Module 5
Supply Chain Management and Customer Relations
a. Creating Strategic Advantage through Supply Chain Management and Information
System
It is the retailer’s responsibility to gauge customers’ wants and needs and work
with the other members of the supply chain—wholesalers, vendors, and transportation
companies—to make sure the merchandise that customers want is available when they
want it. Wholesalers are firms that buy products from manufacturers and resell them to
retailers. The would be much more complicated—and harder to read—if we included all
the various suppliers of materials to manufacturers; all the various manufacturers,
wholesalers, and stores in a typical supply chain; and electronic channels through which
customers order products and receive them directly with the assistance of delivery
providers such as UPS, FedEx, or the U.S. Postal Service.
In determining whether to ship merchandise directly to stores or to a distribution
center (DC), retailers must consider a variety of factors that can impact efficiency, cost-
effectiveness, and overall supply chain performance. These factors encompass logistical
considerations, inventory management strategies, vendor relationships, geographic
distribution, and customer demand patterns, among others. By carefully evaluating these
factors, retailers can make informed decisions to optimize their supply chain operations
and meet the needs of their customers effectively.
One key consideration in deciding whether to ship merchandise directly to stores
or to a DC is transportation and logistics efficiency. Shipping directly to stores may be
preferable when vendors are located in close proximity to the stores, minimizing
transportation costs and reducing lead times. On the other hand, consolidating shipments
at a DC can yield economies of scale, allowing retailers to benefit from bulk
transportation rates and streamlined logistics processes.
Inventory management also plays a crucial role in determining the optimal
shipping strategy. Shipping directly to stores may be advantageous for fast-moving or
seasonal items that require rapid replenishment and frequent restocking. By bypassing the
DC, retailers can minimize inventory holding costs and respond quickly to changes in
customer demand. However, for slower-moving or bulkier items, consolidating shipments
at a DC may offer better inventory visibility, control, and optimization, enabling retailers
to manage inventory levels more effectively and reduce stockouts or overstocks.
Vendor relationships and agreements also influence the decision-making process.
Some vendors may prefer to ship directly to stores to maintain control over their products
and ensure timely delivery, while others may be willing to work with retailers to
consolidate shipments at a DC for greater efficiency and cost savings. Clear
communication, collaboration, and alignment of interests between retailers and vendors
are essential to achieving mutually beneficial outcomes in the supply chain.
Geographic distribution and store network configuration are additional factors
that influence shipping decisions. Retailers with a dispersed store network spanning a
wide geographic area may find it more practical to ship merchandise directly to stores to
minimize transit times and optimize inventory allocation. Conversely, retailers with a
centralized or hub-and-spoke distribution model may prefer to route shipments through a
DC to serve multiple stores efficiently and cost-effectively.
Customer demand patterns and service level requirements also inform shipping
decisions. Retailers must balance the need to maintain adequate inventory levels at stores
to meet customer demand with the desire to minimize excess inventory and associated
carrying costs. By analyzing historical sales data, demand forecasts, and seasonal trends,
retailers can determine the most effective shipping strategy to ensure product availability
while minimizing inventory-related expenses.
In summary, the decision to ship merchandise directly to stores or to a distribution
center involves a careful evaluation of various factors, including transportation
efficiency, inventory management considerations, vendor relationships, geographic
distribution, and customer demand patterns. By aligning shipping decisions with strategic
objectives and operational priorities, retailers can optimize their supply chain operations
and enhance overall business performance.
Supply chain management is a set of activities and techniques firms employ to
efficiently and effectively manage these flows of merchandise from the vendors to the
retailer’s customers. These activities ensure that the customers are able to purchase
merchandise in the desired quantities at a preferred location and appropriate time.
Retailers are increasingly taking a leadership role in managing their supply
chains. When retailers were predominantly small businesses, larger manufacturers and
distributors dictated when, where, and how merchandise was delivered. But with the
consolidation and emergence of large, global retail chains, retailers often play a dominant
role in coordinating supply chain management activities. Retailers also are sharing their
data on shopping behaviors with suppliers to plan production, promotions, deliveries,
assortments, and inventory levels. Efficient supply chain management is important to
retailers because it can provide a strategic advantage, based on increased product
availability and inventory turnover, and also produces a higher return on assets.
Developing a competitive advantage from information and supply chain systems
can indeed be a challenging endeavor for retailers, but those who successfully achieve it
can reap significant rewards in terms of operational efficiency, cost savings, and
customer satisfaction. However, the process of leveraging information and supply chain
systems to gain a competitive edge requires careful planning, investment, and ongoing
innovation.
One of the primary challenges in developing a competitive advantage from
information and supply chain systems lies in the complexity and dynamic nature of retail
operations. Retailers must contend with a myriad of factors, including shifting consumer
preferences, evolving market trends, supply chain disruptions, and technological
advancements, all of which can impact the effectiveness and efficiency of their
information and supply chain systems. Furthermore, the rapid pace of change in the retail
landscape requires retailers to continuously adapt and evolve their systems to remain
competitive in the marketplace.
Retailers must align their information and supply chain systems with their overall
business strategy and objectives. This involves identifying areas where technology and
process improvements can drive value and differentiate the retailer from competitors. For
example, retailers may prioritize investments in inventory management systems to
minimize stockouts and improve product availability, or they may focus on enhancing
customer relationship management (CRM) systems to personalize the shopping
experience and increase customer loyalty.
Technology Investment: Developing a competitive advantage often requires
significant investment in technology infrastructure, software platforms, and data analytics
capabilities. Retailers must stay abreast of emerging technologies and trends in
information and supply chain management, such as artificial intelligence (AI), machine
learning, blockchain, and Internet of Things (IoT), and assess how these innovations can
be leveraged to enhance operational efficiency and customer engagement.
Data Integration and Analysis: Effective use of data is critical for retailers looking
to gain insights and drive informed decision-making across their supply chain. Retailers
must invest in systems and tools for aggregating, cleansing, and analyzing data from
multiple sources, including point-of-sale (POS) systems, inventory management systems,
customer databases, and external market data. By harnessing the power of data analytics,
retailers can identify trends, optimize processes, and uncover opportunities for
improvement.
Collaboration and Partnerships: Developing a competitive advantage often
requires collaboration and partnerships with suppliers, logistics providers, technology
vendors, and other stakeholders across the supply chain ecosystem. Retailers must foster
strong relationships with key partners and work together to drive innovation, optimize
processes, and create value for customers. For example, retailers may collaborate with
suppliers to implement just-in-time inventory systems or partner with logistics providers
to improve delivery speed and reliability.
