Chapter 5: Some managers view customers as the least important people in the organisation strategy, but for marketers

this is opposite See upside down diagram page140. Due to the internet customers expect more than ust to shop, they want !uick service and want to be valued. Customer perceived value: the difference between the prospective customers evaluation of all benefits and costs and the perceived alternative Total customer value "he perceived monetary value of all benefits. Total customer cost - "he total cost customers expect to pay in evaluating, searching, obtaining etc. Applying value concepts: #ompanies can increase perceived value and reduce customer cost to help secure a sale Choices and implications why would a customer choose another good even if they gained greater value from the other 1$ "he buyer might be under orders to buy the lowest price %$ "he buyer will retire before the company realises the other offer is in fact more expensive e.g. higher running costs. &$ "he buyer en oys a long term friendship with the owner of the other good'service ( seller must 1$ assess total customer value and total customer cost associated with each competitors offer in order to know how his or her offer rates in the buyers mind. %$ "he seller can either increase total customer value or decrease total customer cost. Delivering high customer value )oyalty refers to a deeply held commitment to re*buy a preferred product or service despite marketing efforts to cause switching behaviour. Value proposition ( cluster of benefits the company promises to deliver. Total customer satisfaction ( buyer will be satisfied if performance relates to expectation. Satisfaction is a persons feeling of pleasure or dissatisfaction resulting from the comparison of performance and expectation. #ompanies are increasingly tracking customer satisfaction as they realise its importance in terms of loyalty and repeat purchases. "here are a number of ways to track satisfaction and these include periodic surveys asking the right !uestions, measuring the customer loss rate and mystery shoppers that are used to analyse customer service.

Product and service uality +uality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. "otal !uality is the key to value creation and customer satisfaction. Total uality management an organisational approach to continually improving !uality of all organisational processes. ( profitable customer is one who provides the company with revenue that is greater than the cost needed to satisfy that customer. !ee figure on page "#$ this shows how a company needs to ensure customers buy its profit making products. Competitive advantage - "his is the companies ability to perform in one or more ways that competitors will not or cannot match..this leads to increase customer satisfaction and sales. Customer life time value this describes the net present value of the stream of future benefits expected from one customer. "his helps to plan customer investment, if cost exceeds to benefit, less money should be spent on those customers. "aco bell believes a repeat customer can be worth as much as ,11000. #ustomer e!uity is used by the firm to ascertain how its customers view the company in terms of value of the good offered to the firm, customers assessment of the brand, and the tendency of the customer to stick with the brand. Cultivating customer relationships %ass customi&ation this relates to companies allowing customers to specially choose the features that they want on a product. Customer relationship management - process of managing detailed information about customers and carefully catering for most desired needs to help maximise customer loyalty. 1$ %$ &$ 4$ 0$ 2$ .dentify prospects and customers Differentiate customers in terms of needs and value to company .nteract with customers to improve knowledge of their needs #ustomi/e products and services for each customer 1educe the rate of customer defection 3nhance growth potential through cross selling e.g. 4errari now selling clothes 5$ 6ake low profit customers more profitable or terminating them 7$ 4ocus disproportionate effort on high value customers. Attracting retaining and 'rowing customers #heck table on page 100 #ustomer churn relates to customer defection

Types of mar(et 1$ 8ermanent capture markets e.g. nursing home %$ Simple retention markets e.g. telecom &$ #ustomer migration markets e.g. retail and airlines See tables on page 105 about retaining customers )educing customer defection - company must define and measure retention rate, distinguish causes, estimate profit loss, cost of reducing retention *orming strong customer +onds Adding financial +enefits - rewards for customers who buy fre!uently, Adding social +enefit #ompanies work on cementing social bonds with customers through personali/ing customer relationships. Adding structural ties this may include creating long term contracts, charge a lower price to consumers who buy larger supplies and turn the product into a long term service e.g. a dog food company could offer a 8et care service could include kennels and insurance and veterinary help. #ustomer databases and data mining are used to record what a customer has purchased, where they live, items they have browsed, age etc and this all helps a marketer to know how to most effectively meet their needs. ,sing the data+ase 1$ #an be used to identify prospects %$ "o decide which customers should receive special offers &$ "o deepen customer loyalty 4$ "o reactivate customer purchases such as reminding them of specials 0$ "o avoid serious customer mistakes such as the same bank offering a customer two different loan rates. The downside of data+ase mining 1$ 9uilding and maintaining a customer database re!uires a huge investment %$ .t is difficult to get everyone in the company customer orientated and to use the available information to the companies advantage. &$ :ot all customers want a relationship with the company and may get annoyed or irritated with mail etc 4$ (ssumptions behind #16 may not hold true. 3.g. it may not cost less to serve loyal customers. )oyal customers may try to gain discounts etc. Pro+lems where C)% may fail 1$ .mplementing #16 before creating a customer strategy %$ 1olling out #16 before changing organi/ation match &$ (ssuming more #16 technology is better 4$ Stalking, not wooing customers.