J. International Business and Entrepreneurship Development, Vol. 3, No. 1/2, 2006 41 111 2 3 4 5 6 7 8 9 1011 1 2 3 4 5 6 7 8 9 2011 1 2 3 4 5 6 7 8 9 30 1 2 3 4 5 6 7 8 9 40 1 2 3 4 5 6 711 8
An exploratory study of the implementation of customer relationship management by Malaysian automobile distributors Nor Khomar Ishak* Faculty of Hospitality & Tourism Management, Universiti Tun Abdul Razak (UNITAR), 46760 Petaling Jaya, Selangor, Malaysia E-mail:
[email protected] *Corresponding author
Dilip Mutum Department of International Business, Faculty of International Studies, Universiti Utara Malaysia, 06010 Sintok, Kedah, Malaysia Fax: 604-9286602 E-mail:
[email protected]
Ezlika Ghazali Department of Marketing and Information Systems, Faculty of Business and Accountancy, University of Malaya, 50603, Kuala Lumpur, Malaysia Fax: 603–7967-3810 E-mail:
[email protected]
Cheong Khai Fan Faculty of Business and Accountancy, University of Malaya, 50603, Kuala Lumpur, Malaysia Abstract: The deregulation of the Malaysian automobile industry has resulted in intensified competition with the presence of more players in the market place. Customer relationships become important when there are many companies trying to satisfy their customer needs and create customer loyalty. The practice of customer relationship management (CRM) is relatively new in Malaysia and this exploratory study is one of the first to look into this area with regards to the automobile industry. The review of literature also presents a general overview of the development of CRM. This study compares the perspectives of two national and ten non-national car companies in Malaysia, with special reference to the various CRM programmes implemented by them. Despite the fact that CRM usage is still relatively new in Malaysia, the study concluded that it has indeed proven to be useful to Malaysian automobile marketers, especially in identifying the target customers and reaching specific customer segments, besides identifying various customer needs. The authors suggest some areas for future research. Keywords: customer information; customer relationship management; Malaysian auto industry; marketing.
Copyright © 2006 Inderscience Enterprises Ltd.
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N.K. Ishak, D. Mutum, E. Ghazali and C.K. Fan Reference to this paper should be made as follows: Ishak, N.K., Mutum, D., Ghazali, E. and Fan, C.K. (2006) ‘An exploratory study of the implementation of customer relationship management by Malaysian automobile distributors’, Journal for International Business and Entrepreneurship Development, Vol. 3, No. 1/2, pp.41–56. Biographical notes: Nor Khomar Ishak has been a Faculty Member of the Faculty of Business and Accountancy, University of Malaya, Kuala Lumpur, Malaysia since November 2000. Prior to that she had been with the Faculty of Hotel and Tourism Management at University Technology MARA since 1974. She received her BSc in Business Administration from the University of Denver. She then obtained her MSc in Business Administration from the University of Northern Colorado and her PhD in Hotel and Tourism Management from the Virginia Polytechnic Institute and State University (Virginia Tech). She is currently the President of the Tourism Educators Association of Malaysia and is also a Board Member of the Asia Pacific Council on Hotel and Tourism Educators. Dilip Mutum is a Lecturer with the Department of International Business, Faculty of International Studies, Universiti Utara Malaysia, Kedah, Malaysia. He has a BSc in Forestry and an MSc in Forest Products from the University of Horticulture and Forestry, Himachal Pradesh, India. He later obtained his MBA from the University of Malaya, Kuala Lumpur. He was previously a Freelance Contributor with the South Review and the Jaring Internet magazines. He also held the post of Editor of the quarterly newsletter of the Consumer International Regional Office – Asia and Pacific. Ezlika Ghazali received her Bachelor of Business Administration (Honours) degree from De Montfort University, Leicester, UK, in 1997, her MBA from the University of Malaya, Malaysia, in 2000 and is currently a Lecturer at the University of Malaya. Her research interests include issues related to marketing, electronic marketing, consumer behaviour, services marketing and entrepreneurship. She has published more than 20 papers in academic journals and refereed conference proceedings, locally and overseas. Cheong Khai Fan obtained his MBA from the Faculty of Business and Accountancy, University of Malaya.
