Examination Paper: Customer Relationship Management
7
IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
Services Marketing
Section A: Objective Type (30 marks)
•?This section consists of Multiple choices/Fill in the blanks/True-False & Short notes type
questions.
•?Answer all the questions.
•?Part One questions carries 1 mark each & Part Two questions carry 5 marks each.
Part One:
Multiple Choices:
1. The extent to which customers recognize and willing to accept this variation is called:
a. Zone of tolerance
b. Zone of fitness
c. Zone of acceptance
d. None of the above
2. SERVQUAL is used to measure service quality. (T/F)
3. SWICS stands for………………………………………………………………………………
4. Real /perceived and monetary/non monetary costs are termed as switching costs.(T/F)
5. TARP stands for ……………………………………………………………………………….
6. If the direct cost be ‘a’, overhead cost be ‘b’ and profit margin be ‘c’ then the cost based pricing
can be calculated by:
a. a+b+c
b. a-b+c
c. a/b*c
d. None of the above
7. If the percentage change in quality purchased be ‘a’ and the percentage change in price be ’b’
then elasticity is given by:
a. a*b
b. a/b
c. a+b
d. a-b
8. If the actual revenue be ‘a’ and the potential revenue be ‘b’ then the yield can be given by:
a. a-b
b. a+b
c. a/b
Examination Paper: Customer Relationship Management
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IIBM Institute of Business Management
d. b/a
9. Reactors make adjustments unless forced to do so by environmental pressures.(T/F)
10. Least profitable customers are categorized in:
a. Platinum
b. Gold
c. Iron
d. Lead
Part Two:
1. What do you understand by “Customer Gap”?
2. Write the difference between perceptions of service quality and customer satisfaction.
3. Write short “SERVQUAL” survey.
4. What are different types of “Complainer”?
END OF SECTION A
Section B: Caselets (40 marks)
•?This section consists of Caselets.
•?Answer all the questions.
•?Each Caselet carries 20 marks.
•?Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
Giordano is a retailer of casual clothes in East Asia, South-East Asia, and the Middle East. In 1999, it
operated outlets in China, Dubai, Hong Kong, Macao, Philippines, Saudi Arabia, Singapore, South Korea,
and Taiwan. Giordano’s sales grew from HK$712 million in 1989 to HK$3,092 million in 1999. This
case study describes the success factors that allowed Giordano to grow rapidly in some Asian countries. It
looks at three imminent issues that Giordano faced in maintaining its success in existing markets and in
its plan to enter new markets in Asia and beyond. The first concerns Giordano’s positioning. In what
ways, if at all, should Giordano change its current positioning? The second concerns the critical factors
that have contributed to Giordano’s success. Would these factors remain critical over the coming years?
Finally, as Giordano’s seeks to enter new markets, the third issues, whether its competitive strengths can
be transferred to other markets, needs to be examined.
Being Entrepreneurial and Accepting Mistakes as Learning Opportunities
The willingness to try new ways of doing things and learning from past errors was an integral part of
Lai’s management philosophy. The occasional failure represented a current limitation and indirectly
pointed management to the right decision in the future. To demonstrate his commitment to this
philosophy. Lai took the lead by being a role model for his employees “. . . Like in a meeting, I say, look,
I have made this mistake, I’m sorry for that. I hope everybody learns from this. If I can make mistakes,
Examination Paper: Customer Relationship Management
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IIBM Institute of Business Management
who the hell do you think you are that you can’t make mistakes?” He also believed strongly in
empowerment – if everyone is allowed to contribute and participate, mistakes can be minimized.
Service
Giordano’s commitment to excellent service was reflected in the list of service-related awards it had
received. It was ranked number one by the Far Eastern Economic Review, for being innovative in
responding to customers’ needs, for three consecutive years – 1994, 1995, and 1996. And when it came to
winning service awards, Giordano’s name kept cropping up. In Singapore, it won numerous service
awards over the years. It was given the Excellent Service Award for three consecutive years: 1996, 1997,
and 1998. It also received three tourism awards: “Store of the Year” in 1991, “Retailer of the Month” in
1993, and “Best Shopping Experience – Retailer Outlet” in 1996. These were just some of the awards
won by Giordano.
How did Giordano achieve such recognition for its commitment to customer service? It began with the
Customer Service Campaign in 1989. In that campaign, yellow badges bearing the words “Giordano
Means Service” were worn by every Giordano employee. This philosophy had three tents: We welcome
unlimited try-ons; we exchange – no questions asked; and we serve with a smile. The yellow badges
reminded employees that they were there to deliver excellent customer service.
Since its inception, several creative, customer-focused campaigns and promotions had been launched to
extend its service orientation. For instance, in Singapore, Giordano asked its customers what they thought
would be the fairest price to charge for a pair of jeans and charged each customer the price that they were
willing to pay. This one-month campaign was immensely successful, with some 3,000 pairs of jeans sold
every day during the promotion. In another service-related campaign, customers were given a free T-shirt
for criticizing Giordano’s service. Over 10,000 T-shirts were given away. Far from only being another
brand-building campaign, Giordano responded seriously to the feedback collected. For example, the
Giordano logo was removed from some of its merchandise, as some customers liked the quality but not
the “value –for – money” image of the Giordano brand.
