Certificate Guide - The customer sample chapter

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Introduction
(i)
Page
Introduction
About the Author (iv)
How to use this Guide (v)
Additional Study Resources (vi)
Section 1: Customer Context
Chapter 1: Commercial Organisations
1.1 Ownership and Finance 1
1.2 Owners, Shareholders, and Managers 7
1.3 Multinational, Transnational, International and Global Corporations 8
1.4 Small and Medium Enterprises (SMEs) and Micro Enterprises 9
1.5 The Effects of Company Size 9
1.6 B2B, B2C, Service and Retail Companies 11
1.7 Fulfilling the Needs of Organisations and Customers 12
Chapter 2: Not-For-Profit Organisations
2.1 The Not-For-Profit Sector 17
2.2 The Voluntary and Charity Sectors 18
2.3 Trade Unions 20
2.4 Professional Bodies 21
2.5 Educational Institutions 22
2.6 National and International Non-Governmental Organisations 24
2.7 Social Enterprises 24
2.8 Social versus Business Value Creation 25
2.9 Organisational Motives for Non-Profit Organisations 26
2.10 Stakeholders 27
2.11 Transparency and Ethical Practice 28
Chapter 3: Public Sector Organisations
3.1 Public Sector Organisations and the Role of Government 31
3.2 Government Administrative Departments, Offices and Agencies 32
3.3 Local Government 35
3.4 Education 36
3.5 Health 36
3.6 Police and Emergency Services 37
3.7 Aims, Objectives and Financial Motives 38

Introduction
(ii)
Chapter 4: The Importance of Customer Expectations
4.1 Customer Needs and Expectations 41
4.2 Customer Satisfaction 48
4.3 Customer Expectations 49
4.4 Models of Customer Satisfaction and Customer Expectations 49
4.5 Competitor Offers 52
4.6 Financial Consequences 52
Chapter 5: The Importance of Brands
5.1 Brands and Branding 55
5.2 Brand Characteristics, Promise and Loyalty 59
5.3 Brand Strategies 59
Chapter 6: Consumer Behaviour Theory and Customer Expectations
6.1 Expectation-Confirmation Theory 61
6.2 Cognitive Dissonance and Consonance 62
6.3 Neuromarketing 63
Section 2: Customer Experience
Chapter 7: The Components of Customer Experience
7.1 Definitions of Customer Experience 67
7.2 Moments of truth 69
7.3 Touchpoints 71
7.4 Customer Journey 74
7.5 Value Creation – The Experience Economy 75
7.6 Branded Customer Experience 77
Chapter 8: The Different Dimensions of Customer Experience
8.1 Customer Experience Frameworks 79
8.2 Customer Experience Designs 82
8.3 Customer Relationship Marketing
and Customer Experience Management 90
Chapter 9: Activities to Enhance the Customer Experience
9.1 The Role of Product/Service in Customer Experience 96
9.2 The Role of Price and Place in Customer Experience 100
9.3 People and Processes 104
9.4 The Role of the Promotional Mix in Enhancing Customer Value 111

Introduction
(iii)
Section 3: Measuring and Monitoring
Chapter 10: Measuring and Monitoring
10.1 Customer Satisfaction 120
10.2 Primary and Secondary Research Methods 124
10.3 The Relevance of Customer Feedback 133
10.4 The Importance of Monitoring 135
Chapter 11: Customer Experience Measures
11.1 Metrics and KPIs: Why They Matter and Who Needs to Know 137
11.2 Analysing Metrics 145
11.3 Recommending Improvements in Customer Experience 148
Index 151

Introduction
(iv)
About the Author
Kiran Kapur BA MPhil (Oxon) FCMC Chartered Marketer
Kiran has worked predominantly in Financial Services and has expertise in customer
relationship marketing and customer communications. As a consultant, she has worked as
project manager for companies including Liverpool Victoria, Barclays, London Life and
Cazenove.
She has taught a wide variety of courses at Cambridge Marketing College since 1999. She is
the Distance Learning & Overseas Course Director, with responsibility for the College’s
overseas expansion and a Fellow of the College. She has been a CIM examiner since 2004.
Her publications include the Assessing the Marketing Environment Study Guide published by
Pearson Education in 2009 and the Cambridge Marketing Handbook: Law for Marketers
published by Cambridge Marketing Press in 2015.
She is a trustee of Jimmy’s Cambridge, a charity for homeless people.