1
Introduction
A combination of government support and the high purchasing power of consumers has resulted in Malaysia becoming one of the region’s largest auto markets. Presently, it holds a dominant position in vehicle sales among ASEAN countries and, in fact, Malaysia is Southeast Asia’s largest car market (Ng, 2004). However, Malaysian auto companies are facing a new challenge in the form of the ASEAN Free Trade Area (AFTA). The two national car companies are expected to be worst affected, namely, Perusahaan Otomobil Nasional Bhd (PROTON) and Perusahaan Otomobil Kedua Sdn. Bhd. (Perodua) which have been accused of not being customer focused and being too dependent on Government support (Mutum, 2000).
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In January 2004, the Malaysian government has reduced tariff rates on imported passenger cars from between 42% and 80% (depending on the engine capacity) to flat rate of 25% as a ‘pre-exercise’ for the introduction of AFTA regulations in 2005. This move would have led to a drastic reduction in passenger car prices had the government not simultaneously imposed higher excise duties to compensate for the loss in revenue due to tariff reduction. The National Automotive Policy Framework released by the Malaysian Government aims to make Malaysia a regional car manufacturing, assembly and distribution hub (NAP, 2005). This deregulation of the Malaysian automobile industry has resulted in intensified competition with the presence of more players in the market. This is evidence of a mature market with increasingly competitive market conditions. Furthermore, the increased availability of information through the Internet, better consumer education and an increase in the choice of models will lead to an increase in customers’ expectations and demands. Customer relationships become important when there are many companies trying to satisfy their customer needs and create customer loyalty. This is especially true for companies in the services sector, which have adopted the use of technology such as the internet in their operations. However, services go beyond the ‘services sector’. Understanding services and service management becomes imperative for success, not only for the so-called service companies but for other sectors such as manufacturing (Gronroos, 1990) and in this case the automobile sector. The practice of CRM is relatively new in Malaysia and, in fact, this exploratory study is one of the first to look into this area with regards to the Malaysian automobile industry. In view of this, it was considered important to compare the perspectives of distributors of national and non-national car brands in Malaysia with special reference to the various CRM programmes implemented by them. The specific objectives of the exploratory study are:
to study the perceived usefulness of CRM programs as indicated by the automobile distributors
to examine how different CRM factors are ranked by the different auto companies
to explore the comprehensiveness of CRM programmes undertaken by distributors of national and non-national cars.
2
Literature review
The concept of marketing has undergone drastic changes over the past three decades, evolving from the production era through the sales and marketing era and finally moving to the relationship era as practised today. The change in marketing focus from the product to the customer occurred during the marketing era, which appeared around the 1960s in the west. Effectiveness and efficiency in meeting customer demands, needs and wants were identified as the key elements in determining companies’ long-term success. The relationship era, which emerged during the 1990s, shifted the focus to the establishment and maintenance of mutually beneficial relationships with existing customers and suppliers. One important concept that emerged was the Customer Relationship Management (CRM) approach, whereby, it has become an important part of building customer loyalty (Chen and Popovich, 2003; Keegan, 1999).
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Sue and Morin (2001) defined CRM as ‘a technology enabled business strategy whereby companies leverage increased customer knowledge to build profitable relationship, based on optimising value delivered and realised from their customers’. On the other hand, according to Xu et al. (2002) CRM is ‘an information industry term for methodologies, software and usually internet capabilities that help an enterprise manage customer relationships in an organised way’. Recently, Kotler and Armstrong (2004) defined CRM as ‘the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction’. Sin et al. (2005) hypothesised that CRM is a multi-dimensional construct consisting of four broad behavioural components: key customer focus, CRM organisation, knowledge management and technology-based CRM. Looking at the definitions of CRM provided above, the importance of technology in CRM is clearly stated. Technology is an enabler for CRM including the sharing of information (Blue, 1999; Sue and Morin, 2001; Xu et al., 2002). Boon et al. (2002) have identified three streams of information systems (IS) leading to CRM, namely, the front-end systems, the data-handling technologies and the back-end systems. The front-end information systems include sales force automation, market automation and customer service automation. Data handling technologies are the core technologies required for sorting and interpreting the data. These include data warehousing, data