Against advice that it would be abused, Lai also introduced a no-questions-asked and no-timelimit
exchange policy, Which made it one of the few retailers in Asia outside Japan with such a generous
exchange policy. Giordano claimed that returns were less than 0.1 percent of sales.
To ensure that every store and individual employee provided excellent customer service, performance
evaluations were conducted frequently at the store level, as well as for individual employees. The service
standard of each store was evaluated twice every month, while individual employees were evaluated once
every two months. Internal competitions were designed to motivate employees and store teams to do their
best in serving customers. Every month, Giordano awarded the “Services Star” to individual employees,
based on nominations provided be shoppers. In addition, every Giordano star was evaluated every month
by mystery shoppers. Based on the combined results of these evaluations, the “Best Services Shop” award
was given to the top store.
Aggressive advertising and Promotion
Fung said, “Giordano spends a large proportion of its turnover on advertising and promotions. No retailer
of our size spends as much as us.” For the past five years, Giordano in Singapore had been spending
about S$1.5 million to S$2 million annually on its advertising and promotional activities. It won the Top
Advertiser Award from 1991 to 1994. Up to June 30, 2000, total advertising and promotional expenditure
for the group amounted to HK$41.5 million, or 3 percent of the group’s retail turnover. In addition to its
big budget, Giordano’s advertising and promotional campaigns were creative and appealing. One such
campaign was the “Round the Clock Madness Shopping” with the Singapore radio station FM93.3 on 1
May 1994. Different clothing items were offered at a 20 percent discount from 12 A.M. to 1 A.M.,
whereas polo shirts and T-shirts and T-shirts were given a 30 percent discount from 1 A.M. to 2 A.M. and
then shorts at a 40 percent discount from 2 A.M. to 3 A.M. To keep listeners awake and excited, the
product categories that were on sale at each time slot were released only at the specified hour, so that
nobody knew the next items that would be on this special sale. Listeners to the radio station were cajoled
into coming to Giordano stores throughout the night (Ang 1996). In 1996, Giordano won the Singapore
Examination Paper: Customer Relationship Management
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IIBM Institute of Business Management
Ear Award. Its English radio commercial was voted by listeners to be one of the best, with the most
creative English jingle.
Another success was its “Simply Khakis” promotion, launched in April 1999, which emphasized
basic, street-culture style that “mixed and matched” and thus fitted all occasions. In Singapore, within
days of its launch, the new line sold out and had to be relaunched two weeks later. By October 1999, over
a million pairs of khaki trousers and shorts had been sold. This success could be attributed partly to its
clearly defined communications objectives. As Garrett Bennett, Giordano’s Executive Director in charge
of merchandising and operations, said, “We want to be the key provider of the basics: khakis, jeans, and
the white shirt.” Elsewhere in the region, sales were booming for Giordano, despite only moderate
recovery experienced in the retail industry. Its strength in executing innovative and effective promotional
strategies helped the retailer to reduce the impact of the Asian crisis on its sales and take advantage of the
slight recovery seen in early 1999. Aggressive advertising and promotions also played a significant role in
the successful remarketing of its core brand prelaunch or introduction of sister brands, Giordano Ladies’,
Giordano Junior, and Bluestar Exchange.
Giordano’s Growth Strategy
As early as the 1980s, Giordano realized that it was difficult to achieve substantial growth and economies
of scale if it operated only in Hong Kong. The key was in regional expansion. By 1999, Giordano had
opened 740 stores in 23 markets, out of which Giordano directly managed 317 stores. Until 2000, four
markets dominated its retail and distribution operations – Hong Kong, Taiwan, China, and Singapore. By
2000, Giordano had 895 Giordano stores in 25 markets.
Giordano cast its sights on markets beyond Asia, driven partially by its desire for growth and
partially to reduce its dependence on Asia in the wake of the 1998 economic meltdown. In Giordano’s
first full year of operation in Australia, sales turnover reached HK$29 million (US$3.72 million) in
December 2000. The number of retail outlets increased from 4 in 1999 to 14 in 2000. With the opening up
of its first retail outlet in Sydney in September 2000, Giordano outlets could now be found in both
Melbourne and Sydney. As part of Giordano’s globalization process, it planned to open up its first shops
in Germany and Japan during the first half of 2001. Currently, Giordano planned to focus its globalization
efforts on new markets like Germany, Japan, Australia, Indonesia, and Kuwait.
When the crisis made Giordano rethink its regional strategy, it was still determine to enter and
further penetrate new Asian markets. This determination led to the successful expansion of Giordano in
Mainland China, which saw the retail outlets grow from 253 stores in 1999 to 357 stores in 2000. Due to
the expanded retail network in Mainland China and improvements made to the product line, sales
turnover increased by 30.9 percent to HK$712 million (US$91.3 million) in 2000. Faced with the
imminent accession of Mainland China to the World Trade Organization, Giordano’s management
foresees both challenges and opportunities ahead. In Indonesia, Giordano opened up 7 more stores in
2000, bringing the total number of retail stores to 10. These stores covered areas in Jakarta, Surabaya, and
Bali. However, with the political and social instability in Indonesia, coupled with the downward pressure
on the Rupiah, Giordano was cautiously optimistic about further expansion and planned to proceed with
caution. In Malaysia, Giordano planned to refurnish its Malaysian outlets and intensify its local
promotional campaigns to consolidate its leadership position in the Malaysia market.