Continuous Improvement: Achieving a sustainable competitive advantage
requires a commitment to continuous improvement and innovation. Retailers must
constantly monitor market trends, customer feedback, and performance metrics to
identify areas for optimization and refinement. By embracing a culture of
experimentation and learning, retailers can adapt to changing market conditions, stay
ahead of competitors, and maintain their position as industry leaders.
In conclusion, while developing a competitive advantage from information and
supply chain systems may pose challenges for retailers, those who succeed in doing so
can enjoy long-term success and profitability. By aligning technology investments with
strategic objectives, leveraging data analytics capabilities, fostering collaboration with
key partners, and embracing a culture of continuous improvement, retailers can create a
sustainable competitive advantage that is difficult for competitors to replicate.
For example, a critical factor in Walmart’s success is its information and supply
chain management systems. Even though competitors recognize this advantage, they have
difficulty achieving the same level of performance as Walmart’s systems for four
reasons. First, Walmart made substantial initial and continuing investments in developing
its systems over a long time period. Second, it has the size and scale economies to justify
these investments. Third, its supply chain activities take place within the firm and are not
easily known and copied by competitors. Its systems are not simply software packages
that any firm can buy from a software supplier. Through its continuous learning process,
Walmart is always refining its systems to improve its performance.
Yet even with these remarkable advantages already in place, Walmart continues
to work to improve its supply chains to maintain those strategic advantages. Its primary
competitor Amazon already offers one-day shipping and a vast breadth and depth of
product offerings, whereas Walmart has struggled to meet demand and attain similar
turnaround times. But as online sales continue to increase nearly 40 percent each year,
Walmart has introduced some alternative methods to remain competitive. For example, it
encourages its vendors to leverage the Walmart Fulfillment Services option, through
which they can pay the retailer to deliver their products. With this program, vendors get
the benefits of lower shipping fees; Walmart gets the benefit of a broader offering from
more diverse suppliers that can keep its customers satisfied.16 It also introduced
Walmart+, a loyalty program to guarantee rapid delivery. According to customer
satisfaction polls, Walmart delivery services are appealing because of their capacity for
the immediate provision of groceries and household items, along with added deals and
incentives. Its online sales already increased by 74 percent during 2020.
Another benefit provided by information systems that support supply chain
systems is making sure that the right merchandise is available at the right store. Most
national retail chains adjust assortments in their stores on the basis of climate—stocking
more wool sweaters in northern stores and cotton sweaters in southern stores during the
winter. Some retailers are now using sophisticated statistical methods to analyze sales
transaction data and adjust store assortments for a wide range of merchandise on the basis
of the characteristics of customers in each store’s local market.
A stockout occurs when an SKU that a customer wants is not available. What
would happen if Abby went to the Target store and the store did not have the Ninja
blender she wants because the DC did not ship enough to the store? The store would give
Abby a rain check so that she could come back and still pay the sale price when the store
receives a new shipment. But Abby would not be pleased because she would have made a
wasted trip to the store, and there is a risk that her added coupon will expire in the
meantime. As a result of the stockout, Abby might decide to buy another model, or she
might go online to Amazon to buy a blender. While at Amazon, she could buy other
items in addition to the blender. She also might be reluctant to shop at Target in the
future, tell her friends about the negative experience she had, or post a negative review on
Yelp or Twitter. This bad experience could have been avoided if Target had done a better
job of managing its supply chain.
From the retailer’s perspective, an efficient supply chain and information system
can improve its return on assets (ROA) because the system increases sales and net profit
margins, without increasing inventory. Net sales increase because customers are offered
more attractive, tailored assortments that are in stock. Consider Abby Fernandez’s
blender purchase. Target, with its information systems, could accurately estimate how
many Ninja blenders each store and its online channel would sell during the special
promotion. Using its supply chain management system, it would make sure sufficient
stock was available at Abby’s store so that all the customers who wanted to buy one
could.
b. The Flow of Information through a Supply Chain
Information flows from the customer to stores, to and from DCs and FCs, to and
from wholesalers, to and from product manufacturers, and then on to the producers of any
components and the suppliers of raw materials. To simplify our discussion—and because
information flows are similar in other marketing channel links, such as through the
Internet and catalogs—we again shorten the supply chain in this section to exclude
wholesalers, as well as the link from suppliers to manufacturers.
Flow 1 (Customer to Store): At the point-of-sale (POS) terminal, the associate
scans the universal product code (UPC) tag on the blender packaging, and the customer
receives a receipt. The UPC tag is the black-and-white bar code found on most
merchandise. It contains a 13-digit code that indicates the manufacturer of the item, a
description of the item, information about special packaging, and special promotions.18
In the future, RFID tags, discussed later in this, may replace UPC tags.
Flow 2 (Store to Buyer): The POS terminal records the purchase information and
electronically sends it to the buyer at Target’s corporate office. The sales information is
incorporated into an inventory management system and used to monitor and analyze sales
and decide to reorder more blenders, change a price, or plan a promotion. Buyers also
send information to stores about overall sales for the chain, ways to display the
merchandise, upcoming promotions, and so on.
Flow 3 (Buyer to Manufacturer): The purchase information from each Target
store and its online operation is typically aggregated by the retailer as a whole, which
creates an order for new merchandise and sends it to the blender manufacturer. The buyer
at Target may also communicate directly with the manufacturer to get information and
negotiate prices, shipping dates, promotional events, or other merchandise-related issues.
Flow 4 (Store to Manufacturer): In some situations, the sales transaction data are
sent directly from the store to the manufacturer, and the manufacturer decides when to
ship more merchandise to the DCs, FCs, and the stores. In other situations, especially
when merchandise is reordered frequently, the ordering process is done automatically,
bypassing the buyers. By working together, the retailer and manufacturer can better
satisfy customer needs.
Flow 5 (Store to Distribution Center): Stores also communicate with the Target
distribution centers to coordinate deliveries and check inventory status. When the store
inventory drops to a specified level, more blenders are shipped to the store, and the
shipment information is sent to the Target computer system.