Introduction
(v)
How to Use this Guide
This Guide has been written specifically to provide an introduction to the key knowledge and
skills you need to understand the customer. It includes examples and activities to help
reinforce your learning, and recommended reading and website links for additional
information. We recommend that you work through the Guide from beginning to end
undertaking the exercises and supplementary reading included.
The Guide is part of a set, all written by professional marketers and tutors, designed to
provide clear and easy to read introductions to key marketing topics. The other Guides in this
set are: Marketing, Communications, and Digital Marketing.
Within the Guide you will find the following icons used:
This icon defines a key learning concept.
This icon identifies additional reading resources that can be used to gather extra
information or to reinforce learning about a particular concept.
This icon identifies tasks that are useful in widening your knowledge and applying
the concepts to your own organisation.
This icon identifies real-life examples that illustrate the key issues discussed.
This icon identifies websites with further information on the key issues discussed.
This icon identifies videos available online to reinforce your learning.

Introduction
(vi)
Additional Study Resources
This Guide has been designed to provide you with the core knowledge and skills you need to
understand the customer. However, marketing is a constantly changing discipline and in
order to be a first class marketer you must keep up-to-date with what is going on around
you. Consequently we strongly recommend that you read widely around the subject using
some of the following resources:
CMC Tutor Blog, Scoop.it! and YouTube Channel
CMC Tutor Blog: www.marketingcollege.com/blog
Scoop.it!: http://www.scoop.it/u/charles-nixon
YouTube Channel: www.youtube.com/channel/UC0_uEMPBTxuUr8hH1Ikl70w
Magazines and Journals
We strongly recommend that you read around the subject from the daily and weekly press
and marketing journals and widen your studies by looking at key trade magazines that serve
the industry. These include:
Ad Age www.adage.com
Cambridge Marketing Review www.marketingcollege.com/blog/cambridge-
marketing-review/
Campaign www.campaignlive.co.uk
Marketing www.marketingmagazine.co.uk
Marketing Week www.marketingweek.co.uk
Media Week www.mediaweek.co.uk
Cambridge Marketing Handbooks
Cambridge Marketing Handbooks: Digital Marketing, Distribution for Marketers, Law for
Marketers, Marketing Communications, Marketing Philosophy, Marketing Planning, Pricing for
Marketers, Product Marketing, Research for Marketers, Services Marketing, and Stakeholder
Marketing, 2015, Cambridge Marketing Press

Introduction
(vii)
Useful Websites
The Chartered Institute of Marketing
www.cim.co.uk CIM website with information and access to learning
support.
www.cim.co.uk/insight/tools-
and-templates/study-resources/
Direct access to information and support materials for all
levels of CIM qualification (available to CIM Members).
www.cim.co.uk/cuttingedge Weekly roundup of marketing news (available to CIM
members), awards and forthcoming marketing events.
www.cim.co.uk/insight/marketin
g-library-resources/
EBSCO, Emerald, iLibrary and more.
Publications on line
www.ft.com Extensive research resources across all industry sectors,
with links to more specialist reports. (Charges may apply).
www.economist.com Useful links and easily-searched archives of articles from
back issues of the magazine.
www.mad.co.uk Marketing Week magazine online.
www.brandrepublic.com Marketing magazine online.
Sources of useful information
www.esomar.org/ European Market Research Association.
www.asa.org.uk/asa/ Advertising Standards Association – useful for the Codes
of Practice.
www.marketresearch.org.uk The Market Research Society. Contains useful material on
the nature of research, choosing an agency, ethical
standards and codes of conduct for research practice.
www.statistics.gov.uk Detailed information on a variety of consumer
demographics from the Government Statistics Office.
www.data.gov.uk/publisher/ce
ntral-office-of-information
Government News.
www.quickmba.com/ Quick reference website for business models.
Wikipedia – A Note on its Use
Wikipedia is a good place to start any research on a new subject. Whilst content now goes
through some review to remove obvious errors of fact, the encyclopaedia is not definitive
and can be incorrect. Always check any information with a second source. Wikipedia is a
good source for other sources.

The Customer
SECTION 1
CUSTOMER CONTEXT

The Customer 1
The expected learning outcomes for this chapter are that you will understand the
different forms that commercial organisations can take, their specific characteristics, drivers,
goals and the role of marketing within them including:
 Various legal types of ownership
 Varying personal and financial motivations
 The importance and behaviours of founders, managers and equity holders
 The nature of multinational, transnational, global and international firms
 How small and medium enterprises (SMEs) operate
 The importance of micro enterprises
 The differences between B2B, B2C, service and retail contexts
 How marketing can fulfill the needs of organisations and their customers
Introduction
A key element of this topic is to be able to analyse the differences between organisations.
This unit looks at a wide variety of organisations and considers the differences between them.
Clearly, different organisations have different types of customer, and can require different
marketing messages. We will look at this in more detail as we consider each type of
organisation.
This chapter starts by considering the differences between organisation types. Chapter 2
looks at more specific organisations. Both chapters are UK biased and, if you are not based
in the UK, you need to think about how the organisations described relate to organisations in
your own country.
1.1 Ownership and Finance
In this section, we look at the different types of profit making companies and at the
differences between private sector companies, public listed companies, sole traders and
partnerships. We also consider the financial and personal motives for setting up these
organisations.
1.1.1 Private sector companies
When thinking of companies, we tend to think immediately of large corporations or small
family run businesses. These are private sector companies, that is businesses which are not
run or owned by governments.