Giordano’s success in these markets would depend on its understanding of them, and consumer tastes
and preferences for fabrics, colors, and advertising. In the past, Giordano relied on a consistent strategy
across different countries, and elements of this successful strategy included its positioning and service
strategies, information systems and logistics, and human resource policies. However, tactical
implementation (e.g., promotional campaigns) was left mostly to local managers in their respective
countries. A country’s performance (e.g., sales, contribution, service levels, and customer feedback) was
monitored by regional headquarters (e.g., Singapore for South-East Asia) and the head office in Hong
Kong. Weekly performance reports were made accessible to all managers. In recent years, it appeared that
as the organization expanded beyond Asia, different strategies had to be developed for different regions or
countries.
Examination Paper: Customer Relationship Management
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IIBM Institute of Business Management
Questions:
1. How do you think Giordano had/would have to adapt its marketing and operations strategies and
tactics when entering and penetrating your country?
2. What general lessons can be learned from Giordano for other major clothing retailers in your
country?
Caselet 2
In 2003, Jyske Bank Group’s primary operations consisted of Jyske Bank, which was the third largest
bank in Denmark after Den Danske Bank and Nordea’s Danish operations. Jyske Bank was created in
1967 through the merger of four Danish banks having their operations in Jutland, Jyske being Danish for
“Jutlandish.” Jutland was the large portion of Denmark attached to the European mainland to the north of
Germany. Until the late 1990s, Jyske Bank was characterized as a typical Danish bank: prudent,
conservative, well-managed, generally unremarkable, and largely undifferentiated.
Beginning in the mid-1990s, Jyske Bank embarked on a change process that led to its no longer being
characterized as either unremarkable or undifferentiated. By 2003 its unique “flavor” of service made it a
leader in customer satisfaction among Danish banks. At the heart of these changes was the bank’s
determination to be, in the words of one executive, “the most customer-oriented bank in Denmark.” The
bank achieved its goal by focusing on what it called Jyske Forskelle, or Jyske Differences.
Jyske Differences
Jyske Differences stemmed from Jyske Bank’s core values. These stood as central tents, guiding virtually
all aspects of the organization’s life. As one manager pointed out, the values were consistent with the
bank’s Jyske heritage: “Really, when we started talking about our core values, and their Jyskeness, we
just became overt about values we had long held.” Jyske Bank’s core values, published for employees,
customers, and shareholders, were that the bank shouls (1) have common sense; (2) be open and honest;
(3) be different and unpretentious; (4) have genuine interest and equal respect for people; and (5) be
efficient and persevering.
The core values led management to reevaluate how the bank did business with its customers.
Managers determined that if the bank were to be true to its values, it would have to deliver service
differently from both how it had in the past, and how other banks delivered service. Jyske Differences
were thus operational zed as specific practices that distinguished Jyske Bank.
Competitive Positioning
Managers looked to Jyske values and differences for the bank’s competitive positioning. This process was
aided by a Dutch consultant, whose market research indicated that Jyske bank’s core target market of
Danish families and small-to-medium sized Danish companies (earnings were 40 % commercial, 60%
retail) generally liked the idea of a bank that was jyske. Additional research suggested that what managers
described as the “hard factors” of price, product, and location had become sine qua non in the eyes of
customers. In contrast, “soft factors” relating to an individual customer’s relationship with her service
providers served as the basic for differentiation, specially, “being nice,” “marketing time for the
customer,” and “caring about the customer and his family.”
Managers felt that the “genuine interest” component of the bank’s values dictated a shift from
traditional product focused selling to a customer-solution approach. They characterized the new approach
by contrasting the statement, “Let me tell you about our demand-deposit account,” with the question,
“What you need?”
Although he bank’s core financial products remained essentially similar to those of other Danish
banks,3 the way they were delivered changed. This required significant changes in the branches, both
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IIBM Institute of Business Management
tangible and intangible, and how they were supported. Tools were developed to support solution-based
service delivery. For example, new IT systems helped employees take customers through processes to
determine their needs and final appropriate solutions. In one, the customer and her banker filled out an
on-line investor profile to determine what style of investment products were most appropriate for her
based on risk aversion, time frame, and return goals, among other factors. A manager commented that,
“The tools themselves aren’t proprietary. We’ve seen other financial services with similar programs – it’s
how our people use them that makes the difference.” Another stated, “Our tools are designed either to
enhance our ability to deliver solutions, or to reduce administrative tasks and increase the amount of time
our people can spend with customers – delivering solutions.”
Finally, being overtly Jyske meant that the bank would no longer be a good place for any customer
meeting its demographic criteria for two reasons. First, delivering this type of service was expensive. As a
result, the bank charged a slight premium, and targeted only those customers who were less likely to
represent a credit risk. Second, the bank would have a personality. According to one manager, “The
danger in having a personality is, someone, inevitably, won’t like you.” Senior management considered
this the price of being candid, and welcomed the effect it had on some customers. For example, Jyske
Bank’s cash/debit card had a picture of a black grouse on it, black grouses being found in Jutland’s rural
countryside. When a few customers complained that the bird didn’t seem very business-like, or wasn’t hip
(one was “embarrassed to pull it out at the disco”) managers were happy to invite them to open accounts
at competitor institution. A manager noted:
Actually, if no one reacts to our materials, they’re not strong enough. Some people should
dislike us. After all, we’re only about 6% of the market. I don’t want everyone to like us –
We’re not for everyone and don’t want to be.