mining and knowledge management. Finally back-end systems feed into CRM like the other streams. These include the software applications for unique or specific needs such as inventory control for inventory and enterprise wide applications (EWA), which link software applications to interchange data between software applications and systems. Enterprise resource planning (ERP) is the final point in integrating back end operations, which includes the sum of enterprise wide application integration as well as supply chain management. The new supply chain technologies include the e-commerce and the internet. Executing a CRM strategy on a mass basis through the application of technology (also known as e-CRM) would enable a company to establish relationships with a larger number of customers. According to Brown (2000), this makes CRM a ‘strategic imperative in the world of e-business’. He further pointed out that integrated databases have become the most important technical consideration due to the fact that CRM processes depend on data. This also includes the software for the database, datamining, decision support and campaign management tools such as call centre software and hardware. At the same time, the customer relationship cannot be separated from customer satisfaction. Several studies proved that there is a link between customer satisfaction and customer loyalty/retention (Anderson and Sullivan, 1993; Yu and Dean, 2001). A series of comprehensive studies on CRM conducted in Hong Kong validated that CRM is a critical success factor for business performance (Sin et al., 2005). According to them, Managers can effectively boost their marketing performance (trust and customer satisfaction) through proper implementation of CRM. With an effective CRM programme implemented, companies could raise their revenues and lower the cost (Sue and Morin, 2001). It will encompass or engage all marketing levels, right from the sales function to customer service and back office operations to new product development and requires members of the value chain and other partners to work together. Table 1 shows the main elements of CRM in a company.
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Table 1 Elements of CRM (Robinson, 2000) Sales force automation (SFA)
Customer service/call centre management
Marketing automation
Call centre
Campaign management
Telephone sales
Call centres managing aspects of customer contact
E-commerce
Web-based self service
Field sales
Field services and dispatch technicians
Retail
Content management Data analysis and business intelligence tools
Third-party broker Distributor, agents Data warehouse and data cleansing tools
Though the implementation of CRM programmes may present some problems, namely the cost involved, it may be even harder to measure the returns from implementing a CRM programme. In fact, it may be difficult to even achieve an accurate measurement of customer loyalty. As noted by Rigby et al. (2002) ‘successful CRM depends more on strategy than on the amount you spend on technology’. This demands a high investment on the customer database development and analysis on the part of the organisations (Brewer, 2000; Hewson Group, 2000). Despite the growing importance, relatively few organisations in Malaysia have adopted CRM strategies to deliver real customer value and to develop appropriate long-term relationships. This may be due to confusion and lack of understanding regarding CRM (Chen and Popovich, 2003; Oracle, 2000). For some companies, it is just another loyalty scheme while others assume that having a help desk is enough. This is sad considering the fact that CRM has ‘effectively become a requirement, not a competitive advantage’ (Curry and Kkolou, 2004).
3 3.1
Research methodology Research instrument
The survey instrument was an eight-page questionnaire divided into three sections. The first section was designed to obtain the respondent’s profile and particulars of the company with regards to nature of business and mode of execution. The second section relates to the effectiveness of the CRM programmes and is divided into six parts. However, for this paper only the first three parts of the section are relevant. The research statements were developed by the researchers, taking into account the past literature and in consultation with managers in the industry. They are as follows:
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Part 1 was designed to measure usage of CRM programmes and the perceived usefulness of CRM programmes used by Malaysian auto distributors. A total of ten statements were used. Respondents were asked to state their level of agreement towards the statements using a four point scale ranging from ‘1 = Strongly disagree’ to ‘4 = Strongly agree’.
Part 2 attempted to identify the relationship between CRM programmes and its contribution to the company’s profitability. The respondents were asked to rank nine items according to order of importance, in terms of its perceived contribution to overall increase in profitability of the companies. Please refer to Table 2 for the list of CRM factors.
Part 3 examined the usage of CRM facilities and information technology in the various CRM programmes. These were based on those identified in previous studies of Brown (2000) and Xu et al. (2002). The respondents were first asked if they used the facility and, if they did, to indicate the usage rate. The usage rate was measured utilising a four point scale ranging from ‘1 = Least used’ to ‘4 = Most used’.
