The Creative Kitchen

Executive Summary

The present report looks closer at the eBusiness model, the Creative Kitchen, which was developed in a previous assignment in the subject HGM 554 eBusiness Design for Competitive Advantage. The Creative Kitchen is a virtual community targeted at people that are interested in cooking and meeting others with the same interest. The aim of the business model is to facilitate personal atmosphere and to build up contacts among the community members. The Creative Kitchen is an interactive website that constantly collects information about its users to answer their individual needs and wants. Partnerships with six cooking schools in Germany, with sellers of kitchen accessories and utensils and with the online bookshop “amazon.de” are formed.

The main aim of this report is to focus on a specific business function within the business model. The Customer Relationship Management (CRM) side of the business model is looked upon in detail. The main reason for choosing to focus on CRM is the growing importance for a business to be able to handle the large amount of information and data it has access to and can create in today’s society (Bergeron, 2002).

The focus on CRM include looking at what kind of information that needs to be collected from the customer, how it is collected and what it is going to be used for. The collected data are; user recognition data, demographic customer data, site traffic and usage, purchasing behaviour, customer feedback and informational needs. Further the report describes the needed CRM operations and the benefits created for customer, partners and for Creative Kitchen itself. This includes multi channel contact centre, e-mail response management and coordinated campaign management.

The report concludes with underpinning that the technological applications are simply the mean to generate strong relationships for mutual benefit between customers and the networked business of the Creative Kitchen. However, by understanding both the limitations and advantages of implementing a CRM system, it can help Creative Kitchen to become a sustainable business for the future.

eBusiness Design for Competitive Advantage © 2003: Sandra Gaessler

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TABLE OF CONTENT

  Executive Summary  3

1  Introduction  6

2  Description of the Creative Kitchen’s business model  7

3  System Components  7

3.1  Resources  7

3.1.1  Architecture and related costs  7

3.1.2  Infrastructure  8

3.2  The Creative Kitchen as a system  8

4  Creative Kitchen a virtual community supported by CRM  8

4.1  Key Success Factors  9

5  Scalability and sustainability of the Creative Kitchen  9

5.1  Profitability  9

5.2  Differentiation from Competitors  10

5.3  Competitive advantage  10

6.  Customer data collected on the website  11

7.  Outsourcing of the CRM functions  13

8.  CRM cooperation with the business partners  13

8.1  Centralized contact center  13

8.2  Coordinated campaign management  14

9.  Partner Relationship management  17

10.  Internal knowledge management and decision support systems  17

11.  Considerations  18

12.  Conclusion  18

  References  19

  Appendices  20

Appendix A   20

  System requirements  20

Appendix B   20

  Channel of communication with customers  20

Appendix C   21

  Promotion  21

  eBusiness Design for Competitive Advantage 2003: Sandra Gaessler  

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  LIST OF FIGURES  

  Figure 5 1: First steps to build long-term customer relationships  11

  Figure 8 1: CRM operations between the Creative Kitchen and its partners  15

  LIST OF TABLES  

Table 6 1  Data collection and leveraging  12

Table 8 1:  CRM operations and benefits  16

  eBusiness Design for Competitive Advantage 2003: Sandra Gaessler  

1 Introduction

This report is initiated to develop an eBusiness model design for a selected business function. Based on the Creative Kitchen, a virtual community for cooking lovers, the focus shifts toward the implementation of customer relationship management (CRM). The CRM market is predicted to grow from $8 billion in 1999 to more than $24 billion by 2003 (Dyché 2002). In comparison to the traditional product orientation with its major concern to sell as many products and services as possible, the integration of CRM requires a customer-centric business philosophy. Although today’s worldwide companies are declaring themselves to be customer-focused and support this statement by investing millions of dollars in CRM-related technologies, they often neglect that there is more than just buying the right technology. CRM is not only about technological applications, but also about the creation of strong relationships that increase customer value and motivate customers to remain loyal to the business (Dyché 2002). The Creative Kitchen is a virtual community that integrates customer information with business action and views CRM as a coherent business strategy embedded in the culture and way-of thinking of the business.

The focus on CRM was chosen because of the growing importance of being able to handle the large amount of information and data that an eBusiness company has access to and can create in today’s society (Bergeron, 2002). To be able to handle this information in such a manner that it becomes a competitive advantage for the business is one of the key focus points for the Creative Kitchen. By collecting information and utilising it to it’s fully potential it can help a company to become better at offering the right product or service to the right customer at the right time and price, via the right contact point (Kalakota and Robinson, 2001). Since the Creative Kitchen is a “click-only” business, the strategic assets of the company mainly lie in how they are able to build and maintain relationships externally and internally. By successfully understanding and implementing CRM, the Creative Kitchen can become a competitive and sustainable business for the future.

eBusiness Design for Competitive Advantage © 2003: Sandra Gaessler

2 Description of the Creative Kitchen’s business model

The Creative Kitchen is an interactive web site for all people who love cooking and who are keen to learn more about it. The web site is designed to provide a virtual meeting space for people with similar cooking interests to form a community. Like any other virtual community, the Creative Kitchen creates value in several ways (Turban, McLean & Wetherbe 2002). Members input useful information to the community in the form of comments, feedback and information needs, thus creating value. This input is retrieved and accessible to be used by other members of the community and by the Creative Kitchen and its marketers. Since the Creative Kitchen community is made up of like-minded individuals, opportunities exist for business transactions, exchanging and collecting information on both the groups attitudes and beliefs as well as on their interactions and interaction dynamics (Turban 2002). The Creative Kitchen then absorbs and utilizes this important customer information to provide up-to-date cooking trends, tips and recipes. To offer expert knowledge about cooking, international specialities, and healthy nutrition, the Creative Kitchen cooperates with six German cooking schools, with sellers of kitchen accessories and utensils (Fissler, Alessi and Zwilling) and with the online bookshop “amazon.de”. Thus, members of the Creative Kitchen are enabled to easily take advantage of the unique opportunity to perfectionize their cooking skills (Aronson 2002).

3 System Components

Information about the system requirements, channel of communication, and promotion can be found in the appendices (appendix a, b and c).

3.1 Resources

To perform the activities that underpin customer value, the Creative Kitchen relies on three resources classified into three categories: tangible, intangible and human (Afuah & Tucci 2001). The Creative Kitchen’s tangible resources are its Internet connectivity, its network equipment including the CRM applications, desktop computer and cash reserves; its intangible resources include the reputation and relationships established with customers, partners and suppliers; and the human resources are the employees’ skills and knowledge.

3.1.1 Architecture and related costs

The architecture of the Creative Kitchen is designed to combine the business objective with technology to operate cost effectively and efficiently (Turban, McLean & Wetherbe 2002). The cost drivers for the Creative Kitchen and its architectural design are identified as hardware, software,

eBusiness Design for Competitive Advantage © 2003: Sandra Gaessler