Tangible Differences
Account Teams:
Delivering on the banks competitive positioning required a number of tangible changes in its service
delivery system. These began with assigning each customer a branch employee to serve as primary point
of contact. Over time, managers discovered that this created problems, because customers often arrived at
a branch when their service provider was busy with other customers or otherwise unavailable.
Nevertheless, managers were committed to providing individualized service. According to one, “How can
we be honest in saying we care about customers as individuals if we don’t get to know them as
individuals? And without knowing them, we can’t identify and solve their problems.” The solution was
found in account teams: each customer was assigned to a small team of branch bankers. These employees
worked together to know and serve their customers, sitting in close physical proximity within the branch.
Branch Design:
Jyske Bank planned to spend approximately DKK 750 million to physically redesign its branches (most
of this had been spent by 2003). Danish observers described the new branches as looking “like an
advertising agency” or “a smart hotel.” These effects were accomplished through the use of modern, upscale
materials such as light wood, warm colors, and original art. Branch redesign also included changes
in the way customers interacted with their bankers, made possible by architectural and design changes.
For example, customers waiting for their banker could help themselves to fresh coffee in a small part of
the branch resembling a café. A customer commented on the café, “It means more than you initially think
– it makes you feel welcome, it says they’re really interested in me.” Fruit juice was available for
children, who could amuse themselves with toys in the play center. Bankers’ desks were now round
tables, signifying equally. A team of three or four bankers sat at a single large round table, with customers
making themselves comfortable between the bankers’ work stations. Customers could see bankers’
computer screens, reinforcing openness. Customers’ ability to view the screens also facilitated the use of
IT programs designed to structure interactions between account team members and customers. As equals,
bankers and customers sat in the same type of chairs, and bankers no longer sat on a raised dais, the
origins of which went back to feudal times when the heads of certain people were supposed to be higher
than those of others. If a conversation required more discretion, specially designed meeting rooms giving
the feeling of “home” were available.
Examination Paper: Customer Relationship Management
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IIBM Institute of Business Management
Intangible Differences
Delivering the bank’s new competitive positioning also required numerous intangible changes and other
changes not immediately visible to the customer. Managers stated that the most important of these
involved training and empowering those employees closest to the customer to serve the customer.
Training
Before a branch was remodeled, all staff took part in special training sessions. These included
teambuilding and customer service, drawing on best practices from the “traditional” retail sector.
Management Style
A senior manager commented:
You can train and educate all day long, but unless your managers and employees are committed to Jyske
Differences, they just won’t happen. Getting them required a great deal of my effort.
When we started this process there were times when it was hard – really hard. The branch managers
didn’t think strategically – they sat in their offices and focused on their day-to-day work. I wanted the
branch manager to get up on a hill and look around, to get a bigger picture. To get them to change I asked
them questions: What’s the market? Where – and who – are your competitors? What are your strengths
and weaknesses, how do they tie to Jyske Differences? Now, contrast what you need with what you have.
Are the teams in your branch living up to the demands? What do you need to do to ensure that they will?
There will be resistance; understand where it is coming from. One way to deal with it is to make
agreements with individuals on how they will develop new skills. If there is a complete mismatch you
may need new team members, but for the most part, you can coach your people through this kind of
change – you can lead them.
According to another executive:
The branch managers have to be able to motivate employees to work a little harder, and differently. The
most successful give their employees a lot of latitude for decision making. They do a lot of training, 80%
of which is on the job. When it isn’t, it’s mostly role playing. There aren’t any high-powered incentives to
offer, but there are really good tools coming out of IT. it’s more how the branch managers do it than what
employees to share the values and act on them.
A third noted:
When I have a difficult situation I look for what I call a “culture carrier.” I try put that person into the
middle of it, because they live our values. What I usually see is that the other employees who are on the
fence about the values start to come over – they see the example and they like what they see. This leaves
the few people who really don’t want to be Jyske on the outside, and they tend not to last long. Most
people are willing to change, but they’ve got to be supported in the process.
Conclusion
The bank’s leadership believed that Jyske values and differences, and the bank’s value chain, provided
ways to achieve the balance they wanted among their three stakeholders: employees, customers, and
shareholders. Several leaders commented that with the large capital investments behind them as of 2003,
net income would increase considerably in the coming years, assuming the recession of 2001 and 2002
was over. Shareholders had received a 17.8% annual return on their investment for the ten years prior to
year-end 2002. Anders Dam’s 2002-2003 goal for shareholders was to increase the bank’s stock multiple
approximately 40% to the level of Danske Bank’s, the largest and most richly-priced bank in Denmark.
This was achieved in July 2003.6 While the bank’s leadership was pleased with the bank’s success, they
were more interested in determining how the bank would remain in a position of leadership while still
keeping the interests of its key stakeholders in balance.
Questions:
1. What did Jyske Bank change to enable it to deliver its new competitive positioning?
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IIBM Institute of Business Management
2. How did Jyske Bank implement those changes?
END OF SECTION B
Section C: Applied Theory (30 marks)
•?This section consists of Applied Theory Questions.
•?Answer all the questions.
•?Each question carries 15 marks.
•?Detailed information should form the part of your answer (Word limit 200 to 250 words).
1. Choose a firm you are familiar with. Describe how you would design an ideal service recovery
strategy for that organization.