2 The Customer
Private companies can be large or small and can be formed in different ways. The two key
differences are:
a) how any profits made by the organisation are distributed; and
b) if there are any debts (called ‘liabilities’), who is responsible (liable) for paying them.
1.1.2 Sole traders
The simplest organisation is a sole trader, a business that is owned and run by one person. The
sole trader is the business.
There is no distinction between the business the sole trader does and the sole trader as an
individual: the business' assets are the sole trader’s assets, and so the business' debts are the
sole trader's debts.
There is no formality in becoming a sole trader; anyone can become one by simply
announcing that they are now a sole trader and telling the tax office. Records showing the
business income and expenses have to be kept.
 Profits – any profit the sole trader makes belongs to the sole trader
 Debts – the sole trader is personally liable to repay any debts, which means if the
business has high debts, the sole trader must sell his/her own assets (such as their
home and any personal savings) in order to repay the debts. Because of this personal
liability for debt, it can be hard for sole traders to borrow money
 Management – the sole trader takes all the decisions on how to manage the business
Confusingly, sole traders can employ people. Employees are employed by the sole trader
directly.
The reasons that someone chooses to become a sole trader are varied. Some like the idea
of being their own boss, wanting to be self-directed in their work. Many like the simplicity of
starting up as a sole trader, without any complex arrangements to set up. Others start as a
sole trader as a first step to setting up the private company.
Because the sole trader takes the financial risks, s/he also takes any financial rewards from
the business. However, being personally liable for any debts and the lack of being able to
obtain external finance can lead to sole traders deciding to become limited companies
(discussed in Section 1.1.4).
1.1.3 Partnerships
A partnership is more formal than a sole trader. Each partner is self-employed but has an
agreement that they are working together. Usually, partners draw up a partnership
agreement. Partnerships may be as small as two people working together, or involve several
hundred professionals working together.

The Customer 3
 Profits – the partners take a share of the profits
 Debts – all partners are liable for any debts run up by other partners. So if two people
are partners, and one absconds with all the business profits, the remaining partner is
left to deal with the debts. This has led to partnerships becoming a less popular
business model. To meet this concern, in 2000, the Limited Liability Partnership Act
allowed some partnerships to limit the liability of any debts
 Management – partners usually manage the business, though they can delegate
responsibilities to employees
Partners raise money for the business out of their own assets. 'Sleeping' partners contribute
money to the business but are not involved in running it.
Clearly a partnership requires trust between the partners. People choose to become partners
because they have control over the business but also have the other partner's expertise to
call upon. Partnerships can be as small as two people and as large as Linklaters, a global law
firm, with 447 practising partners across 20 countries (source: linklaters.com/whoweare).
1.1.4 Limited liability companies
These are very different to sole traders and partnerships. A Limited Company exists in its own
right: it is a separate legal entity, owned by shareholders. The company pays a salary to its
staff.
 Profits – the company makes and receives any profits. Profits can be retained by the
company (for example to grow the business) or distributed as dividends to its
shareholders
 Debts – any debts are taken out by the company, and it is the company's
responsibility to repay the debts. Shareholders are not liable for the company's debt,
unless they have guaranteed a loan for the company
There are two types of limited liability companies: private limited companies and public
limited companies (PLCs). The main difference is that a Private Limited Company (usually with
Limited or Ltd after their name) cannot offer shares to the public. It must have one director
who may also be a shareholder of the company. However, if the company goes out of
business, the shareholders may lose any money they have invested in the business.
Private Limited Companies give the owners more protection than sole traders and
partnerships. There are more legal requirements to set up the company. Owners may choose
to become limited companies if they want to have more protection or if they wish to raise
finance through loans from financial institutions which often prefer to lend to limited
company status, than sole traders.

