Conference Paper

Who is the Adopter? Organizational Acceptance of Customer Loyalty Programs in Supermarket Chains and the Potential Role of a Community of Practice

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The paper presents a map of cognitions about customer relationship management and customer loyalty programs (CRM/CLPs) in USA food retailers. It shows that managers separate CRM/CLPs from their ongoing value adding effort and consider costs of CRM/CLPs critical obstacles. This is an example of failing implementation of IT systems manifesting in managerial cognition.

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Analyses the diffusion of a single innovation in the same industry but across different geographic markets. Controls for variables, such as the capital cost of the innovation or the potential profitability of an innovation. Specifically, analyzes the early diffusion of the optical scanner through the food store industry in the largest US metropolitan areas.-from Authors
Prologue Part I. Practice: Introduction I 1. Meaning 2. Community 3. Learning 4. Boundary 5. Locality Coda I. Knowing in practice Part II. Identity: Introduction II 6. Identity in practice 7. Participation and non-participation 8. Modes of belonging 9. Identification and negotiability Coda II. Learning communities Conclusion: Introduction III 10. Learning architectures 11. Organizations 12. Education Epilogue.
The supermarket industry has been developing customer relationship marketing (CRM) programs and strategies for over 15 years. At this point the impacts of CRM on the supermarket industry are mixed at best. Despite the potential to radically change the way supermarket business is conducted, there is also the possibility that CRM could be marginalized by supermarket companies as just another management fad. This study employed a combination of literature review, retailer surveys, interviews with supermarket and manufacturer executives, and consumer focus groups to examine CRM in the U.S. supermarket industry. Our research focused on identifying the current status of CRM programs, on the role of CPGs in those programs, and the industry-specific issues constraining the realization of full CRM benefits. This report also presents an overview of the future direction of CRM theory with perspectives on the supermarket industry. Despite over 15 years of development in the supermarket industry, and more than three-quarters of sales transacted with loyalty cards, and several hundred million dollars invested in technology and programs, customer loyalty has not been significantly increased because most consumers belong to multiple programs that offer mostly undifferentiated benefits. Even though the underlying premise of CRM is that loyal customers are less price sensitive, contributing to their potential higher profitability, the major benefit offered by retailers and perceived by consumers in frequent shopper programs is price discounts. While retailers surveyed reported very positive results from their CRM Programs (e.g. increased transactions, shopping frequency, transaction size, overall sales, gross margin, net profit, and return on marketing investment), some of these trends are counterintuitive, perhaps reflecting the misuse of price discounts and other tactics that undermine CRM’s foundation. Fast-paced lifestyles limit the appetite of most consumers for targeted marketing activities, generally, and, the efforts of supermarket and CPG companies, specifically, are perceived as intrusive for most consumers. The importance of customer service cannot be overemphasized in determining the success or failure of retailer CRM programs. All the technology and analytical skills in the world will not prevent poor customer service from driving customers to competitors. At the same time, the critical role of store employee turnover in the success or failure of customer service cannot be overemphasized. For most retailers, the customer service issue will not be resolved until employee turnover is controlled. As manufacturers continue to scrutinize the efficiency of their trade spending and retailers increase their dependence on trade promotion dollars, CRM initiatives could be limited by the internal retailer tug of war over how trade funds will be spent. At the same time, manufacturers and retailers must work closely together to meet the needs of their shared customers. By sharing information, learning and resources, the seemingly divergent goals of building both store loyalty and brand loyalty perhaps can be met simultaneously. While funding and technology are the most pervasive barriers to CRM realization, relieving those constraints will be meaningless if the cultural issues that plague most retailers are not resolved. Organizational and cultural issues will prevent the attraction and retention of sufficient people with the technical, analytical, and customer service skills needed at all levels of the organization to make CRM succeed. According to leading academics and business visionaries, the future of CRM involves a dramatic shift in the identification and valuation of assets. Given the similarities in the physical assets such as locations, stores, products, and services across most retailers today, visionary retailers will realize that assets that will give them competitive advantage in the future are their customer relationships or customer equity. Now is the time to begin transforming retail companies into customer-centric organizations driven by the realization that customers are the only truly valuable assets.