2. Discuss the customer’s role as a productive resource for the firm. Describe a time when you
played this role. What did you do and how feel? Did the firm help you perform your role
effectively? How?
END OF SECTION C
S-2-210311
7
IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
Services Marketing
Section A: Objective Type (30 marks)
•?This section consists of Multiple choices/Fill in the blanks/True-False & Short notes type
questions.
•?Answer all the questions.
•?Part One questions carries 1 mark each & Part Two questions carry 5 marks each.
Part One:
Multiple Choices:
1. The extent to which customers recognize and willing to accept this variation is called:
a. Zone of tolerance
b. Zone of fitness
c. Zone of acceptance
d. None of the above
2. SERVQUAL is used to measure service quality. (T/F)
3. SWICS stands for………………………………………………………………………………
4. Real /perceived and monetary/non monetary costs are termed as switching costs.(T/F)
5. TARP stands for ……………………………………………………………………………….
6. If the direct cost be ‘a’, overhead cost be ‘b’ and profit margin be ‘c’ then the cost based pricing
can be calculated by:
a. a+b+c
b. a-b+c
c. a/b*c
d. None of the above
7. If the percentage change in quality purchased be ‘a’ and the percentage change in price be ’b’
then elasticity is given by:
a. a*b
b. a/b
c. a+b
d. a-b
8. If the actual revenue be ‘a’ and the potential revenue be ‘b’ then the yield can be given by:
a. a-b
b. a+b
c. a/b
Examination Paper: Customer Relationship Management
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IIBM Institute of Business Management
d. b/a
9. Reactors make adjustments unless forced to do so by environmental pressures.(T/F)
10. Least profitable customers are categorized in:
a. Platinum
b. Gold
c. Iron
d. Lead
Part Two:
1. What do you understand by “Customer Gap”?
2. Write the difference between perceptions of service quality and customer satisfaction.
3. Write short “SERVQUAL” survey.
4. What are different types of “Complainer”?
END OF SECTION A
Section B: Caselets (40 marks)
•?This section consists of Caselets.
•?Answer all the questions.
•?Each Caselet carries 20 marks.
•?Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
Giordano is a retailer of casual clothes in East Asia, South-East Asia, and the Middle East. In 1999, it
operated outlets in China, Dubai, Hong Kong, Macao, Philippines, Saudi Arabia, Singapore, South Korea,
and Taiwan. Giordano’s sales grew from HK$712 million in 1989 to HK$3,092 million in 1999. This
case study describes the success factors that allowed Giordano to grow rapidly in some Asian countries. It
looks at three imminent issues that Giordano faced in maintaining its success in existing markets and in
its plan to enter new markets in Asia and beyond. The first concerns Giordano’s positioning. In what
ways, if at all, should Giordano change its current positioning? The second concerns the critical factors
that have contributed to Giordano’s success. Would these factors remain critical over the coming years?
Finally, as Giordano’s seeks to enter new markets, the third issues, whether its competitive strengths can
be transferred to other markets, needs to be examined.
Being Entrepreneurial and Accepting Mistakes as Learning Opportunities
The willingness to try new ways of doing things and learning from past errors was an integral part of
Lai’s management philosophy. The occasional failure represented a current limitation and indirectly
pointed management to the right decision in the future. To demonstrate his commitment to this
philosophy. Lai took the lead by being a role model for his employees “. . . Like in a meeting, I say, look,
I have made this mistake, I’m sorry for that. I hope everybody learns from this. If I can make mistakes,
Examination Paper: Customer Relationship Management
9
IIBM Institute of Business Management
who the hell do you think you are that you can’t make mistakes?” He also believed strongly in
empowerment – if everyone is allowed to contribute and participate, mistakes can be minimized.
Service
Giordano’s commitment to excellent service was reflected in the list of service-related awards it had
received. It was ranked number one by the Far Eastern Economic Review, for being innovative in
responding to customers’ needs, for three consecutive years – 1994, 1995, and 1996. And when it came to
winning service awards, Giordano’s name kept cropping up. In Singapore, it won numerous service
awards over the years. It was given the Excellent Service Award for three consecutive years: 1996, 1997,
and 1998. It also received three tourism awards: “Store of the Year” in 1991, “Retailer of the Month” in
1993, and “Best Shopping Experience – Retailer Outlet” in 1996. These were just some of the awards
won by Giordano.
How did Giordano achieve such recognition for its commitment to customer service? It began with the
Customer Service Campaign in 1989. In that campaign, yellow badges bearing the words “Giordano
Means Service” were worn by every Giordano employee. This philosophy had three tents: We welcome
unlimited try-ons; we exchange – no questions asked; and we serve with a smile. The yellow badges
reminded employees that they were there to deliver excellent customer service.
Since its inception, several creative, customer-focused campaigns and promotions had been launched to
extend its service orientation. For instance, in Singapore, Giordano asked its customers what they thought
would be the fairest price to charge for a pair of jeans and charged each customer the price that they were
willing to pay. This one-month campaign was immensely successful, with some 3,000 pairs of jeans sold
every day during the promotion. In another service-related campaign, customers were given a free T-shirt
for criticizing Giordano’s service. Over 10,000 T-shirts were given away. Far from only being another
brand-building campaign, Giordano responded seriously to the feedback collected. For example, the
Giordano logo was removed from some of its merchandise, as some customers liked the quality but not
the “value –for – money” image of the Giordano brand.
