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IBM Challenge: How to Serve a Diverse Mix of Demanding Custo

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Taran Pereira

on 2 April 2014

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Transcript of IBM Challenge: How to Serve a Diverse Mix of Demanding Custo

IBM Challenge: How to Serve a Diverse Mix of Demanding Customers
Cost differences in customer relationships
IBM - Diverse multi-national
Utilization of CRM
Most important:
cost efficient
secure profit
Value Drivers
Switching Cost strategies for Group B
Offer a contract for supply of good/services e.g. discounts for bulk purchases
Include and exit fee in contract
Risk of exposure
Switching Cost strategies for Group C
Set a minimum quantity with the low price and limited service.
Increasing service support or include more attributes to result in a psychological switching cost
By using their strong brand equity and by offering quality products and services therefore they will not want to switch to another supplier
Switching Cost
IBM should consider two types of switching costs:
risk exposure
IBM -Overview
International Business Machines (IBM)
IBM operates in five segments
3 Main competitors
430,000 employees worldwide
Wolfgang Ulaga and Andreas Eggert, “Value-Based Differentiation in Business Relationships: Gaining and Sustaining Key Supplier Status,” Journal of Marketing 70 (January 2006): p. 122.

Ganesan, S., Brown, S., Mariadoss, B., & Ho, H. (2010). Buffering and Amplifying Effects of Relationship Commitment in Business-to-Business Relationships. Journal Of Marketing Research (JMR), 47(2), 361-373.

YAHOO! Finance (2014) IBM Competitors http://au.finance.yahoo.com/q/co?s=DELL&ql=1

Hutt M. D. & Speh, T. W. (2013) Business Marketing Management: B2B, 11th Edition, South-Western/Cengage Learning, Mason, OH, USA

Luo, A., & Kumar, V. V.(2013. Recovering Hidden Buyer-Seller Relationship States to Measure the Return on Marketing Investment in Business-to-Business Markets. Journal Of Marketing Research (JMR), 50, 143-160.

Hutt, M., Speh, T. (2013). Business Marketing Management: B2B, 11th Edition, South-Western/Cengage Learning, Mason, OH, USA.

IBM. (2014). Customer Support Online, it's all about you. Retrieved from http://www-05.ibm.com/support/operations/au/en/overview.html

Plank, R. E., Reid, D. A., & Ellen, B. P. (1999). Percieved trust in business-to-business sales: A new measure. The Journal of Personal Selling and Sales Management, 19, 61-71.

Shun, Y. L., Shankar, V., Erramilli, M. K., & Murthy, B. (2004). Customer value, satisfaction, loyalty and switching costs: An illustration from a business-to-business service context. Academy of Marketing Science Journal, 32, 292-311.

Value drivers relating to IBM
Group A - Core Product
Group B - Core product
Group C - Sourcing process
Question 1
What is relationship marketing ?
A: Centre’s on all activities directed towards establishing developing and maintain successful exchanges with customers and other constitutions.

B: Transactions that involve little or no emotions or commitment, just purely contractual arrangements.

C: Marketing products and services, locally or internationally for consumption or use of resale.
Issues of IBM
Diversity of customer groups
Maintaining Valued relationships
Research has shown that relationship commitment has many benefits including reducing uncertainty, increasing exchange efficiency, satisfaction, enhancing profitability and performance (Ganesan, Brown, Mariadoss & Ho, 2010).
As IBM has a strong brand equity they should focus on capitalizing on its steady service and longtime quality reputation.
The answer is.....
IBM Beliefs
1. Respect for the individuals
2. Service to customer.
3. Excellence must be a way of life

Cost differences in customer relationships – Group A
Cost differences in customer relationships – Group B
Cost differences in customer relationships – Group C
Question 3
On this Customer Profitability figure, where would you place Group A, B and C ?

The Relationship Spectrum
Question 2
Which relationship spectrum did Group A fall under?

A) collaborative exchanges
B) value-added exchanges
C) transactional exchanges
And the answer is......
The answer is.....
learn to retain customers
understand how to keep customers
keep customers over competitors
Craft the right value proposition
determine what customers need
Asses competitors, products and services
identifying new products and services that the consumer wants
develop new pricing models
determine value-adding attributes of the product
Question 4
What does IBM stand for?

a) Integrated business machinery

b) International Business Machinery

c) Informational Business Machinery
Question 5
What are the two main limitations for switching costs of IBM?

a) Risk in decrease in profit margin and lowering prices may dilute

b) Operation expansion and exit fees

c) Limited services and low prices
Question 6
What are the two types of switching costs?

a) Investment and inventory handling

b) Inventory handling and operational

c) Investment and risk exposure
Question 7
How many New Zealanders are helped by IBM each year through the prediction of weather and natural disasters?

a) 3.5 million

b) 4.5 million

c) 5.5 million
Question 8
What is IBM’s slogan?

a) Lets build a smarter planet

b) Lets build a brighter future

c) Lets build a new tomorrow
Question 9
What are the 3 sources of value creation?

a) Core product, secondary product, direct costs

b) Customer Operations, Service Support, Sourcing Process

c) Core Offering, Sourcing Process, Customer Operations
Question 10
What is IBM's main three competitors?

a) HP, Accenture, Microsoft

b) HP, Dell, Microsoft

c) Accenture, Dell, Microsoft
Full transcript