Recently and independently, two dynamic approaches to organization and strategy have emerged in fields traditionally confined to static methods. One approach uses the cybernetic properties of collective cognitive maps to create a dynamic theory of organization and social system change. The other approach uses the hierarchic properties of collective cognitive maps to create a dynamic theory of strategy. This article discusses how a dynamic cognitive approach makes organization theory and strategy theory inseparable. The approach distinguishes between aggregate and congregate collective cognitive maps. The approach creates a unified dynamic theory of organization and strategy. In this unified theory, the hierarchic and cybernetic aspects of collective cognitive maps combine with the cryptic aspect of concepts and connections present in maps to further explicate the association between organization and strategy. In practice, the cryptic character of many concepts - especially those responsible for the congregation of individual cognitive maps - is exploited to generate both a potent interview technique and a powerful method for facilitating the initiation and development of strategy workshops.
In 1995, IBM Global Services began implementing a business model that included support for the growth and development of communities of practice focused on the competencies of the organization. This paper describes our experience working with these communities over a five-year period, concentrating specifically on how the communities evolved. We present an evolution model based on observing over 60 communities, and we discuss the evolution in terms of people and organization behavior, supporting processes, and enabling technology factors. Also described are specific scenarios of communities within IBM Global Services at various stages of evolution.
This paper describes how established companies can create strategic business communities in order to usher in innovation. The paper focuses on the case of NTT DoCoMo, Japan’s largest mobile telecommunications carrier, which has utilised strategic community management principles in its efforts to cultivate and expand the mobile Internet market in Japan. In doing so, new markets were created, in turn leading to further opportunities for NTT DoCoMo. The paper distinguishes between strategic communities and other organisational forms such as projects and communities of practice and discusses the advantages of each. It concludes with the assertion that strategic community management is an effective methodology aimed at strategic innovation by major enterprises.
The research concludes that every implementation can fall foul of certain specific pitfalls that will derail its effectiveness and drain value from investments. The author will indicate the nature of the pitfall and how they can be diagnosed and then turn to appropiate actions managers can take to realize the full promise of technological change
Propuesta administrativa inscrita dentro la corriente de la administración del conocimiento, consistente en la formación de lo que los autores llaman comunidades de práctica, para la creación de una verdadera organización de conocimiento. Aunque las comunidades en general tienen un proceso de formación "natural", las compañías han de ser más proactivas y sistemáticas para desarrollarlas e integrarlas dentro de la estrategia corporativa. Las comunidades de práctica son una palanca dentro de la planeación estratégica general, que origina nuevas oportunidades de negocios, mecanismos de identificación entre las metas empresariales y el desarrollo personal, transferencia de las mejores prácticas y la retención de los talentos más calificados de las compañías.
This study uses monthly data on the adoption of optical scanners by sixty-three grocery chains in thirty-two large U.S. cities to identify the determinants of the rate of intrafirm diffusion. The methodology involves a two-stage approach that relates market environment characteristics to the estimated rate of intrafirm diffusion. The results indicate that firms with larger market shares adopt a new innovation (scanners) more quickly initially but diffuse the innovation through their stores more slowly than firms with smaller market shares. In addition, firms that lag competitors in the initial adoption of scanners tend to diffuse the innovation more quickly. Copyright 1992 by MIT Press.
Two p roportional hazard models are used to investigate the differingeffects of marke t structure variables on the conditional probabilityof a firm initially adoptin g the new technology of optical scanners as the innovation spreads through the f ood store industry. During the early stage, leading firms with large average sto re size which are not members of chains and which operate in less concentrated m arkets with higher incomes and wage rates, tend to adopt scanners sooner. Later on, differences in seller concentration, market share, and size become less impo rtant as other firms follow prior adoptions. Copyright 1987 by MIT Press.
Customer Relationship Marketing (CRM in the US Supermarket Industry: Current Status andProspects. Food Industry Management Program
  • Hawkes
  • Gerard
Hawkes, Gerard F. 2003. Customer Relationship Marketing (CRM in the US. Supermarket Industry: Current Status andProspects. Food Industry Management Program Report EB 2003-02, Comell University.
Why New Technologies Fail
  • Griffith
  • L Temi
  • F Raymond
  • Lynda Zammuto
  • Aiman
  • Smith
Griffith, Temi L.; Raymond F. Zammuto and Lynda Aiman-Smith. 1999. " Why New Technologies Fail. " Industrial Management, May-June, pp. 29-34.