Table 2 Various CRM factors CRM factor B01
Individual customer satisfaction
B02
Individual customer loyalty
B03
Individual product or service profitability
B04
Gaining new customers
B05
Saving customers i.e. convincing them to stay with the company
B06
Getting existing customers to buy new products
B07
Winning back customers, i.e. convincing them to rejoin
B08
Improving productivity through reduction in response time
B09
Elimination of costs from unprofitable customers
3.2
Sampling procedure and data collection method
Before the actual survey, a pilot test was conducted on three automobile distributors. Certain ambiguities in the questionnaire were identified and subsequently eliminated. Convenience sampling was employed for the study, whereby the researchers tried to obtain at least one respondent from each of the selected 24 automobile companies operating in the Klang Valley of Malaysia (see Table 3).
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Table 3 List of automotive marketing companies in the Klang Valley region as on 1st January 2004 Company
Brand distributed
Country of origin
1
Automotive Corporation (M)
Isuzu
Japan
2
BMW Malaysia
BMW
Germany
3
Cycle & Carriage Automotive
Peugeot
France
4
Cycle & Carriage Bintang Bhd.
Mercedes Benz
Germany
5
Cycle & Carriage Malaysia
Mazda
Japan
6
Competitive Supreme
SSangyong
South Korea
7
Daihatsu (M)
Daihatsu
Japan
8
Daimler Chrysler (M)
Mercedes Benz
Germany
9
Directional (M)
Citroen
France
10
Edaran Tan Chong
Nissan
Japan
11
EON
Proton
Malaysia
12
Eurokars
Renault
France
13
Europal
Opel
France
14
Ford Malaysia
Ford
USA
15
Honda Malaysia
Honda
Japan
16
Land Rover (M)
Land Rover
UK
17
Lion Suzuki
Suzuki
Japan
18
Milan Auto
Alfa Romeo
Italy
19
Naza Motor Trading
Kia
South Korea
20
Oriental Hyundai
Hyundai
South Korea
21
Perodua Sales
Perodua
Malaysia
22
Torino
Fiat
Italy
23
UMW Toyota
Toyota
Japan
24
Volvo Car Malaysia
Volvo
Sweden
Source: Malaysian Automotive Association (2004)
The sampling frame consisted of 22 non-national cars distributors and two national car distributors. The list of all the approved members in the non-national car sector was obtained from the Malaysian Automotive Association (MAA). The two national auto companies, namely Perodua Sales Sdn. Bhd. and Edaran Otomobil Nasional Bhd (EON), are not members of the MAA. Motors traders of commercial vehicles were excluded from the study and the focus was solely on distributors of cars. A key person (most conveniently available) in the headquarters of each company was identified and a questionnaire was either mailed or faxed to them. Ultimately, only 12 completed responses were obtained for the final analysis.
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3.3
N.K. Ishak, D. Mutum, E. Ghazali and C.K. Fan
Qualitative research
Following the receipt of the completed questionnaires, follow-up personal interviews were conducted to obtain a clearer picture. For reasons of confidentiality, the names of the respondents or responding companies will not be identified in this paper.
4
Findings and discussion
A total of 12 responses were received. Table 4 shows the number of responding non-national car companies by country of origin of the brands distributed by these companies. As mentioned earlier, two of the companies were involved in the distribution of the national brands, namely Proton and Perodua. The rest (ten) were foreign franchise holdings. The number of distributors of Japanese brands was the highest in terms of country of origin and made up 40% of the foreign car franchises that responded. Table 4 Business modes of non-national automobile distributors Business modes
CKD CBU CKD + CBU Total
Country of origin Japan
Germany
4
1 1 2
4
France
Sweden
Total South Korea
Italy
1
1
1
1
1 1 1
1
2 6 2 10
Of all the companies dealing with non-national car brands, two distributed ‘Completely Knocked Down’ (CKD) models while six sold ‘Completely Built Up’ (CBU) models. Two others indicated that their companies sold both CKD and CBU models (see Table 4). Two car brands, one from South Korea and another from Italy, were brought into the country in the CKD form, which were then assembled locally (see Table 5). All the four Japanese makes were in the form of CBUs. One German and the Swedish brand were also brought into Malaysia as CBUs. The second German brand was sold in both the CKD and CBU forms. The distributor of the French brand also sold both CKD and CBU units. CKD units are usually priced lower than the CBU due to the existing Malaysian import duty structure. Table 5 Number of companies by country of origin Country of origin Malaysia Japan Germany France South Korea Sweden Italy Total
Number of respondents 2 4 2 1 1 1 1 12
Percentage 16.7 33.3 16.7 8.3 8.3 8.3 8.3 100
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4.1
49
Profile of respondents
This section will provide a descriptive overview of the characteristics of the respondents’ department, position held, years employed in the company, degree of involvement in the implementation and operation of CRM programmes, type of business, mode of execution and whether the company is in the process of implementing any CRM programmes currently. Of the total 12 respondents, seven (58.3%) were from the Sales/Marketing department, three (25%) from the Information Technology (IT) department and only two (16.7%) from the Strategic Planning department. Both the respondents from the two local companies were from their respective Sales/Marketing departments (see Table 1). The Sales and Marketing departments were usually the initiators and planners for the implementation of CRM as part of their marketing plans. In the cases where respondents were from the IT department, they were facilitators for the implementation and functionality of the CRM programmes. The respondents in the strategic department were involved in the formulation and introduction of some CRM concepts and ideas to their respective companies. The designations of the respondents are given in Table 6. Apart from one respondent, all the rest held managerial positions and, in fact, three of the respondents were General Managers in their respective companies. Regarding the national car distributors, the respondent from the first was a research manager and the respondent from the other company was a senior manager. As managers, these are key people who play an important role in the successful introduction and implementation of CRM in their organisations and as such would be best target sample. Table 6 Respondents’ designations Designation
