

Bruhn (2001) advocated that CRM activities are of two types, namely offering driven or experience driven, and in Berry (2000), it was pointed out superior customer experiences are difficult for competitors to imitate. In other words, it is invention rather than imitation that rules branding efforts (ibid, p. 131). Further, it was acknowledged that in service industry, brand is associated with the company as an entity, which is different from consumer goods industry where brand is associated with the experiences of the products. In either case, it is the customer’s actual experience that disproportionately shapes brand meaning and thus brand equity – that is, source of experience is the locus of brand formation.

Specifically, brand equity is the result of the differential effort of brand awareness and meaning combined on customer response to the marketing of the brand (Keller, 1993), and both brand awareness and brand meaning are serving two different purposes. While two organizations, for instance, could have equally high level of brand awareness, their respective brand meaning could be vastly different. Differences are illustrated, for instance, between Southwest Airlines versus Northwest Airlines, and Wal-Mart versus Target.

In Berry (2000), factors that impact on brand equity are both uncontrollable and controllable, in both communication and experience domains. Communication, as cited in Berry (2000, p. 129), have the most influence with new customers who have had little or no direct experience with the company’s service to shape their impressions. Communication is predominantly a means of CRM on offering centric rather than experience enhanced strategy (Bruhn, 2001).

Customer experience managed by CRM is a means to bridge the mental picture of both the inside (organization) and the outside (customers). This is important because of the intangible nature of service (Zeithaml and Bitner, 1996), and thus it is important that organization makes a consistent and persistent effort to help customers visualize the brand and have trust on it, essentially creating brand equity, mind share, money share, and market share.

Both the controllable and uncontrollable factors contributing to brand equity can be illustrated using the proposed business model framework.



and Services

Deliver Values

Revenue Streams


Long-term Shareholder and Stakeholder Values,

ROI

Business Model: Implementation

Controllable communication and experience Offering centric Experience enhanced

Targeted Customers Brand

Equity

Uncontrolled communication and experience

Invention (Being

Different)

CRM Strategies and Activities across Business Model

Imitation

Action Type:

Accumulative CRM:

Brand Awareness

Brand Meaning

Brand Equity

Strategy Type:

Brand Characteristics:

Strong Brand

Offering Centric

Experience Centric

Weak Brand

Experience Centric

Offering Centric

Factors of CRM:

Case Illustration: The importance of branding and brand image/message to reflect the customers’ identities.

Brand: CVP Value Curves


Targeted Customers

Value Producing Activities

Resources

Aligned

It is extremely vital the branding effort and image reflect customers’ identities – that is, the brand’s values align emotionally to customers’ identities.

Example; Rust et al. (2004) illustrated how Honda decided to launch a new brand “Acura” so that the traditional associated image of the Honda brand with economy cars i.e. not very exciting cars did not influence on new exciting models.

In short, this simple example illustrates that to build brand equity it is important the messages delivered by every part of the business model are aligned and inter-supportable, inter-enable.

Case Illustration: An example of what research as key resource is needed to develop brand equity and customer

equity.



Targeted Customers

Value Producing Activities

Resources Research

Chick-fil-A holds store operator workshops in individual markets to present their research findings, so as to help them develop an understanding on brand-building strategies for their markets on the basis of the research. In short, Chick-fil-A uses research, branding and CRM strategies to educate the store operators about brand marketing, and to internalize them with the mental picture of their brand design and messages, and the concept and values of the service. Berry (2000, p. 135) advocated that the more providers internalize the concept and values of the services, the more consistently and effectively they are likely to perform it, and to align and reflect what the customers really desire and their identities (Rust et al. 2004, p. 2)

The brand should conveys the company’s reason for being

References: Beithaml, V.A. and Bitner, M.J. (1996), Services Marketing, USA: McGraw-Hill. Berry, L.L. (2000), “Cultivating Service Brand Equity,” Academy of Marketing Science Journal, 28(1), pp.

128-137. Bruhn, M. (2001), Orientarea Spre Clienti, Temelia Afacerii de Succes, Ed. Economica, Bucuresti. Keller, K.L. (1993), “Conceptualizing, Measuring, and Managing Customer-based Brand Equity,” Journal of

Marketing, 57, pp. 1-22. Rust, R.T., Zeithaml, V.A. and Lemon, K.N. (2004), “Customer-Centered Brand Management,” Harvard

Business Review, September, pp. 1-9.

Eco-Resort

Musa et al. (2012) targeted on the environmental provision as stimulating sources to arouse the positive emotional states of tourists, based on the model that describes the emotional impact of environments advocated by Mehrabian and Russell (1974).

Environmental Stimuli

Emotional States (PAD): Pleasure Arousal Dominance

Behavior: Approach Avoidance

Source: PAD Environmental Psychological Model, Mehrabian and Russell (1974)

The environmental stimuli to emotional reaction, also surprisingly, match with the two dimensions of actions needed to establish brand equity, namely offering centric emotional states and the experience enhanced emotional states. Brand awareness is predominantly offering centric, as cited in Berry (2000, p. 129), “Customers may gain awareness and form impressions about a brand not only from company communications but from communications about the company offered by independent sources,” and thus brand awareness strategies are in particular needed to target new customers. Pleasure, similarly, corresponds to evaluation by the tourists (Mehbrabian and Russell, 1974), which is an impetus for brand awareness – to get the tourists to connect to the organization i.e. eco-resort establishment.

Brand meaning, on the other hand, refers to the customer’s dominant perceptions of the brand, through close interaction with the activities i.e. eco-resort services and experiences, provided by the eco-resort. Thus experience of the tourists with the brand services is the primary influence on brand meaning. Mehrabian and Russell (1974) explained such activity-based emotional reaction to the environmental stimuli as the “Arousal.”

The “Dominance” level of the emotional states, as a result of the environmental stimuli, relates to the cumulative measure of the offering and experiential impression (cf. Musa and Kassim, 2012). In this way, the emotional state of reaction at the cumulative offering and experience levels of brand encounters essentially establishes the so-called brand equity for experienced tourists (Berry, 2000). This combinational and compositional resultant, known as brand equity, is understood by Keller (1993) as the differential effect of brand awareness and meaning combined on customer response to the marketing of the brand, in which CRM is a key implementation strategy of the marketing.

Environmental Stimuli(A form of Resource)

Emotional States (PAD): Pleasure Arousal Dominance

Brand Impact: Brand Awareness Brand Meaning Brand Equity

From the view of the business model framework, environment to stimulate emotional reaction and engagement of the tourists (or customers) should be extended to other dimensions or domains of resources i.e. tour guides, employees, technology, the eco-resort environmental design, etc.

Value Curves: Customer Value Propostions, Bases of Competition and Intensity.

As cited in Musa and Kassim (2012), customers today are seeking for more value, choices, and subsequently meaningful and memorable experience. Such a trendy reality can be seen, for instance, in Starbucks, who could squeeze more tables and chairs into their stores from the traditional cost-effectiveness perspective, but instead they resolve to create an ample spatial environment to sell a respite and a social experience (Berry, 2000, p. 130).

Along the view that strong branding needs branding distinctiveness and message consistency, by performing their core services (offering centric) well, from reaching customers emotionally (experience enhanced) (cf. Berry, 2000; Bruhn, 2001), the concept of “Experiential Value” seems both practical and applicable.

“Experiential Value” is defined by Mathwick et al. (2002, p. 53) as “A perceived, relativistic preference for product attributes or service performance arising from interaction within a consumption goals or purposes.”

Thus, this definition skillfully blends both offering and experience centric CRM strategies and actions together, to establish consistent and trustworthy messages needed to build strong brand equity. In a way, both brand awareness and brand meaning are inseparable parts of the same entity – brand value or brand equity.

Experiential Value

Emotional States and Organizational

Commitment

Musa et al. (2012) and Musa and Kassim (2012) extended the concept of “Experiential Value” to ecotourism industry and identified six dominant dimensions of the experiential value for eco-tourists visiting Malaysia. The following are the questionnaire items, categorized after exploratory and confirmatory factor analysis, for the eco-tourism experiential values (p. 740-741):

Aesthetics Peaceful and restful atmosphere Truly tropical rainforest paradise Wilderness of the national park thrills me Scenic landscape excite me Beauty of this park is aesthetically pleasing

Escapism Feel like I am in a different world So involved that I forget everything else This vacation “gets me away from it all” Jungle trekking and hiking challenging

Social Enjoy socializing with others Opportunities to make friends who share the same interest

Service Tour guides are knowledgeable Tour guides are helpful and friendly Activities competently organized

Economy Knowledge Enrichment

Musa et al. (2012) and Musa and Kassim (2012) extended the concept of “Experiential Value” to ecotourism industry and identified six dominant dimensions of the experiential value for eco-tourists visiting Malaysia. The following are the questionnaire items, categorized after factor structuralization analysis, for the eco-tourism experiential values:

Economy Cost of this trip is considered reasonable My money’s worth spent for this vacation Overall cost of the trip is of economic value

Knowledge Enrichment Learn and particulate in local culture and traditional activities

The questionnaire items to measure eco-tourist experience quality (Musa and Kassim, 2012, p. 741):

Pleasure: Disappointed – Delighted Not enjoyable – enjoyable Unsatisfied – Satisfied Unmemorable - Memorable

Arousal: Boring – Interesting Forgettable - Unforgettable

In their confirmatory factor analysis, all reliability of the questionnaire items are above 0.70, matching the acceptable requirement for construct reliability as advocated by Nunnally and Bernstein (1994).