Flow 6 (Manufacturer to Distribution Center and Buyer): When the manufacturer
ships the blenders to the Target DCs or FCs, it sends an advanced shipping notice to
them. An advance shipping notice (ASN) is an electronic document that the supplier
sends the retailer in advance of a shipment to tell the retailer exactly what to expect in the
shipment. The center then sets appointments for trucks to make the delivery at a specific
time, date, and loading dock. When the shipment is received at the DC, the buyer is
notified and authorizes payment to the vendor.
Purchase data collected at the point of sale goes into a huge database known as a
data warehouse. Using the data warehouse, executives can learn how the corporation is
generally doing. They also can look at the data for a merchandise division, a region of the
country, or the total corporation. A buyer may be more interested in a particular
manufacturer in a certain store on a particular day. Analysts from various levels of the
retail operation extract information from the data warehouse to make a plethora of
marketing decisions about developing and replenishing merchandise assortments.
Electronic data interchange (EDI) is the computer-to-computer exchange of
business documents from a retailer to a vendor and back. In addition to sales data,
purchase orders, invoices, and data about returned merchandise can be transmitted back
and forth. With EDI, vendors can transmit information about on-hand inventory status,
vendor promotions, and cost changes to the retailer, as well as information about
purchase order changes, order status, retail prices, and transportation routings. Thus, EDI
enables channel members to communicate more quickly and with fewer errors than in the
past, ensuring that merchandise moves from vendors to retailers more quickly.
Vendor-managed inventory (VMI) is an approach for improving marketing
channel efficiency, in which the manufacturer is responsible for maintaining the retailer’s
inventory levels in each of its stores.19 By sharing the data in the retailer’s data
warehouse and communicating that information via EDI, the manufacturer automatically
sends merchandise to the retailer’s store, DC, or FC when the inventory at the store
reaches a prespecified level.
In ideal conditions, the manufacturer replenishes inventories in quantities that
meet the retailer’s immediate demand, reducing stockouts with minimal inventory. In
addition to providing a better match between retail demand and supply, VMI can reduce
the vendor’s and the retailer’s costs. Manufacturer salespeople no longer need to spend
time generating orders on items that are already in the stores, and their role shifts to
selling new items and maintaining relationships. Retail buyers and planners no longer
need to monitor inventory levels and place orders.
Although it is a more advanced level of collaboration, VMI still has its
limitations. The vendor coordinates the supply chain for its specific products, but it does
not know what other actions the retailer might be taking that could affect the sales of its
products in the future. For example, Pepsi might not know that a supermarket will be
having a big promotion in three weeks for a new beverage introduced by Coca-Cola.
Without this knowledge, Pepsi would ship too much merchandise.
To overcome the lack of two-way communications that is inherent in traditional
VMI systems, collaborative planning, forecasting, and replenishment (CPFR) relies on
shared forecasts and related business information and collaborative planning between
retailers and vendors to improve supply chain efficiency and product replenishment.
Although retailers share sales and inventory data when using a VMI approach, the vendor
remains responsible for managing the inventory. In contrast, CPFR is a more advanced
form of retailer–vendor collaboration that involves sharing proprietary information such
as business strategies, promotion plans, new product developments and introductions,
production schedules, and lead-time information.
For example, in its efforts to enhance the sustainability of its operations, Walmart
works with its vendors to plan hauling and shipping operations more carefully, and it has
significantly increased its efficiency in the United States. Through its Project Gigaton,
Walmart and around 1,000 of its suppliers are seeking to reduce greenhouse gases created
by their global supply chain by a gigaton. A recent report from the company indicates
that it already has cut 93 million metric tons, on track to meet its ambitious goals.
c. The Flow of Merchandise through a Supply Chain
Although manufacturers and retailers may collaborate, the ultimate decision is
usually up to the retailer and depends on the characteristics of the merchandise and the
nature of demand. To determine which distribution system—DCs or direct store delivery
—is better, retailers consider the total cost associated with each alternative and the
customer service criterion of having the right merchandise at the store when the customer
wants to buy it.
More accurate sales forecasts are possible when retailers combine forecasts for
many stores serviced by one DC rather than doing a forecast for each store. Consider a
set of 50 Target stores, serviced by a single DC that each carries Ninja blenders. Each
store normally stocks 5 units for a total of 250 units in the system. By carrying the item at
each store, the retailer must develop individual forecasts, each with the possibility of
errors that could result in either too much or too little merchandise. Alternatively, by
delivering most of the inventory to a DC and feeding the stores merchandise as they need
it, the effects of forecast errors for the individual stores are minimized, and less backup
inventory is needed to prevent stockouts.
Distribution centers enable the retailer to carry less merchandise in the individual
stores, which results in lower inventory investments systemwide. If the stores get
frequent deliveries from the DC, they need to carry relatively less extra merchandise as
backup stock.
Retail store space is typically much more expensive than space at a DC, and DCs
are better equipped than stores to prepare merchandise for sale. As a result, many retailers
find it cost-effective to store merchandise and get it ready for sale at a DC rather than in
individual stores. But DCs aren’t appropriate for all retailers. If a retailer has only a few
outlets, the expense of a DC is probably unwarranted. Also, if many outlets are
concentrated in metropolitan areas, merchandise can be consolidated and delivered by the
vendor directly to all the stores in one area economically. Direct store delivery gets
merchandise to the stores faster and thus is used for perishable goods (meat and produce),
items that help create the retailer’s image of being the first to sell the latest product (e.g.,
video games), or fads. Finally, some manufacturers provide direct store delivery for
retailers to ensure that their products are on the store’s shelves, properly displayed, and
fresh. For example, employees delivering Frito-Lay snacks directly to supermarkets
replace products that have been on the shelf too long and are stale, replenish products that
have been sold, and arrange products so they are neatly displayed.
The DC performs the following activities: managing inbound transportation;
receiving and checking; storing and cross-docking; getting merchandise floor-ready;
ticketing and marking; preparing to ship merchandise to stores; and shipping merchandise
to stores. Fulfillment centers perform the same functions, but because they deliver
directly to customers rather than to stores, they do not have to get merchandise floor-
ready. To illustrate these activities being undertaken in a DC, we’ll continue our example
of blenders being shipped to a Target DC.
Traditionally, buyers focused their efforts, when working with manufacturers, on
developing merchandise assortments, negotiating prices, and arranging joint promotions.
Now, buyers and planners are much more involved in coordinating the physical flow of
merchandise to stores. Buyers are generally responsible for the purchase and profitability
of merchandise, whereas planners are responsible for the financial planning and analysis
of merchandise and its allocation to stores.
