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8/10/2019 Kotler Mm13e Media 05
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Creating Customer Value,
Satisfaction,
and Loyalty
Market ing Management, 13thed
5
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-2
Chapter Questions
What are customer value, satisfaction, andloyalty, and how can companies deliverthem?
What is the lifetime value of customers?
How can companies cultivate strongcustomer relationships?
How can companies both attract and retaincustomers?
What is database marketing?
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-3
Ritz Carlton - Famous for its
Exceptional Service
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-4
Figure 5.1 Organizational Charts
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-5
What is Customer Perceived Value?
Customer perceived valueis thedifference between the prospective
customers evaluation of all the benefits
and all the costs of an offering and theperceived alternatives.
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-6
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
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-7
Steps in a Customer Value Analysis
Identify major attributes and benefitsthat customers value
Assess the qualitative importance of
different attributes and benefits Assess the companys and competitors
performances on the different customervalues against rated importance
Examine ratings of specific segments
Monitor customer values over time
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-8
What is Loyalty?
Loyaltyis a deeply held commitment tore-buy or re-patronize a preferred
product or service in the future despite
situational influences and marketingefforts having the potential to cause
switching behavior.
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-9
Top Brands in Customer Loyalty
Avis
L.L. Bean
Samsung (mobilephones)
Yahoo!
Canon (officecopiers)
Lands End
Coors
Hyatt
Marriott
Verizon
KeySpan Energy
Miller Genuine Draft
Amazon
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-10
The Value Proposition
The whole cluster of
benefits thecompany promises
to deliver
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-11
Raising Customer Expectations
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-12
Measuring Satisfaction
Periodic Surveys
Customer Loss Rate
Mystery Shoppers
Monitor CompetitivePerformance
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-13
J.D. Power Rates
Customer Satisfaction
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-14
What is Quality?
Qualityis the totality of features and
characteristics of a product orservice that bear on its
ability to satisfy
stated or implied needs.
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-15
Maximizing Customer Lifetime Value
Customer
Profitability
CustomerEquity
LifetimeValue
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-16
Figure 5.3 The 15020 Rule
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-17
Figure 5.4 Customer-Product
Profitability Analysis
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-18
Estimating Lifetime Value
Annual customer revenue: $500
Average number of loyal years: 20
Company profit margin: 10 Customer lifetime value: $1000
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-19
What is Customer Relationship
Management?
CRMis the process of carefullymanaging detailed information about
individual customers and all customertouchpoints to maximizecustomer loyalty.
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-20
Framework for CRM
Identify prospects and customers
Differentiate customers by needsand value to company
Interact to improve knowledge
Customize for each customer
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-21
Harrahs
targetshundreds of
segments
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-22
CRM Strategies
Reduce the rate of defection
Increase longevity
Enhance share of wallet
Terminate low-profitcustomers
Focus more effort onhigh-profit customers
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-23
Focuson
CRM
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-24
Customer Retention
Acquisition of customers can cost five timesmore 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 thelife of a retained customer.
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-25
Figure 5.5 The Customer
Development Process
Prospects
Suspects
Disqualified
First-timecustomers
Repeatcustomers Clients Members
PartnersEx-customers
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-26
Creating Customer Evangelists
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-27
Steps for Creating
Customer Evangelists
Customer plus-delta
Napsterize your knowledge
Build the buzz Create community
Make bite-size chunks
Create a cause
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-28
Database Key Concepts
Customerdatabase
Databasemarketing
Mailing list
Businessdatabase
Data warehouse
Data mining
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-29
Using the Database
To identify prospects
To target offers
To deepen loyalty
To reactivate customers
To avoid mistakes
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-30
Dont Build a Database When
The product is a once-in-a-lifetimepurchase
Customers do not show loyalty
The unit sale is very small
The cost of gathering information is toohigh
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-31
Perils of CRM
Implementing CRM before creating acustomer strategy
Rolling out CRM before changing theorganization to match
Assuming more CRM technology isbetter
Stalking, not wooing, customers
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-32
Marketing Debate
Online vs. Offline Privacy?
Take a position:1. Privacy is a bigger issue in the
online world than in the offline world.
or
2. Consumers receive more benefitthan risk from marketers knowingtheir personal information.
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Copyright 2009 Pearson Education Inc Publishing as Prentice Hall 5-33
Marketing Discussion
Choose a business and show how
you would go about developing aquantitative formulation that capturesthe concept of customer lifetime value.