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CHAPTER 4 CREATING CUSTOMER VALUES AND CUSTOMER RELATIONSHIP BY D.SANTOSH NEERAJ MAKIJA SWAGAT KUMAR DASH ABHINAV RAVI SHANKER NIKITA SIMMY S NIGAM Indian Institute of Management Raipur 1

Conducting Market Research

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CHAPTER 4 CREATING CUSTOMER VALUES AND CUSTOMER RELATIONSHIP

CHAPTER 4CREATING CUSTOMER VALUES AND CUSTOMER RELATIONSHIPBYD.SANTOSHNEERAJ MAKIJASWAGAT KUMAR DASHABHINAVRAVI SHANKERNIKITASIMMY S NIGAMIndian Institute of Management Raipur1Indian Institute of Management Raipur2

Indian Institute of Management Raipur3Customer perceived Value = Cost of an offering benefits achieved through offering Total customer benefit = monetary value of economic, functional and psychological benefits of offeringTotal customer cost = cost (money, time, energy, etc) incurred by the customer for procuring, maintaining and disposing the offering Eg: Experience of Buying, Maintaining and selling a car Indian Institute of Management Raipur4TOTAL CUSTOMER SATISFACTIONMONITORING SATISFACTIONHiring mystery shoppers

Periodic surveys

Customer complaint monitoringIndian Institute of Management Raipur5Customer Satisfaction & Net Promoter Score(NPS) Indian Institute of Management Raipur6Would Customer recommend the product to his friend or colleague depends upon how customers experience has been.Customers are asked to rate the likelihood to recommend the product on a 0-10 point scale.0-6 range customers (detractors) are subtracted from 9-10 customers (promoters).

Indian Institute of Management Raipur7Impact of QualityProduct and Service QualityIndian Institute of Management Raipur8Satisfaction hugely depends upon quality.Quality - fitness for use. - conformance to requirements. - freedom variation.

Indian Institute of Management Raipur9Customer ProfitabilityA profitable customer is that person or household which over the time yields a revenue stream exceeding the companys cost stream for serving the customer by an acceptable amount.Stress is on the lifetime stream of revenue & cost and not on profit from a particular transaction.Indian Institute of Management Raipur10Customer Lifetime Value80:20 Philosophy Tool to maximize profitabilityCLV = Expected revenue Expected total cost

Indian Institute of Management Raipur11Customer Profitability analysisBy Accounting based costing (ABC)ABC = Revenue from customer All costs incurredIndian Institute of Management Raipur12Customer Relationship ManagementFMCG marketers for rural relationsCustomer touch point

Indian Institute of Management Raipur13Personalizing marketingPoor effectiveness in the mails from GE plastics to different customersPoor Customization of computer orderingIndian Institute of Management Raipur14Effect of Social mediaHIPPO Twitter campaign by Parle Agro : To fulfill stock at retail shops

Ezone Twitter campaign : To improve product, promotions, displaysIndian Institute of Management Raipur15Building Relations with Rural Consumers

Lack of Technological Infrastructure, Markets should approach, take interest and build relations with Rural consumersEg SBI started DBI Tiny scheme with 0 balance with minimum deposit mount of Rs 5 through which SBI could evolve opportunities to offer loans and insurance to same customers

Indian Institute of Management Raipur16E-commercialsEg- dominos Has introduced to build your owm pizza so that customer can choose size, sauce and toppings etc. So that system improved accuracy increase repeat visit and boosted revenue. Indian Institute of Management Raipur17PersonalisationPermission marketing- By respecting customer wishes and sending messages only when they express a willingness to become more involve with the brand One to one marketingIdentify your customerDifferentiate customer on the basis of neds and valueInteractionCustomisation

Indian Institute of Management Raipur18Empowerment review and recommendationPantene had created a campaign to encourage women to cut their hair and donate the clippings to make wigs for cancer patients.Indian Institute of Management Raipur19Attracting and retaining customers

Reducing defectionRetention dynamicsManaging customer baseBuilding loyalty

Indian Institute of Management Raipur20DATABASES: Include information related to customers(Names, address, transactions, preferneces etc)DATABASE MARKETING: Utilization of database to analyze customers and their preferences and offer products accordinglyExample: Hotels, Restaurants can offer services based on the customers previous preferencesCUSTOMER DATABASES AND DATABASE MARKETINGIndian Institute of Management Raipur21Data collected is organized and stored in Data Warehouse for further analysisData Mining involves extracting useful information from a huge mass of dataDATA WAREHOUSES AND DATA MININGIndian Institute of Management Raipur22Identify prospects and converting them into customersCustomization of offers based on customers preferencesDeepen Customer loyalty by remembering preferences and offering gifts, discounts etcReactivate Customer purchase through automated birthday, anniversary etc mailsAvoid serious customer mistakes- Wrong actions for wrong customers( Like levy of penalties on influential customers)

USE OF DATABASESIndian Institute of Management Raipur23Unsuitable situations like once in a lifetime product, loyal customers, or when the cost of gathering information is highMaintenance of the hardware and software infrastructure is expensiveDifficult to make everyone customer oriented and use of available informationNot all customers want a relationship with the companyAssumptions behind CRM may not always be true

Downside of Database marketing and CRMIndian Institute of Management Raipur24THANK YOU!!