DEFINITION OF CUSTOMER:-Peter Drucker, a well known management expert, defined customers as:A person who purchases the product from the marketer or from theretailer or from the wholesaler.Customer Profiling:-Customer profile may be defined as customer description that includesdemographic, geographic and psychographic characteristics, buyingpattern, creditworthiness, purchase history etc. This description mayinclude information pertaining to the income level, Occupation, level ofeducation, age, gender, hobbies, and/or area of residence. For example,magazine advertising salespeople provide advertisers with customerprofiles describing the type of person who will be exposed to theadvertisements in that magazine. The description may include income,occupation, level of income, occupation, level of education, age, gender,hobbies, area of residence etc.These customer profiles which are built by the companies help them tounderstand their customers better. Using this customer profile thecompanies are able to identify and segment their potential customers.What is customer satisfaction?
Customer satisfaction refers to the extent to which customers are happywith the products and services provided by a business. And can bemeasured using survey techniques and questionnaires. Gaining highlevels of customer satisfaction is very important to a business becausesatisfied customers are most likely to be loyal and to make repeat ordersand to use a wide range of services offered by a business.According to Dr. Philip Kotler:“Customer satisfaction occurs when the perception of the reward from thepurchase of goods or services by the customer meets or exceeds his/herperceived sacrifice. The perception is a consequence of matching pastpurchase and consumption experience with the current purchase.Why is Customer Satisfaction So Important?A customer is satisfied only when he is getting quality product andquality service which he perceives. If a company is able to provide both,this will lead to customer satisfaction. A satisfied customer will develoployalty towards the company and will buy product of same companyagain and again. At the same time he will recommend companys productto others. This will help company in getting new customers. As a resultcompanys sale will increase and profits will rise.Dissatisfied customer on an average will tell 12 others not to buy a
product of the company. With internet and other information technologytools this number could go up to 10,000.This will affect the image of the company and will result in loss of saleand profit.The cost of acquiring new customer is 5 times more than keeping the oldone. The old customer will remain with a company only if they aresatisfied with the services provided by the company.Page 22 of 67If a customer has a major complaint, 91 % of such customers will notbuy from the company again. If the problem is resolved quickly, 82% ofthem will return. So a company should see that it is able to meetexpectations of each and every customer and should not delay in solvingcustomers complaint.PURPOSE OF CUSTOMER SATISFACTION"Customer satisfaction provides a leading indicator of consumerpurchase intentions and loyalty." "Customer satisfaction data are amongthe most frequently collected indicators of market perceptions. Theirprincipal use is twofold:"1. "Within organizations, the collection, analysis and dissemination of thesedata send a message about the importance of tending to customers andensuring that they have a positive experience with the company’s goodsand services.2. "Although sales or market share can indicate how well a firm is
performing currently, satisfaction is perhaps the best indicator of howlikely it is that the firm’s customers will make further purchases in thefuture. Much research has focused on the relationship between customersatisfaction and retention. Studies indicate that the ramifications ofsatisfaction are most Strong realized at the extremes." On a five-pointscale, "individuals who rate their satisfaction level as 5 are likely tobecome return customers and might even evangelize for the firm. (Asecond important metric related to satisfaction is willingness torecommend. This metric is defined as "The percentage of surveyedcustomers who indicate that they would recommend a brand to friends."When a customer is satisfied with a product, he or she might recommendit to friends, relatives and colleagues. This can be a powerful marketingadvantage.) "Individuals who rate their satisfaction level as 1, bycontrast, are unlikely to return. Further, they can hurt the firm bymaking negative comments about it to prospective customers.Page 23 of 67Willingness to recommend is a key metric relating to customersatisfaction."Customer Perceived Value (CPV):-Consumers are more educated and informed than ever, and they havethe tools to verify companies’ claims and seek out superior alternatives.Customer-perceived value is the difference between the prospectivecustomer’s evaluation of all the benefits and all the costs of an offering
and the perceived alternatives. Total customer benefit is perceivedmonetary value of the bundle of economic, functional, and psychologicalbenefits customer expect from a given marketing because of the product,services, personnel, and image involved. Total customer cost is theperceived bundle of costs customers expect to incur in evaluating,obtaining, using, and disposing of the given market offering, includingmonetary, time, energy, and psychological costs.Page 24 of 67CPV is thus based on the difference between what the customer gets andwhat he or she gives for different possible choices. The customer getsbenefits and assume cost. The marketer can increase the value of thecustomer offering by some combination of raising economic, functional,or emotional benefits and/or reducing one or more of the various types ofcosts. The customer choosing between two value offering. Applying Value Concept: Very often, managers conduct a customervalue analysis to reveal the company’s strengths and weaknessesrelative to those of various competitors. The steps in the analysis areas follows. Identify the major attributes and benefits that customer valuePage 25 of 67 Assess the quantitativeimportance of the different attributes and
benefits Assess the company’s and competitor’s performances on the differentcustomer value against their related importance Examine how customer in a specific segment rate the company’sperformance against a specific major competitor on an attribute orbenefit bases. Monitor customer values over time Choices and Implications: Some marketers might argue that theprocess we have described is to rational. Suppose the customerchooses the product. How can we explain this choices? Here are threepossibilities The buyer might be under orders to buy at the lowest price The buyer will retire before the company realize that the product ismore expensive to operate The buyer enjoys a longterm friendship with the salesperson -CPV is a useful framework that applies to many situations and yieldsrich insights. Here are its implications: First, the seller must assess the total cutomer benefit and total scustomer cost associated with each competitors associated with eachcompetitor’s offer in order to know how his or her offer rates in thebuyer’s mind. Secondthe seller who is at a CPV disadvantages has two alternatives: ,to increase total customer benefit or to decrease total customer cost.The former calls for strengthening or augmenting the economical,functional, and psychological benefits of the offering’s product,
services, personnel, and image. The latter calls for reducing thebuyer’s cost by reducing the price or costs of ownership andmaintenance, simplifying the ordering and delivery process, orabsorbing some buyer risk by offering a warranty.Page 26 of 67 Deliveri High Customer Value:- Consumers have varying degrees ngof loyalty to specific brands, stores, and companies. The value-delivering system includes all theexperiences the customer will haveon the way to obtaining and using the offering. At the heart of a goodvalue delivery system is a set of core business processes that help todeliver distinctive consumer value.