Against advice that it would be abused, Lai also introduced a no-questions-asked and no-timelimit
exchange policy, Which made it one of the few retailers in Asia outside Japan with such a generous
exchange policy. Giordano claimed that returns were less than 0.1 percent of sales.
To ensure that every store and individual employee provided excellent customer service, performance
evaluations were conducted frequently at the store level, as well as for individual employees. The service
standard of each store was evaluated twice every month, while individual employees were evaluated once
every two months. Internal competitions were designed to motivate employees and store teams to do their
best in serving customers. Every month, Giordano awarded the “Services Star” to individual employees,
based on nominations provided be shoppers. In addition, every Giordano star was evaluated every month
by mystery shoppers. Based on the combined results of these evaluations, the “Best Services Shop” award
was given to the top store.
Aggressive advertising and Promotion
Fung said, “Giordano spends a large proportion of its turnover on advertising and promotions. No retailer
of our size spends as much as us.” For the past five years, Giordano in Singapore had been spending
about S$1.5 million to S$2 million annually on its advertising and promotional activities. It won the Top
Advertiser Award from 1991 to 1994. Up to June 30, 2000, total advertising and promotional expenditure
for the group amounted to HK$41.5 million, or 3 percent of the group’s retail turnover. In addition to its
big budget, Giordano’s advertising and promotional campaigns were creative and appealing. One such
campaign was the “Round the Clock Madness Shopping” with the Singapore radio station FM93.3 on 1
May 1994. Different clothing items were offered at a 20 percent discount from 12 A.M. to 1 A.M.,
whereas polo shirts and T-shirts and T-shirts were given a 30 percent discount from 1 A.M. to 2 A.M. and
then shorts at a 40 percent discount from 2 A.M. to 3 A.M. To keep listeners awake and excited, the
product categories that were on sale at each time slot were released only at the specified hour, so that
nobody knew the next items that would be on this special sale. Listeners to the radio station were cajoled
into coming to Giordano stores throughout the night (Ang 1996). In 1996, Giordano won the Singapore
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Ear Award. Its English radio commercial was voted by listeners to be one of the best, with the most
creative English jingle.
Another success was its “Simply Khakis” promotion, launched in April 1999, which emphasized
basic, street-culture style that “mixed and matched” and thus fitted all occasions. In Singapore, within
days of its launch, the new line sold out and had to be relaunched two weeks later. By October 1999, over
a million pairs of khaki trousers and shorts had been sold. This success could be attributed partly to its
clearly defined communications objectives. As Garrett Bennett, Giordano’s Executive Director in charge
of merchandising and operations, said, “We want to be the key provider of the basics: khakis, jeans, and
the white shirt.” Elsewhere in the region, sales were booming for Giordano, despite only moderate
recovery experienced in the retail industry. Its strength in executing innovative and effective promotional
strategies helped the retailer to reduce the impact of the Asian crisis on its sales and take advantage of the
slight recovery seen in early 1999. Aggressive advertising and promotions also played a significant role in
the successful remarketing of its core brand prelaunch or introduction of sister brands, Giordano Ladies’,
Giordano Junior, and Bluestar Exchange.
Giordano’s Growth Strategy
As early as the 1980s, Giordano realized that it was difficult to achieve substantial growth and economies
of scale if it operated only in Hong Kong. The key was in regional expansion. By 1999, Giordano had
opened 740 stores in 23 markets, out of which Giordano directly managed 317 stores. Until 2000, four
markets dominated its retail and distribution operations – Hong Kong, Taiwan, China, and Singapore. By
2000, Giordano had 895 Giordano stores in 25 markets.
Giordano cast its sights on markets beyond Asia, driven partially by its desire for growth and
partially to reduce its dependence on Asia in the wake of the 1998 economic meltdown. In Giordano’s
first full year of operation in Australia, sales turnover reached HK$29 million (US$3.72 million) in
December 2000. The number of retail outlets increased from 4 in 1999 to 14 in 2000. With the opening up
of its first retail outlet in Sydney in September 2000, Giordano outlets could now be found in both
Melbourne and Sydney. As part of Giordano’s globalization process, it planned to open up its first shops
in Germany and Japan during the first half of 2001. Currently, Giordano planned to focus its globalization
efforts on new markets like Germany, Japan, Australia, Indonesia, and Kuwait.
When the crisis made Giordano rethink its regional strategy, it was still determine to enter and
further penetrate new Asian markets. This determination led to the successful expansion of Giordano in
Mainland China, which saw the retail outlets grow from 253 stores in 1999 to 357 stores in 2000. Due to
the expanded retail network in Mainland China and improvements made to the product line, sales
turnover increased by 30.9 percent to HK$712 million (US$91.3 million) in 2000. Faced with the
imminent accession of Mainland China to the World Trade Organization, Giordano’s management
foresees both challenges and opportunities ahead. In Indonesia, Giordano opened up 7 more stores in
2000, bringing the total number of retail stores to 10. These stores covered areas in Jakarta, Surabaya, and
Bali. However, with the political and social instability in Indonesia, coupled with the downward pressure
on the Rupiah, Giordano was cautiously optimistic about further expansion and planned to proceed with
caution. In Malaysia, Giordano planned to refurnish its Malaysian outlets and intensify its local
promotional campaigns to consolidate its leadership position in the Malaysia market.