Number of respondents
Percentage
Malaysia
2
16.7
General manager
3
25
Sales and dealers manager
1
IT manager
3
Product manager
1
8.3 25 8.3
Research manager
1
8.3
Senior manager
2
16.7
Table 7 shows that a large number of the respondents have been working in the companies for a number of years. Twenty five per cent have been employed for 15–19 years. These were followed by an equal number of respondents (16.7% each) who had been employed for 20–24 years and five to nine years respectively. Only one respondent (making up 8.3% of the total) had been employed for 10–14 years. Three respondents (33.3%) had been working for less than three years in their companies.
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Table 7 Years employed in the company Years employed
Number of respondents
Percentage
Malaysia
2
16.7
5–9
2
16.7
10–14
1
8.3
15–19
3
25
20–24
2
16.7
As for their degree of involvement in CRM, most of the respondents (50%) indicated that they were involved in providing support services, while 25% were planners. Sixteen point seven per cent said that they were only users of CRM programmes in the company. Only one respondent (8.3%) indicated involvement both as a planner and support service provider.
4.2
Perceived usefulness of CRM programmes
The usage of the CRM programme and its perceived usefulness to the organisation as a whole was analysed. Table 8 reflects the respondents’ mean scores for each statement, which relates to the usage of the CRM programmes in the responding organisations. The statements A01 to A04 were tested for internal consistency reliability using Cronbach’s coefficient alpha. An alpha score of 0.9042 was obtained showing high internal consistency. In the table ‘Local’ stands for distributors of local brands whereas ‘Foreign’ refers to the distributors of non-national brands. Total means were used to compare between the two groups. Table 8 Usage and usefulness of CRM programmes Item
Statement
Local mean
Foreign mean
Overall mean
A01
Our customer database is constantly updated
3.0
3.5
3.42
A02
CRM helps us to identify the target customers
4.0
3.6
3.67
A03
We have systems to reach specific customer segments
3.0
3.3
3.25
A04
CRM has helped our company to identify the various customer needs
3.5
3.2
3.25
A05
CRM is efficiently maintained in our company (based on cost and benefit analysis)
3.0
3.1
3.08
A06
CRM has helped our company to significantly increase profit
3.0
3.0
3.00
A07
CRM has helped our company to increase the average profit contributed by each customer
3.0
2.9
2.92
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Table 8 Usage and usefulness of CRM programmes (continued) Item
Statement
Local mean
Foreign mean
Overall mean
A01
Our customer database is constantly updated
3.0
3.5
3.42
A08
CRM has helped our company to achieve higher number of repeat customers
3.0
3.2
3.17
A09
CRM has helped our company to inter-link our delivery channels
3.0
2.9
2.92
A10
CRM has helped our company integrate the front-end and back office functions
3.0
2.9
2.92
31.5
31.6
31.58
Total µ Ave µ
3.15
3.16
3.16
Overall, it was found that the statement ‘CRM helps us to identify the target customers’ indicated the highest mean score at 3.67, which indicates that the respondents agreed with the statement. Next was the statement A01 (Our customer database is constantly updated) with a mean score of 3.42. Based on the table, it was observed that there is not much difference between local companies and foreign franchise holders on the perceived usefulness of the CRM programmes in the organisation. However, the mean scores of the foreign franchise holders for the statements A07 (CRM has helped our company to increase the average profit contributed by each customer), A09 (CRM has helped our company to inter-link our delivery channels) and A10 (CRM has helped our company integrate the front-end and back office functions) were slightly lower with means of 2.9 respectively, compared with that of the local companies. This indicates that CRM programmes had not helped the foreign franchise holdings to increase the average profit contributed by each customer. The programmes have also not helped to inter-link the delivery channels nor integrate the front-end and back office functions. The overall average mean (3.16) indicates that, in general the CRM programmes were perceived as useful to the various organisations as a whole. Following the personal interviews it was revealed that the company distributing the French brand stood out from the others. They were the only foreign car distributor to agree strongly with the view that CRM programmes should be used to help their company to interlink their delivery channels as well as to integrate the front end and back office functions. This indicates that these functions are not considered as important by the rest and may be due to the fact that CRM usage is still relatively new in the country.
