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B.Com 07-11, Lecture 4

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B.Com 07-11, Lecture 4

  1. 1. 17 September 2009
  2. 2. Outlines <ul><li>Relationship marketing </li></ul><ul><li>Customer relationship management </li></ul><ul><li>Changing nature of customer </li></ul><ul><li>Capturing value from customer </li></ul><ul><li>The marketing landscape </li></ul>
  3. 3. Relationship Marketing <ul><li>Development and maintenance of long term cost effective exchange relationship with customer , suppliers and other partners of organization. </li></ul><ul><li>Long tem commitment </li></ul><ul><li>Customer focus </li></ul><ul><li>Competitive advantage </li></ul>
  4. 4. Customer Relationship Management (CRM) <ul><li>The overall process of building and maintaining profitable customer relationship by delivering superior customer value and satisfaction . </li></ul><ul><li>It deals with </li></ul><ul><li>Acquiring </li></ul><ul><li>Retaining </li></ul><ul><li>Growing customer </li></ul>
  5. 5. CRM cont … .. <ul><li>Customer Value </li></ul><ul><li>The difference between the total customer value and total cost. </li></ul><ul><li>Customer Satisfaction </li></ul><ul><li>The extend to which product perceived performance matches a buyer expectation. </li></ul><ul><li>Performance < Expectation dissatisfied </li></ul><ul><li>Performance = Expectation satisfied </li></ul><ul><li>Performance > Expectation highly satisfied </li></ul>
  6. 6. Customer Relationship Levels and Tools <ul><li>Companies can build customer relationship at many levels depending on nature of target market. </li></ul><ul><li>With low margin customer </li></ul><ul><li>Through sales promotion, advertisement contact phone number and websites. </li></ul><ul><li>With high level margin customer </li></ul><ul><li>Develop customer loyalty and retention program beyond offering high level value and satisfaction. They use special tools. </li></ul>
  7. 7. Changing Nature Of Customer Relationship <ul><li>Relating with more carefully selected customer </li></ul><ul><li>Relating for long term </li></ul><ul><li>Relating directly </li></ul><ul><li>Partner relationship management </li></ul><ul><li>Partners inside the company </li></ul><ul><li>Partners outside the company </li></ul>
  8. 8. Relating With More Carefully Selected Customer <ul><li>Most marketers realize that they do not want relationship with every customer instead companies now are targeting fewer more profitable customer. </li></ul><ul><li>They assess value of customer to firm (Selective Relationship Marketing) </li></ul><ul><li>Customer profitability analysis. </li></ul><ul><li>At the same time companies are finding the new ways to deliver more value to customer. </li></ul>
  9. 9. Relating For Long Term <ul><li>Today companies are going beyond designing strategies to attract new customer and create transactions with them, they are using CRM to attract, retain and build profitable long term relationship. </li></ul><ul><li>New view of Marketing is the art and science of finding, retaining and growing profitable customer. </li></ul>
  10. 10. Why Companies Emphasis This <ul><li>Increase in competition </li></ul><ul><li>Overcapacity in many industries </li></ul><ul><li>Increase in number of sellers </li></ul><ul><li>On average it cost 5 to 10 times as much to attract a new customer as it does to keep a current customer satisfied. </li></ul>
  11. 11. Relating directly <ul><li>Many companies are also connecting more directly. </li></ul><ul><li>Today customer can buy virtually any product without going to store through </li></ul><ul><li>Telephone </li></ul><ul><li>Mail order </li></ul><ul><li>Online using web </li></ul><ul><li>Business purchasing agent routinely shop on web for items ranging from standard office supplies to high priced equipment. </li></ul>
  12. 12. Partner Relationship Management <ul><li>Marketers realize that they cannot they cannot go alone. </li></ul><ul><li>They must work with variety of marketing partners in addition to being good at CRM They also must good in Partners relationship management. </li></ul><ul><li>“ Working closely with partners in other company departments and outside the company to jointly bring greater value to customer ” </li></ul>
  13. 13. Partners Inside Company <ul><li>Old Thinking </li></ul><ul><li>Marketing is done only by marketing, sales and customer support people. </li></ul><ul><li>New Thinking </li></ul><ul><li>Every department can interact with customer and today all departments linking together to create customer value. </li></ul><ul><li>Company is unable to obtain its long term objective until its all departments work together. </li></ul>
  14. 14. Partners Outside The Company <ul><li>How marketers connect with supplier, channel partners and competitors. </li></ul><ul><li>Channel partners are </li></ul><ul><li>Distributors </li></ul><ul><li>Wholesaler </li></ul><ul><li>Retailer </li></ul><ul><li>Today suppliers are not treated as venders and distributors are not as customers. They all treated as partners in delivering customer value. </li></ul>
  15. 15. Capturing value from customer <ul><li>Creating customer loyalty and retention </li></ul><ul><li>Growing share of customer </li></ul><ul><li>Building customer equity </li></ul><ul><li>Building right relationship with right customer </li></ul>
  16. 16. Creating Customer Loyalty And Retention <ul><li>Customer lifetime value </li></ul><ul><li>“ The value of the entire stream of purchases that the customer would make over a life time. ” </li></ul><ul><li>Highly satisfied customer buy again and also tell other about the product. </li></ul><ul><li>Companies realize that losing a customer means losing more than a single customer. In means losing the stream of purchases that he would make over a life time. </li></ul>
  17. 17. Growing Customer Share <ul><li>Share of customer </li></ul><ul><li>The portion of the customer ’ s purchasing that a customer gets in its product categories. </li></ul><ul><li>Market share </li></ul><ul><li>The % of target market that company is capturing in the industry. </li></ul><ul><li>Marketers spend less time in thinking to increase market share and spend more time to increase share of customer by </li></ul><ul><li>Offering greater value </li></ul><ul><li>Cross selling and up selling </li></ul>
  18. 18. Building Customer Equity <ul><li>“ The total combined customer life time value of all the company ’ s customers. ” </li></ul><ul><li>This is a better measures of performance than current sale and market share. </li></ul>
  19. 19. Building Right Relationship With Right Customer <ul><li>Customers are assets and need to be managed and maximized, but not all customer or even not all loyal customer </li></ul><ul><li>Some loyal customer can be unprofitable </li></ul><ul><li>Some disloyal customer can be profitable </li></ul><ul><li>Company can classify customer according to the potential profitability and loyalty and manage relationship accordingly. </li></ul>
  20. 20. Building Right Relationship With Right Customer High profitability Low profitability profitability Loyalty Short term customer Long term customer Butterflies Good fit between company’s offering and customer’s need: high profit potential True friends Good fit between Company’s offering and Customer need: highest profit potential Strangers Little fit between Company’s offering and Customer’s need: lowest Profit potential Barnacles limited fit between Company’s offering and Customer need: low profit potential
  21. 21. The new Marketing Landscape <ul><li>The new Digital age </li></ul><ul><li>Internet </li></ul><ul><li>Globalization </li></ul><ul><li>Call for more ethics and social Responsibilities </li></ul>

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