4 The Customer
A Public Limited Company (with PLC after their name) must have at least 2 directors and
offer at least £50,000 worth of shares to the public before it can trade. There are also some
differences in the way the companies are run. For example, a PLC must have a qualified
company secretary, must hold an AGM (annual general meeting) and comply with Stock
Exchange regulations.
 Management – employees are employed by the company. A director or board of
directors makes the management decisions. Finance comes from the shareholders,
loans and any profits
Table 1.1 summarises the key characteristics and differences between the different types of
private companies.
Sole trader Partnership Private Limited
Company
Public Limited
Company
Example Plumber, business
consultant
Large legal and
accountancy
firms, such as
PWC
Cambridge
Marketing
College Limited
Tesco plc
Set up None Partnership
agreement
Register (be
incorporated) at
Companies
House
Register (be
incorporated) at
Companies
House
Ownership Owned by sole
trader
Owned by
partners
Owned by
shareholders
Owned by
shareholders
Profits Go to sole trader Go to partnership Go to company.
Distributed to
shareholders as
profits
Go to company.
Distributed to
shareholders as
profits
Liability
(debts)
Sole trader is
liable
Each partner is
liable
Company is
liable
Company is
liable
Records Tax return Tax return Accounts must
be filed at
Companies
House. Accounts
must be audited
annually
Accounts must
be filed at
Companies
House. Accounts
must be audited
annually

The Customer 5
Tax Register as self-
employed. Profits
taxed as income.
Register as self-
employed. Each
partner's profits
taxed individually
as income.
Liable for
corporation tax
Liable for
corporation tax
Other Limited Liability
Partnership Act
2000 allowed
partners to limit
their personal
liability
Must have a
qualified
company
secretary. Must
have offered
£50,000 share
capital to the
public before
trading
Table 1.1 Summary of private companies
Consider 4 different private companies that you know and work out whether they
are sole traders, partnerships, private limited companies or PLCs.
You should now be able to:
 State the main forms of business ownership
 Describe what a sole trader is
 Describe what a partnership is
 Explain the difference between a Ltd and a PLC
1.1.5 Franchises
We have looked at the four standard types of private company. However, there is another
private sector business type that we should consider – the franchise.
What do Domino's Pizza, McDonalds and Dyno-Rod have in common? They are all
franchises.

6 The Customer
In the UK in 2013 (NatWest bfa Franchise Survey, 2013:
 the franchising industry annual turnover was £13.7 billion
 there were 930 franchisor brands operating; and
 there were 39,000 franchisee outlets employing 561,000 people
Why franchise? Franchising can help to reduce the risks of starting a new business or
expanding an established one.
For companies wanting to expand, starting a new branch in a new area can be risky.
Operating in new locations requires controlling the new set-up, finding motivated staff and
premises.
For someone wishing to start their own business, there are the problems of getting their
business known and risks around getting the product and service offering right.
Franchising is a way of meeting these problems. The original business (franchisor) offers its
name or more usually its whole way of doing business to a franchisee. The franchisee pays a
fee and gets to trade as part of the business. The franchisee is usually highly motivated, the
franchisor has experience of the business, so both benefit.
There are two main types of franchise:
 Product or trade name franchising – the franchisor owns the right to a name or
trademark which they sell to a franchisee
 Business format franchising – the franchisor offers an entire package to the
franchisee, including continual business assistance, and a proven business format. In
return for a start-up fee and a percentage of turnover or profits, the franchisee buys
into a known company and gains ongoing business support. The franchisee reduces
the risks and costs associated with starting a completely new business. The franchisor's
company is able to grow, while reducing the risks of expansion

The Customer 7
Example Domino's Pizza, Dyno-Rod
Set up Franchisee buys into the franchise and both sign
a formal agreement
Ownership Franchisee owns their part of the franchise as
agreed with franchisor
Profits Retained by franchisee
Liabilities (debts) Set up fee and ongoing fee/proportion of profits
paid to franchisor
Table 1.2 Summary of franchising
 Profits – retained by franchisee but a proportion may be paid to the franchisor
 Debts – raising finance is usually up to the franchisee. The franchisee will pay fees to
the franchisor
 Management – the franchisee must follow the business format laid down by the
franchisor. Finding and recruiting staff is the responsibility of the franchisee
1.2 Owners, Shareholders and Managers
We have seen that the ownership of commercial companies varies. For sole traders and
partnerships, the owner is the sole trader or the partners. For limited companies, there are
shareholders. Shareholders may or may not work for the company but they are the owners,
owning an element of the company (in shares).
A private company limited by shares is owned by the shareholders. Each shareholder has a
liability to the value of the shares issued to him/her. So, if a shareholder is given 100 shares at
an original value of £1, if the company fails, the shareholder is liable for £100.
Shareholders then collect a dividend on the shares, usually paid six monthly. The company's
annual accounts show how much profit the company has made and the company decides
how much of this profit to pay out as a dividend. The dividend is then divided up amongst
the shareholders depending on how many shares they own. In a small company, with only 2
equal shareholders, clearly each gets 50% of the dividend. In a large PLC, small shareholders
will get a tiny fraction.
A private company limited by guarantee does not have shareholders. It has members who
will back the company financially up to an agreed amount (that is the guarantee).
As the company owners, shareholders have rights such as voting and agreeing changes to
the company.

