Phillip Kevin Lane Kotler • Keller Marketing Management • 14e
Creating Long-term Loyalty Relationships
Discussion Questions 1. What are customer value, satisfaction, and loyalty, and how can companies deliver them? 2. What is the lifetime value of customers, and how can marketers maximize it? 3. How can companies attract and retain the right customers and cultivate strong customer relationships? 4. What are the pros and cons of database marketing? Slide 3 of 34
Customer Value, Satisfaction, and Loyalty Holistic M arketing • Inform • Engage • Energize Slide 4 of 34
Traditional Organization vs. Customer-Oriented Organization Slide 5 of 34
Customer Perceived Value Customer- perceived Value Economic Evaluating Obtaining Functional Using Psychological Disposing Total Customer Total Customer = Benefit Cost Slide 6 of 34
What is Customer Perceived Value? • 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. • CPV= TCB-TCC Slide 7 of 34
Customer- perceived value T otal customer T otal customer benefit cost Determinants Product M onetary benefit cost of Customer Services Time Perceived Value benefit cost Personal Energy benefit cost Image Psychological benefit cost Slide 8 of 34
Value Concepts - Caterpillar Customer Profit Price Value $6,000 $20,000 -0- 5,000 19,000 $1,000 4,000 18,000 2,000 3,000 17,000 3,000 2,000 16,000 4,000 Worth to farmer: 1,000 15,000 5,000 $20,000 -0- 14,000 6,000 Cost to produce: $14,000 Slide 9 of 34
Choice Processes and Implications accompanying services—delivery, training, and maintenance Friends with Lowest purchase salesperson price wins. reliability, durability, performance, and resale value operating expenses Slide 10 of 34
Steps in a Customer Value Analysis • Identify major attributes and benefits that customers value • Assess the qualitative importance of different attributes and benefits • Assess the company’s and competitor’s performances on the different customer values against rated importance • Examine ratings of specific segments • M onitor customer values over time Slide 11 of 34
Customer Loyalty “A deeply held commitment to rebuy or re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior.” -- Oliver Consumers have varying degrees of loyalty to specific brands, stores, and companies
Top Brands in Customer Loyalty • Apple iPhone • Google In Jordan • Clairol • Amazon • Fine • Samsung • Bing • Aramex • M ary Kay • J.Crew • Arab bank • Grey Goose • AT&T Wireless • Nabeel • Clinique • Discover Card • Higeen • Avis • Verizon Wireless • M r chips • Wal-M art • Cheerios • Sha’rawi Slide 13 of 34
Value Proposition Consists of the whole cluster of benefits the company promises to deliver; it is more Core positioning: • Safety than the core positioning of the offering. Other benefits: • Good performance • Design • Environmentally friendly Volvo Fine Slide 14 of 34
Value Proposition • The value proposition is thus a promise about the experience customers can expect from the company’s market offering and their relationship with the supplier. Whether the promise is kept depends on the company’s ability to manage its value delivery system . • The value delivery system includes all the experiences the customer will have on the way to obtaining and using the offering. At the heart of a good value delivery system is a set of core business processes that help deliver distinctive consumer value. Slide 15 of 34
Satisfaction A person’s feelings of pleasure or disappointment that result from comparing a product’s perceived performance to (or outcome) to expectations.
