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marketing-management-chapter-5ppt.ppt
- 2. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-2
Chapter Questions
• 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?
- 3. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-3
Ritz Carlton - Famous for its
Exceptional Service
- 4. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-4
Figure 5.1 Organizational Charts
- 5. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-5
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.
- 6. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-6
Figure 5.2 Determinants of
Customer Perceived Value
Image benefit Psychological cost
Personnel benefit Energy cost
Services benefit Time cost
Product benefit Monetary cost
Total customer benefit Total customer cost
- 7. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-7
Steps in a Customer Value Analysis
• 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
- 9. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-9
What is Loyalty?
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.
- 10. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-10
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
- 11. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-11
The Value Proposition
The whole cluster of
benefits the
company promises
to deliver
- 12. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-12
Raising Customer Expectations
- 13. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-13
Measuring Satisfaction
Periodic Surveys
Customer Loss Rate
Mystery Shoppers
Monitor Competitive
Performance
- 14. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-14
J.D. Power Rates
Customer Satisfaction
- 15. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-15
Single Key Question of Net Promoter
“How likely is it that you would recommend
this product or service to a friend or
colleague?”
Use 0-10-point scale
0-6 are Marketers than subtract Detractors
7-8 are deemed Passively satisfied
9-10 are Promoter (Net Promoter Score-
NPS)
- 17. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-17
World class companies used NPS
- 18. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-18
Customer Satisfaction
Customer Loyalty
Company’s Profit
- 19. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-19
What is 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.
- 21. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-21
Maximizing Customer Lifetime Value
Customer
Profitability
Customer
Equity
Lifetime
Value
- 22. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-22
Figure 5.3 The 150–20 Rule
- 23. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-23
Figure 5.4 Customer-Product
Profitability Analysis
- 24. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-24
Estimating Lifetime Value
• Annual customer revenue: $500
• Average number of loyal years: 20
• Company profit margin: 10
• Customer lifetime value: $1000
- 25. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-25
What is Customer Relationship
Management?
CRM is the process of carefully
managing detailed information about
individual customers and all customer
touchpoints to maximize
customer loyalty.
- 26. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-26
Framework for CRM
Identify prospects and customers
Differentiate customers by needs
and value to company
Interact to improve knowledge
Customize for each customer
- 27. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-27
Harrah’s
targets
hundreds of
segments
- 28. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-28
CRM Strategies
Reduce the rate of defection
Increase longevity
Enhance “share of wallet”
Terminate low-profit
customers
Focus more effort on
high-profit customers
- 29. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-29
Focus
on
CRM
- 30. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-30
Customer Retention
• 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.
- 31. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-31
Figure 5.5 The Customer
Development Process
Prospects
Suspects
Disqualified
First-time
customers
Repeat
customers Clients Members
Partners
Ex-customers
- 32. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-32
Creating Customer Evangelists
- 33. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-33
Steps for Creating
Customer Evangelists
• Customer plus-delta
• Napsterize your knowledge
• Build the buzz
• Create community
• Make bite-size chunks
• Create a cause
- 34. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-34
Database Key Concepts
• Customer
database
• Database
marketing
• Mailing list
• Business
database
• Data warehouse
• Data mining
- 35. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-35
Using the Database
To identify prospects
To target offers
To deepen loyalty
To reactivate customers
To avoid mistakes
- 36. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-36
Don’t Build a Database When
• The product is a once-in-a-lifetime
purchase
• Customers do not show loyalty
• The unit sale is very small
• The cost of gathering information is too
high
- 37. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-37
Perils of CRM
• Implementing CRM before creating a
customer strategy
• Rolling out CRM before changing the
organization to match
• Assuming more CRM technology is
better
• Stalking, not wooing, customers
- 38. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-38
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 benefit
than risk from marketers knowing
their personal information.
- 39. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-39
Marketing Discussion
Choose a business and show how
you would go about developing a
quantitative formulation that captures
the concept of customer lifetime value.