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Kotlermm13 chapter 05
The document discusses how companies can create value, satisfaction, and loyalty for customers. It defines concepts like customer perceived value, quality, satisfaction, and lifetime value. It also discusses how companies can implement customer relationship management strategies to maximize customer retention, acquisition, and profitability through databases and targeted communications.
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Kotlermm13 chapter 05
- 1. Creating Customer Value, Satisfaction, andLoyalty Marketing Management, 13th ed 5
- 2. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Chapter Questions ā¢ What are customer value, satisfaction, and loyalty, and how can companies deliver them? ā¢ What is the lifetime value of customers? ā¢ How can companies cultivate strong customer relationships? ā¢ How can companies both attract and retain customers? ā¢ What is database marketing?
- 3. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Ritz Carlton - Famous for its Exceptional Service
- 4. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Figure 5.1 Organizational Charts
- 5. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall What is Customer Perceived Value? Customer perceived value is the difference between the prospective customerās evaluation of all the benefits and all the costs of an offering and the perceived alternatives.
- 6. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Figure 5.2 Determinants of Customer Perceived Value Image benefit Psychological cost Personal benefit Energy cost Services benefit Time cost Product benefit Monetary cost Total customer benefit Total customer cost
- 7. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Steps in a Customer Value Analysis ā¢ Identify major attributes and benefits that customers value ā¢ Assess the qualitative importance of different attributes and benefits ā¢ Assess the companyās and competitorās performances on the different customer values against rated importance ā¢ Examine ratings of specific segments ā¢ Monitor customer values over time
- 8. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall What is Loyalty? 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.
- 9. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Top Brands in Customer Loyalty ā¢ Avis ā¢ Google ā¢ L.L. Bean ā¢ Samsung (mobile phones) ā¢ Yahoo! ā¢ Canon (office copiers) ā¢ Landās End ā¢ Coors ā¢ Hyatt ā¢ Marriott ā¢ Verizon ā¢ KeySpan Energy ā¢ Miller Genuine Draft ā¢ Amazon
- 10. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall The Value Proposition The whole cluster of benefits the company promises to deliver
- 11. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Raising Customer Expectations
- 12. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Measuring Satisfaction Periodic SurveysPeriodic Surveys Customer Loss RateCustomer Loss Rate Mystery ShoppersMystery Shoppers Monitor Competitive Performance Monitor Competitive Performance
- 13. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall J.D. Power Rates Customer Satisfaction
- 14. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall What is Quality? Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.
- 15. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Maximizing Customer Lifetime Value Customer Profitability Customer Equity Lifetime Value
- 16. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Figure 5.3 The 150ā20 Rule
- 17. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Figure 5.4 Customer-Product Profitability Analysis
- 18. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Estimating Lifetime Value ā¢ Annual customer revenue: $500 ā¢ Average number of loyal years: 20 ā¢ Company profit margin: 10 ā¢ Customer lifetime value: $1000
- 19. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall What is Customer Relationship Management? CRM is the process of carefully managing detailed information about individual customers and all customer touchpoints to maximize customer loyalty.
- 20. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Framework for CRM Identify prospects and customers Differentiate customers by needs and value to company Interact to improve knowledge Customize for each customer
- 21. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Harrahās targets hundreds of segments
- 22. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall CRM Strategies Reduce the rate of defectionReduce the rate of defection Increase longevityIncrease longevity Enhance āshare of walletāEnhance āshare of walletā Terminate low-profit customers Terminate low-profit customers Focus more effort on high-profit customers Focus more effort on high-profit customers
- 23. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Focus on CRM
- 24. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Customer Retention ā¢ Acquisition of customers can cost five times more than retaining current customers. ā¢ The average customer loses 10% of its customers each year. ā¢ A 5% reduction to the customer defection rate can increase profits by 25% to 85%. ā¢ The customer profit rate increases over the life of a retained customer.
- 25. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Figure 5.5 The Customer Development Process Prospects Suspects Disqualified First-time customers Repeat customers Clients Members Partners Ex-customers
- 26. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Creating Customer Evangelists
- 27. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Steps for Creating Customer Evangelists ā¢ Customer plus-delta ā¢ Napsterize your knowledge ā¢ Build the buzz ā¢ Create community ā¢ Make bite-size chunks ā¢ Create a cause
- 28. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Database Key Concepts ā¢ Customer database ā¢ Database marketing ā¢ Mailing list ā¢ Business database ā¢ Data warehouse ā¢ Data mining
- 29. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Using the Database To identify prospectsTo identify prospects To target offersTo target offers To deepen loyaltyTo deepen loyalty To reactivate customersTo reactivate customers To avoid mistakesTo avoid mistakes
- 30. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Donāt Build a Database When ā¢ The product is a once-in-a-lifetime purchase ā¢ Customers do not show loyalty ā¢ The unit sale is very small ā¢ The cost of gathering information is too high
- 31. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Perils of CRM ā¢ Implementing CRM before creating a customer strategy ā¢ Rolling out CRM before changing the organization to match ā¢ Assuming more CRM technology is better ā¢ Stalking, not wooing, customers
- 32. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Marketing Debate ļ¼ Online vs. Offline Privacy? Take a position: 1. Privacy is a bigger issue in the online world than in the offline world. or 2. Consumers receive more benefit than risk from marketers knowing their personal information.
- 33. Copyright Ā© 2009Pearson Education, Inc. Publishing as Prentice Hall Marketing Discussion ļ¼ Choose a business and show how you would go about developing a quantitative formulation that captures the concept of customer lifetime value.