4.3
Ranking of CRM factors
Interesting results were observed with regards to the ranking of the various CRM factors (given in Table 2) in decreasing order of importance by perceived effectiveness in
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increasing the profitability in an organisation. Individual customer satisfaction (factor B1) was ranked highly by both local car and foreign brand distributor. In fact, based on mean scores, it was ranked as the top most important CRM factor by the foreign car distributors while the local car distributors ranked it the second most important (refer to Table 9). The only exception was the distributor of an Italian brand who ranked individual customer satisfaction highly. Instead, he put factor B04 ‘Gaining new customers’ as the most important followed by ‘Getting existing customers to buy new products’. Table 9 Most important and least important factors ranked by the car companies Companies
Most important factor
2nd most important factor
Least important factor
Local (mean)
B09
B01, B07
B06
Japan (mean)
B02
B01
B09
Germany (mean)
B01
B03, B04, B06
B09
France
B01
B03
B05
Sweden
B01
B02
B09
South Korea
B01
B04
B09
Italy
B04
B06
B07
As is evident from the table, there are some differences in the rankings of the various factors between the national car companies and those selling foreign brands. While the local auto companies ranked factor B09 ‘elimination of costs from unprofitable customers’ at the top, most of those in the non-national (foreign) car segment ranked it as the least important. It was also interesting to note that local companies thought that convincing existing customers (B06) to stay with the company was not that important and ranked it low. This may be due to the fact that the Malaysian auto industry is highly protected. As a result the two local brands, Proton and Perodua, are the cheapest in the market and together control the biggest market share. They may not see customer loyalty as a big problem. This sense of security may change once the AFTA rules come into effect and customers have a wider variety of choices at comparable, or much cheaper, prices.
4.4
Comprehensiveness of CRM programmes
Table 10 reflects the mean scores of the various facilities which relate to the comprehensiveness of the CRM programmes implemented by the various organisations, in other words, the usage levels of various facilities especially ICT, used to support the execution of effective CRM programmes in the organisation. It is implicitly assumed that a good CRM implementation programme would have a high usage rate of as many facilities as possible. The higher the mean scores, the higher the usage rate relating to the specific facility. In order to obtain meaningful results, the overall usage rates were divided into High, Medium and Low levels.
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High level (mean scores ranging from 3 and above). In terms of decreasing usage, the facilities which fall into this category include telephone, after sales support and website.
Medium level (mean scores ranging from 2 to 2.99). Most of the facilities come into this level of usage, namely, data warehousing which facilitates the storage of information, direct contact with customers, datamining facilities which facilitate the sharing of information, enterprise resource planning (ERP) software, which facilitates integration of front end and backend office operations, followed by enterprise wide application (EWP) software, which facilitates data interchange with the system.
Low level (mean scores 1.99). The usage levels of two facilities come into this level, namely, call centres followed by E-commerce, which has the lowest usage levels.
