Customer Relationship Management and Business Profitability: The Case of Mary Kay

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TABLE OF CONTENTS

CHAPTER 2: LITERATURE REVIEW1

2.1. Customer Relationship Management System1

2.2. Implementation and Integration of Customer Relationship Management3

2.3. Customer Centric Organisational Culture7

2.3.1. Management Controls8

2.3.2. Workplace Learning9

2.3.3. End User Involvement10

2.3.4. Executive Management Support11

2.4. The Relationship between CRM and Business Profitability12

2.5. Point of Sale Incentive Programme16

2.6. The Loyalty Effect18

REFERENCES21

CHAPTER 2: LITERATURE REVIEW

2.1. Customer Relationship Management System

Extensive research has been conducted on the economic intricacies related to the implementation of customer relationship management system (Musico, 2009, 32), value of customer relationship management system as a business model (Marchand, 2006), and the effectiveness of customer relationship management system on customer satisfaction in retail industries (Kevork, & Vrechopoulos, 2009, 48). Apart from the existing research, few studies have addressed the link between customer relationship management systems within the cosmetics product industry as a possible competitive advantage, particularly from the retail provider perspective (Kanagal, 2009, 11). Three components of customer relationship management system that influence quality retail delivery from the retail provider perspective were of interest in this study, including customer centricity (Jaworski, & Merchant, 1988), workplace learning (Homburg, Droll, & Totzek, 2008), and management controls (Hernandez, & Cincotto, 2010).

Understanding the perceived influence these customer relationship management system components has on the retail firm's ability to deliver quality skincare product, from the perspective of the retail provider, presents management with an opportunity to increase competitive advantage by recognising what intrinsically motivates individuals to become exemplary retail firms (Hartline, Maxham, & McKee, 2000, 35). Customer relationship management (CRM) is a strategy often employed by retail organisations in an effort to attain competitive advantage in the marketplace (Hancock & Cotlar, 2010). Despite the tumultuous economic conditions in the world economy, the skincare-product segment of the retail industry remains fiercely competitive as the fastest growing lodging market in the world today (Gummesson, 2002, 35).

Given the competitive nature of the skincare products market, organisations may employ a customer relationship management system business model as a key differentiator to gain competitive advantage (Galbraith, 2005, 47). This literature review examines three components of customer relationship management system with a focus to churn out profits: [a] a customer centric culture [b] management controls, and [c] workplace learning, as they influence the retail firm's ability to deliver quality retail within the niche hospitality market of Mary Kay Inc. (Ford, Wilderom, & Caparella, 2008, 143).

These three components of customer relationship management system may be the critical factors required to deliver quality retail and to attain the distinctive competitive advantage of customer loyalty in the skincare marketplace (Finnegan, & Willcocks, 2007, 55). This research is intended to expand the understanding of critical components within a customer relationship management system framework (Evans, Stan, Murray, 2008), and to explore the influence of each component on a retail firm's ability to deliver quality retail, from the perspective of the retail provider.

The use of CRM as a strategy in retail organisations is a state-of-the-art approach toward competitive advantage (Elbanna, 2009, 175). This study explored the influence of the customer ...