The buyer arranges for a truckload of blenders to be delivered to a DC at a
specific time because the distribution center has all of its 100 receiving docks allocated
throughout the day, and much of the merchandise on this particular truck is going to be
shipped to stores that evening. Unfortunately, the truck was delayed in a snowstorm. The
dispatcher—the person who coordinates deliveries to the distribution center—reassigns
the truck delivering the blenders to a Wednesday morning delivery slot and charges the
firm several hundred dollars for missing its delivery time. Although many manufacturers
pay transportation expenses, some retailers negotiate with their vendors to absorb this
expense. These retailers believe they can lower their net merchandise cost and better
control merchandise flow if they negotiate directly with trucking companies and
consolidate shipments from many vendors.
Receiving is the process of recording the receipt of merchandise as it arrives at a
distribution center. Checking is the process of going through the goods upon receipt to
make sure they arrived undamaged and that the merchandise ordered was the
merchandise received.
In the past, checking merchandise was a very labor-intensive and time-consuming
process. Today, however, many distribution systems using EDI are designed to minimize,
if not eliminate, these processes. The advance shipping notice (ASN) tells the distribution
center what should be in each carton. A UPC label or radio frequency identification
(RFID) tag on the shipping carton that identifies the carton’s contents is scanned and
automatically counted as it is being received and checked. Radio frequency identification
(RFID) tags are tiny computer chips that automatically transmit to a special scanner all
the information about a container’s contents or individual products.
After the merchandise is received and checked, it is either stored or cross-docked.
When merchandise is stored, the cartons are transported by a conveyor system and
forklift trucks to racks that go from the distribution center’s floor to its ceiling. Then,
when the merchandise is needed in the stores, a forklift driver or a robot goes to the rack,
picks up the carton, and places it on a conveyor system that routes the carton to the
loading dock of a truck going to the store. Such efforts seek to improve efficiency in the
supply chain too; at Walmart, for example, newly introduced, robotic mechanisms and
conveyer belts in distribution centers reduce the number of workers required to unload
trucks by half, such that the center can get more products unloaded and inventoried more
quickly.
Using a cross-docking distribution center, merchandise cartons are prepackaged
by the vendor for a specific store. The UPC or RFID labels on the carton indicate the
store to which it is to be sent. The vendor also may affix price tags to each item in the
carton. Because the merchandise is ready for sale, it is placed on a conveyor system that
routes it from the unloading dock at which it was received to the loading dock for the
truck going to the specific store—hence the name cross-docked. The cartons are routed
on the conveyor system automatically by sensors that read the UPC or RFID label on the
cartons. Crossdocked merchandise is in the DC for only a few hours before it is shipped
to the stores.
Merchandise sales rate and degree of perishability or fashionability typically
determine whether cartons are cross-docked or stored. For instance, if blenders sell
quickly, it is in Target’s interest not to store them in a DC. Similarly, cross-docking is
preferable for fashion apparel or perishable meat or produce.
For some merchandise, additional tasks are undertaken in the distribution center
to make the merchandise floor-ready. Floor-ready merchandise is merchandise that is
ready to be placed on the selling floor. Getting merchandise floor-ready entails ticketing,
marking, and, in the case of some apparel, placing garments on hangers (or maybe
attaching RFID chips). For the UK-based grocery chain Tesco, it is essential that
products ship in ready-to-sell units so that it has little manipulation or sorting to do at the
DC or in the stores. To move the store-ready merchandise it receives from suppliers
quickly into the store, Tesco demands that products sit on roll cages rather than pallets.
Then, store employees can easily wheel them onto the retail floor. The stores’ backrooms
have only two or three days’ worth of backup inventory, and it is important to keep
inventory levels low and receive lots of small, accurate deliveries from its suppliers—
which also helps cut costs.
Ticketing and marking refers to affixing price and identification labels to the
merchandise. It is more efficient for a retailer to perform these activities at a DC than in
its stores. In a DC, an area can be set aside and a process implemented to efficiently add
labels and put apparel on hangers. Conversely, getting merchandise floor-ready in stores
can block aisles and divert salespeople’s attention from their customers. An even better
approach from the retailer’s perspective is to get vendors to ship floor-ready
merchandise, totally eliminating the expensive, timeconsuming ticketing and marking
process.
At the beginning of the day, the computer system in the DC generates a list of
items to be shipped to each store on that day. For each item, a pick ticket and shipping
label is generated. The pick ticket is a document or display on a screen in a forklift truck
indicating how much of each item to get from specific storage areas. The forklift driver
goes to the storage area, picks up the number of cartons indicated on the pick ticket,
places UPC shipping labels on the cartons that indicate the stores to which the items are
to be shipped, and puts the cartons on the conveyor system, where they are automatically
routed to the loading dock for the truck going to the stores. In some distribution and
fulfillment centers, these functions are performed by robots.
d. System Design Issues and Trends
To streamline their operations and make more productive use of their assets and
personnel, some retailers outsource supply chain functions. Many independent companies
are very efficient at performing individual activities or all the supply chain activities.
There are a large number of companies that can transport merchandise from the vendor to
DCs, from the centers to the retailer’s stores, or from the FCs to individual consumers.
Rather than owning warehouses to store merchandise, retailers can use public warehouses
that are owned and operated by an independent company. Rather than outsource specific
activities, retailers can use freight forwarders to arrange for the storage and shipping of
their merchandise. Freight forwarders provide a wide range of services: tracking
transportation routes, preparing export and shipping documentation, booking cargo space
(or warehousing items until the cargo space is needed), negotiating the charges for and
consolidating freight, and insuring the cargo or filing insurance claims as necessary.
The primary benefit of outsourcing is that the independent firms can perform the
activity at a lower cost and/or more efficiently than the retailer. Independent firms
typically have a lower cost because they perform the activity for many retailers and thus
realize scale economies. For example, independent trucking firms have more
opportunities to fill their trucks on the return trip (backhaul) with merchandise for other
retailers after delivering merchandise to one retailer’s stores. In addition, when there are
many independent firms available to undertake the activity, retailers can have the firms
bid against each other to undertake the activity and thus drive down the costs.
Another supply chain decision retailers make is determining whether merchandise
will be pushed from the DCs to the stores or pulled from the DCs to the stores.
