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Kotler Mm13e Media 05 Creating Customer Value, Satisfaction, And Loyalty

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Kotler Mm13e Media 05 Creating Customer Value, Satisfaction, And Loyalty

  1. 1. Creating Customer Value, Satisfaction, and Loyalty Marketing Management, 13 th ed 5
  2. 2. Chapter Questions <ul><li>What are customer value, satisfaction, and loyalty, and how can companies deliver them? </li></ul><ul><li>What is the lifetime value of customers? </li></ul><ul><li>How can companies cultivate strong customer relationships? </li></ul><ul><li>How can companies both attract and retain customers? </li></ul><ul><li>What is database marketing? </li></ul>Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  3. 3. Ritz Carlton - Famous for its Exceptional Service Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  4. 4. Figure 5.1 Organizational Charts Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  5. 5. What is Customer Perceived Value? <ul><li>Customer perceived value is the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives. </li></ul>Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  6. 6. Figure 5.2 Determinants of Customer Perceived Value Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5- Image benefit Psychological cost Personnel benefit Energy cost Services benefit Time cost Product benefit Monetary cost Total customer benefit Total customer cost
  7. 7. Steps in a Customer Value Analysis <ul><li>Identify major attributes and benefits that customers value </li></ul><ul><li>Assess the qualitative importance of different attributes and benefits </li></ul><ul><li>Assess the company’s and competitor’s performances on the different customer values against rated importance </li></ul><ul><li>Examine ratings of specific segments </li></ul><ul><li>Monitor customer values over time </li></ul>Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  8. 8. Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  9. 9. What is Loyalty? <ul><li>Loyalty is a deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior. </li></ul>Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  10. 10. Top Brands in Customer Loyalty <ul><li>Avis </li></ul><ul><li>Google </li></ul><ul><li>L.L. Bean </li></ul><ul><li>Samsung (mobile phones) </li></ul><ul><li>Yahoo! </li></ul><ul><li>Canon (office copiers) </li></ul><ul><li>Land’s End </li></ul><ul><li>Coors </li></ul><ul><li>Hyatt </li></ul><ul><li>Marriott </li></ul><ul><li>Verizon </li></ul><ul><li>KeySpan Energy </li></ul><ul><li>Miller Genuine Draft </li></ul><ul><li>Amazon </li></ul>Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  11. 11. The Value Proposition Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5- The whole cluster of benefits the company promises to deliver
  12. 12. Raising Customer Expectations Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  13. 13. Measuring Satisfaction Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5- Periodic Surveys Customer Loss Rate Mystery Shoppers Monitor Competitive Performance
  14. 14. J.D. Power Rates Customer Satisfaction Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  15. 15. Single Key Question of Net Promoter “How likely is it that you would recommend this product or service to a friend or colleague?” Use 0-10-point scale 0-6 are Marketers than subtract Detractors 7-8 are deemed Passively satisfied 9-10 are Promoter (Net Promoter Score-NPS) Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  16. 16. Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  17. 17. World class companies used NPS Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  18. 18. <ul><li>Customer Satisfaction </li></ul><ul><li>Customer Loyalty </li></ul><ul><li>Company’s Profit </li></ul>Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  19. 19. What is Quality? Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5- Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.
  20. 20. Conformance V.S. Performance
  21. 21. Maximizing Customer Lifetime Value Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5- Customer Profitability Customer Equity Lifetime Value
  22. 22. Figure 5.3 The 150 – 20 Rule Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  23. 23. Figure 5.4 Customer-Product Profitability Analysis Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  24. 24. Estimating Lifetime Value <ul><li>Annual customer revenue: $500 </li></ul><ul><li>Average number of loyal years: 20 </li></ul><ul><li>Company profit margin: 10 </li></ul><ul><li>Customer lifetime value: $1000 </li></ul>Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  25. 25. What is Customer Relationship Management? <ul><li>CRM is the process of carefully managing detailed information about individual customers and all customer touchpoints to maximize customer loyalty. </li></ul>Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  26. 26. Framework for CRM Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5- Identify prospects and customers Differentiate customers by needs and value to company Interact to improve knowledge Customize for each customer
  27. 27. Harrah’s targets hundreds of segments Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  28. 28. CRM Strategies Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5- Reduce the rate of defection Increase longevity Enhance “share of wallet” Terminate low-profit customers Focus more effort on high-profit customers
  29. 29. Focus on CRM Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  30. 30. Customer Retention <ul><li>Acquisition of customers can cost five times more than retaining current customers. </li></ul><ul><li>The average customer loses 10% of its customers each year. </li></ul><ul><li>A 5% reduction to the customer defection rate can increase profits by 25% to 85%. </li></ul><ul><li>The customer profit rate increases over the life of a retained customer. </li></ul>Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  31. 31. Figure 5.5 The Customer Development Process Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5- Prospects Suspects Disqualified First-time customers Repeat customers Clients Members Partners Ex-customers
  32. 32. Creating Customer Evangelists Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  33. 33. Steps for Creating Customer Evangelists <ul><li>Customer plus-delta </li></ul><ul><li>Napsterize your knowledge </li></ul><ul><li>Build the buzz </li></ul><ul><li>Create community </li></ul><ul><li>Make bite-size chunks </li></ul><ul><li>Create a cause </li></ul>Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  34. 34. Database Key Concepts <ul><li>Customer database </li></ul><ul><li>Database marketing </li></ul><ul><li>Mailing list </li></ul><ul><li>Business database </li></ul><ul><li>Data warehouse </li></ul><ul><li>Data mining </li></ul>Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  35. 35. Using the Database Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5- To identify prospects To target offers To deepen loyalty To reactivate customers To avoid mistakes
  36. 36. Don’t Build a Database When <ul><li>The product is a once-in-a-lifetime purchase </li></ul><ul><li>Customers do not show loyalty </li></ul><ul><li>The unit sale is very small </li></ul><ul><li>The cost of gathering information is too high </li></ul>Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  37. 37. Perils of CRM <ul><li>Implementing CRM before creating a customer strategy </li></ul><ul><li>Rolling out CRM before changing the organization to match </li></ul><ul><li>Assuming more CRM technology is better </li></ul><ul><li>Stalking, not wooing, customers </li></ul>Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-
  38. 38. Marketing Debate Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5- <ul><li>Online vs. Offline Privacy? </li></ul><ul><li>Take a position: </li></ul><ul><li>Privacy is a bigger issue in the </li></ul><ul><li>online world than in the offline world. </li></ul><ul><li>or </li></ul><ul><li>2. Consumers receive more benefit </li></ul><ul><li>than risk from marketers knowing </li></ul><ul><li>their personal information. </li></ul>
  39. 39. Marketing Discussion Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5- <ul><li>Choose a business and show how </li></ul><ul><li>you would go about developing a </li></ul><ul><li>quantitative formulation that captures </li></ul><ul><li>the concept of customer lifetime value. </li></ul>
  40. 40. Brought to You By Hashim Khan IMS University of Peshawar [email_address]

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