Aesthetics: Aesthetics

value of the environment

Pricing Escapism Social Service Economy Knowledge Enrichment

Our eco-tourism or eco-resort concept

Competitors

Substitutes

In sum, to actively aim to develop strong brand meaning and awareness, it is important to implement and excel in emotional involvement strategies i.e. of CRM, across all the interaction between the customer and seller (Musa and Kassim, 2012), and the customer and the tourism site, which is rooted in creating total customer experience as a totally positive, engaging, enduring, and socially fulfilling physical and emotional experience across all major levels of one’s consumption chain (Mascarenhas et al. 2006).

The interrelationship among business model concept, CRM factors and brand equity development strategies are shown in the Table as follows.

Invention (Being

Different)

CRM Strategies and Activities across Business Model

Imitation

Action Type:

Accumulative CRM:

Brand Awareness

Brand Meaning

Brand Equity

Strategy Type:

Brand Characteristics:

Strong Brand

Offering Centric

Experience Centric

Weak Brand

Experience Centric

Offering Centric

Factors of CRM:

Val

ue C

urve

s:E

co-t

ouris

m E

xper

ient

ial V

alue

Eco

-Res

ort E

xper

ient

ial V

alue

Fou

r G

reen

ness

Lev

els

Note that the 4 greenness levels are the “innovative greenness” description that depicts the nature of competition of the business model, which is a reduction of constructs originally conceived by Andersen and Nilsson-Andersen (2012) but skillfully incorporates the national competitiveness model of Michael Porter (1990). In short, competitiveness of a business entity is an interplay of the “me-we-world” strategies, namely: light green that skillfully anticipates and competent in compliance to regulations and laws, market green which innovatively looks into the underserved or over-served needs of consumers i.e. tourists, cluster or value-chain green that clusters all stakeholders into cooperative and synergistic participation and involvement, and finally the innovation dark green which realizes the cradle-to-cradle or resource-regenerative concept of the business model (see Tan’s (2013b) sustainable business model).

The seven levels of greenness innovation (Andersen and Nilsson-Andersen, 2012) can be regrouped into 4 levels, namely the light green, market green, stakeholder green, and innovation dark green in Tan (2013c), based on the “Me-We-World” or tactical ethics (self-interest)-societal ethics-transcendental ethical levels of corporations (Tan, 2013c).

Tan (2013c) Andersen and Nilsson-Andersen (2012)

Innovation Greenness Level:

Light Green Level 1: Regulation drivenLevel 2: Compliance driven

Market Green -Cluster or Value-Chain Level 3: Production Chain drivenGreen Level 4: New design or existing offering redesign for eco-friendliness

Level 5: Business model focusLevel 6: Creating new platforms

Innovation Dark Green Level 7: Disrupting existing industries and developing entirely new ones

Ethical Level:

Me

We

World

BA

Illegal

Unethical Ethical

Highly ethicalHighly unethical

Obeying law

Light Green

Market Green

Cluster or Value Chain Green

Innovation Dark Green

Competitiveness

Innovation Green

Market

Clusters and Culture

Red: Illustrated (CC Tan, 2014)

Compliance

References: Andersen, J.B. and Nilsson-Andersen, P. (2012), “Green Business Model Innovation in the Tourism and Experience

Economy,” Nordic Innovation. Mascarenhas, O.A., Kesavan, R., and Bernacchi, M.D. (2006), “Lasting Customer Loyalty: A Total Customer

Experience Approach,” Journal of Consumer Marketing, 23(7), pp. 397-405. Mathwick, C., Malhotra, N. and Rigdon, E. (2002), “The Effect of Dynamic Retail Experiences on Perception of Value:

An Internet and Catalog Comparison,” Journal of Retailing, 78, pp. 51-60. Mehrabian, A. and Russell, J.A. (1974), “The Basic Emotional Impact of Environments,” Perceptual and Motor Skill,

38, pp. 283-301. Musa, R., Kassim, R.M., and Putit, L. (2012), Disentangle the Factorial Structure of Ecotourism Experiential Value

(EEV) and its Effects on Total Eco-Tourist Behavioral Intentions (EBI): An Analysis of Taman Negara National Park,” Technical Report, Institute of Research, Development and Commercialization, Universiti Teknologi MARA.

Musa, R. and Kassim, R.M. (2012), “Factorial Structure and Psychometric Validation of Ecotourism Experiential Value Construct: Insights from Taman Negara National Park, Malaysia,” World Academy of Science, Engineering and Technology, 69, pp. pp. 738-746.

Nunnally, J.C. and Bernstein, I. (1994), “Psychometric Theory,” 3rd Edition, New York: McGraw-Hill Inc. Porter, M.E. (1990), The Competitive Advantage of Nations, New York, Free Press. Tan, C.C. (2013c), Business Ethics, Interim Research Report, School of Management, Mae Fah Luang Univversity. The Star, “Eco-tourism best-seller in sector, says minister.” 12/12/2003.

The Framework

Resort Establishment Sustainability awareness Innovative experience

and brand meaning

Ecotourism, Tourism and Hospitality Industries

Ecotourism is one of the “best-sellers” subsector of tourism in Malaysia. The Star (2003, December) reported that 35% of the visitors from developed nations came to Malaysia because of its ecotourism site.

Thailand, having a richness in culture and environmental diversity and excitement, should share similar context.

Supporting

In sum, the following theoretical model becomes clear and loud that has powerful explanatory power as discussed above, and also is holistic in nature or systems oriented that embraces all the key strategic and operational values realization capabilities of the organization.

Sustainable Business Model embraced CRM Offering centric Experience enhanced Sustainable business model Value-curve driven

Brand Equity establishment

Propositions or Hypotheses:

Strong brand awareness by being different to what is offered and serviced through accumulative CRM efforts across key sustainable business model activities.

Strong brand meaning by being different to what the consumers i.e. tourists are experiencing that match the customer value propositions delivered through accumulative CRM efforts across key sustainable business model activities.

Most of the factors that contribute to the success of CRM are very much of the view of the organization (the inside view), and the evidences are provided in the Table below, which is organized from the research findings and the literature review summary of Vazifehdust et al. (2012).

In our research, we reinforce that there is a need to match the internal brand vision with the external (customer) brand vision and meaning. In short, brand equity development through CRM must enable the organization to create consumer’s mental structure or vision, which helps them to organize knowledge and understanding about the brand, the products and services, that are in alignment with the intended or designed. This understanding reinforces our holistic approach to CRM in developing brand equity.

Since the internal factors to CRM are relatively well established, the research validation of how they contribute to brand equity can be conducted through questionnaire-based survey. However, as the ultimate objective of this research is innovative new-venture development, and since the internal perspectives of CRM factors are relatively well established in the literature, the research effort will not be made on this aspect. However, the knowledge of the literature on the organizational factors of CRM will be innovatively challenged in the business model and business plan – in translating them to CRM strategies or action plans.

Instead, research effort will be spent on exploring the factors of CRM from the customer’s perspective – what is the perceived CRM factors from the view of customers i.e. tourists. This is where the research gap is located. Since no research information is available at this juncture, the research is thus explorative in nature, and an interview-based approach will be designed for this purpose.

Vision, Mission, Culture and Strategy: Culture and Structure change (Torkzadeh et al. 2004), Culture (Strauss et al. 2006; Nonaka, 2009); Cultural change and customer orientation (King and Lam,

2008) Strategy (Handen, 2000), Strategy development process (Lindgreen et al. 2004) Top management support (Croteau and Li, 2003; Goodhue et al. 2002;) Vision (Goodhue et al. 2002)Resource:

Business and IT alignment Champion leadership (Torkzadeh et al.

2004), Top management support (King and Lam, 2008)

Organization (Handen, 2000), Definition of the company’s organizational framework (Finnegan et al. 2006), HR organization and management (Finnegan et al. 2006)

Human factor (Campbell, 2007; Nonaka, 2009)

Infrastructure (Leibowitz, 2010) Technology (Handen, 2000; Campbell, 2007;

Nonaka, 2009) and Technological Readiness (Croteau and Li, 2003; King and Lam, 2008), information management process (Lindgreen et al. 2004), information system (Finnegan et al. 2006)

Targeted Customers: Segmentation

(Handen, 2000)

Customer Value Proposition (Value Curve): Brand strategy (Strauss et al. 2006) Innovation and quality (Bull, 2006) Value creation process (Lindgreen et al. 2004; Strauss et al. 2006)

Revenue Stream: Billing issues

(Kim and Kim, 2006)

Production and Customer-Facing Activities: Call back information content (Kim and Kim, 2006) Communication distribution infrastructure (Bull, 2006) Communication of CRM strategy (King and Lam, 2008) Customer contact process (Kim and Kim, 2006) Customer interaction strategy (Strauss et al. 2006) Customer relations (Bull, 2006) Dispensing and replacement process (Kim and Kim, 2006) Integration process (Lindgreen et al. 2004) Process map (Finnegan et al. 2006), Process (Campbell, 2007; Handen,

2000; Nonaka, 2009; Leibowitz, 2010) Queuing procedure (Kim and Kim, 2006) Customer strategy (Finnegan et al. 2006; Strauss et al. 2006)

Continuous Improvement, Organizational Learning and Innovation: Accountability and ownership (Kim and Kim, 2006) Business dynamics (Bull, 2006) Definition of a customer relationship assessment system (Finnegan et al. 2006) Knowledge management capability (Croteau and Li, 2003; King and Lam, 2008) Performance assessment process (Lindgreen et al. 2004; Leibowtiz, 2010) Process change capability (King and Lam, 2008) Standard operating procedure compliance (Kim and Kim, 2006) System integration and Capability (Torkzadeh et al. 2004; King and Lam, 2008) Willingness to change processes and willingness to share data (Goodhue et al. 2002; King and Lam, 2008) Willingness to share data (King and Lam, 2008)

CRM Factors for Success across Sustainable Business Model Framework – from the Inside (Organizational) Perspective (source: adapted and organized from Vazifehdust et al. 2012)

Fundamental Characteristics of Eco-Resort: IUCN (International Union for Conservational Nature Resources, 2012) advocated five

principles for the design of eco-favorable resort that is also biodiversity rich, namely: 1. Adopt an ecosystem-based approach in tourism development planning:

helps identify and address cumulative and multi-source impacts of hotels and resorts.

2. Manage impacts on biodiversity from hotel development and attempt to achieve an overall positive contribution:

resort makes all efforts to avoid negative impacts on biodiversity and associated livelihoods from sitting, design and construction.

3. Design with nature and adopt nature-based solution: i.e. hotel and resort development aim to blend into the landscape and

become integrated into the ecosystem. 4. Respect, involve, and support local communities:

Actively engage local communities in the resort-driven activities. 5. Build collaborative among stakeholders:

Collaborative participation to mobilize and foster the knowledge and capacities of all stakeholders.

In short, eco-resort concept aims to skillfully blend the eco-resort design harmoniously and creatively in natural and participative sitting that involves cultural, environmental and commercial elements (Peters, 2001).

Although eco-resort objectives may reflect many of the eco-tourist characteristics, it is not necessary that the design concept to be targeted to only eco-tourists. In fact, through innovation in both design and services, eco-resort could target at tourists and hospitality customers in the widest scopes possible, as human loves nature and nature-human engagement has the natural capacity to heal and induce powerful positive emotion (Haviland-Jones et al. 2005), in which positive experience and emotional feeling are needed to condition to the arising of strong brand equity (Berry, 2000).

The eco-tourists have the following characteristics (Weaver, 2000; cited in Early, 2011): Bio-centric Have a deep commitment to environmental issues Believe activities should enhance resources Are desirous of a deep, meaningful interaction with nature. Prefer small groups and few amenities.


Customer-facing activities: Active service

attitude of employees and the managers

Keeping the guests in constant updates of the activities of the eco-resort i.e. through facebook.

Eternal membership with special packages.

Memorial souvenirs to guests.

Understand what the guests need and how they really need them.

Targeted Customers Eco-resort

themes really matched with the guest’s interest

Value Producing Activities: Experiential

engagement with eco-cultural activities within the eco-resort compound and its surroundings

Resources: Relationship with

the Environmental Stimuli within the eco-resort compound

Relationship with the local community within the eco-resort compound

Information rich website

Thus, suggested CRM factors from the views of the tourists or customers are: (Through interviews)

Brand message is clear

Values of the eco-resort are clear and can be loudly identified by the resort guests.

A diversified eco-themes and activities that match diversified customer segments.

04/10/2023 217

Customer Value Proposition

04/10/2023 218

Simple as it seems, successful commercialization depends on combining an offering that solves a real customer problem with a business model whereby the company can deliver that offering at a profit (Johnson and Suskewicz, 2009). Thus the fundamental structure and mechanism that enables successful commercialization is business model.

What then is business model? Since no generally accepted definition of a business model has emerged to date (Shafer et al. 2005), we begin by reviewing few versions before we finalize it with our version.

In Morris et al. (2005, p. 727), business model is “a concise representation of how an interrelated set of decision variables in the areas of venture strategy, architecture, and economics are addressed to create a sustainable competitive advantage in defined markets.”

In Teece (2010, p. 179), a business model articulates the logic, the data, and other evidence that support a value proposition for the customer, and a viable structure of revenue and costs for the enterprise delivering that value. As such, “a business model is more generic than a business strategy. Coupling strategy and business analysis is needed to protect competitive advantage resulting from the new model design.” (ibid, p. 179).

From the above understanding, it is obvious that customer value proposition becomes the bridge between value creation activities and value delivering activities and capturing activities. This theme is highlighted in Tan (2013c). According to Johnson et al. (2008), it is not possible to invent or reinvent a business model without first identifying a clear customer value proposition, which is a way to help customers get an important job done.

04/10/2023 219

In entrepreneurial term, we define a business model as a business architecture that facilitates an organization to innovate on values to be embedded in products or services, and then systematically examines how that values (i.e. solution to solve a customer’s problem or to fulfil their needs and desires) are to be designed, developed, manufactured, serviced and delivered to customers, and finally to be captured in order to return to the organization in terms of knowledge and wisdom, investment funds and resource regeneration know-how, and its best benefit lies in vividly presenting each strategy and key activity within the business model using actual pictures to tell the stories and movies.

Figure below depicts the overall generic structure or architecture of the business model (Tan, 2013a, 2013b, and 2013c).


tens

ity




Earn Value

Vision

Strategies



Business Model

Figure: Sustainable Innovation-cum-Learning driven Business Model Framework (Source: Tan, 2013b; Chetsopit Trongsawat et al. 2013

Cost StructureRevenue Stream (Capture Value)

Price

Benefits

What a customer is willing to pay (price)

Value =Benefits

Price

Value Curve

ProduceValue

Deliver ValueTo Target

Customers and Stakeholders

including Environment

Revenue – Cost = ProfitLong-Term Shareholder Value

Revenue StreamCost Structure

Investment

Res

ourc

es (

Tra

nsfo

rmed

and

Tra

nsfo

rmin

g)

Continuous Organizational Learning and Innovation

Corporate Vision and Mission, Strategy and Supporting/Enabling Business Functions and Systems

04/10/2023 222

Value curves is a very innovative way to merge or unify the competitive analysis of Porter (1980), Kim and Mauborgne’s (2005) blue ocean strategy, customer value proposition concepts (Anderson et al. 2006) and SWOT analysis into one curve, essentially capturing the patterns of parity, difference and resonance (Anderson et al. 2006) within the three interlocking contexts of business – namely, customers, company, and competitors. These unifying characteristics are first discussed in Tan (2013) as means to provide alignment assessment to business model framework.

In Kim and Mauborgne (2005, p. 17), they advocated that value innovation that is summarizing in value curve, is more than innovation and is in fact about strategy that embraces the entire system of a company’s activities, namely business model in short (Tan, 2013a). Even within the differential or trade-off context of each organization’s strategies or business model, still there exists three similar characteristics or types of fit across all business model’s activities, to what is stated Professor Michael Porter (1996), namely:

First-order fit that is about simple consistency between each activity (function) and the overall strategy – this consistency requirement ensures that the competitive advantages of activities cumulate and do not erode or cancel themselves out (ibid, p. 71)

Second-order fit which is about mutual-reinforcing of each activity and strategy. Third-order fit culminates in optimized state of differentiation that resonates with unique

business model.

