INTRO-to-MARKETING-MANAGEMENT01-Customer-Satisfaction-Value-Retention.pptx

MARKETING AND
MANAGEMENT
STRATEGIES
Professor: Dr. Maria Jewdaly L. Costales, LPT

Customer Satisfaction Value & Retention
Presented by: Bernadine Costales

What is Marketing?
⮚Process by which individuals and groups obtain what they need and want
through creating and exchanging products and value with others.
• Simply put: Marketing is the delivery of customer satisfaction at a profit.

Core Marketing Concepts
Needs, wants
and demands
Markets
Products and
services
Value,
satisfaction,
and quality
Exchange
transactions,
and
relationships

• Needs – a state of felt deprivation for basic
items such as food and clothing and complex
needs such as belonging. i.e. I am hungry.
• Wants – form that a human need takes as
shaped by culture and individual personality.
i.e. I want a hamburger, French fries,
softdrink
• Demands – human wants backed by buying
power. i.e. I have money to buy this meal.
What are Consumer Needs,
Wants & Demands?

What will Satisfy Consumer Needs and Wants?
⮚Products – anything that can be offered to a market to satisfy a need or
want
Experiences, Persons, Places, Organizations, Information, Ideas
⮚Services – Activities or benefits offered for sale that are essentially
intangible and don’t result in the ownership of anything

How do Consumers choose among Products
and Services?
⮚Value gained from owning a product and costs of obtaining the Product is
Customer Value
⮚Products perceived performance in delivering value relative to buyers
expectations is Customer Satisfaction
⮚Total Quality Management Involves improving Quality of Products,
Services and Marketing Processes

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.
▪Total Customer Benefit is the perceived monetary value of the bundle of
economic, functional, and psychological benefits customers expect from a
given market offering because of the product, service, people and image
▪Total Customer Cost is the perceived bundle of cost customers expect to
incur in evaluating, obtaining, using and disposing of the given market
offering, including monetary, time, energy and psychological costs.

Determinants of Customer Perceived Values
Customer
Perceived Values
Total Customer
Benefit
Total Customer
Cost
Services Benefit
Monetary Cost
Product Benefit
Time Cost
Psychological
Cost
Personnel
Benefit
Image Benefit
Energy Cost

Cont…
1. Product benefit accounts for the attributes of the product, which might entice a potential consumer
to decide to choose this product over others.
2. Services benefit accounts for the attributes of the services offered along with the product. Any kind
of help, instructions or assistance offered with the product would fall under this.
3. Personnel benefits include the customer’s perception of the utility value of the personnel in the
system of the product to him/her. Better, knowledgeable and well trained personnel assisting a
customer would be a great help.
4. Image benefit includes the image that a brand/product holds in the market. Reputation and image
together form a very crucial part of a customer’s transactions with a brand depending upon
circumstances he/she has experienced during his buying process.
5. Monetary cost encompasses the literal cost incurred by a customer in order to obtain the product.
6. Time cost is the total amount of time that has been invested by a customer during his buying
process.
7. Energy cost refers to the energy spent by the buyer during the entire process of buying the product.
8.Psychological cost is the total mental effort made during acquiring and using the product from the
moment it was bought to the moment it was consumed. It is also very difficult to measure this as it
would take lots of data to biologically decide what goes where.

Customer Value Analysis
Report of the company’s
strength and weaknesses
relative to those of various
competitors.

Steps in a Customer Value Analysis
1. Identify the major attributes and benefits customers value.
Customers are asked what attributes, benefits, and performance levels
they look for in choosing a product and vendors. Attributes and benefits
should be defined broadly to encompass all the inputs to customers’
decisions.
2. Assess the quantitative importance of the different attributes and
benefits. Customers are asked to rate the importance of different
attributes and benefits. If their ratings diverge too much, the marketer
should cluster them into different segments.
3. Assess the company’s and competitors’ performances on the
different customer values against their rated importance. Customers
describe where they see the company’s and competitors’ performances
on each attribute and benefit.

Cont… Steps in a Customer Value Analysis
4. Examine how customers in a specific segment rate the company’s
performance against a specific major competitor on an individual
attribute or benefit basis.
If the company’s offer exceeds the competitor’s offer on all important
attributes and benefits, the company can charge a higher price (thereby
earning higher profits), or it can charge the same price and gain more
market share.
5. Monitor customer values over time.
The company must periodically redo its studies of customer values and
competitors’ standings as the economy, technology, and features change.

