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Creating Customer Value, Satisfaction,
and Loyalty
5
What are customer value, satisfaction, and loyalty,
and how can companies deliver them? What is the lifetime value of customers? How can companies cultivate strong customer
relationships? How can companies both attract and retain
customers? What is database marketing?
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 5-2
Chapter Questions
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 5-4
Ritz Carlton - Famous for its Exceptional Service
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 5-5
Figure 5.1 Organizational Charts
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.
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 5-6
What is Customer Perceived Value?
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 5-8
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
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 Monitor customer values over time
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 5-9
Steps in a Customer Value Analysis
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.
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 5-10
What is Loyalty?
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 5-11
Top Brands in Customer Loyalty
Avis Google L.L. Bean Samsung (mobile
phones) Yahoo! Canon (office
copiers)
Land’s End Coors Hyatt Marriott Verizon KeySpan Energy Miller Genuine Draft Amazon
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 5-12
The Value Proposition
The whole cluster of benefits the
company promises to deliver
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 5-13
Measuring SatisfactionPeriodic SurveysPeriodic Surveys
Customer Loss RateCustomer Loss Rate
Mystery ShoppersMystery Shoppers
Monitor Competitive Performance
Monitor Competitive Performance
What is Quality?
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 5-14
Quality is the totality of features andcharacteristics of a product or
service that bear on its ability to satisfy
stated or implied needs.
CRM is the process of carefully managing
detailed information about individual customers and all customer touchpoints to
maximize customer loyalty.
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 5-15
What is Customer Relationship Management?
Framework for CRM
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 5-16
Identify prospects and customers
Differentiate customers by needs and value to company
Interact to improve knowledge
Customize for each customer
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 5-17
CRM StrategiesReduce the rate of
defectionReduce the rate of
defection
Increase longevityIncrease longevity
Enhance “share of wallet”Enhance “share of wallet”
Terminate low-profit customers
Terminate low-profit customers
Focus more effort on high-profit customersFocus more effort on high-profit customers
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 5-18
Focus on
CRM
Acquisition of customers can cost five
times more than retaining current customers.
The average customer loses 10% of its customers each year.
A 5% reduction to the customer defection rate can increase profits by 25% to 85%.
The customer profit rate increases over the life of a retained customer.
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 5-19
Customer Retention
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 5-20
Database Key Concepts
Customer database
Database marketing
Mailing list
Business database
Data warehouse
Data mining
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 5-21
Using the DatabaseTo identify prospectsTo identify prospects
To target offersTo target offers
To deepen loyaltyTo deepen loyalty
To reactivate customersTo reactivate customers
To avoid mistakesTo avoid mistakes
Analyzing Consumer
Markets and
Buyer Behavior
■ How do cultural, social, personal, and
psychological factors influence consumer buying behavior?
■ How does the consumer make a purchasing decision?
We will address the following questions:
Cultural Factors Influencing Buyer Behavior
- Culture
- Subculture
- Social class
HOW AND WHY CONSUMERS BUY
Culture. Culture is the most fundamental determinant of a person’s wants and behavior.
Subculture. Each culture consists of smaller subcultures that provide more specific identification and socialization for their members.
Social class. Social classes are relatively homogeneous and enduring divisions in a society.
Cultural Factors Influencing Buyer Behavior
Culture is the fundamental determinant of a
person’s wants and behaviors acquired through socialization processes with family
and other key institutions.
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 6-26
What is Culture?
Nationalities Religions Racial groups Geographic regions
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 6-27
Subcultures
The average American:
chews 300 sticks of gum a year goes to the movies 9 times a year takes 4 trips per year attends a sporting event 7 times each year
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 6-28
Fast Facts About American Culture
Reference Groups
Family
Roles and Statuses
Social Factors Influencing Buyer Behavior
Reference Groups; consist of all of the groups that
have a direct (face-to-face) or indirect influence on a person’s attitudes or behavior. Groups that have a direct influence on a person are called membership groups. Some primary membership groups are family, friends, neighbors, and co-workers,
Social Factors Influencing Buyer Behavior
The family is the most important
consumer-buying organization in society, and it has been researched extensively.
Marketers are interested in the roles and relative influence of the husband, wife, and children in the purchase of a large variety of products and services. These roles vary widely in different cultures and social classes.
Family
A person participates in many groups, such as
family, clubs, or organizations.