04/10/2023 223

By exploiting and synthesizing the research findings of three separate gurus in respectively marketing (Anderson et al. 2006), business strategy and competition (Kim and Mauborgne, 2005) and Michael Porter (1996), we propose an interlocking scheme to capture customer value proposition in value curve structure, which is depicted in two-axis plots of the intensity of competition versus the bases of competition.

In this way, value curve clearly outlines the patterns of parity, difference and zones of resonance among the new entries, the competitors within the industry, and new substitutes, each strategizing to focus on different product or service values.

Having bringing different key stakeholders into a single platform to organize and structure business model (Tan, 2013), value curve or being called the strategy canvas in Kim and Mauborgne (2005) has done its role effectively as both a diagnostic and an action framework for building a compelling blue ocean strategy (Kim and Mauborgne, 2005, p. 25). As cited in Kim and Mauborgne (2005, p. 25) this depiction essentially “allows you to understand where the competition is currently investing, the factors the industry currently competes on in products, services, and delivery, and what customers receive from the existing competitive offerings on the market.”

In short, this single-platform customer-value-proposition value curve presents the interlocking dynamics of stakeholder engagement and participation among the customers, the competitors and the company – the 3Cs of business, and skillfully bridges both the value-creation-side of activities to the value-delivery-side of activities (Tan, 2013b).

04/10/2023 224

Apart from acknowledging three distinctive categories of customer values or bases of competition in the value curve, Kim and Mauborgne (2005) explain that it also depicts the three characteristics of a good strategy, namely: (1) the value curve should has focus – that is, the company does not diffuse its efforts across all key factors of competition, (2) the value curve should demonstrate divergence – that is to show how an organize diverges its strategies from the other players, a result of not benchmarking competitors but instead looking across alternatives, and (3) the value curve should have a compelling tagline of the organization’s strategic profile – that is resonating. Further explained and illustrated in Kim and Mauborgne (2005, p. 37), without these three qualities, a company’s strategy “will likely be muddled, undifferentiated, and hard to communicate with a high cost structure.” In short, these three qualities meets the three criteria that define “a good blue ocean strategy.”

04/10/2023 225

Customers

CompetitorsCompany

All Benefits: Most in Parity

Anderson et al. (2006)

Favorable Points of Difference

Resonating Focus

Tan,

C.C

. (20

13a)

Value Curves (Customer Value Proposition, Intensity-Bases of CompetitionUnifying Characteristics

of Business Model (Tan, 2013a,b)

Business Model Components:


Kim and Marborgne (2005) Blue-Ocean Strategy Compelling Tag

DivergenceFocus

Value-Creating ActivitiesPorter (1996) Simple Consistency Reinforcing Optimizing

Brunh (2001), Berry (2000), Rust et al. (2000), Tan (2013c)

CRM-Brand Equity Offering Centric Experiential and Resonating Centric(Brand Awareness,

Value Equity) (Brand Meaning)

Brand Equity

Relationship Equity

04/10/2023 226

The table above mentioned three types of equity that reinforces the importance of CRM and other components in the business model for winning business. Following the earlier work by Rust, Zeithaml and Lemon (2000), three types of equity have been described as antecedents to customer equity: value equity, brand equity, and relationship equity, which similar characteristics of other research findings i.e. CRM being offering centric to create brand awareness, and being experiencing and resonating to create strong brand meaning (Bruhn, 2001; Berry, 2000; Tan, 2013c):

Value Equity – is the customer’s appraisal of the brand based on its utility (Richards and Jones, 2008), which is offering centric (Bruhn, 2001), contributing predominantly to brand awareness (Berry, 2001). In Kim and Mauborgne (2005, p. 13), utility-induced alignment to business innovation is fundamental concept to value innovation for the creation of value curve or strategy canvas. In other words, value innovation occurs only when companies align innovation with utility, price, and cost positions (ibid, p. 13).

Brand Equity – is a more subjective appraisal of the brand and is more concerned with image and meaning than the rational evaluation of price, quality, and convenience (Lemon et al. 2001; Rust et al. 2000; Richards and Jones, 2008, p. 122).

Relationship Equity – involves the special relationship elements that link the customer to the brand and serve to cement the relationship above and beyond value and brand equity (Richards and Jones, 2008, p. 122), which is strongly effected by the CRM efforts across the business model chain (Tan, 2013,c). Table below depicts typical benefits of targeting right CRM factors across business model which could be extended to other types or dimensions of business and functional strategies. As such, sustainable business model provides a holistic but simple framework to generate, design and develop, deliver and capture values for the organizations and the stakeholders, and the world (Tan, 2013c).

04/10/2023 227

Some Benefits of CRM being targeted across Business Model:(Source: Adapted from Tan, 2013c business model structure, while beneficial components from Buttle, 2004; Chen and Popovich, 2003; Croteau and Li, 2003; Eggert, Ulaga and Schultz, 2006; Jones et al. 2005; Leigh and Tanner, 2004; Park and Kim, 2003; Parvatiyar and Sheth, 2001, Reinartz et al. 2004; Richards and Jones, 2008; Rigby et al. 2002; Rivers and Dart (1999); Sheth et al. (2000), Schivinski and Dabrowski, 2013; Thomas et al. 2004; Winer, 2001; Zikmund et al. 2003):

Resource Value-Creation Value Curve Value-Delivery Targeted Customers

Improved ability to target profitable customers

Integrated offerings across channels.

Improved sales force efficiency and effectiveness

Individualized marketing messages

Improved customer service efficiency and effectiveness

Improved media communication

Improves buyer-seller integration

Customized products and services

Improved pricing Enables

customization of products and services

Improves customization of services and product offerings

Positive influence on brand awareness, brand meaning, brand equity, and customer equity

Increase customer satisfaction and loyalty

Improves customer targeting, obtaining and keeping

Improves support for product development

Increases supply-chain efficiency via personal contact

Enhances supplier know-how

Improves resource allocation to customers

04/10/2023 228



Provides customers a “one-to-one” experience

Enables customized marketing plan for each customer

Enables salespeople to have a lifetime value perspective

Simplifies customer support

Enables key account management and business development

Improves co-branding, joint-marketing and strategic alliances

Improves product differentiation

Enables ability to offer right products and services to right customers

Improves customer segmentation

Improves customer loyalty

Motivates employees to foster customer relationship

Improves supply chain planning and integration

04/10/2023 229



Improves marketing effectiveness

Improves customization of marketing efforts to individual customers

Personalizes service Enhances

communication across multiple selling channels

Enhances acquisition, development and development of customers

Automation of functions etc.

Improves customer solutions and relational values

Enables personalized products and services

Improves customer commitment, satisfaction and loyalty

Increase share of customers

Improves customer segmentation and valuation

Enables better allocation of resources across the customer portfolio

Reduces administrative duties

Supports new product and service development

04/10/2023 230


Cost Structure Sustainability, Organizational Learning and Innovation Revenue Stream

Reduces cost to serve

Improves ability to understand costs

Increase revenue Improves cross-

selling and up-selling Enables individualized

pricing

Increases data sharing across selling organization Enhances ability to create long-term partnerships Assists in gathering competitive intelligence Coordinates communication Improves knowledge management Improves knowledge sharing within the selling firm Enables companies to pursue “best practices” Enhances long-term profitability Enhances customer knowledge and feedback Enhances decision making (strategy) Improves the financial efficiency of marketing efforts

04/10/2023 231

References: Anderson, J.C., Narus, J.A. and van Rossum, W. (2006), “Customer Value Propositions in Business

Markets,” Harvard Business Review, pp. 91-99. Berry, L.L. (2000), “Cultivating Service Brand Equity,” Academy of Marketing Science Journal, 28(1), pp.

128-137. Bruhn, M. (2001), Orientarea Spre Clienti, Temelia Afacerii de Succes, Ed. Economica, Bucuresti. Johnson, M.W. and Suskewicz, J. (2009), “How to Jump-Start the Clean-Tech Economy,” Harvard

Business Review, November. Kim, W.C. and Mauborgne, R. (2005), Blue Ocean Strategy: How to Create Uncontested Market Space

and Make the Competition Irrelevant, Boston, Massachusetts: Harvard Business School Press. Lemon, K.N., Rust, R.T. and Zeithaml, V.A. (2001), “What Drives Customer Equity?” Marketing

Management, 10, pp. 20-25. Morris, M., Schindehutte, M. and Allen, J. (2005), “The Entrepreneur’s Business Model: Toward a Unified

Perspective,” Journal of Business Research, 58, pp. 726-735. Porter, M.E. (1996), “What is Strategy?”, Harvard Business Review, pp. 61-78. Richards, K.A. and Jones, E. (2008), “Customer Relationship Management: Finding Value Drivers,”

Industrial Marketing Management, 37, pp. 120-130.

04/10/2023 232

References: Rust, R.T., Zeithaml, V.A. and Lemon, K.N. (2000), Driving Customer Equity, New York, NY: Free Press. Schivinski, B. and Dabrowski, D. (2013), The Impact of Brand Communication on Brand Equity

Dimensions and Brand Purchase Intention through Facebook, Working Paper Series A (Economics, Management, Statistics), No. 4/2013 (4), GUT Faculty of Management and Economics, Gransk University of Technology.

Shafer, S.M., Smith, H.J. and Linder, J.C. (2005), “The Power of Business Model,” Business Horizons, 48, pp. 199-207.

Tan, C.C. (2013a), A New Business Model, Interim Research Report, School of Management, Mae Fah Luang University.

Tan, C.C. (2013b), “Sustainable Innovation-cum-Learning driven Business Model Framework,” Interim Business Research Report, School of Management, Mae Fah Luang University.

Tan, C.C. (2013c), “Towards a Holistic Approach to CRM Implementation: A Case with Eco-Resort,” Interim Research Report, School of Management, Mae Fah Luaung University.

Teece, D.J. (2010), “Business Models, Business Strategy, and Innovation,” Long Range Planning, 43, pp. 172-194.

04/10/2023 233

References: Buttle, F. (2004), Customer Relationship Management: Concept and Tools, Burlington, MA: Elsevier. Chen, I.J. and Popovich, K. (2003), “Understanding Customer Relationship Management (CRM):

People, Process, and Technology,” Business Management Journal, 9(5), pp. 672-688. Croteau, A. and Li, P. (2003), “Critical Success Factors of CRM Technological Initiatives,” Canadian

Journal of Administrative Sciences, 20(1), pp. 21-34. Eggert, A., Ulaga, W. and Schultz, F. (2006), “Value Creation in the Relationship Lifecycle: A Quasi-

Longitudinal Analysis,” Industrial Marketing Management, 35(1), pp. 20-27.Harvard Business Review, pp. 2-11.

Johnson, M.W., Christensen, C.M. and Kagermann, H. (2008), “Reinventing Your Business Model,” Jones, E., Brown, S.P., Zoltners, A.A. and Weitz, B.A. (2005), “The Changing Environment of Selling and

Sales Management,” Journal of Personal Selling and Sales Management, XXV(2), pp. 105-111. Leigh, T.W. and Tanner, Jr., J.F. (2004), “Introduction: JPSSM Special Issue on Customer Relationship

Management,” Journal of Personal Selling and Sales Management, 24(4), pp. 259-262. Park, C. and Kim, Y. (2003), “A Framework of Dynamic CRM: Linking Marketing with Information

Strategy,” Business Process Management Journal, 9(5), pp. 652-671. Parvatiyar, A. and Sheth, J.N. (2001), “Customer Relationship Management: Emerging Practice,

Process, and Discipline,” Journal of Economic and Social Research, 3(2), pp. 1-34. Reinartz, W., Krafft, M. and Hoyer, W.D. (2004), “The Customer Relationship Management Process: Its

Measurement and Impact on Performance,” Journal of Marketing Research, XLI, pp. 293-305.

04/10/2023 234

References: Rigby, D.K., Reichheld, F.F. and Schefter, P. (2002), “Avoid the Four Perils of CRM,” Harvard Business

Review, 80(2), pp. 101-109. Rivers, M.L. and Dart, J. (1999), “The Acquisition and Use of Sales Force Automation by Mid-Sized

Manufacturers,” Journal of Personal Selling and Sales Management, 19(2), pp. 59-73. Sheth, J.N., Sisodia, R. and Sharma, A. (2000), The Antecedents and Consequences of Customer-

Centric Marketing,” Journal of the Academy of Marketing Science, 28, pp. 55-56. Thomas, J.S., Reinartz, W. and Kuman, V. (2004), “Getting the Most out of all of Your Customers,”

Harvard Business Review, pp. 116-123. Winer, R.S. (2001), “A Framework for Customer Relationship Management,” California Management

Review, 43(4), pp. 89-105. Zikmund, W.G., McLeod, Jr.R. and Gilbert, F.W. (2003), “Customer Relationship Management:

Integrating Marketing Strategy and Information Technology,” Hoboken, NJ: John Wiley & Sons.

04/10/2023 235

Theoretical Framework and Hypotheses or Propositions

04/10/2023 236

Customers

CompetitorsCompany

Value Curves (Customer Value Proposition, Intensity-Bases of Competition

Implementing framework for Customer Value Proposition to Create Brand Awareness and Beyond:

All Benefits: Most in Parity

Anderson et al. (2006)

Favorable Points of Difference

Resonating Focus

Tan,

C.C

. (20

13a)

Unifying Characteristics of Business Model (Tan, 2013a,b)

Business Model Components:


Kim and Marborgne (2005) Blue-Ocean Strategy Compelling Tag

DivergenceFocus

Value-Creating ActivitiesPorter (1996) Simple Consistency Reinforcing Optimizing

Brunh (2001), Berry (2000), Rust et al. (2000), Tan (2013c)

CRM-Brand Equity Offering Centric Experiential and Resonating Centric(Brand Awareness,

Value Equity) (Brand Meaning)

Brand Equity

Relationship Equity

Different Levels of CVP Characteristics:

04/10/2023 237

Simplified theoretical framework:

Different Levels of CPV Characteristics: All benefits – most in parity Favorable points of difference Resonating focus

Different Levels of Brand Awareness strength

Different Levels of Brand Equity strength

Different Levels of Customer Equity strength

04/10/2023 238

Hypotheses (for Questionnaire Survey Research Design) or Propositions (for Interview-based Explorative Research Design):

“All Benefits: Most in Parity” type of customer value proposition provides weak brand awareness

“Favorable Points of Difference” type of customer value proposition provides strong brand awareness and brand equity

04/10/2023 239

Cup Cake

04/10/2023 240

Case Studies:How Sprinkles Cupcake using Media-based CRM

to develop Brand Awareness

04/10/2023 241

04/10/2023 242

Flexibility – Innovation, Product Mix, Volume Mix, Delivery Flexibility(See Operations KPIs Strategies Figure)

Pricing

Low

Medium

High

Competitors

Sprinkles Cupcakes (449,000 Likes as of 11-12-2013

The Facebook cover profile of Sprinkles Cupcakes on 11-12-2013

Continuous innovative Relationship Activities with Customers

10/04/2023 243

Operations KPIs Strategies Figure (Tan, 2013d)

04/10/2023 244

04/10/2023 245

Order an email-able cupcake card for $25 or more before 12/25 and Sprinkles Cupcakes will email to customers 2 free cupcakes!

Flexibility – Innovation, Product Mix, Volume Mix, Delivery Flexibility

04/10/2023 246

To support World AIDS Day, Sprinkles is donating the proceeds from their Red Ribbon Cupcakes to the Elizabeth Glaser Pediatric AIDS Foundation.


04/10/2023 247

Sprinkles is holding a sweet holiday toy drive! Give a toy, get a free cupcake from December 1 to 15 2013!

Flexibility – Innovation, Product Mix, Volume Mix, Delivery Flexibility

04/10/2023 248

Would you eat a Sprinkles Cupcake with Adam Levine's "Sexiest Man Alive" photo on it? The cast of The Voice digs in, thanks to Extra! ---- Connecting to Stars!!!!


04/10/2023 249

Twins Soleil and Siena prove Sprinkles fans come in all sizes!


04/10/2023 250

Sprinkles Cupcakes received so many beautiful submissions, and awarded ten winners (instead of one) a dozen cupcakes each! At Sprinkles, they are thankful for the joy their customers bring them each day and the stories they share.


04/10/2023 251

References: Sprinkles Cupcakes: https://www.facebook.com/sprinkles. Tan, C.C. (2013d), “Operations Management Lecture,” School of Management, Mae Fah Luang University.

04/10/2023 252

Customer Satisfaction

04/10/2023 253

Definitions of Customer Satisfaction:

The degree to which a consumer’s pre-purchase expectations are fulfilled or surpassed (Peter and Olson, 1996)

Following this definition, the measurement of customer satisfaction usually takes on a confirmation or disconfirmation process. For instance, disconfirmation referring to the difference between pre-purchase expectations and post-purchase perceptions (Tikkanen and Alakoutsirjarvi, 2002, p. 25) could be used as the direction for operationalizing the construct disconfirmation to confirm customer dissatisfaction.

It is then the responsibility of the organization to figure out exactly what went well or went bust in the value-design, value-creation, value-delivering, and value-capturing processes that lead to confirmation and disconfirmation. Thus systematic examination into the business model (Tan, 20013a-c) is needed. For instance, in the industrial marketing, e.g. geo-informatics business, customer satisfaction has usually been related to the key elements and outcomes of the inter-organizational exchange process (Moller and Wilson, 1995; cited in Tikkanen and Alakoutsirjarvi, 2002, p. 25).

04/10/2023 254


Nevertheless, Tikkanen and Alakoutsirjarvi (2002) argued that examining into the actual dynamics and phenomenon of customer satisfaction is not trivial, for a number of reasons, for instance:

The context of the industry is diverse and very dynamic, and often very unique to itself. Thus, Tikkanen and Alkaoutsirjarvi (2002, p. 37) recommended, based on their qualitative research finding, that researcher has to, among other things, familiarize himself or herself with the primary features of each key customer relationship revolving around the dimensions of “context, process, and content.” Besides, due to the complexity of the issues and factors which may contribute to customer satisfaction or dissatisfaction, Tirkkanen and Alkaoutsirjarvi (2002, p. 38) further advised that the researcher has to decide what issues to focus on, based on his or her understanding of the focal company, its network of customer and other relationships, and the industry.

Thus, in this research, we will use interview-based qualitative research method to examine the dynamical issues of customer satisfaction with the employees of the new venture-focused company selling geo-informatics service, the suppliers and partners and the customers. These issues then will be systematically studied which is guided by the holistic alignment nature of the business model framework by Tan (2013a, 2013b, 2013c).

04/10/2023 255


The business model framework is an excellent way to categorize all the possible antecedents to customer satisfaction, including service quality, expectations, performance, desires, affect and equity (Jamal and Naser, 2002).

04/10/2023 256


Other reason why qualitative research method is used is that as industrial companies, like the geo-informatics service which is highly knowledge driven, usually have relatively few key customers (e.g, Hakansson and Snehota, 1995), there is a possibility of gathering and handling qualitative information on customer satisfaction (Tikkanen and Alkaoutsirjarvi (2002, p. 38) in which the quantitative survey version finds it as precious information difficult to locate.

One challenging issue to deal with in qualitative research method is the richness of information which, to an inexperienced researcher, could make it difficult to sort out, analyze and systematically categorize them into themes and meaningful constructs to build model. Nevertheless, this richness of information is useful to help build meaningful business model and thus business plan, which is the ultimate purpose of this thesis.

04/10/2023 257

Why there is a need to focus on customer satisfaction in geo-informatics service business:

Although geo-informatics is a knowledge driven industry, but it is essentially a service oriented industry. As outlined in Williams and Visser (2002, p. 194), customer satisfaction with service industries in the USA is steadily deteriorating and there is little reason to suppose that the situation in Thailand and else is very different.

In fact, it is urgently needed to re-examine seriously into the dynamics of factors that bring about customer satisfaction or dissatisfaction, as due to the broad-based interconnectivity of people around the globe through internet, the trend of increasing customer awareness, expectations (Williams and Visser, 2002) are at its height, and is non-stop.

In addition, customer satisfaction, which captures the feeling or attitude of a customer towards a product or service after it has been used (Jamal and Naser, 2002, p. 147) leads to favorable customer behaviors i.e. repeat purchase and try line extensions (East, 1997), which tend reflect the level of brand equity and customer equity, as discussed earlier in Customer Value Proposition and CRM factors that lead to brand awareness, brand equity and customer equity based on business model concepts (Tan 2013a, 2013b, 2013c).

04/10/2023 258

Measuring Customer Satisfaction or Interview Questions:

Simple assessment to the level of customer satisfaction is suggested by Jamal and Naser, 2002, p. 151) as follows, on a five-point Likert-scale questionnaire item, which can also be easily adapted for interview based research.

After considering everything, I am extremely satisfied with the [company]’s service.

The [company]s’s service always meets my expectations. The overall quality of the services provided by [the company] is

excellent. The suggested questionnaire items by Jamal and Naser (2002, p. 151),

which they used themselves with high reliability, also match with the given definition of satisfaction, for instance, Levesque and McDougall (1996, p. 14) supported that customer satisfaction is “an overall customer attitude towards a service provider.” In addition, customer satisfaction can also be understood as an emotional reaction to the difference between what customers anticipate and what they receive (Zineldin, 2000), regarding the fulfilment of some need, goal, or desire (Oliver, 1999) (cited in Hansemark and Albinsson, M. 2004).

04/10/2023 259

Measuring Customer Satisfaction or Interview Questions:

As customer satisfaction is an overall consumer attitude towards a service provider (Levesque and McDougall, 1996, p. 14), it is important the questionnaire items or interview questions capture multi-item dimensions to help clarify the definition – which is customer satisfaction. For instance, Jamal and Naser (2002, p. 151) suggested three items to study the construct reliability.

In the website of the American Marketing Association, customer satisfaction can be inferred to be fundamentally rooted in delivering the “customer value propositions” favorably:

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have “value” for customers, clients, partners, and society at large. (Approved July 2013, www.marketingpower.com).

In view of the definition of marketing given by the American Marketing Association and the definitions of customer satisfaction discussed in aforementioned, it is clear to have reliability in the measure, it is important to capture various dimensions that capable to capture the “overall attitude, feeling or assessment” towards the service.

Innovative Vertical Downstream Strategy

04/10/2023 261

04/10/2023 262

04/10/2023 263

Innovation

Breakthrough Innovation

Recycled Innovation

Innovation Models:

Fusion

Fission

04/10/2023 264

04/10/2023 265

04/10/2023 266

Bio-computer

Neural Network

Fuzzy LogicBio-Electronics

Biocomputers use systems of biologically derived molecules, such as DNA and proteins, to perform computational calculations involving storing, retrieving, and processing data.

04/10/2023 267

Optomechatronics

Optics

MechanicalElectronics

04/10/2023 268

Fusion of Product:

Harrier: The Harrier, informally referred to as the Jump Jet, is a family of military jet aircraft capable of vertical/short takeoff and landing (V/STOL) operations.

2 in 1 Shampoo3 in 1 CoffeeBird + SakeFusion Foods

http://en.wikipedia.org/wiki/Jet_aircraft

http://en.wikipedia.org/wiki/V/STOL

04/10/2023 269

Fusion food the perfect mix and match:

Fusion food is made from a combination of at least two cuisines or cookery forms which go into a single dining experience. The objective is to present some excitement to diners by giving a traditional dish a new look while still aiming to entice them to dare to try it by offering some familiar ingredients.

04/10/2023 270

Fusion is also considered a smart way to upgrade local cuisine to an international level with the perfect mix and match of great dietary value ingredients that will satisfy a wider group of diners. Fusion food is the perfect answer for health conscious groups as the chef has the freedom to pick only the best ingredients when adapting the original formula.

04/10/2023 271

Fusion food is a great combination of both art and science, which is a good reason to make it very well known and quickly accepted globally. It does not just offer palate pleasure in a different way but also allows chefs to express their creativity. Chefs have freedom in making something new and unique by combining the best elements of traditional favorites.

04/10/2023 272

Some fine examples of Thai and other Western cuisines that have been fused and are readily available include: Italian pizza topped with stir-fried chicken; pork with chili and basil; tom yum salmon soup for anyone trying to avoid cholesterol from prawns or allergic to prawns; spaghetti deep-fried with salted fish; and mieng tuna, a bite of which consists of cubed lemon, shallots, ginger, chili, lettuce and tuna served with a special sweet sauce.

04/10/2023 273

Fusion food is the perfect choice for a young generation looking for new experiences and excitement in dining. Restaurants where fusion food is served also differentiate themselves from the others with exclusive décor easily distinguished by diners. Interior design of venues is usually based around the types of fusion menus available.

04/10/2023 274

04/10/2023 275

Fusion-driven Business Redefined: Boots: Health products are not limited to foods and beverages They cover a wide range of products including skin and hair

creams, sports clothing and equipment, and services such as diet plans.

Boots the Chemist, the UK retailer, has offered a variety of health products, including health insurance, under the “Boots” brand.

04/10/2023 276

04/10/2023 277

04/10/2023 278

Product sustainability Understanding the social and environmental benefits and impacts of our business is critical if we're to have a sustainable future. We have a strong and long heritage of actively caring about these issues, building our knowledge through in‑house expertise and external collaboration, and then acting positively to make a genuine difference.

This approach within our product development processes drives innovation that meets our customers' needs whilst ensuring that we continue to protect and improve the environment and local communities within our supply chains around the world.

04/10/2023 279

Boots product journeyWe ensure that our decisions are based on a whole-life approach to product sustainability, embracing the complete product lifecycle. Every product and every supply chain can have different impacts at different stages in the product lifecycle, from concept and design, through to customer use and final disposal of the packaging and waste product. We call this holistic lifecycle approach our 'Product Journey'.

04/10/2023 280

Reducing our product footprints In 2010 Boots introduced our Product Sustainability

Strategy to bring together a series of previous initiatives into a single strategy aiming to embed and continually improve sustainability standards in all Boots brand and exclusive products.

That same year, Boots developed a web-based tool that quickly and simply analyses and scores 24 sustainability indicators throughout a product's entire lifecycle. The tool was peer reviewed by Forum for the Future (a non-profit organization which works globally with business and government to create a sustainable future) and launched in May 2011. Take a look at the following video to see how this works.

04/10/2023 281

Boots process enables the creation of a sustainability profile, or 'footprint', for any product or range of products, which allows us to score and compare the relative performance of individual ingredients, products and entire product ranges. It identifies any impact 'hotspots' (high risk areas) and produces a database of sustainability performance data. This allows analysis, reporting, and greater understanding of the available sustainability improvement opportunities. It also enables well-focused improvement targets to be established.

04/10/2023 282

An initial sustainability footprint example

04/10/2023 283

An improved sustainability footprint example

04/10/2023 284

Product development and technical staff at both our Nottingham support office and Boots sourcing office in Hong Kong have been trained to use the sustainability model. We are also engaging with our suppliers in the use of this tool.

By the end of March 2012 Boots had used this process to assess products within seven Boots cosmetics and toiletries brands, and Boots have begun to use the insights gained to set sustainability objectives for the future development of these brands.

Boots are also using the data from product sustainability assessments to help the government's Waste Resources Action Programme (WRAP), working with their Product Sustainability Forum to develop a strategy on achieving more sustainable use of resources over the entire lifecycle of products, throughout the whole supply chain.

04/10/2023 285

Innovation Boots teams continually evaluate new technologies and

ideas for packaging development and product formulation, often looking to develop new product ideas up to three years in advance. This future-focused work includes consideration of sustainability to minimize risks, such as resource scarcity, and to optimize the impacts of raw material inventories and packaging choices within the product journey.

04/10/2023 286

Research and collaborationCollaboration is the only way to tackle complex, global sustainable

development issues. Boots do this by working with other experts in the field including policy makers, academia and NGOs (non-government organizations) such as pressure groups and charities.

Since 2010 Boots has sponsored the Green Alliance 'Designing out Waste' project to bring together retailers, manufacturers, government and the waste management sector to ensure that efficient end to end processes are in place to reduce the impact of waste. This work has now entered a new phase with the launch of the Circular Economy Task Force, a partnership of government and business with assistance from key observer organizations, to address resource opportunities and concerns, disseminate leadership thinking and provide a forum for policy innovation.

04/10/2023 287

Research and collaborationBoots also work with universities such as Loughborough

University and Nottingham Trent University on research projects in the area of sustainable product design and developing sustainable business models.

Boots UK is a member of the Product Sustainability Roundtable, a group of major international businesses whose aim is to share insights and best practice in product sustainability.

04/10/2023 288

04/10/2023 289

04/10/2023 290

04/10/2023 291

04/10/2023 292

04/10/2023 293

04/10/2023 294

04/10/2023 295

04/10/2023 296

04/10/2023 297

04/10/2023 298

Coca Cola Recycled Safari

04/10/2023 299

04/10/2023 300

04/10/2023 301

04/10/2023 302

Tokyo Future University is located in 34-12 Senjuakebono-machi, Adachi-ku, Tokyo. It was established in 2007. The president is Dr, Ikuo Daibo. The honorary president is Dr. Akira Tago, who is a well-known psychology professor.

Tokyo Future University consists of two departments:Child Psychology (established in 2007)2. Motivation and Behavioral Science (established in 2012).

The School of Child Psychology studies the minds of children in order to learn about people's way of thinking. We can broaden a child's future possibilities by looking into his or her psychology, nursing, and education. Our goal is to train pre-school, kindergarten, and elementary school teachers, and counselors to have a comprehensive understanding of the growing process of a child.

04/10/2023 303

Tokyo Future University :The School of Motivation and Behavioral Sciences is the first throughout Japan to study motivation. We study methods in motivating oneself, surrounding people, and organizations. Motivation is related to every field. For example, in the case of a company, a person with leadership skills who can successfully manage a project through proper employment of human resources is necessary. In the case of a school, a teacher who can motivate youths and students to lead a fulfilling school life is important. We study motivation systematically through three categories: management, psychology and communication, and education.

04/10/2023 304

Egypt

04/10/2023 305

Future University in Egypt

04/10/2023 306

04/10/2023 307

04/10/2023 308

04/10/2023 309

04/10/2023 310

04/10/2023 311

Business Model

04/10/2023 312

04/10/2023 313

04/10/2023 314

04/10/2023 315

04/10/2023 316

Michelin Challenge Design Showcases Innovation:Automotive designers are in a constant struggle to increase

the fuel efficiency of their vehicles these days. To help answer that need, Michelin invited creative designers worldwide to reinvent not just the wheel but the whole car.

The Michelin Challenge Design, a yearly event created by Michelin North America, Inc., is about way more than tires. It’s a contest that challenges designers to come up with vehicle concepts that accomplish a different goal each year. The 2013 MCD, Half! Lightweight with Passion, asked for concepts that reduced vehicle weight without sacrificing the safety and comfort of the vehicle. Here’s a look at the winners of the 2013 Michelin Challenge Design.

http://www.michelinchallengedesign.com/home/

04/10/2023 317

04/10/2023 318

eLink by Jorge Biosca: The eLink is an electric SUV concept from

Spanish designer Jorge Biosca. When you hear SUV, do you think gas-guzzler? Think again with the eLink concept.

It’s a four-wheel drive vehicle that uses Michelin Active Wheel technology. Its electric motor is linked to the steering wheel wirelessly. The vehicle rotates on a central point. This vehicle is lightweight because its body is made of lightweight but sturdy fabric that contains thin-film solar panels. This fabric is stretched over thermoplastic composite materials.

04/10/2023 319

04/10/2023 320

PolyPlus by Song Wei Teo:Singapore-born Song Wei Teo came up with the

vacuum-formed PolyPlus design. His vehicle design cuts weight by using aerospace-spec carbonate plastic, which is strong and lightweight but has never been used in the automotive industry. He also suggests using a vacuum to form the body of the vehicle in order to eliminate the added weight of the chassis structure of contemporary vehicles.

04/10/2023 321

04/10/2023 322

Dolphin by Shun Liu and Team: This is pictured at the top of the article. Three young

minds from China came up with the concept that rounded out the top three at this year’s Michelin Challenge design. Shun Liu, 20, Zhiqiang Gao, 23, and Zhilei Chen, 26, invented the Dolphin car concept. This lightweight car concept looks like the sports car of the future. This futuristic car concept has a body made of transparent glass and carbon fibers. The team combined this lightweight body with a dual-stator MagLev engine, a lighter model than what’s featured in many cars.

04/10/2023 323

04/10/2023 324

04/10/2023 325

04/10/2023 326

04/10/2023 327

04/10/2023 328

04/10/2023 329

04/10/2023 330

04/10/2023 331

04/10/2023 332

04/10/2023 333

04/10/2023 334

04/10/2023 335

04/10/2023 336

04/10/2023 337

04/10/2023 338

04/10/2023 339

04/10/2023 340

04/10/2023 341

04/10/2023 342

04/10/2023 343

04/10/2023 344

04/10/2023 345

04/10/2023 346

04/10/2023 347

04/10/2023 348

Open Collaboration Model

04/10/2023 349

04/10/2023 350

04/10/2023 351

04/10/2023 352

04/10/2023 353

04/10/2023 354

04/10/2023 355

04/10/2023 356

Business Model

Innovation Model

Collaborative Model

Profit Model

Investment Model

Operations Model

Upstream to Downstream:

04/10/2023 357

The New Skill-Set Required:

Trusting Caring Sharing Collaborating

Serving Experiencing Thinking Knowing

358

References:

Andrews, K.R. (1971), The Concept of Corporate Strategy, Homewood, IL: Irwin. Chen, J. (2008), Coffee Academy, Retrieved September 29, 2004, from Coffeemachine-maker web site:

http:www.coffeemachine-maker.co.uk. Chetsopit Trongsawat, Prapun Treewattanawong, Nang Poe Hnin Phyu, Kanuengnij Sattayadit, Supakarn

Ammartmanee, Chaw Su Kyi, Parinda Treewattanawong, Songkwan Nakinbodee, Sangchan Kantabutra, C.C. Tan, and Pratsanee Na Keere (2013), “Making Business Model alive for Innovative and Competitively Advantageous Enterprise: A Theoretically Robust Foundation,” presented at the 29th National Graduate Research Conference, Mae Fah Luang University, 24-25 October.