Information and merchandise flows such a pull supply chain—a supply chain in which
requests for merchandise are generated at the store level on the basis of sales data
captured by POS terminals. Basically, in this type of supply chain, the demand for an
item pulls it through the supply chain. An alternative is a push supply chain, in which
merchandise is allocated to stores on the basis of forecasted demand. Once a forecast is
developed, specified quantities of merchandise are shipped (pushed) to DCs and stores at
predetermined time intervals.
In a pull supply chain, there is less likelihood of being overstocked or out of
stock, because the store’s requests for merchandise are based on customer demand. A
pull approach increases inventory turnover and is more responsive to changes in customer
demand, and it becomes even more efficient than a push approach when demand is
uncertain and difficult to forecast. Yet a pull approach is not effective in all situations.
First, a pull approach requires a more costly and sophisticated information system to
support it.
Accordingly, most retailers employ a push strategy in practice and request
products on the basis of their anticipated demand. Effective advanced planning can help
suppliers, manufacturers, distribution centers, and retailers prepare, obtain, build, and
distribute merchandise according to predetermined schedules. Such capacities are
particularly useful for seasonal items, such as Christmas lights, and predictable use items,
such as deodorant, for which demand is easier to forecast. However, if the forecast is
inaccurate, the retailer may struggle with too much or too little inventory.
In support of a pull supply chain, item-level RFID can benefit both retailers and
vendors. For retailers, RFID provides an accurate, affordable, real-time measure of item
inventory levels. As discussed earlier, radio frequency identification devices are tags that
transmit identifying information and are attached to individual items, shipping cartons,
and containers. They then transmit data about the objects in which they are embedded.
These devices have two advantages over traditional bar codes. First, they can hold more
data and update the data stored. For instance, the device can keep track of where an item
has been in the supply chain and even where it is stored in a DC. With these data,
retailers can dramatically reduce inventory levels and stockouts. Second, the data on the
devices can be acquired without a visual line of sight. Thus, RFID enables the accurate,
real-time tracking of every single product, from manufacturer to checkout in the store. It
eliminates the manual point-and-read operations needed to get data from UPC bar
codes.24 Walmart, Macy’s, Marks & Spencer, Dillard’s, Amazon Go, and others have
implemented large-scale, item-level RFID initiatives.
The supply chains and information systems for supporting catalog and Internet
channels tend to be distinct from those that support traditional store channels. For
example, a typical retail DC supporting a store channel is designed to receive a relatively
small number of cartons from vendors and ship about the same number of cartons to its
stores. In contrast, FCs supporting nonstore channels are designed to receive about the
same number of cartons from vendors but ship a very large number of small packages to
customers. In addition, the information systems for store channels focus on products—
making sure that the right number of products are delivered to each store— whereas
information systems supporting nonstore channels are focused on the customer—making
sure that the right customer receives the right product.
Drop shipping, or consumer direct fulfillment, is a system in which retailers
receive orders from customers and relay these orders to vendors; the vendors then ship
the merchandise ordered directly to the customer. Such systems are especially popular
among companies that need to ship products made from bulky or heavy materials (e.g.,
lumber, iron).
e. The CRM Process
Traditionally, retailers might have focused on encouraging more customers to
visit their stores or websites, using mass media advertising and sales promotions to attract
as many people as possible. This approach treats all existing and potential customers the
same way: They all receive the same messages and the same promotions. But with CRM,
the goal is to develop loyalty and repeat purchase behavior among a retailer’s best
customers. Simply satisfying them or encouraging repeat visits is not sufficient. A
customer might exclusively patronize a local supermarket because it is the only one
convenient to her house, but that behavior does not necessarily mean that the customer is
loyal to it. If another supermarket opened with a somewhat better offering, the customer
might immediately switch to the new supermarket, even though she had been a repeat
customer at the existing store.
All elements in the retail mix contribute to the development of customer loyalty
and repeat purchase behavior.14 Customer loyalty can be enhanced by creating an
appealing brand image, offering exclusive merchandise, establishing convenient
locations, and providing an engaging shopping experience. However, personal attention
and customer service are two of the most effective methods for developing loyalty. For
example, many small, independent restaurants build loyalty by functioning as
neighborhood cafés, where servers recognize customers by name and know their
preferences. Nordstrom invites its best customers to grand-opening celebrations, pampers
them during private shopping parties, and provides concierge services and free
alterations. Such practices are more effective than discounts, because when a retailer
develops a personal connection with customers, it is difficult for any competitors to
attract them away. The CRM programs and activities discussed in this use information
systems and customer data to personalize a retailer’s offering and increase the value that
its best customers receive. Personalized value also can be provided by employees in face-
to-face interactions with customers.
f. Collecting Customer Shopping Data
Transactions: A complete history of the purchases made by the customer,
including the purchase date, the SKUs purchased, the price paid, the amount of profit,
and whether the merchandise was purchased in response to a special promotion or
marketing activity.
Customer contacts: A record of the interactions that the customer has had with the
retailer, including visits to the retailer’s website, inquiries made through in-store kiosks,
comments made on blogs and Facebook pages, merchandise returns, and telephone calls
made to the retailer’s call center, plus information about contacts initiated by the retailer,
such as catalogs and e-mails sent to the customer.
Different members of the same household might also have interactions with a
retailer. Thus, to get a complete view of the customer, retailers need to be able to
combine individual customer data from each member of a household. For example,
Richards is a family-owned apparel chain in Westport and Greenwich, Connecticut.
Spouses often buy presents for each other at Richards. The chain’s data warehouse keeps
track of both household-level purchases and individual purchases so that sales associates
can help one spouse buy a gift for the other. The data warehouse also keeps track of
spending changes and habits. Anniversaries, birthdays, and even divorces and second
marriages are tracked along with style, brand, size, and color preferences, hobbies, and
sometimes pets’ names and golf handicaps.
It is relatively easy for retailers to construct a database for customers using
nonstore channels because these customers must provide their contact information (e.g.,
name, address) for the purchases to be sent to them. It is also easy to keep track of
purchases made by customers patronizing warehouse clubs because they need to present
their membership cards when they make a purchase. In these cases, the identification of
the customer is always linked to the transaction. When retailers issue their own credit
cards, they also can collect the contact information for billing when customers apply for
the card. However, identifying most customers who are making in-store transactions is
more difficult because they often pay for the merchandise with cash, a third-party credit
card such as Visa or Mastercard, or their mobile wallets (e.g., Apple Pay).
Some retailers have their sales associates ask customers for identifying
information, such as their phone number, e-mail address, or name and home address,
when they process a sale. This information is then used to link all the transactions to the
customer. However, some customers may be reluctant to provide the information because
they feel that the sales associates are violating their privacy.
When customers use third-party credit cards such as Visa or Mastercard to make a
purchase in a store, the retailer cannot identify the purchase by the customer. However, if
the customer used the same credit card while shopping at the retailer’s website and
provided shipping information, the retailer could connect the credit card purchases
through its store and electronic channels.
Frequent-shopper programs, also called loyalty programs, are programs that
identify and provide rewards to customers who patronize a retailer. Customer transaction
data are automatically captured when the card is scanned at the point-of-sale terminal.
Customers are enticed to enroll in these programs and provide some descriptive
information about themselves by the offer of discounts if they use the cards when making
purchases from the retailer. These frequent-shopper programs are discussed in more
depth in following section.
Perhaps RFID provides the most convenient approach, from the customer’s
perspective, for customers to make purchases. An RFID reader in the store can acquire
the customer’s personal information from small devices carried by customers and RFID
tags on the merchandise they want to purchase. In addition, using a global satellite
tracking system, the store reader could collect information about where the customer has
been in the store.
The collection and analysis of data about customer attitudes, preferences, and
shopping behaviors enables retailers to target information and promotions and provide
greater value to their customers. However, many customers are concerned that retailers
violate their privacy when they collect detailed personal information. Even if customers
trust a retailer, they are concerned that the data may not be secure and/or may be sold to
other businesses.
These concerns are particularly acute for online customers, because of the
extensive amount of information that can be collected without their knowledge using
cookies. Cookies are small files stored on a customer’s computer that identify customers
when they return to a website. Because of the data in cookies, customers do not have to
identify themselves or use passwords every time they visit a site. However, cookies also
can enable the collection of data about what pages people have viewed, other sites the
people have visited, how they spend money online, and their interactions on social
networking sites.
Proactive retailers also can increase customers’ confidence by providing
consumers more information about their privacy options and how the information will be
used. The EU perspective is that consumers own their personal information, so retailers
must get consumers to agree explicitly to share this personal information. This agreement
is referred to as opt in. In contrast, personal information in the United States is generally
viewed as being in the public domain, and retailers can use it any way they desire.
American consumers must explicitly tell retailers not to use their personal information—
they must explicitly opt out. 18 Considering the growing consensus that personal
information must be collected fairly and purposefully, and that the data should be
relevant, accurate, and secured, retailers should find ways to assure customers that
information about them is held securely and not passed on to other companies without the
customers’ permission.
g. Analyzing Customer Data and Identifying Target Customer
One of the goals of CRM is to identify and cater to the retailer’s most valuable
customers. Retailers often use information in their customer databases to determine how
valuable each customer is to their firm. The value of a customer, called customer lifetime
value (CLV), is the expected contribution from the customer to the retailer’s profits over
their entire relationship with the retailer. Retailers typically use past behaviors to forecast
their CLV.
Which customer has the highest CLV—that is, who would be the most valuable
customer for the retailer in the future? If the retailer considered only the purchases made
by the two customers over the past 12 months, the retailer might conclude that Customer
1 is most valuable because the customer bought the most merchandise during the last 12
months ($400 versus $355). But Customer 1’s purchase history might reflect a visit to the
United States from Brazil during which the customer made a one-time purchase, such that
Customer 1 is unlikely to patronize the retailer again. As the retailer digs deeper into the
data, it might decide that Customer 2 is the most valuable customer because the customer
purchased merchandise both more frequently and more recently. In addition, Customer
2’s monthly purchases are trending up. Even though Customer 1 may have bought more
in the last 12 months, Customer 2’s purchase pattern suggests that the customer will buy
more in the future.
The CLV in the example is based on sales, not on the profitability of the
customers. The use of sales to identify a retailer’s best customers can be misleading,
however. For example, airlines assign rewards in their frequent-flyer programs on the
basis of miles flown. These programs provide the same rewards to customers who take
lowcost, less profitable flights as to those who make a larger contribution to the airline’s
profit by flying first class and paying full prices. Sophisticated statistical methods are
typically used to estimate the CLV for each customer.19 These deeper analyses consider
the gross margin from the customer’s purchases and the costs associated with the
purchase, such as the cost of advertising and promotions used to acquire the customers,
and the cost of processing merchandise that the customer returned. For example,
customers who pay full price and buy the same amount of merchandise have a higher
CLV than customers who buy only items on sale. Customers who return 30 percent of the
merchandise they purchase have a lower CLV than customers who rarely return
merchandise.
Retailers today are increasingly recognizing the importance of leveraging data to
understand and optimize their relationships with customers. One powerful metric that
retailers can derive from their data is Customer Lifetime Value (CLV), which quantifies
the total value a customer is expected to bring to the business over the course of their
relationship. By measuring CLV, retailers can gain insights into the profitability of
individual customers, identify high-value segments, and tailor their marketing, sales, and
service strategies accordingly.
The availability of a data warehouse represents a valuable resource for retailers
seeking to harness the power of data-driven insights to drive business growth and
success. A data warehouse serves as a centralized repository for storing, organizing, and
analyzing vast amounts of customer data collected from various sources, including
transactions, interactions, demographics, and behavioral patterns. This centralized data
infrastructure enables retailers to aggregate and integrate disparate data sets, break down
data silos, and gain a comprehensive view of their customers' behaviors, preferences, and
lifetime value.
Segmentation and Targeting: Retailers can use data warehouse analytics to
segment their customer base into distinct groups based on CLV, purchasing behavior,
demographics, psychographics, and other relevant criteria. By identifying high-value
customer segments, retailers can tailor their marketing messages, promotions, and
product offerings to better meet the needs and preferences of each segment, thereby
maximizing customer lifetime value.
Personalization and Customization: Data warehouse insights enable retailers to
deliver personalized and relevant experiences to individual customers across various
touchpoints, including online channels, mobile apps, email campaigns, and in-store
interactions. By leveraging data on past purchases, browsing history, preferences, and
engagement patterns, retailers can personalize product recommendations, promotions,
and communications, fostering stronger customer relationships and driving repeat
purchases.
Product and Service Innovation: Data warehouse analytics provide retailers with
valuable insights into customer needs, preferences, and trends, enabling them to identify
new product and service opportunities that resonate with high-value segments. By
leveraging data-driven insights, retailers can develop and launch innovative products,
services, and experiences that meet evolving customer expectations, drive differentiation,
and enhance customer lifetime value.
Operational Efficiency and Resource Allocation: Data warehouse analytics enable
retailers to optimize resource allocation and operational efficiency by identifying areas of
opportunity for improving processes, reducing costs, and increasing profitability. By
analyzing data on customer acquisition costs, retention rates, and lifetime value, retailers
can make data-driven decisions about marketing budgets, staffing levels, inventory
management, and pricing strategies, ensuring that resources are allocated effectively to
maximize ROI.
In summary, the availability of a data warehouse provides retailers with a
powerful resource for developing strategies, making informed decisions, and driving
business growth through customer-centric initiatives. By leveraging data-driven insights
to measure and optimize customer lifetime value, retailers can enhance customer
relationships, increase profitability, and gain a competitive edge in today's dynamic and
data-driven retail landscape.
Retail analytics are applications of statistical techniques and models that seek to
improve retail decisions through analyses of customer data.20 Data mining is an
information processing method that relies on search techniques to discover new insights
into the buying patterns of customers, using large databases.21 Three of the most popular
applications of data mining are market basket analysis, targeting promotions, and
assortment planning.
In a market basket analysis, the data mining tools determine which products
appear in the market basket that a customer purchases during a single shopping trip. This
analysis can suggest where stores should place merchandise and which merchandise to
promote together based on merchandise that tends to show up in the same market basket.
Beyond aiding decisions about where to place products in a store, market basket
analysis can help provide insights into assortment decisions and promotions. For
example, retailers might discover that customers typically buy a specific brand of
conditioner and shampoo at the same time (in the same market basket). With this
information, the retailer might offer a special promotion on the conditioner, anticipating
that customers will also buy the (higher margin) shampoo at its full price.
Managers have to make decisions about what merchandise to carry in each
category. Customer data also can be mined to help with these assortment decisions. By
analyzing which products the retailer’s most valued customers purchase, the manager can
ensure that they are available in the store at all times. For example, an analysis might
discover that customers in its highest CLV segment are very loyal to a brand of gourmet
mustard. However, this brand of mustard is only the tenth best seller in the retailer’s
mustard category across all customers. Due to its relatively low sales, the retailer might
consider dropping the mustard brand from its assortment. But based on this analysis, the
retailer would decide to continue offering the mustard, fearing that these high CLV
customers would defect to another retailer if the gourmet brand was no longer stocked in
its stores.
h. Developing CRM through Frequent-Shopper Programs
Although frequent-shopper programs are useful for building data warehouses,
they are not particularly useful for building long-term customer loyalty.22 The perceived
value of these programs by consumers is low because consumers perceive little difference
among the programs offered by competing retailers. Most programs simply offer
customers price discounts that are available to all customers that register for the
programs. Thus, competitive advantages based on frequent-shopper programs are rarely
sustainable. The programs are very visible, so they can be easily duplicated by
competitors. They also are very expensive in most cases.23 A 1 percent price discount
might cost large retailers around $100 million—and that is only after they invest up to
$30 million to get the loyalty program up and running. Over time, they must continue to
invest, up to $10 million annually, to maintain the program, including IT costs, marketing
efforts, and training.
Therefore, some retailers work to differentiate their programs with inexpensive
benefits. Target Circle is free to join, and like lots of retailers’ programs, it offers deals
and discounts, such as 5 percent off purchases on members’ birthdays. But unlike most
other programs, Target Circle also assigns members a vote in which nonprofit ventures
the retailer will support. In addition to engaging with the company, and its charitable
efforts, consumers enjoy a warm glow, knowing that their purchase helped support a
local organization that they believe is worthy of receiving donations.
Such experiments can be risky, though; loyalty programs are difficult to revise or
correct. Once they become part of customers’ shopping experience, retailers have to
inform customers about even the smallest changes. If those changes imply that customers
are losing some of the benefits of the programs, a strong negative reaction is likely, even
from customers who relatively little loyalty in the first place.
Frequent-shopper programs seek to encourage repeated purchases and develop
customer loyalty. To build true loyalty, retailers need an emotional connection with
consumers, as well as a sense of commitment from them. Retailers can promote such an
emotional connection by organizing around a purpose, such as health, safety, or the
environment—all topics that grew especially relevant during the COVID-19 pandemic.
With the recognition that older consumers were at greater risk, Carrefour developed two
product boxes specifically for this target market, one with food and one with cleaning
supplies. By creating such thoughtful offerings, Carrefour was able to earn not just
increased sales but also greater loyalty from grateful customers.25 To move frequent-
shopper programs beyond simple data collection and short-term sales effects, retailers
also might (1) create tiered rewards, (2) treat frequent shoppers as VIPs, (3) incorporate
charitable activities, (4) offer choices, (5) reward all transactions, and (6) make the
program transparent and simple.
Many frequent-shopper programs contain cascading tier levels, such as silver,
gold, and platinum. The higher the tier, the better the rewards. This reward structure
provides an incentive for customers to consolidate their purchases with one retailer to
reach the higher tiers. Some programs combine both discounts and points. For example, a
retailer might offer a $5 discount on purchases between $100 and $149.99, $10 off
purchases from $150 to $249.99, and $15 off purchases of $250 or more. Then beyond
$250, customers accumulate points that can be redeemed for special, unique rewards,
such as a free shirt or tickets to a local baseball game. A key requirement for a tiered
program is to design tiers that consumers perceive as attainable. Frequent shoppers can
calculate the tier level they can achieve with their usual spending pretty easily. They may
be less inclined to shop at a retailer or participate in its frequent-shopper program if the
tiers are impossibly distant. Although Neiman Marcus has a reward tier for customers
who make $600,000 in annual purchases, a similar reward tier would be vastly
inappropriate for a grocery store loyalty program.
Consumers respond well to being treated as if they are someone special. Effective
programs therefore go beyond discounts on purchases to offer unique rewards. For
example, in its PowerUp Rewards program, GameStop encouraged its target customers to
spend more on racing and fantasy video games by offering tickets to NASCAR races or
backstage access to Comic-Con.27 The rewards accordingly should match the retailer’s
target market to make customers feel really special: A private shopping night might be
important for a high-spending Nordstrom shopper, whereas an exclusive tour of the
company’s facility might be more interesting for Apple customers. These events also
should be promoted in advance to encourage more customers to enroll and pursue enough
points to be invited to attend the events.
Many programs are linked to charitable causes, as the example of Target’s Circle
program indicated. Participants in Sephora’s rewards program and Pampers Rewards
program can redeem their points by offering them as charitable donations. Although these
altruistic rewards can be an effective element of a frequent-shopper program, they
probably should not be the focal point of the program.
Not all customers value the same rewards, so the most effective frequent-shopper
programs provide choices. Sainsbury, a UK supermarket chain, allows customers to use
their Nectar points for vouchers at a variety of retail partners. Caesars Entertainment has
different programs for guests who live close to one of its properties and for customers
who must fly to its casinos or resorts. It also introduced Total Rewards Member Pricing,
which enables loyalty program members to get better pricing than nonmembers at
Caesars property restaurants, as well as the opportunity to purchase presale show tickets.
To ensure that the retailer collects all customer transaction data and encourages
repeat purchases, programs need to reward all purchases, not just purchases of selected
merchandise or those made through certain channels (e.g., in-store versus online).
Customers should gain entry to an introductory tier with nearly their first purchase, to
encourage them to join. Accordingly, Sephora designates customers as Beauty Insiders
the moment they sign up for a card. Once they earn 100 points, they qualify to receive a
free sample-sized product.
Effective programs are transparent in that they make it easy for customers to keep
track of their spending and available rewards. When they are both transparent and
convenient, loyalty programs can quickly become integral to shoppers’ consumption
choices. Thus, there is an increasing use of smartphone-linked programs that let
customers earn and redeem rewards through a mobile app, instead of requiring them to
remember their cards or coupons. With a push of a button, shoppers can recall their point
totals, how much more they need to spend to reach a desired prize, or whether they can
redeem points for something great today. Retailing View 11.2 describes some of the ways
that Starbucks makes such features clear through its revolutionary loyalty program app.
i. Implementing CRM Programs
For most retailers, a relatively small number of customers account for the
majority of their profits. This condition is often called the 80–20 rule—80 percent of the
sales or profits come from 20 percent of the customers. Thus, retailers could group their
customers into two categories on the basis of their CLV scores. One group would be the
20 percent of the customers with the highest CLV scores, and the other group would be
the rest. However, this two-segment scheme, “best” and “rest,” does not consider
important differences among the 80 percent of customers in the “rest” segment. Many of
the customers in the “rest” category are potentially “best,” or at least, good customers. A
commonly used segmentation scheme divides customers into four segments. This scheme
allows retailers to develop more effective strategies for each of the segments. Different
CRM programs are directed toward customers in each of the segments. Each of the four
segments is described next.
This segment is composed of the customers with the top 25 percent CLVs.
Typically, these are the most profitable and loyal customers who, because of their loyalty,
are typically not overly concerned about prices. Customers in this quartile buy a lot of the
merchandise sold by the retailer and often place more value on customer service than
price.
The next quartile of customers, in terms of their CLVs, make up the gold
segment. Even though they buy a significant amount of merchandise from the retailer,
they are not as loyal as platinum customers and patronize some of the retailer’s
competitors. The profitability levels of the gold-tier customers are less than those of the
platinum-tier customers because price plays a greater role in their decision making. An
important objective of any CRM program is to provide incentives to move gold-tier
customers to the platinum level.
The customers in this quartile purchase a modest amount of merchandise, but
their spending levels, loyalty, and profitability are not substantial enough for special
treatment. Although it could be possible to move these people up to higher tiers in the
pyramid, for reasons such as limited income, price sensitivity, or shared loyalties with
other retailers, additional expenditures on them may not be worth it.
Customers with the lowest CLVs can make a negative contribution to the firm’s
income. They often demand a lot of attention but do not buy much from the retailer.
When they do buy from the retailer, they often buy merchandise on sale or abuse return
privileges. They may even cause additional problems by complaining about the retailer to
others. As a result, retailers should not direct any attention to these customers. In the
following sections, we discuss programs retailers use to retain their best customers,
convert good customers into high-CLV customers, and get rid of unprofitable customers.
An important limitation of CRM strategies developed for market segments, such
as a platinum segment in the customer pyramid, is that each segment is composed of a
large number of customers who are not identical. Thus, any general offering will be most
appealing for only the typical customer and not as appealing to the majority of customers
in the segment. For example, customers in the platinum segment with the highest CLVs
might include a 25-year-old single woman whose needs are quite different from those of
a 49-year-old working mother with two children.
The availability of customer-level data and analysis tools helps retailers overcome
this problem and offer unique benefits and targeted messages to individual customers in a
cost-effective manner. Retailing View 11.3 describes the use of chatbots to personalize
the customer experience, though other retailers provide unusually high-quality,
personalized customer service to build and maintain the loyalty of their best customers.
For example, upscale department stores such as Saks Fifth Avenue and Neiman Marcus
provide wardrobe consultants for their best customers. These consultants can arrange
special presentations and fittings in the store during hours when the store is not open or at
the customers’ offices or homes. Nordstrom holds complimentary private parties for
invitees to view new clothing lines. Saks Fifth Avenue offers free fur storage,
complimentary tailoring, and dinner at the captain’s table on a luxury cruise line. At
Andrisen Morton, a Denver men’s apparel specialty retailer, salespeople occasionally
contact customers directly; if the store receives a new shipment of Brioni suits, they call
customers who have purchased Brioni in the past. If a customer has been relatively
inactive, the associates might offer him a $100 certificate for something he has not
bought in a while.
In many cases, the bottom tier of customers actually has a negative CLV.
Retailers lose money on every sale they make to these customers. For example, catalog
retailers have customers who repeatedly buy three or four items and return all but one of
them. The cost of processing two or three returned items is much greater than the profits
coming from the one item that the customer kept. The National Retail Federation
estimates that return fraud accounts for $18 billion in losses for retailers annually.34 In
response, even Amazon has banned a few customers who abuse its return policy, by
making frequent returns or fraudulently returning the wrong items.
Approaches for getting the lead out are (1) offering less costly services to satisfy
the needs of lead customers and (2) charging customers for the services they are abusing.
For example, a retailer might get 70,000 daily calls, about three-quarters of which go to
automated systems that cost the company less than $1 each. The remaining calls are
handled by call center agents that cost $13 per call. The retailer could contact 25,000
lower-tier customers who placed a lot of calls to agents and tell them they must use the
website or automated calls for simple account and price information. Each name could be
flagged and routed to a special representative who would direct callers back to automated
services and tell them how to use it.