Total Customer Satisfaction
▪Satisfaction is a person’s feelings of pleasure or disappointment that result
from comparing a product’s perceived performance (or outcome) to
expectations. Perceived performance is the consumer’s belief about the
product or service experience.
▪If the performance falls short of expectations, the customer is dissatisfied.
▪If it matches expectations, the customer is satisfied.
▪If it exceeds expectations, the customer is highly satisfied or delighted.
▪Customer assessments of product performance depend on many factors,
especially the type of loyalty relationship the customer has with the brand.
▪Consumers often form more favorable perceptions of a product with a
brand they already feel positive about.

▪Periodic surveys can track customer satisfaction directly and ask
additional questions to measure repurchase intention and the
respondent’s likelihood or willingness to recommend the company and
brand to others.
▪Companies need to monitor their competitors’ performance too. They can
monitor their Customer Loss Rate and contact those who have stopped
buying or who have switched to another supplier to find out why.
▪Companies can hire mystery shoppers to pose as potential buyers and
report on strong and weak points experienced in buying the company’s
and competitors’ products.
▪Managers themselves can enter company and competitor sale situations
whether they are unknown and experience firsthand the treatment they
receive.
Measuring Satisfaction

Attracting and Retaining Customers
• Relationship Marketing - Relationship marketing is concerned with attracting customers,
retaining customers, and eventually ending up with a long term relationship between
customer and company.
Frequent flyer program offered by Airlines and the Privilege Gold Card offered by some hotels
are good example of firms attempting to maintain an ongoing relationship with their customers.
How do you attract customers?
• Today’s customers are becoming harder to please. They are smarter, more price conscious,
more demanding, less forgiving, and they are approached by many more competitors with
equal or better offers. The challenge according to Jeffrey Gitomer, is not to produce satisfied
customers; several competitors can do this. The challenge is to produce delighted and
loyal customers.
• Companies seeking to expand their profits and sales have to spend considerable time and
resources searching for new customers. To generate leads, the company develops ads and
places them in media that will reach new prospects; its salespeople in participate in trade
shows where they might find new leads and so on. Salespeople come into play once you
have attracted your prospects.

• 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.
• The key to generating high customer loyalty is to deliver high
customer value. A company must design a competitively superior
value proposition aimed at a specific market segment, backed by a
superior value delivery system. For customer centered companies,
customer satisfaction is both a goal and a marketing tool. Companies
that achieve high customer satisfaction ratings make sure that their
target market knows it.
What is Loyalty?

The Main Steps in Customer Loyalty

Building Loyalty
• INTERACTING WITH CUSTOMERS
Listening to customers is crucial to customer
relationship management. Some companies
have created an ongoing mechanism that
keeps their marketers permanently plugged
in to frontline customer feedback.
• DEVELOPING LOYALTY PROGRAMS
Frequency programs (FPs) are designed to
reward customers who buy frequently and in
substantial amounts. They can help build
long-term loyalty with high CLV customers,
creating cross-selling opportunities in the
process. Club membership programs can
be open to everyone who purchases a
product or service, or limited to an affinity
group or those willing to pay a small fee.

Cont… Building Loyalty
• Creating Institutional Ties The company may supply customers with
special equipment or computer links that help them manage orders,
payroll, and inventory. Customers are less inclined to switch to another
supplier when it means high capital costs, high search costs, or the loss of
loyal-customer discounts.
• Win-Backs Regardless of how hard companies may try, some customers
inevitably become inactive or drop out. The challenge is to reactivate them
through win-back strategies. It’s often easier to reattract ex-customers
(because the company knows their names and histories) than to find new
ones

• Describes the net present value of the stream of future profits expected over
the customer’s lifetime purchases. The company must subtract from its
expected revenues the expected costs of attracting, selling, and servicing the
account of that customer, applying the appropriate discount rate (say,
between 10 percent and 20 percent, depending on cost of capital and risk
attitudes). Lifetime value calculations for a product or service can add up to
tens of thousands of dollars or even into six figures.
Customer Lifetime Value (CLV)

Measuring Customer Lifetime Value (CLV)

• It is not enough to be skillful in attracting new customers; the company
must keep them and increase their business. To many companies suffer
from high customer defection through switching company to company
Computing the Cost of Lost Customers

Reducing Defection Rate
• Define and measure its retention rate.
For a magazine, subscription renewal rate is a good measure of retention.
• Distinguish the causes of customer attrition and identify those that can be
managed better.
Not much can be done about customers who leave the region or go out of
business, but much can be done about those driven away by poor service, shoddy
products, or high prices.
• Compare the lost customer’s lifetime value to the costs of reducing the
defection rate.
As long as the cost to discourage defection is lower than the lost profit, spend the
money to try to retain the customer.

