Transcript Creating customer Value, Satisfaction and Loyalty

Creating customer Value,
Satisfaction and Loyalty
Chapter: 5
Customer Perceived Value
“ It 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 value is the perceived monetary
value of the bundle of economic, functional and
psychological benefits customer expect from a
market offering ( product value+service
value+personnel value+image value)
Total customer cost : Monetary cost+Time
cost+Energy cost+Psychic cost
Total Customer Satisfaction
Satisfaction is a feeling of pleasure that
results from comparing product’s
perceived performance with one’s
expectations
Actual < Expected = Dissatisfaction
Actual > Expected = Delight
Actual = Expected = Satisfaction
Maximising customer Value
• The 80 : 20 principle
• The concept of profitable customer –
whose revenue stream exceeds cost of
servicing him
• Customer profitability analysis : different
tiers
• Customer life time value: net present value
of stream of future profits expected over
the customer’s lifetime purchases
Cultivating Customer Relationships
• Mass customisation – ability of firm to
meet requirements of each and every
customer
• CRM: process of managing detailed
information about customers and
managing “customer touch point” to
ensure customer loyalty
Attracting, Retaining and Growing
Customers
Suspects(Potentials) Prospects First time
customers Repeat customers Clients
Members Advocates Partners
At any point customers – from first timers to
partners can become inactive or excustomers
Building Loyalty
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Basic marketing: Sales men simply sells product
Reactive marketing: Sales men sells product and
encourages customer to call up in case of any queries
Accountable marketing: Sales men rings up the
customer asking for problems, suggestions and
improvements
Proactive marketing: Salesmen contacts customer
from time to time with suggestions about improved
product used or new products
Partnership marketing: Company works continuously
with customers to help improve their performance
Forming strong customer bonds
1. Adding financial benefits – e.g. Frequent
flier program
2. Adding social benefits – e.g. TTL’s
customer loyalty program
3. Adding structural ties – e.g. Magazine’s
subscription
Customer database and Database
marketing
Customer database is an organised collection of
comprehensive information about individual
customer or prospects that is accessible and
actionable for marketing purpose
Database marketing is the process of building,
maintaining and using customer databases and
other databases for the purpose of contracting,
transacting and building customer relationships
Analysing Consumer Markets
Chapter: 6
Cultural factors
Consumer behavior is influenced by culture, subculture and
social class
Culture is values, rituals, beliefs that are passed from
generation to generation
Subculture is alternate culture that moves parallel to culture
in the same or opposite direction
Social stratification : SEC in India – Socioeconomic
classification – on the basis of education and occupation
of the chief wage earner – A1, A2,B1,B2, C,D,E1,E2
In rural areas SEC is based on occupation of the chief
wage earner and the type of house – R1 to R4
Social factors
Reference groups - groups with which person has direct or
indirect contact which affects his behaviour
Memberships groups – groups having direct influence
Primary groups - continuous and informal interaction
Secondary groups – Less continuous and formal interaction
Aspiration group – hope to join
Dissociative groups – whose values person rejects
Family : blood or legal linkage
Family of orientation : Parents and siblings
Family of Procreation: One’s spouse and kids
Personal factors
• Age and stage in the life cycle
• Occupation and economic circumstance
• Personality and self concept
- personality is set of distinguishing human
psychological traits that lead to relatively
consistent and enduring responses to
environmental stimuli
• Lifestyle and values
Key psychological processes
Motivation:
• Sigmund Freud’s theory :”Psychological
forces shaping people’s behaviour are
largely unconscious”
• Maslow’s theory: “Human needs are
arranged in an hierarchy”
• Herzeberg’s theory: “Dissatisfiers and
Satisfiers”
Perception
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Selective Attention
Selective distortion
Selective retention
Subliminal perception
Learning
• Permanent change in individual’s
behaviour that rises from experience
• It is an interplay of drives, stimuli, cues,
responses and reinforcement
Memory
• Short term – temporary repository of
information
• Long term memory – permanent repository
of information
Associative network memory model
• Long term memory has a set of nodes an
links
• Nodes are stored information connected
by links that vary in strength
• Nodes becomes activated when external
information is encoded or internal
information is retrieved from long term
memory
The buying decision process : Five
stage model
1. Problems Recognition – triggered by internal or
external stimuli
2. Information search – sources of information personal,commercial,public,experimental
3. Evaluation of alternatives – purchase intention –
affected by attitude of others and unanticipated
situational factors
4. Purchase decisions
5. Post purchase behaviour – post purchase
satisfaction and post purchase dissonance
Purchase decisions
Noncompensatory models of consumer choice – the
negative aspects of a product are not off set by its
positive aspects as in compensatory models
Types of choice heuristics:
1. Conjunctive : consumer sets minimum acceptable
cutoff for each attribute and choose the first option
that meets the minimum requirements
2. Lexicographic : consumer chooses the best brand on
the basis of its perceived most important attribute
3. Elimination by aspect: consumer compares brands on
attribute selected probabilistically – based on
attribute's importance
Level of Consumer Involvement
1. Elaboration Likelihood model : Central
route and peripheral route to persuasion
2. Variety seeking buying behaviour
Analysing Business Markets
Chapter : 7
Business market v/s Consumer
market
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Few and larger buyers
Close supplier –customer relationships
Professional purchasing
Several buying influences
Multiple sale calls
Derived demand
Fluctuating demand
Geographically concentrated buyers
Direct purchasing
Buying situations
• Straight rebuy
• Modified rebuy
• New task
Participants in business buying
process
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Initiators
Users
Influencers
Deciders
Approvers
Buyers
Gatekeepers
Stages of buying process
1. Problem recognition
2. General need recognition and product
specification
3. Supplier search
4. E-procurement
5. Proposal solicitation
6. Supplier selection
7. Order routine specification
8. Performance review
Identifying Market Segments
and Targets
Chapter 8
Levels of Market Segmentation
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Segment Marketing
Niche Marketing
Local Marketing
Customerisation
Segmenting consumer markets
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Geographic Segmentation
Demographic Segmentation
Psychographic segmentation
Behavioural segmentation : Occasions,
Benefits, User status,Usage rate, Buyer
readiness stage, Loyalty status, Attitude
Segmenting Business markets
• Demographic : Industry, company size, Location
• Operating variables: Technology, User or
nonuser status, customer capabilities
• Purchasing approaches: purchasing function,
power structure, nature of existing relationships,
purchase polices, purchasing criteria
• Situational factors: urgency, specific application,
size of order
• Personal characteristics: buyer seller similarity,
attitudes towards risk, loyalty
Favorable market segments
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Measurable
Substantial
Accessible
Differentiable
Actionable
Evaluating and Selecting Market
Segments
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Single segment concentration
Selective specialisation
Product Specialisation
Market Specialisation
Full Market coverage