Both local and foreign car distributors showed very low levels of usage with respect to call centres and e-commerce. The later is understandable as the penetration of the internet and e-commerce is still very low in Malaysia. Table 10 Comprehensiveness of CRM programmes Item
Facility
Mean Local
Foreign
Overall
C01
Call centre
1.5
1.6
1.58
C02
Telephone
3
3.9
3.75
C03
Direct contact
2.5
3
2.92
C04
Website
3.5
2.9
3
C05
After sales support
2.5
3.5
3.33
C06
Data-mining facilities
2.5
2.8
2.75
C07
Data warehousing
3.5
2.8
2.92
C08
Enterprise wide application (EWP) software
2.5
1.9
2
C09
Enterprise resource planning (ERP) software
0
2.5
2.08
C10
E-commerce
Total µ Average µ
1.5 23 2.3
0.8
0.92
25.7
25.25
2.57
2.53
The fact that buying a car is a high involvement decision for most people may also contribute to the low usage of e-commerce facilities. So far, only one national car company has e-commerce facilities. However, online sales were still negligible. Some of the respondents noted during the personal interviews that most customers preferred to come in person and even take a car for a test drive before buying it. This may be the reason behind the low usage of call centres.
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It was surprising to note that the distributors of the Swedish brand did not use three IT facilities at all, namely, ERP software, EWP software and E-commerce. However, their usage of other facilities was quite high. This indicates that their usage of CRM facilities is not as comprehensive as the others. The company selling the Italian brand scored the lowest average mean score (1.10) with the respondent indicating that they used only three of the total ten listed facilities, namely C02, C03 and C05. This indicates that their CRM programme may not be that comprehensive even though they have had a presence in Malaysia since 1960. As we can see from Table 10, local companies show lower mean scores for most of the facilities compared with the overall scores of foreign car companies. For example, they did not use ERP software at all. That may indicate that they are behind the foreign brand companies in terms of comprehensiveness of CRM programmes.
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Marketing implications
In this era of relationship marketing, one of the main determinants of business success is the in-depth understanding of the needs and demands of the existing, as well as potential, customers and the provision of efficient services. Highly satisfied customers are more likely to be loyal. Despite the fact that CRM usage is still relatively new in Malaysia, the study reveals that it has been indeed proven useful to Malaysian automobile marketers, especially in identifying the target customers and in reaching specific customer segments besides identifying various customer needs. CRM has also helped the various companies to achieve a higher number of repeat customers. Individual customer satisfaction was ranked highly by distributors of both local and foreign car brands, in terms of effectiveness in increasing the profitability in an organisation. This is a positive indication that the Malaysian auto companies are aware of the importance of investing in customer satisfaction. It is also clear that most of the companies realise that using technology is essential to CRM. Customers should have an easy access to the facilities provided and news updates. This is only possible through the use of technology, especially the company websites. However, the low usage levels of call centres and e-commerce can be attributed to the fact that CRM is a relatively new development in the Malaysian auto industry. CRM is a business strategy that aims to understand, anticipate and manage the needs of an organisation’s current and potential customers. Its implementation requires a clear focus on the service attributes that represents value to the customer and, in turn, creating loyalty. No matter how technically up-to-date or expensive the technologies used are, success depends ultimately on the people who will manage and use the overall process and systems in order to understand the customer (Brendler, 2001). The company selling the Italian brand was found to be the least comprehensive in terms of CRM facilities. Being an established company is no excuse for not being up to date. Failure to have a comprehensive system could mean a loss of market share to the other players. This is true for the other car companies as well. CRM programmes, which are well implemented, could improve the response time to the customers’ need for information and product delivery. The organisations are on the right track, considering that fact that the implementation of CRM programmes, which includes the setting up of facilities, involves a significant investment of money and takes time.
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Limitations and recommendations for future research
It should be noted that this study had certain limitations. First of all, this is one of the first to look into the use of CRM and its usage as a marketing strategy in the Malaysian automobile industry. As the study is exploratory in nature, the research was limited to the 12 responding companies and may not represent the industry as a whole. Future studies could look in depth into the CRM implementation strategies in individual companies. There is also a need to examine the relationship between the comprehensiveness of CRM facilities and implementation levels with consumer satisfaction. Other studies could also look at the relationship with CRM implementation and the profitability of the company. It should be noted that this study is limited to the views of respondents from the companies and completely ignores the views of the customers. Maybe future studies could incorporate the viewpoints of the customers and see whether they are in line with the CRM objectives of the companies.
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