Description of Nestlé (Thai) School Channel in Ice-Cream Business Unit and Current CRM Complication

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2. Issue research & analysis

2a. Objectives

To find a strategic technique to win over prospective customers and retain current customers through school’s decision making units in order to increase overall sales revenues.

2b. Literature Research

Most of the data needed for research objectives are about Nestlé (Thai) ice-cream business unit, which are neither available in textbooks nor websites. Therefore, the data for primary research of this report will derive from an in-depth and recorded interview with Ms Thitikarn Suwansukhum, a trade marketing promotion executive of school channel in Nestlé (Thailand) company, ice-cream business unit. I will combine the interview with an analysis based on a theoretical method from CRM textbooks, as well as many academic journal articles related to Business-to-Business CRM and online website articles.

2c. Literature Review

i. The total revenue of Nestlé (Thai) ice-cream business unit in 2009 was 1,890 million baht. There are four sale channels of the ice-cream products. Sales volume in the school channel represented 480 million baht (49.68 Thai baht equal £1 Great Britain pound sterling as of 7 April 2010 quoted by Bank of Thailand), representing one fourth of the company’s total sales revenue in 2009. In the last five years, Nestlé school channel has expanded to around 5,000-7,000 schools. School channel penetration was hardest and toughest compared to other distribution methods. However, once the decision maker of a school trusts the brand, the loyalty is strong and sustained.

In Thailand, the entire ice-cream market is estimated to be worth a total of 5,400 million baht. The market share of Nestlé ice-cream is 36 percent, trailing behind Wall’s ice-cream which is distrib...

... middle of paper ...

...l data to look at length of relationship and share of customers. It is very important for Nestle to follows its every commitments to school DMUs. This commitment means forgoing the benefits of acting opportunistically and not look for bargains, discounts and better deals elsewhere, preferring instead the possible long-term benefits of doing business with the same supplier (Little & Marandi, 2003).

Relationship returns: The cost of execute RM to school DMUs as well as students must not exceed the profit. For that reason, a selection of customers to execute RM activities onto is essential. A consumer can be loyal to a product or a brand but not all customers are created equal. Only customers who are expected to deliver a profit should be retained (Stevens, 2005). Also, RM activities should increase customer lifetime value and generate longer customer life cycle.

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