What is Customer Relationship Management
(CRM)?
⮚CRM is the process of carefully managing detailed information about
individual customers and all customer “touch points” to maximize loyalty.
A customer touch point is any occasion on
which a customer encounters the brand and
product— from actual experience to personal or
mass communications to casual observation.
(i.e. for a hotel, the touch points include
reservations, check-in and checkout, frequent-
stay programs, room service, business services,
exercise facilities, laundry service, restaurants,
and bars).

Framework for CRM
1. Identify your prospects and customers. Don’t go after everyone.
Build, maintain, and mine a rich customer database with information
from all the channels and customer touch points.
2. Differentiate customers in terms of (i) their needs and (ii) their value
to your company. Spend proportionately more effort on the most
valuable customers (MVCs).
3. Interact with individual customers to improve your knowledge about
their individual needs and to build stronger relationships. Formulate
customized offerings you can communicate in a personalized way.
4. Customize products, services, and messages to each customer.
Facilitate customer interaction through the company contact center
and Web site

Customer Databases and Database Marketing
• A customer database is an organized collection of
comprehensive information about individual customers or
prospects that is current, accessible, and actionable for lead
generation, lead qualification, sale of a product or service, or
maintenance of customer relationships.
• Database marketing is the process of building, maintaining,
and using customer databases and other databases (products,
suppliers, resellers) to contact, transact, and build customer
relationships.

• Customer mailing list is simply a set of names, addresses, and
telephone numbers. A customer database contains much more
information, accumulated through customer transactions, registration
information, telephone queries, cookies, and every customer contact.
• Customer database contains the consumer’s past purchases,
demographics (age, income, family members, birthdays), psychographics
(activities, interests, and opinions), mediagraphics (preferred media), and
other useful information.

• TQM is an organizations approach to continuously improving the quality of all the
organization’s processes, product and services. Product and Service quality,
customer satisfaction, and company profitability are intimately connected.
• Higher level of customer satisfaction results in higher levels of customer
satisfaction which support higher prices and often lower costs. A quality company
is one that satisfies most of its customer’s needs most of the time. Total quality is
the key to value creation and customer satisfaction.
Total Quality Management (TQM)

Market Oriented Strategic Planning
⮚Market oriented strategic planning is the managerial process of developing
& maintaining a viable fit between an organization objectives/ skills/
resources and its changing market opportunities.
▪Aim: Shape/ Reshape companies business & products so that they yield
targeted profits and growths.

⮚Strategic Planning has Action Areas :
• Managing companies business as an investment portfolio.
• Assessing each business activity by considering market’s growth
rate & companies position & fit in that market.
• Developing a strategy (game plan) to achieve long run objectives.
⮚Strategic Planning takes into account that large organizations
consist of four organizational levels.
• Corporate level
• Divisional level
• Business unit level
• Product level

⮚Strategic Marketing Plan develops / outlines.
• Broad marketing objective.
• Strategy based on analysis of current market situation and
opportunities (based on STP).
⮚Tactical Marketing Plan outlines specific marketing plan. It may
include
– Advertising
– Merchandising
– Pricing
– Distribution Channels (4 P’s of Marketing)
– Product Variants

• Corporate HQ creates strategic plan to guide the whole enterprise to
a profitable future.
• Each division creates a divisional plan covering the allocation of
funds to each business unit within division.
• Each business unit develop a business unit strategic plan to carry
that business to a profitable future.
• Each product level develops a marketing plan to achieve its
objective. In its product marketing.
• Marketing plan made up of
• Strategic Marketing Plan.
• Tactical Marketing Plan.

Summary and Conclusion
⮚Customers are value maximizers. They will buy from the firm that they perceived to
offer the highest customer-delivered value.
⮚High customer satisfaction leads to high customer loyalty.
⮚Managing core business processes effectively means an effective marketing
network.
⮚Customers’ defection means less profit and more costs to the firm in attracting new
prospects and new customers.
⮚Quality is the totality of features and characteristics of a product or services that
bears the ability to satisfy a customer stated or implied need.
⮚Marketing managers two main responsibilities are; 1) formulate strategies and
policies that will win through total excellence and 2) deliver marketing quality
alongside production quality
⮚Customer relationship management (CRM) often requires building a customer
database and data mining to detect trends, segments, and individual needs.

Reference:
Marketing Management - 14th
Edition
by: Philip Kotler and Kevin Lane Keller

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