creating customer value, satisfaction, and loyalty 5

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

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Chapter Questions


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Ritz Carlton - Famous for its Exceptional Service

http://www.ritzcarlton.com/


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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.


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What is Customer Perceived Value?


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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


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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.


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What is Loyalty?


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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

http://www.ritzcarlton.com/


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The Value Proposition

The whole cluster of benefits the

company promises to deliver

http://www.volvo.com/


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Measuring SatisfactionPeriodic SurveysPeriodic Surveys

Customer Loss RateCustomer Loss Rate

Mystery ShoppersMystery Shoppers

Monitor Competitive Performance

Monitor Competitive Performance

What is Quality?


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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.


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What is Customer Relationship Management?

Framework for CRM


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Identify prospects and customers

Differentiate customers by needs and value to company

Interact to improve knowledge

Customize for each customer


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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


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Focus on

CRM

http://www.enterprise.com/

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.


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Customer Retention


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Database Key Concepts

Customer database

Database marketing

Mailing list

Business database

Data warehouse

Data mining

http://www.enterprise.com/


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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.


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What is Culture?

Nationalities Religions Racial groups Geographic regions


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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


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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


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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


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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.

creating customer value, satisfaction, and loyalty 5

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