Customer Satisfaction Expectations Customer assessments of product performance depend on many factors, especially the type of loyalty relationship the customer has with the brand. Slide 17 of 34
Customer Expectations If marketers raise expectations too high, the buyer is Previous purchases likely to be disappointed. Friends advice If it sets expectations too M arketers’ / competitors low, it won’t attract enough buyers Expectations Korean automaker Kia found success in the United States by launching low-cost, high-quality cars with enough reliability to offer 10-year, 100,000 mile warranties Slide 18 of 34
M onitoring Satisfaction Influence of Customer Satisfaction M easurement Techniques Customer Complaints Slide 19 of 34
M easurement Techniques Customer Loss Rate Surveys M ystery Shopper Slide 20 of 34
Influence of Customer Satisfaction customer satisfaction is both a goal and a marketing tool Customer satisfaction the Internet provides a tool for consumers to quickly spread both good and bad word of mouth Speed of communication Slide 21 of 34
Customer Complaints 54% - 70% 5% Buy again if resolved Tell 5 people Complain 95% If resolved quickly 25% Dissatisfied 95% Tell 11 people Stop buying Dallas travel Complaints Slide 22 of 34
Product and Service Quality Performance Conformance Quality Satisfaction Profitability Slide 23 of 34
Satisfaction and Quality • Quality is defined as “ fitness for use,” “conformance to requirements,” and “ freedom from variation.” • ASQ: Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. A company that satisfies most of its customers’ needs most of the time is called a quality company, but we need to distinguish between conformance quality and performance quality (or grade). Slide 24 of 34
Satisfaction and Quality • A Lexus provides higher performance quality than a Hyundai: The Lexus rides smoother, goes faster, and lasts longer. Y et both a Lexus and a Hyundai deliver the same conformance quality if all the units deliver their respective promised quality. Slide 25 of 34
M aximizing Customer Lifetime Value 80–20 rule 20% of 80% of Customers Profits 80% Customers Slide 26 of 34
Customer Profitability Customer Profitability Analysis Profitable شﯾﺟﻟا ضرﻋو تﻻﺎﺻﺗﻻا يرﺻﻣﻟا نطاوﻣﻟاو تﻻﺎﺻﺗﻻا ندرﻻا ﻲﻓ Customer Lifetime Value Unprofitable Slide 27 of 34
Customer Lifetime Value Slide 28 of 34
A Profitable Customer A person, household, or company that over time yields a revenue stream exceeding by an acceptable amount the company’s cost stream for attracting, selling, and serving that customer.
Customer-Product Profitability Analysis Slide 30 of 34
Cultivating Customer Relationships Customer Information • Differentiate • Customize • Personalize • Share Slide 31 of 34
Customer Relationship M anagement (CRM ) Personalizing M arketing Customer Empowerment Customer Reviews & Recommendations Slide 32 of 34
Customer Relationship M anagement (CRM ) • CRM is the process of carefully managing detailed information about individual customers and all customer “ touch points” to maximize loyalty. • For a hotel, the touch points include reservations, check-in and checkout, frequent- stay programs, room service, business services, exercise facilities, laundry service, and restaurants. Slide 33 of 34
Personalizing M arketing knew their customers by name Personalizing marketing is about making sure the brand and its marketing are as relevant as possible to as many customers as possible—a challenge, given that no two customers are identical. Slide 34 of 34
One-to-One M arketing Identify prospects Differentiate and customers customers Interact with Customize each customer Slide 35 of 34
Customer Empowerment “ The power is with the consumer,” Pantene and selling wigs donation for cancer patients M arketers are helping consumers become evangelists for brands by providing them resources and Doritos 30-second short films opportunities to demonstrate their Brand Evangelists passion. Slide 36 of 34
Customer Reviews/ Recommendations Create Buzz Negative reviews Customer ratings Slide 37 of 34
Customer Retention Acquiring new customers costs 5x more than retaining current customers The average company loses 10% Of its customers yearly Reducing customer defections by 5% can increase profits from 25% to 85% Slide 38 of 34
Attracting and Retaining Customers M anage customer base Reduce Defections 1. Define and measure 2. Determine causes 3. Compare CL V to costs Retention Dynamics Slide 39 of 34
The M arketing Funnel Slide 40 of 34
Building Loyalty Interact with customers Create institutional ties Develop loyalty programs Slide 41 of 34
Databases & Database M arketing Customer databases • Name, address, telephone # • Purchase history • Demographics • Psychographics • M ediagraphics Data mining Data Warehouses Slide 42 of 34
QZ 2 • CH 3,4 • Wednesday 28 / 3 Slide 43 of 34
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