18-1

PRINCIPLES OF MARKETING
Eighth Edition
Philip Kotler and Gary Armstrong

Chapter 18

Competitive Strategies:
Building Lasting Customer
Relationships
 Copyright 1999 Prentice Hall
 18-2
Defining Customer Value

(Product, Service,
Total Customer
Personnel, &
Value Image Values)

- Total Customer (Monetary, Time,

Energy, &
Cost Psychic Costs)
= Customer (Profit to the
Delivered Value Consumer)

 Copyright 1999 Prentice Hall

Customer Satisfaction 18-3

Customer Satisfaction Results When a Company’s

Performance Has Fulfilled a Buyer’s Expectations.

Performance Exceeds Expectations-

Product’s Actual Performance

Customer is Delighted

Buyer’s Expectations Are Based On:

Customer’s Past Buying Experiences
Opinions of Friends & Associates
Marketer/ Competitor Information &
Promises

Performance Below Expectations -

Customer is Dissatisfied

 Copyright 1999 Prentice Hall

Total Customer Satisfaction 18-4

• Highly satisfied (delighted) customers produce

benefits:
– They are less price sensitive,
– They remain customers longer,
– They talk favorably about the company and products to
others.

• