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Creating customer value, Satisfaction and Loyalty

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value, Satisfaction and Loyalty

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Creating customer value, Satisfaction and Loyalty

  1. 1. MARKETING MANAGEMENT 14th edition 5 Creating Customer Value, Satisfaction, and Loyalty Kotler Keller
  2. 2. CHP: 1&5-2 Value and Satisfaction •Perceived Value – The customer’s evaluation of the difference between benefits and costs. – Customers often do not judge values and costs accurately or objectively. •Customer Satisfaction – Product’s perceived performance relative to customer’s expectations.
  3. 3. CHP: 1&5-3 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
  4. 4. Determinants of Customer-Delivered CHP: 1&5-4 Value Customer-delivered value Total customer value Total customer cost Product value Monetary cost Personal value Energy cost
  5. 5. CHP: 1&5-5 Loyalty 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.
  6. 6. CHP: 1&5-6 The Value Proposition The whole cluster of benefits the company promises to deliver
  7. 7. CHP: 1&5-7 Measuring Satisfaction PPeerriiooddiicc SSuurrvveeyyss CCuussttoommeerr LLoossss RRaattee MMyysstteerryy SShhooppppeerrss Monitor competitive performance
  8. 8. Product and Service Quality CHP: 1&5-8 Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.
  9. 9. Total Quality Management CHP: 1&5-9 TQM is an organization-wide approach to continuously improving the quality of all the organization’s processes, products, and services.
  10. 10. Maximizing Customer Lifetime Value CHP: 1&5-10 Customer Profitability Customer Equity Lifetime Value
  11. 11. Customer-Product Profitability Analysis CHP: 1&5-11
  12. 12. CHP: 1&5-12 Framework for CRM Identify prospects and customers Differentiate customers by needs and value to company Interact to improve knowledge Customize for each customer
  13. 13. CHP: 1&5-13 CRM Strategies Reduce the rraattee ooff ddeeffeeccttiioonn IInnccrreeaassee lloonnggeevviittyy EEnnhhaannccee ““sshhaarree ooff wwaalllleett”” Terminate low-profit customers Focus more effort on high-profit customers
  14. 14. Mass vs. One-to-One Marketing Mass • Average customer • Customer anonymity • Standard product • Mass production • Mass distribution • Mass advertising • One-way message • Economies of scale One-to-One • Individual customer • Customer profile • Customized market offering • Customized production • Economies of scope • Share of customer CHP: 1&5-14
  15. 15. CHP: 1&5-15 Customer Retention • Acquisition of customers can cost 5 times more than retaining current customers. • The average company loses 10% of its customers each year. • A 5% reduction to the customer defection rate can increase profits by 25% to 85%. • The customer profit rate increases over the life of a retained customer.
  16. 16. The Marketing Funnel CHP: 1&5-16
  17. 17. The Customer-Development CHP: 1&5-17 Process Suspects Prospects Disqualified First-time customers Repeat customers Clients Members Partners Ex-customers
  18. 18. CHP: 1&5-18 Building Loyalty Partnership Proactive Accountable Reactive Basic
  19. 19. Forming Strong Customer Bonds CHP: 1&5-19 Add financial benefits Add social benefits Add structural ties

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