8 The Customer
Directors of a limited company have legal responsibilities under UK law. These are:
 Try to make the company a success, using your skills, experience and judgment
 Make decisions for the benefit of the company, not yourself
 Tell other shareholders if you might personally benefit from a transaction the
company makes
 Keep company records and report changes to Companies House and HM Revenue
& Customs
 Make sure the company’s accounts are a ‘true and fair view’ of the business’
finances
Managers are employed by the company and may or may not be shareholders. There is no
single accepted definition of what a manager does. A suggestion attributed to American
management consultant Mary Parker Follett is: "the art of getting things done through
people" and “management is what managers do”,
When looking at management, we can simplify these into 3 or 4 levels of management:
i. Supervisors, section leaders and foremen whose role requires supervision of workers
ii. Middle managers who are branch or department managers
iii. Senior managers who manage middle managers and set the direction and strategy of
their section of the company
iv. Board of directors who set the direction for the entire company
Of course the level and number of managers will depend on the size of the company. In a
small company, there may be one or two managers of the whole company. In a large
organisation, there may be many levels of management, each with different and graded
levels of influence and control
In the next section, we look at the largest corporations.
1.3 Multinational, Transnational, International and Global
Corporations
As the names suggest, all these types of companies operate over several countries. There is
no generally accepted definition of the difference between these. An international and
multinational corporate (MNC) may operate across just two countries with facilities in its
home country and at least one other.
Transnational corporations (TNCs) is the term used to describe global corporations. These are
businesses that have merged to create large conglomerates, operating across many
countries, often with a number of businesses.

The Customer 9
The Indian Company Tata Group (www.tata.com), operate across many countries
with a variety of brands, including:
 Taj Hotels • Land Rover
 Himalayan Water • Tetley
 Bombay Brasserie • Manza Cars
 Range Rover • Good Earth Tea
 Jaguar • Nano Car
1.4 Small and Medium Enterprises (SMEs) and Micro Enterprises
At the other end of the scale of company size, we find micro enterprises and SMEs. The EU
provides the following definitions:
 Micro Enterprises are the smallest businesses. The EU defines these as an enterprise
which employs fewer than 10 persons and whose annual turnover and/or annual
balance sheet total does not exceed EUR 2 million.
In developing countries, micro enterprises comprise the vast majority of the small
business sector. Here the micro enterprises can lack access to commercial banking,
so rely on micro-credit institutions.
 A Small Enterprise is defined by the EU as an enterprise which employs fewer than 50
persons and whose annual turnover and/or annual balance sheet total does not
exceed EUR 10 million.
 A Medium-Sized Enterprise is defined by the EU as an enterprise which employs fewer
than 250 persons and whose annual turnover does not exceed EUR 50 million or
whose annual balance-sheet total does not exceed EUR 43 million.
1.5 The Effects of Company Size
Big is not always better; being small is not automatically a problem. Both have advantages
and disadvantages. Consider the following comparison of small/medium enterprises (SMEs)
and large/global companies:

10 The Customer
1.5.1 Small organisations
Advantages:
 Lower overheads, no HQ, less staff costs, less internal communication costs
 More flexible in making decisions, because it is less bureaucratic and has shorter
decision making chains
 May be closer to the customer and offer a more personal service
Disadvantages:
 Cannot take advantage of economies of scale, because of small size
 Less access to finance; may have to rely on personal savings or bank loans. This can
constrain the opportunities to grow. It may make taking risks harder, as it can be
difficult to raise the capital.
1.5.2 Large/global organisations
Advantages:
 Can exploit economies of scale in production, marketing and purchasing raw
materials
 Access to finance is easier
 Suppliers may be keen to supply larger firms to gain credibility for example, suppliers
are keen to supply large supermarket chains, despite the chains’ control on costs
Disadvantages:
 Can have long chains for decision-making, which can make the organisation slow to
change
 Can be harder to access information in a large company
 Internal communications can be difficult, expensive and inefficient
 Staff may run personal ‘fiefdoms’ sometimes concentrating on internal politics, rather
than the organisation’s overall benefit
 Graded levels of responsibility can be motivating for staff to feel they are rising their
the organisation but can also mean that decisions can be hard to make or that staff
can be risk-adverse and be focussed on internal promotion