In general, people choose products that communicate their role and status in society.
Roles and Statuses
Görev: Mission“Çarşı’dan bir gömlek al!” «Buy a shirt from the market»
Çarşı
Male Female
Kahve Molası
Costs 60 $Time 12 min
Costs 650 $Time 198 min
Age and Stage in the Life Cycle
Taste in clothes, furniture, and recreation is also age-related, which is why smart marketers are attentive to the influence of age.
Similarly, consumption is shaped by the family life cycle.
Personal Factors Influencing Buyer Behavior
A lifestyle is the person’s pattern of living in the
world as expressed in activities, interests, and opinions. Lifestyle portrays the “whole person” interacting with his or her environment.
Psychographics is the science of measuring and categorizing consumer lifestyles.
Lifestyle
Motivation, A need becomes a motive when it is
aroused to a sufficient level of intensity. A motive is a need that is sufficiently pressing to drive the person to act.
Psychological Factors Influencing Buyer Behavior
Psychologists have developed theories of
human motivation. One of the best known—the theory of Abraham Maslow,
Upper uppers Lower uppers Upper middles Middle Working Upper lowers Lower lowers
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 6-42
Social Classes
Within a class, people tend to behave alike Social class conveys perceptions of inferior or
superior position Class may be indicated by a cluster of
variables (occupation, income, wealth) Class designation is mobile over time
Copyright © 2009 Pearson Education, Inc. Publishing as
Prentice Hall 6-43
Characteristics of Social Classes
Age and Stage in the Life Cycle
Occupation and Economic Circumstances
Lifestyle
Personality and Self-Concept
Personal Factors Influencing Buyer Behavior
THE CONSUMER BUYING DECISION PROCESS
Five-Stage Model of the Consumer Buying Process
How do cultural, social, personal, and
psychological factors influence consumer buying behavior?
How does the consumer make a purchasing decision?
Buyer’s Decision
Product choice
Brand choice
Dealer choice
Purchase amount
Marketing Stimuli
OtherStimuli
Product
Price
Place
Promotion
Technological
Political
Cultural
Buyer’sCharacteristics
Buyer’s Decision Process
Cultural
Social
Personal
Psychological
Problem recognition
Information search
Evaluations of alternatives
Purchase decision
Post purchase behavior
Model of Consumer Buyer Behavior
As this model indicates, a consumer’s buying
behavior is influenced by cultural, social, personal, and psychological factors.
We can distinguish five roles that people
might play in a buying decision. An initiator
first suggests the idea of buying the product or service. An influencer is the person
whose view or advice influences the decision. A decider actually decides whether to buy,
what to buy, how to buy, or where to buy. A buyer makes the actual purchase, while a
user consumes or uses the product or service.
THE CONSUMER BUYING DECISION PROCESS
Complex buying behavior
Dissonance-reducing buyer behavior
Habitual buying behavior
Variety-seeking buying behavior
Buying Behavior
Stage 1: Problem Recognition Stage 2: Information Search Stage 3: Evaluation of Alternatives Stage 4: Purchase Decision Stage 5: Postpurchase Behavior
The Stages of the Buying Decision Process
The buying process starts when the buyer recognizes a problem or need. This need can be triggered by internal stimuli or external that then becomes a drive.
Marketers can develop marketing strategies that trigger consumer interest and lead to the second stage in the buying process.
Stage 1: Problem Recognition
At the milder search state of heightened
attention, a person simply becomes more receptive to information about a product.
At the active information search level, a person surfs the Internet, talks with friends, and visits stores to learn more about the product.
Stage 2: Information Search
Consumers form judgments largely on a
conscious and rational basis.
The consumer sees each product as a bundle of attributes with varying abilities of delivering the benefits to satisfy this need.
Stage 3: Evaluation of Alternatives
Two factors can intervene between the purchase intention and the purchase decision.
The first factor is the attitudes of others.The second factor is unanticipated situational factors
Stage 4: Purchase Decision
The buyer’s satisfaction with a purchase is
a function of the closeness between the buyer’s expectations and the product’s perceived performance.
If performance falls short of expectations, the customer is disappointed; if it meets expectations, the customer is satisfied; if it exceeds expectations, the customer is delighted
Stage 5: Postpurchase Behavior
Our best advertisement is a satisfied customer.