Giordano’s success in these markets would depend on its understanding of them, and consumer tastes
and preferences for fabrics, colors, and advertising. In the past, Giordano relied on a consistent strategy
across different countries, and elements of this successful strategy included its positioning and service
strategies, information systems and logistics, and human resource policies. However, tactical
implementation (e.g., promotional campaigns) was left mostly to local managers in their respective
countries. A country’s performance (e.g., sales, contribution, service levels, and customer feedback) was
monitored by regional headquarters (e.g., Singapore for South-East Asia) and the head office in Hong
Kong. Weekly performance reports were made accessible to all managers. In recent years, it appeared that
as the organization expanded beyond Asia, different strategies had to be developed for different regions or
countries.
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Questions:
1. How do you think Giordano had/would have to adapt its marketing and operations strategies and
tactics when entering and penetrating your country?
2. What general lessons can be learned from Giordano for other major clothing retailers in your
country?
Caselet 2
In 2003, Jyske Bank Group’s primary operations consisted of Jyske Bank, which was the third largest
bank in Denmark after Den Danske Bank and Nordea’s Danish operations. Jyske Bank was created in
1967 through the merger of four Danish banks having their operations in Jutland, Jyske being Danish for
“Jutlandish.” Jutland was the large portion of Denmark attached to the European mainland to the north of
Germany. Until the late 1990s, Jyske Bank was characterized as a typical Danish bank: prudent,
conservative, well-managed, generally unremarkable, and largely undifferentiated.
Beginning in the mid-1990s, Jyske Bank embarked on a change process that led to its no longer being
characterized as either unremarkable or undifferentiated. By 2003 its unique “flavor” of service made it a
leader in customer satisfaction among Danish banks. At the heart of these changes was the bank’s
determination to be, in the words of one executive, “the most customer-oriented bank in Denmark.” The
bank achieved its goal by focusing on what it called Jyske Forskelle, or Jyske Differences.
Jyske Differences
Jyske Differences stemmed from Jyske Bank’s core values. These stood as central tents, guiding virtually
all aspects of the organization’s life. As one manager pointed out, the values were consistent with the
bank’s Jyske heritage: “Really, when we started talking about our core values, and their Jyskeness, we
just became overt about values we had long held.” Jyske Bank’s core values, published for employees,
customers, and shareholders, were that the bank shouls (1) have common sense; (2) be open and honest;
(3) be different and unpretentious; (4) have genuine interest and equal respect for people; and (5) be
efficient and persevering.
The core values led management to reevaluate how the bank did business with its customers.
Managers determined that if the bank were to be true to its values, it would have to deliver service
differently from both how it had in the past, and how other banks delivered service. Jyske Differences
were thus operational zed as specific practices that distinguished Jyske Bank.
Competitive Positioning
Managers looked to Jyske values and differences for the bank’s competitive positioning. This process was
aided by a Dutch consultant, whose market research indicated that Jyske bank’s core target market of
Danish families and small-to-medium sized Danish companies (earnings were 40 % commercial, 60%
retail) generally liked the idea of a bank that was jyske. Additional research suggested that what managers
described as the “hard factors” of price, product, and location had become sine qua non in the eyes of
customers. In contrast, “soft factors” relating to an individual customer’s relationship with her service
providers served as the basic for differentiation, specially, “being nice,” “marketing time for the
customer,” and “caring about the customer and his family.”
Managers felt that the “genuine interest” component of the bank’s values dictated a shift from
traditional product focused selling to a customer-solution approach. They characterized the new approach
by contrasting the statement, “Let me tell you about our demand-deposit account,” with the question,
“What you need?”
Although he bank’s core financial products remained essentially similar to those of other Danish
banks,3 the way they were delivered changed. This required significant changes in the branches, both
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tangible and intangible, and how they were supported. Tools were developed to support solution-based
service delivery. For example, new IT systems helped employees take customers through processes to
determine their needs and final appropriate solutions. In one, the customer and her banker filled out an
on-line investor profile to determine what style of investment products were most appropriate for her
based on risk aversion, time frame, and return goals, among other factors. A manager commented that,
“The tools themselves aren’t proprietary. We’ve seen other financial services with similar programs – it’s
how our people use them that makes the difference.” Another stated, “Our tools are designed either to
enhance our ability to deliver solutions, or to reduce administrative tasks and increase the amount of time
our people can spend with customers – delivering solutions.”
Finally, being overtly Jyske meant that the bank would no longer be a good place for any customer
meeting its demographic criteria for two reasons. First, delivering this type of service was expensive. As a
result, the bank charged a slight premium, and targeted only those customers who were less likely to
represent a credit risk. Second, the bank would have a personality. According to one manager, “The
danger in having a personality is, someone, inevitably, won’t like you.” Senior management considered
this the price of being candid, and welcomed the effect it had on some customers. For example, Jyske
Bank’s cash/debit card had a picture of a black grouse on it, black grouses being found in Jutland’s rural
countryside. When a few customers complained that the bird didn’t seem very business-like, or wasn’t hip
(one was “embarrassed to pull it out at the disco”) managers were happy to invite them to open accounts
at competitor institution. A manager noted:
Actually, if no one reacts to our materials, they’re not strong enough. Some people should
dislike us. After all, we’re only about 6% of the market. I don’t want everyone to like us –
We’re not for everyone and don’t want to be.