The Customer 11
1.6 B2B, B2C, Service and Retail Companies
These are definitions of companies based on their industry and type of customer.
B2C means Business to Consumer – the company is selling to consumers, that is, parts of the
public.
Products that are sold to consumers are often classified as durable goods, lasting
several years such as washing machines, computers and cars, or fast-moving consumer
goods (FMCGs). Examples of FMCG goods include Mars (chocolate bars), Persil (washing
powder), PG tips (tea), Huggies (nappies). Any product that is sold to a part of the public is
classified as B2C. Retail and service companies may also be B2C. So Thomas Cook sells
holidays (a service) to families, so is a B2C service company. It is worth noting that there are
different regulatory rules for selling and marketing products to consumers rather than to
businesses. The CAP Code makes a clear distinction between advertisements to consumers
and those to businesses. For more information on the CAP (Committee of Advertising
Practice) Rules, see the Cambridge Marketing College Handbook: Law for Marketers by
Kiran Kapur, 2015, Cambridge Marketing Press or visit: www.cap.org.uk.
B2B means Business to Business – the company is selling products to other companies.
Examples are office photocopiers, raw materials to a car manufacturer, corporate clothing,
and computer services.
Companies may often be both B2C and B2B. For example, Ford sells cars B2C via its
dealerships but also sells B2B via its fleet cars and commercial vehicles.
Services – these are “anything you cannot drop on your foot”. It is surprisingly difficult to find
a generally accepted definition of a ‘service’. Essentially, it is something that you hire or buy
that does not give you anything physical. So a lawyer and accountant offer professional
advice which is a service. A taxi-firm moves you from one place to another which is a
transport service.
Retail – retailers sell products or services to the end-user in shops, called ‘retail outlets’.
Retailers may sell one-type of product, such as food retailers, or offer a multitude of different
products such as department stores. Automated retail outlets are vending machines or
automated kiosks that allow the end-user to purchase a product from a machine that then
dispenses the product.

12 The Customer
For more on products and services see:
The Cambridge Marketing Handbook: Product Marketing by Tony Wilson, Chapter 1, 2015,
Cambridge Marketing Press; and
The Cambridge Marketing Handbook: Services Marketing by Andrew Hatcher, Chapter 2,
2015, Cambridge Marketing Press
1.7 Fulfilling the Needs of Organisations and Customers
Marketing's role in all organisations is to understand the organisation's customer. This is
discussed further in Section 3.
This section covers elements of marketing that you will have found in other modules, such as
the Marketing topic. As a result, this is a high level overview of these topics. More details can
be found in the Marketing Guide and throughout there are suggestions for further reading in
the Cambridge Marketing Handbooks.
1.7.1 Organisation orientation
Orientation here means the way an entire organisation is focussed. A sales-led organisation
concentrates on selling what it produces. Examples include pension companies who create
a pension and then try to sell as many as possible. It is a ‘one-size fits all view’ or even a
‘company knows best’ approach. Targets within the company will be based on sales targets,
and sales people will be rewarded for reaching these targets. This is a common approach
when there is more demand than supply in a market – the customer has little choice if they
want a particular product or service, so the company can concentrate on trying to gain as
much of the market as possible.
The danger is that the company can become too focused on sales and ignore other
considerations, such as new competitors or substitute products. The company can then find
that it is very good at selling a product or service which has become out-dated or obsolete.
It can also become too focused on sales at the risk of signing up unsuitable customers. For
example, Wonga, a short-term personal loan company, had to write-off loans that were
made to customers who were unable to repay the loan. Had Wonga done the proper
checks, these customers would not have been offered loans.
Customers and governments are increasingly concerned about sales tactics used by some
companies and some industries.

The Customer 13
There are 6 large energy companies that dominate the UK home energy market.
Each has been hit by fines from the Government regulatory body, Ofgem, for misleading
customers when signing them up to new contracts.
EDF Energy, NPower, Scottish Power, Scottish and Southern Energy, E.ON and British Gas have
all been fined. This leads to consumer mistrust of the industry as well as damaging the
companies’ reputations.
A product-led organisation has a similar approach. It concentrates on creating products and
then creating a desire for those products in a marketplace. The company is focussed on
making superior products and then improving them over time. Many technology companies
operate in this way. They design a product and then tell the marketplace why the customer
should buy this. Companies that offer products that are new to the market may have to take
this approach. Technology firms argue that the customers don’t know why they need a
product, so need to be told.
Product-led companies run the risk of being too focused on the product and variations on
the product. They can improve the product quality at the risk of making the product too
expensive for the target market. The company may also offer a wide range of additional
items, thinking the customer wants more choice but risk making the product too
complicated for the target market. A product orientated company can focus so strongly on
product that other elements of the marketing mix, such as distribution or price, become
ignored or are considered of secondary importance to improving the product.
A customer-oriented company looks at what the customer wants and then designs products
and services around the customers’ wants and needs. Customer-oriented companies are
very clear about their customer segments – the types of customers that they wish to attract
and keep. Keeping customers is seen as important. This requires the company to understand
both their current customers and how their customers are changing, so researching
customers is seen as important.
Apple makes laptops, tablets and phones which are products. However, purchasing from an
Apple Store and the experience of using those products is designed with the customer’s
wants and needs in mind. This makes Apple a customer-oriented company as opposed to
some other technology firms who are designing products. Apple’s ‘simplicity by design’
approach contrasts with other firms selling as many additional items as possible, which can
confuse the customer.

