This document discusses customer value, satisfaction, and relationship management. It defines customer perceived value as the difference between total customer value and total customer cost. Total customer value is the benefits customers expect, while total customer cost is what they expect to pay. Customer satisfaction depends on performance meeting or exceeding expectations. Companies can increase value by improving benefits, lowering costs, and managing the customer relationship through collecting detailed customer data and ensuring positive touchpoints across departments. The goal is to maximize customer loyalty and equity.

1. CUSTOMER VALUE & SATISFACTION
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Course: MBA-I
Subject: MARKETING MANAGEMENT - 1
Unit: I

2. Defining Customer Value and
Satisfaction
 Customer perceived value (CPV) : The difference between
the prospective customer‘s evaluation of all benefits and all
the cost of an offering and the perceived alternatives.
 Customer perceived value (CPV) =
Total Customer Value ( TCV)-Total Customer Cost (TCC)
 Total Customer Value : the perceived monetary value of
the bundle of economic, functional and psychological
benefits customer expect from a given market offering.
 Total Customer Cost : the bundle of costs customers
expect to incur in evaluating, obtaining, using and
disposing of the given market offering.

3. Determinants of Customer Value

4.  Based on this decision making theory,
there are three (3) ways to making
success in selling to the buyer :
1. Increasing total customer value by improving
product, services, personel, and/or image benefits.
2. Reducing the buyer’s non monetary cost by
reducing the time, energy, and psychic cost.
3. Reducing it’s product monetary cost to the buyer.

5. Total Customer Satisfaction
 The customer satisfaction is depend
on the offer’s performance in relation
to the customer’s expectation.
 Satisfaction : a person’s feelings of
pleasure or dissappoinment resulting
from comparing a product’s perceived
performance (outcome) in relation to
his or her expectations.

6.  If P < E Dissatisfied
 If P = E Satisfied
 If P > E Highly
Satisfied/Delighted
P=Performance
E=Expectation

8.  The important key to generating high customer loyalty is
delivering high customer value.
 A company must design a competitively superior value
proposition aimed at a specific market segment (Michael
Lanning).
 The value proposition : consits of whole cluster of
benefits the company promises to deliver ; it is more
than the core positioning of the offering.

9.  In a hypercompetitive economy a company can
only win the competition by creating and
delivering superior values.
 This involves 5 capabilities :
1. Understanding customer value
2. Creating customer value
3. Delivering customer value
4. Capturing customer value
5. Sustaining customer value
 To succeed, a company needs to use the
concepts of a value chain and a value
delivery network.

10. Value Chain
 Value chain: a tool for identifying was to create more customer
value (Porter,M).
 Every firm is a synthesis of activities that are performed to
design, produce, market, delivery and support its products.
 The value chains identifies nine strategically relevant activities
that create value and cost in a specific business.
 These nine value creating activities consists of five primary
activities and four support activities.
 The primary activities represent the sequence of bringing
materials into the business (inbound logistics), converting them
into final products (operations), shipping out final products
(outbond lohistics), marketing , and servicing them.

11.  The support activities: procurement, technology, human
resource management, and firm infrastructure are handled in
certain specialized departments, but not only there. For
example: several departments may do some procurements and
hiring of people.
 The firm task is to examine its cost and performance in each
value creating activity and to look for ways to improve it.
 The firm should estimate its competitors cost and performance
as benchmarks against which to compare its owns cost and
performances.
 The firm success depends not only on how well each
departments performs its works, but also on how well the
various departmental activities are coordinated. Too often,
company departments act to maximize their interests. For
example: a credit department may take a long time to check
prospective customers’credit so as not to incur bad debts,
mean while the customer waits and the sales person is
frustrated.

12. Firm Infrastucture
Human Resources Management
Technology Development
Procurement
In
bound
logistics
Operatio
n
Out
bound
logistics
Marketi
ng &
Sales
Service
Margin
Margin
S
A
V

13. Competition is
Between networks,
not Companies.
the winner is the
company with
the better network
DuPont
(Fibers)
Miliken
(Fabric)
Levi’s
(Apparel)
Sears
(Retail)
Customer

14. Attracting and Retaining
Customers
 Customer Relationship Management
 The process of managing detailed
information about individual customers and
carefully managing all the customer “touch
points” with the aim of maximizing
customer loyalty.
 The aim of CRM : is to produce high
customer equity ( value equity, brand
equity and relationship equity).

15. 1. Get cross-departmental participation in planning and
managing the customer satisfaction and retention
process.
2. Integrate the voice of customers in all business
decisions.
3. Organize and make accesible a database of information
on individual customer needs, preferences, contacts,
purchase frequency and satisfaction.
4. Make it easy for customers to reach approriate company
personel and express their needs, perceptions, and
complaints.
5. Run award programs recognizing outstanding
employees.

16. References & Sources
 wps.pearsoncustom.com/wps/media/obj
ects/2426/.../MKT101_Ch04.pdf
 en.wikipedia.org/wiki/Customer_satisf
action
 Philip Kotler (Chapter-16)
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