Relationship marketing

• The aim of relationship marketing is to maximise customer retention and satisfaction through two-way communication, rather than to directly increase sales through traditional promotion messages and advertising.
• Relationship marketing recognises the long-term value of building customer relationships through dialogue.

Customer care

• Customer care is concerned with winning and retaining customers and considers customers and customer satisfaction key to success, and the ultimate aim of all activities.
• Open communication with customers is considered vital. This ensures customers are kept informed and encourages customers to raise any issues they have. All involved in the organisation, including ‘back-office’ staff, work towards achieving customer satisfaction.

Customer service

• Customer service is a narrower concept than customer care. Customer service focuses on how the organisation interacts with clients. This is most apparent in sales and post-sales service.
• Customer service is an important element of an organisation’s offering for both products and services. High quality customer service before, during and following a sale helps to create customer loyalty. Therefore, customer service is part of customer care.

• Make the most out of every customer interaction.
• Ensure offers and promotions are relevant to customers.
• Value customers and treat them with respect.
• Listen to customer comments and complaints.
• Act on customer comments and complaints.
• Reward customers for loyalty

There are four types of quality cost – prevention, appraisal/inspection, internal and external failure. Prevention and appraisal costs are known as conformance costs, internal failure and external failure costs are known as non-conformance costs.

• Prevention cost –
  The cost of building quality into the product design or service design, the cost of training staff in quality improvement and error prevention and the cost of prevention devices (e.g. fail-safe features)
• Appraisal cost or inspection cost –
  The cost of inspecting finished goods or services, and other checking devices such as supplier vetting. Customer or client feedback forms (although these may be a way of keeping service staff ‘on their toes’)
• Internal failure cost –
  Cost of materials scrapped due to inefficiencies in stockholding procedures. Cost of materials and components lost during production or service delivery Cost of output rejected during the inspection process.
  Cost of re-working faulty output cost of reviewing product and service specifications after failures or customer dissatisfaction.
  Losses due to selling faulty output cheaply, and
  Not charging for a service so as to pacify dissatisfied and angry customers or clients.
• External failure cost
  Cost of product liability claims from customers or clients.
  Cost of repairing products returned by customers, including those forming part of service.
  Cost of replacing sub-standard products including those included with a service.
  Delivery costs of returned units or items.
  Cost of the customer services section and its operations.
  Loss of customer goodwill and loss of future sales.

• Team working is not suitable for all jobs – although some managers do not like to admit this.
• Teamwork should be introduced because it leads to better performance, not because people feel better or more secure.
• Team processes (especially seeking consensus) can delay decision-making. The team may also produce the compromise decision, not the right decision.
• Social relationships might be maintained at the expense of other aspects of performance.
• Group norms may restrict individual personality and flair.
• ‘Group think’ (Janis): team consensus and cohesion may prevent consideration of alternatives or constructive criticism, leading the team to make risky, ill-considered decisions.
• Personality clashes and political behaviour within a team can get in the way of effective performance.

• It helps the organisation to take a long view and avoid short-termism, while at the same time providing a sensible approach to the uncertainty of the future.
• It guides the allocation of resources.
• It co-ordinates the activities of the various parts of the organisation, ensuring the integration of operational management decisions into the higher strategy, the wider organisational context and longer-term goals.
• It sets a standard by which the actual performance of the organisation is measured and controlled.
• It comforts providers of finance in particular, and encourages suppliers and employees to think in terms of a long-term relationship.
• The process of forming strategy requires wide and complex input, so it can have a beneficial effect on managers’ personal development and awareness, and can assist with management succession planning.

• Identifies risks. Strategic planning helps identify and manage risks.
• Forces managers to think. Strategic planning can encourage creativity and initiative by tapping the ideas of the management team.
• Forces decision making. Companies cannot remain static – they have to cope with changes in the environment. A strategic plan draws attention to the need to change and adapt, not just to ‘stand still’ and survive.
• Better control. Management control can be better exercised if targets are explicit.
• Enforces consistency at all levels. Long-term, medium-term and short-term objectives, plans and controls can be made consistent with one another. Otherwise, strategies can be rendered ineffective by budgeting systems and performance measures that have no strategic content.

• Support structured decisions at operational and management control levels.
• Designed to report on existing operations.
• Have little analytical capability.
• Relatively inflexible.
• Have an internal focus

• They are written down.
• They are circulated to interested parties in the organisation.
• They specify the outcomes (eg where the business wishes to be in five years’ time.
• They specify how the outcomes are going to be achieved.
• They trigger the production of operational plans lower down the hierarchy

• Accountability, ultimately to Parliament.
• Funding. The public sector can obtain funds in three main ways.
  o Raising taxes
  o Making charges (e.g. for prescriptions)
  o Borrowing
• Demand for services. There is a relationship between the price charged for something and the ‘demand’. In the public sector demand for many services is practically limitless.
• Limited resources. Despite the potentially huge demand for public services, constraints on government expenditure mean that resources are limited and that demand cannot always be met.
• Public interest. Governments once believed the public interest was best served if the state run certain services.