14 The Customer
Zipcar is a car club. Car clubs require customers to become a member, then they
can hire a car for a short period of time. The idea is not new, but ZipCar thought about what
put customers off using a car club and simplified the process.
Potential customers said that they were confused by the charges levied by car hire firms,
such as additional insurance and waiver of damage. Customers worried how a car share
scheme would work – did they have to go somewhere to collect keys, or to book the cars?
Zipcar then designed the process of booking, collecting and returning cars to be easy.
Membership gives the customer a keycard which will unlock the chosen zip car. The
company uses mobile phone booking and an easy membership process. Fuel, insurance,
mileage and congestion charges are included in the booking fee, to remove confusing
additional charges.
The entire process is designed to be simple for the customer.
www.zipcar.co.uk
Read more about product, sales and customer orientation in:
The Cambridge Marketing Handbook: Marketing Philosophy by Charles Nixon, 2015,
Cambridge Marketing Press
1.7.2 Customer value
Marketing adds value through understanding the needs of customers and adapting the
company offering (products or services) to meet those needs. Marketing is seen in many
organisations as a cost centre, yet it adds considerable value by observing and
understanding the market place. To do this, the marketing operation needs to be well-
informed and good at analysing trends.
Customer value is what a product or service is worth to a customer – it is not the same thing
as price or cost. By adopting a market orientation and understanding the needs and wants
of customers an organisation can add value to its products and services by developing
offerings which better meet their customers’ needs.
So in the Zipcar example, Zipcar researched what put potential customers off the idea of
using a car share service. They then designed the process to remove these perceived
hassles. The cost of membership covers the costs of this simplified design – as it has to include
the costs of insurance and other charges. Zipcar customers perceive the value of this
simplicity and so are willing to pay for the additional costs because it reduces other hassles –
such as owning a car in a city and finding places to park.

The Customer 15
In Apple Stores, a single sales person will explain the products, explain any options such as
training, then take the payment and help the customer with any product set up. The
simplicity of the purchase matches the user experience. This, plus Apple’s brand values,
create this customer value, for which the customer is prepared to pay a premium price.
To create this value, the company must understand the customers’ wants and needs, both in
the product performance and in other desires, such as a reduction in hassle. Time-poor
customers will often pay a premium price to have an easy experience. This knowledge of the
customer requires customer research which is then used to design both the product and also
the whole user experience. We will look at user experience and customer journeys in Section
2. This value then needs to be clearly communicated and this is most often done through the
brand value.
1.7.3 Brand value
A brand differentiates the product/service, aiding customer recognition and
loyalty.
A brand is defined as a name (IBM), symbol (the Nike swoosh), a sign (the MacDonald’s
golden arches), or design (Toblerone’s triangular shaped boxes). More importantly, a brand
symbolises an emotion or action: Kellogg’s conjures thoughts of breakfast, Virgin conjures
cool, innovative, and so on. These brands embody a customer value into the brand.
Brands have a value. Interbrand publishes a list of annual values of brands and in 2013, the
top global brand was Apple, worth over $98,000 million, Google was the second largest
brand, valued at over $93,000 million (Source: www.Interbrand.com).
We will look at brand and brand value in more detail in Chapter 5.
To find out more about customer value read Chapter 6 of the Cambridge
Marketing Handbook: Product Marketing by Tony Wilson, 2015, Cambridge Marketing Press.
1.7.4 Relationship marketing
The traditional view of marketing was that marketing focused on meeting customer needs
up to the point of the sale. Then marketers realised that repeat customers were important
and the concept of relationship marketing was created. Relationship marketing is defined as
attracting, maintaining, and enhancing customer relationships.

16 The Customer
Huggies nappies estimated that whilst a single pack of disposable nappies costs
£4.99 for a small packet, a parent spends over £1,500 on nappies from birth to potty-training.
Huggies realised it needed to persuade customers to continue to buy Huggies nappies. By
thinking of the Lifetime Value (LTV) of the customer (over £1,500 per child), it was worth
investing in a relationship with the parent. Huggies pioneered the concept of a Bounty Bag,
given to new mothers before they left hospital with free nappies and vouchers for more.

