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4 Creating Customer Value and Customer Relationships

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44 views27 pages

4 Creating Customer Value and Customer Relationships

455

Uploaded by

shiv kumar saini
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 27

4

Creating
Customer Value
and Customer
Relationships

Chapter Questions

What are customer value, satisfaction, and


loyalty, and how can companies deliver them?
What is the lifetime value of customers and
how can marketers maximize it?
How can companies attract and retain
customers and cultivate strong customer
relationships?
What are the pros and cons of database
marketing?
Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-2

Eureka Forbes Gift of a Smile

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-3

Figure 4.1 Customer-Orientations

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-4

Customer Perceived Value


Customer perceived value is the difference
between the prospective customers
evaluation of all the benefits and all the costs
of an offering and the perceived alternatives.

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-5

Figure 4.2 Determinants of


Customer Perceived Value
Total customer benefit

Total customer cost

Product benefit

Monetary cost

Services benefit

Time cost

Personal benefit

Energy cost

Image benefit

Psychological cost

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-6

Applying Value Concepts


A firm can improve its offers in three ways:
1. By improving the economic, functional,
and psychological benefits of its product,
services, people, and/or image.
2. By reducing the buyers nonmonetary
costs by lesser time, energy, and
psychological investment.
3. By reducing the products monetary cost
to the buyer.
Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-7

Steps in a
Customer Value Analysis

Identify major attributes and benefits that


customers value
Assess the qualitative importance of different
attributes and benefits
Assess the companys and competitors
performances on the different customer values
against rated importance
Examine ratings of specific segments
Monitor customer values over time
Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-8

What Is Loyalty?
Loyalty is a deeply held commitment to rebuy or re-patronize a preferred product or
service in the future despite situational
influences and marketing efforts having the
potential to cause switching behavior.

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-9

Establishing Value

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-10

Delivering Superior Value


Customer Value Management (CVM) by Tata
Steel through a cross-functional joint team of
the company and the customer has succeeded
in delivering superior customer value

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-11

Measuring Satisfaction

Periodic surveys
Customer loss rate
Mystery shoppers
Monitor competitive performance

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-12

Managing Customers
Dealing with negative experiences and recovering
customer goodwill:
1. Set up a 7-day, 24-hour toll-free hotline to
receive and act on customer complaints.
2. Contact the complaining customer as quickly as
possible to avoid negative word of mouth.
3. Accept responsibility for the customers
disappointment; dont blame the customer.
4. Use customer service people who are empathic.
5. Resolve the complaint swiftly and to the
customers satisfaction.
Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-13

What is Quality?

Quality is the totality of features and


characteristics of a product or
service that bear on its
ability to satisfy
stated or implied needs.

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-14

Maximizing Customer Lifetime Value


Customer Profitability
Customer Equity
Lifetime Value

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-15

Figure 4.3 Customer-Product


Profitability Analysis

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-16

Estimating Lifetime Value

Annual customer revenue: $500


Average number of loyal years: 20
Company profit margin: 10
Customer lifetime value: $1000

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-17

What Is
Customer Relationship Management?
CRM is the process of carefully managing
detailed information about individual
customers and all customer touch points to
maximize customer loyalty.

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-18

Framework for CRM

Identify prospects and customers


Differentiate customers by needs and
value to company
Interact to improve knowledge
Customize for each customer

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-19

Customer Reviews and


Recommendations
The strongest influence on consumer choice
remains recommended by relative/friend.
With increasing mistrust of some companies
and their advertising, online customer ratings
and reviews and recommendations from
consumers are playing an important role.
Bloggers who review products or services,
online retailers who add their own
recommendations have also become important.
Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-20

Attracting and
Retaining Customers

Reduce the rate of defection


Increase longevity
Enhance share of wallet
Terminate low-profit customers
Focus more effort on high-profit customers

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-21

Figure 4.4 The Marketing Funnel

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-22

Loyalty Programs

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-23

Database Key Concepts

Customer database
Database marketing
Mailing list

Business database
Data warehouse
Data mining

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-24

Using the Database

To identify prospects
To target offers
To deepen loyalty
To reactivate customers
To avoid mistakes

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-25

Dont Build a Database When

The product is a once-in-a-lifetime purchase


Customers do not show loyalty
The unit sale is very small
The cost of gathering information is too high

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-26

For Review

What are customer value, satisfaction, and


loyalty, and how can companies deliver them?
What is the lifetime value of customers and
how can marketers maximize it?
How can companies attract and retain
customers and cultivate strong customer
relationships?
What are the pros and cons of database
marketing?
Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

4-27

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