ABC Pet Store Expansion Plan: CRM and Value Chain Strategy

Background and Business Overview

ABC Pet Store is a small business operated by one owner and a supporting staff of three individuals. Having been in operation for several years, ABC Pet Store has developed and maintained a remarkably loyal client base by providing high-quality pet grooming services along with the sale of pet food, supplies, and grooming accessories. ABC Pet Store credits its loyal customer base to its ability to offer high-quality products at reasonable prices while keeping customer service a top priority. Though its present business model has proved successful, the ABC staff is looking to expand its store operations in order to gain a competitive market advantage in its region.

In order to begin expansion, ABC has focused on one central research question: how can current business practices be improved or expanded upon in order to bring the business to its optimal level of performance? In addressing this question, several objectives have been established to take the business to the next level. In order to expand successfully, ABC must: establish a road map for expansion; evaluate the strengths and weaknesses of the current operation; discover tactics for outselling competitors in the same business district; identify opportunities for high-growth customer segments; and evaluate the market context of ABC Pet Store.

ABC plans to set itself apart from the competition by differentiating its offerings from other pet stores in the area. Key initiatives include implementing obedience training for both dogs and their owners, increasing word-of-mouth through promotion and a new marketing campaign, and providing continued training and education for its staff, with a focus on both customer service and grooming skills.

Research Question and Objectives

In order to begin the process of expansion, ABC plans to utilize Customer Relationship Management (CRM) — a widely used strategy for managing a company's relationships and interactions with customers, clients, and prospective sales groups. CRM uses technology to organize business operations systems, but looks beyond sales activities into marketing, customer service, and technical support — all areas ABC is looking to streamline and strengthen. ABC will utilize the research methods provided by CRM, including its overall goals to "find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service" (Gartner, Incorporated, 2009). Further, CRM offers the possibility of "long-term survival" when implemented within a growing company (Brooksbank, Kane, & Kirby, 2009).

The use of a CRM system will "confer several advantages into a company," including quality and efficiency, a decrease in overall costs, decision support, enterprise agility, and customer attention (Hoegh, p. 303). By utilizing this system, ABC will be able to examine its dealings with current customers in order to more successfully anticipate how to engage new clients once they are brought in. ABC will need to undertake some costs to implement an operational CRM system, but in doing so it hopes to see "increases in revenue, higher rates of client satisfaction, and significant savings in operating costs" (Whittemore, 2001). Author Lior Arussy notes, "Proponents emphasize that technology should be implemented only in the context of careful strategic and operational planning" (Arussy, 2005) — a principle ABC has followed in laying out its expansion plan.

With the implementation of CRM, ABC Pet Store will be able to both expand its customer base and retain existing customers — both of which are vital to increasing the company's size and revenue. In addition to CRM, ABC will utilize value chain analysis, which focuses on achieving the ability to "offer the customer a level of value that exceeds the cost of the activities, thereby resulting in a profit margin" (Porter, 1996). A COPLA Global article describes value chain analysis as a "three-step process" encompassing: activity analysis, which identifies the activities a company undertakes to deliver its product or service; value analysis, which identifies what can be done to add the greatest value for the customer; and evaluation and planning, which assesses whether internal changes to the company are worthwhile and then applies a plan of action (Keane & Mitchell, 2009).

Value chain analysis also combines "internal data about the firm's capabilities with external information about the competitive environment in a manner designed to guide resource allocation" (Hergert & Morris, 2006), which is ideal for treating expansion as a cohesive process rather than a disjointed effort of looking inward and then outward at the market separately.

Research Methods: CRM and Value Chain Analysis

Both CRM and value chain analysis will allow ABC Pet Store to pursue many of its stated expansion goals, including establishing a road map for expansion, evaluating the strengths and weaknesses of current operations, discovering tactics for outselling competitors in the same business district, identifying high-growth customer segments, and evaluating the broader market context. By applying the value chain principle of high customer value at low company expense, tactics as straightforward as employee training and education — which are minimally costly — can yield maximum profit. This is especially true once ABC implements its planned dog and owner obedience training program, a service not currently offered by any competitor stores.

For small businesses exploring growth frameworks, resources such as the U.S. Small Business Administration's growth guide offer practical guidance on operational planning and market positioning.

The exact time required for business expansion is heavily dependent upon the resources available to a company, the degree to which the expansion plan is executed, and an accounting for setbacks that may be inevitable. Financial support is key to any expansion timeline. The Small Business Development Center notes that there are a number of ways to finance expansion, including support from "family, friends, and relatives," as well as helpful information available from Certified Development Companies (CDCs), Small Business Investment Companies (SBICs), and the Small Business Administration (SBA), which specializes in small business loans (SJ Delta College, 1999).

A recent article highlighting the worldwide economic downturn notes that small business expansion may be more achievable than one would expect:

"While some small businesses struggle to stay open during the recession, others have found opportunities to expand. Some said the recession made real estate more affordable and easy to find, while others say they couldn't let the recession stall their growth plans. Nationally, loan guarantee programs are helping small-business owners expand" (Bergstrom, 2009).

This information suggests that the resources needed for successful small business expansion are accessible to motivated owners. By utilizing these resources, there is no reason ABC Pet Store cannot execute its planned business model and successfully expand within one year, provided it commits to the appropriate research and development of new customer services.

With the application of the research methods, objectives, and resources outlined in this proposal, ABC Pet Store should see successful profits within its first year of expanded operation.

Arussy, L. (2005). "Understanding the Fatal Mistakes." Passionate and Profitable, vol. 2, pp. 101–112. Available from LexisNexis.

Bergstrom, K. (2009). "Recession Brings Business Expansion Opportunities." Milwaukee Business Journal. Available from: http://www.portfolio.com/business-news/2009/08/28/recession-has-not-stopped-small-business-expansion/.

Brooksbank, R., Kirby, D., & Kane, S. (2009). "Understanding the Antecedents to the Adoption of CRM Technology by Small Retailers: Entrepreneurs vs. Owner-managers." International Small Business Journal, June 1, 2009, 27, pp. 307–336. Available from ProQuest.

Gartner, Incorporated Data Analysis. (2009). What's Hot in CRM Applications? Available from:

Conclusion

Whittemore, S. (2008). "Lessons from the Canon of Memoria for the Design of Content Management Systems." Technical Communication Quarterly, 17, no. 1, Winter 2008, pp. 88–109. Available from ProQuest.