Index
The Customer 151
5M model.....................................................148
—B—
B2B.............1, 11, 26, 42-44, 67, 71, 86, 91-92,
98-99, 103, 115
B2C................1, 11, 26, 44, 67, 71, 86, 97, 103
Brand touchpoint wheel.............................72
Brand value ...................................................15
Brand value proposition................. 55, 58, 67
Branded customer experience ..... 67, 77-78
Brands................................................. 15, 55-59
—C—
Charity sector...........................................18-19
Co-creation...............................79, 85-87, 100
Cognitive dissonance...................... 61-63, 91
Commercial organisations ......................1-15
Commitment-trust theory .....................91, 93
Competitors...........................................68, 119
Complaints .........................123, 133, 137, 142
Compliments...............................................134
Consonance ..................................... 61-62, 91
Consumer behaviour..............................61-64
Crisis management......................................53
Customer expectations .........................41-64
Customer experience design(s) ..........79, 82
Customer experience management
(CEM) ............................................. 79-81, 90
Customer experience measures ............119,
137-149
Customer experience modelling ........79, 89
Customer feedback ............................81, 133
Customer interaction(s) .........70, 81, 95, 100
Customer journey.................................74, 148
Customer loyalty ................41, 47, 64, 78, 98,
109-110
Customer needs ...................15, 41, 46-47, 53
Customer personality traits...................79, 87
Customer relationship management
(CRM) .........................................90, 120-121
Customer relationship marketing........79, 90
Customer rights.............................................47
Customer satisfaction.................... 48-49, 120
Customer value......................14-15, 111, 113
—D—
Decision-making process .....................41, 44
Decision-making unit (DMU) ..........42, 44, 98
DRIP............................................................... 111
—E—
Educational institutions .........................17, 22
Emergency services..........................31, 37-38
Emotional intelligence ..................87, 95, 014
Employee satisfaction.........95, 109-111, 147
Employee talent...................................95, 111
Ethics ........................................... 17, 26, 28, 58
Expectation-confirmation theory.............. 61
Experience economy.............................75-76
—F—
Fishbone diagram...............................146-147
Franchises ........................................................ 6
—G—
Government departments....................36-37
—H—
Hiriko folding car .......................................... 97
—I—
Ishikawa, K............................................146-147
—K—
Kano model ............................................49, 51
Key Performance Indicators (KPIs).................
137-138, 141-143, 145, 147
—L—
Ladder of loyalty ....... 44-45, 79, 91, 120, 144
Lean Six Sigma approach .....................79-80
Local government ................26, 31-32, 35-46
—M—
Measuring.............................................119-148

Index
152 The Customer
Mendelow's Matrix .......................................27
Metrics ..................................................137, 145
Moments of truth ............................ 69-70, 148
Monitoring............................................ 120-148
Multinational corporations ........................... 8
—N—
Net Promoter Score®......................... 119-122
Non-governmental organisations ......17, 24,
33
Not-for-Profit organisations............. 17-29, 42
—O—
Orientation(s) ..........................................12, 14
—P—
Partnerships ..................................................... 3
People .............3, 50, 57, 62, 83, 95, 104, 108
Physical evidence............48, 81, 95, 103-104
Place........................................90, 95, 100, 102
Price ...........................................83, 90, 95, 100
Private limited companies (Ltd) ..............3, 5
Private sector ...........................................1-2, 6
Process(es).....................................95, 104-105
Product(s) .................6, 11, 58, 90, 95-96, 121
Professional bodies.................................17, 21
Promotion...............................................90, 111
Public limited companies (PLC) ...............3-7
Public sector organisations....................31-39
—Q—
Quangos ........................................................33
—R—
Rainforest Café.................76-77, 89, 100, 147
RATER model ............................................51-52
Reichheld, F.F................95, 110, 120, 121-122
Relationship lifecycle model...................... 79
Relationship marketing ............................... 90
Research........................................70, 124, 131
Retail companies ......................................... 11
—S—
Self-service..................................... 95, 106-107
Service companies ...................................... 11
Service profit chain (SPC)..................109-111
Service profit cycle.................... 110-111, 120
SERVQUAL model...................49-52, 145, 148
Shareholders ............................................... 3, 7
SMEs .............................................................. 1, 9
Social enterprises .............................17, 24, 26
Social networks/media ..................48, 72, 86,
95, 112-113, 125
Social value creation ............................17, 25
Sole traders...........................................1-3, 5, 7
Staff................... 10, 20, 59, 110, 125, 142, 147
Stakeholders.......................................27-28, 36
—T—
Touchpoints..................................... 71-73, 148
Trade unions............................................17, 20
—U—
User Generated Content (UGC)......125-127
—V—
Value creation........................................67, 75
Value proposition......................95-96, 99-101
Voluntary sector ........................................... 18
—Z—
Zero moments of truth (ZMOT).......71, 73, 75

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