Crossan, M.M., Fry, J.N., and Killing, P.J. (2005), Strategic Analysis and Action (6 th Edition), Toronto: Pearson Prentice Hall.

Deakins, D. and M. Freel (2006), Entrepreneurship and Small Firms, Berkshire, UK: McGraw-Hill. Hao, H. (2009), The Shanghai Coffee Industry Development enters the Speedway, Retrieved February 24,

2009, from People website: http://sh.people.com.cn. He, Y. (2008), Baoshan Coffee Industrial Development Prospect Analysis. Retrieved April 10, 2008, from

Baoshan News web site: http://www.lyxw.gov.cn.

http://sh.people.com.cn/

http://www.lyxw.gov.cn/

359

References:

Lee, H. (2004), Coffee Brews a Future in China? Retrieved September 13, 2004, from Euromonitor International web site: http://www. Euromonitor.com/Coffee_brews_a_future_in-China.

Li, H. (2007), Establishing a Western Coffee Shop Chain in China, Vancouver: Simon Fraser University. Lu, Z. (2009), Returnee Employment, Retrieved March 1, 2009, from Sina web site: http://www.sina.com.sn. Mintzberg, H., Ahlstrand, B. and Lampel, J. (1998), Strategy Safari: A Guided Tour through the Wilds of

Strategic Management, New York, NY: Free Press. Porter, M. (1979), Competitive Strategy, New York: The Free Press. Schendel, D.E. and C.W. Hofer (1979), Strategic Management: A New View of Business Policy and Planning,

Boston: Little Brown. Shanghai Statistics (2009), Retrieved April, 2009, from http://www.stats-sh.gov.cn/2008/shtj/index.asp. Shanghai Statistics Yearbook 2008 (2009), Retrieved from Shanghai Statistics web site:

http://www.stats-sh.gov.cn/2004shtj/tjnj/tjnj2009.htm. Tan,C.C and Arsirapongpisit, S. (2002), “Critical Revisit to Performance Measurement from the Spiriutality

Postmodernism and Quantum-Relatvisticism,” presented at the 7th APDSI (Asia Pacific Decision Science Institute) 2002 Conference, NIDA University, July 24-27, Thailand.

Tan, C.C. (2013a), “Sustainable and Innovative Business Model”, Business Research Report, School of Management, Mae Fah Luang University.

Tan, C.C. (2013b), “Balanced Scorecard – Customer Management Processes,” Business Research Report, School of Management, Mae Fah Luang University.

Tan, C.C. (2013c), “Towards a Holistic Approach to CRM Implementation: A Case with Eco-Resort,” “Innovative Vertical Downstream Strategy,” “Innovative Customer Value Proposition to Create Brand Awareness and Customer Satisfaction: A Case with Cupcake and Geo-Informatics New Venture”, Business Research Report, School of Management, Mae Fah Luang University,

http://www.sina.com.sn/

http://www.stats-sh.gov.cn/2008/shtj/index.asp

http://www.stats-sh.gov.cn/2004shtj/tjnj/tjnj2009.htm

References: Bull, C. (2003), “Strategic Issues in Customer Relationship Management (CRM) Implementation,” Business Process

Management Journal, 9(5), pp. 592-602. Campbell, J.A. (2003), “Creating Customer Knowledge Competence: Managing Customer Relationship Management

Programs Strategically,” Industrial Marketing Management, 32, pp. 375-383. Croteau, A.M. and P, Li. (2003), “Critical Success Factors for CRM Technological Initiatives,” Canada Journal of

Administrative Sciences, 20(1), pp. 21-34. Early, K. (2011), Eco-Tourism Resorts: A Case Study of Best Practices at the Hamanasi Resort in Belize,

Undergraduate Student Research Honors Thesis, University of New Hamsphire. Finnegan, D., Wendy, J., and Currie, L. (2009), “A Multi-Layered Approach to CRM Implementation: An Integration

Perspective,” European Management Journal. Goodhue, D.L., B. Wilxom, and H.H.J. Watson (2002), “Realizing Business Benefits through CRM: Hitting the Right

Target in the Right Way,” MIS Quarterly Executive, 1(2), pp. 79-94. Handen, L. (2000), The Three Ws of Technology, in S.A. Brown (Ed.), Customer Relationship Management – A

Strategic Imperative in the World of e-Business, Toronto’s John Wiley and Sons Canada.

References: Haviland-Jones, J., Rosario, H.H. and Mguire, T.R. (2005), “An Environmental Approach to Positive Emotion:

Flowers,” Evolutionary Psychology, 3, pp. 104-132. IUCN (2012), Sitting and Design of Hotels and Resorts: Principles and Case Studies for Biodiversity Conservation,

International Union for Conservation and Natural Resources (IUCN), Gland, Switzerland. Kim, H.S. and Kim, Y.G. (2009), “A CRM Performance Measurement Framework: Its Development Process and

Application,” Industrial Marketing Management, 38, pp. 477-489. King, A. and Lam, W. (2005), “Why KM Projects fail: A Multi-Case Analysis,” Journal of Knowledge Management, 9(3),

pp. 6-17. Leibowitz, J. (2010), “Key Ingredients to the Success of an Organization’s Knowledge Management Strategy,”

Knowledge and Process Management, 6(1), pp. 37-40. Lindgreen, Adam, Roger and Palmer (2006), “A Relationship Management Assessment Tool: Questioning, Identifying,

and Prioritizing Critical Aspects of Customer Relationships,” Industrial Marketing Management, 35, pp. 57-71. Nonaka, I. (2009), “A Dynamic Theory of Organizational Knowledge Creation,” Organization Science, 5(1), pp. 14-37. Peters, R.F. (2001), “Eco-Resorts: Management and Landscape Planning,” 6th SITE Research Seminar, 13-14,

September.

References: Strauss, J. and Frost, R. (2002), “Customer Relationship Management,” E Marketing, Second Edition, New York:

Prentice Hall. Torkzadeh, G.J., Chang, C.J. and Hansen, G.W. (2006), “Identifying Issues in Customer Relationship Management at

Merck-Medco,” Decision Support Systems, 42, pp. 1116-1130. Vazifehdust, H., Shahnavazi, A., Jourshari, M.R.T. and Sharifi, F.S. (2012), “Investigation of Critical Success Factors of

Customer Relationship Management Implementation,” World Applied Sciences Journal, 18(8), pp. 1052-1064. Weaver, D. (2001), Ecotourism, Queensland, Australia: John Wiley & Sons.

04/10/2023 363

References: East, R. (1997), Consumer Behavior: Advances and Applications in Marketing, London: Prentice-Hall. Hansemark, O.C. and Albinsson, M. (2004), “Customer Satisfaction and Retention: The Experiences of

Individual Employees,” Managing Service Quality, 14(1), pp. 40-57. Jamal, A. and Naser, K. (2002), “Customer Satisfaction and Retail Banking: An Assessment of Some of

the Key Antecedents of Customer Satisfaction in Retail Banking,” International Journal of Bank Marketing, 20(4), pp. 146-160.

Levesque, T. and McDougall, G.H.G. (1996), “Determinants of Customer Satisfaction in Retail Bankin,” International Journal of Bank Marketing, 14(7), pp. 12-20.

Moller, K.E.K. (1994), “Interorganizational Marketing Exchange: Metatheoretical Analysis of Current Research Approaches,” in Laurent, G. Lilien, G.L. and Pras, B. (Eds.), Research Traditions in Marketing, Kluwer, Boston, MA, pp. 347-372.

Oliver, R.L. (1999), “Whence Consumer Loyalty?” Journal of Marketing, 63(4), pp. 33-44. Peter, J.P. and Olson, J.C. (1996), Consumer Behavior and Marketing Strategy, Chicago, IL: Irwin. Tikkanen, H. and Alajourtsijarvi, K. (2002), “Customer Satisfaction in Industrial Markets: Opening up the

Concept,” Journal of Business and Industrial Marketing, 17(1), pp. 25-42. Williams, R. and Visser, R. (2002), “Customer Satisfaction: It is dead but it will not lie down,” Managing

Service Quality, 12(3), pp. 194-200. Zineldin, M. (2000), TRM Total Relationship Management, Studentlitteratur, Lund.