Tangible Differences
Account Teams:
Delivering on the banks competitive positioning required a number of tangible changes in its service
delivery system. These began with assigning each customer a branch employee to serve as primary point
of contact. Over time, managers discovered that this created problems, because customers often arrived at
a branch when their service provider was busy with other customers or otherwise unavailable.
Nevertheless, managers were committed to providing individualized service. According to one, “How can
we be honest in saying we care about customers as individuals if we don’t get to know them as
individuals? And without knowing them, we can’t identify and solve their problems.” The solution was
found in account teams: each customer was assigned to a small team of branch bankers. These employees
worked together to know and serve their customers, sitting in close physical proximity within the branch.
Branch Design:
Jyske Bank planned to spend approximately DKK 750 million to physically redesign its branches (most
of this had been spent by 2003). Danish observers described the new branches as looking “like an
advertising agency” or “a smart hotel.” These effects were accomplished through the use of modern, upscale
materials such as light wood, warm colors, and original art. Branch redesign also included changes
in the way customers interacted with their bankers, made possible by architectural and design changes.
For example, customers waiting for their banker could help themselves to fresh coffee in a small part of
the branch resembling a café. A customer commented on the café, “It means more than you initially think
– it makes you feel welcome, it says they’re really interested in me.” Fruit juice was available for
children, who could amuse themselves with toys in the play center. Bankers’ desks were now round
tables, signifying equally. A team of three or four bankers sat at a single large round table, with customers
making themselves comfortable between the bankers’ work stations. Customers could see bankers’
computer screens, reinforcing openness. Customers’ ability to view the screens also facilitated the use of
IT programs designed to structure interactions between account team members and customers. As equals,
bankers and customers sat in the same type of chairs, and bankers no longer sat on a raised dais, the
origins of which went back to feudal times when the heads of certain people were supposed to be higher
than those of others. If a conversation required more discretion, specially designed meeting rooms giving
the feeling of “home” were available.
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Intangible Differences
Delivering the bank’s new competitive positioning also required numerous intangible changes and other
changes not immediately visible to the customer. Managers stated that the most important of these
involved training and empowering those employees closest to the customer to serve the customer.
Training
Before a branch was remodeled, all staff took part in special training sessions. These included
teambuilding and customer service, drawing on best practices from the “traditional” retail sector.
Management Style
A senior manager commented:
You can train and educate all day long, but unless your managers and employees are committed to Jyske
Differences, they just won’t happen. Getting them required a great deal of my effort.
When we started this process there were times when it was hard – really hard. The branch managers
didn’t think strategically – they sat in their offices and focused on their day-to-day work. I wanted the
branch manager to get up on a hill and look around, to get a bigger picture. To get them to change I asked
them questions: What’s the market? Where – and who – are your competitors? What are your strengths
and weaknesses, how do they tie to Jyske Differences? Now, contrast what you need with what you have.
Are the teams in your branch living up to the demands? What do you need to do to ensure that they will?
There will be resistance; understand where it is coming from. One way to deal with it is to make
agreements with individuals on how they will develop new skills. If there is a complete mismatch you
may need new team members, but for the most part, you can coach your people through this kind of
change – you can lead them.
According to another executive:
The branch managers have to be able to motivate employees to work a little harder, and differently. The
most successful give their employees a lot of latitude for decision making. They do a lot of training, 80%
of which is on the job. When it isn’t, it’s mostly role playing. There aren’t any high-powered incentives to
offer, but there are really good tools coming out of IT. it’s more how the branch managers do it than what
employees to share the values and act on them.
A third noted:
When I have a difficult situation I look for what I call a “culture carrier.” I try put that person into the
middle of it, because they live our values. What I usually see is that the other employees who are on the
fence about the values start to come over – they see the example and they like what they see. This leaves
the few people who really don’t want to be Jyske on the outside, and they tend not to last long. Most
people are willing to change, but they’ve got to be supported in the process.
Conclusion
The bank’s leadership believed that Jyske values and differences, and the bank’s value chain, provided
ways to achieve the balance they wanted among their three stakeholders: employees, customers, and
shareholders. Several leaders commented that with the large capital investments behind them as of 2003,
net income would increase considerably in the coming years, assuming the recession of 2001 and 2002
was over. Shareholders had received a 17.8% annual return on their investment for the ten years prior to
year-end 2002. Anders Dam’s 2002-2003 goal for shareholders was to increase the bank’s stock multiple
approximately 40% to the level of Danske Bank’s, the largest and most richly-priced bank in Denmark.
This was achieved in July 2003.6 While the bank’s leadership was pleased with the bank’s success, they
were more interested in determining how the bank would remain in a position of leadership while still
keeping the interests of its key stakeholders in balance.
Questions:
1. What did Jyske Bank change to enable it to deliver its new competitive positioning?
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2. How did Jyske Bank implement those changes?
END OF SECTION B
Section C: Applied Theory (30 marks)
•?This section consists of Applied Theory Questions.
•?Answer all the questions.
•?Each question carries 15 marks.
•?Detailed information should form the part of your answer (Word limit 200 to 250 words).
1. Choose a firm you are familiar with. Describe how you would design an ideal service recovery
strategy for that organization.
2. Discuss the customer’s role as a productive resource for the firm. Describe a time when you
played this role. What did you do and how feel? Did the firm help you perform your role
effectively? How?
END OF SECTION C
S-2-210311
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