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Customer Value Satsifaction & Loyalty.ppt
- 1. A FRAMEWORK for MARKETING MANAGEMENT Kotler Keller Chapter 4 Creating Customer Value, Satisfaction, and Loyalty
- 2. 4-2 Determining Customer Value and Satisfaction Customer perceived value (CPV) is the difference between the prospective customers evaluation of all the benefits and costs of an offering and the perceived alternatives
- 3. Total Customer Value Is perceived monetary value of bundle of economic, functional, and psychological benefits customers expect from a given market offering. Total Customer Cost Is the bundle of costs customers expect to incur in evaluating, obtaining, using and disposing of given market offering, including monetary, time, energy and psychic costs. 4-3
- 4. 4-4 Loyalty Loyalty is a deeply held commitment to rebuy a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior
- 5. Delivering Profitable Value The key to generate high customer loyalty is to deliver high customer value. A company must design competitively superior value proposition aimed at a specific market segment, backed by a superior value delivery system. 4-5
- 6. The Value Proposition It consists of whole cluster of benefits the company promises to deliver. It is more than core positioning of offering. For example Volvo core positioning has been safety, but buyer is promised more than just a safe car, other benefits include a long lasting car, good service, and a long warranty period. The Value Delivery System All the experiences the customer will have on the way to obtaining and using the offering. 4-6
- 7. 4-7 Satisfaction Satisfaction is a persons feelings of pleasure or disappointment resulting from comparing a products perceived performance in relation to his or her expectations
- 8. Total Customer Satisfaction If performance fall short of expectation the customer is dissatisfied. If the performance matches the expectation the customer is satisfied. If the performance exceeds expectations the customer is highly satisfied or delighted. 4-8
- 9. Customer Expectations How do buyers form their expectations? From past buying experience, friends, advice and marketers & competitors information and promises. If company sets expectations too high, the buyer is likely to be disappointed. If the company sets expectations too low, it wont attract enough buyers. 4-9
- 10. Customer Expectations Some of today's most successful companies are raising expectations and delivering performance to match. When General Motors Launched the Saturn Car division, it changed the whole buyer seller relationship with a New Deal for car buyers. There would be a fixed price, a 30 day guarantee or money back, and salespeople on salary not on commission. Look at high satisfaction can do. 4-10
- 11. Measuring Satisfaction IBM tracks how satisfied customers are with each IBM salesperson they encounter & makes this a factor in each salespersons compensation. Highly satisfied customer stays loyal longer, buys more as company introduces new products & upgrade existing products, talks favorable about company & its products, pays less attention to competing brands & is less sensitive to price, offers product or service ideas to company. 4-11
- 12. Measuring Satisfaction A number of methods exit to measure customer satisfaction. Periodic Surveys Customer loss rate For this survey to be successful it is important that company ask the right question. In addition to tracking customer value expectations & satisfaction companies need to monitor their competitors performance in these areas. 4-12
- 13. 4-13 Product and Service 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
- 14. 4-14 Total Quality Management TQM is an organization-wide approach to continuously improving the quality of all the organizations processes, products, and services
- 15. Customer Equity (CRM) The aim of customer relationship management (CRM) is to produce high customer equity. Customer equity is the total of the discounted lifetime values of all the firms customers. Lemon distinguish three drivers of customer equity. 4-15
- 16. 4-16 Drivers of Customer Equity Value Equity: Is customer objective assessment of an offering based on perception of its benefits relative to its costs. The sub drivers of value equity are quality, price & convenience. An airline passenger might define quality as seat width, a hotel guest might define quality as room size.
- 17. Brand Equity Is the customers subjective and intangible assessment of the brand , above and beyond its perceived value. The sub drivers of brand equity are customer brand awareness, customer attitude toward brand & customer perception of brand ethics. Companies use advertising, public relations and other communication tools to affect these sub drivers. 4-17
- 18. Relationship Equity Is customers tendency to stick with brand above & beyond objective and subjective assessment of its worth. Sub drivers include loyalty programs, special recognition and treatment programs, community building programs & knowledge building programs. 4-18
- 19. 4-19 Framework for CRM Identify prospects and customers Differentiate customers by needs and value to company Interact to improve knowledge Customize for each customer
- 20. 4-20 Improving the Value of Companys Customer Base Reduce the rate of defection Increase longevity Enhance customer growth potential Terminate low-profit customers Focus more effort on high-profit customers
- 21. 4-21 The Customer-Development Process Suspects Prospects First-time customers Repeat customers Clients Member Partners
- 22. 4-22 Building Loyalty Basic: The salesperson simply sells product. Reactive: Salesperson sells the product & encourage customer to call if he has questions, comments or complaints. Accountable: Salespersons phones to check whether the product is meeting expectations. Proactive: Salesperson contact customer from time to time with suggestions about improved product uses or new product. Partnership: Company works with its customers to help improve their performance. General Electric has stationed engineers at large sides to help them produce more power.
- 23. 4-23 Reducing Customer Defection Define and measure retention rate Distinguish causes of customer attrition Estimate profit loss associated with loss of customers Assess cost to reduce defection rate Gather customer feedback
- 24. 4-24 Forming Strong Customer Bonds Add financial benefits Add social benefits Add structural ties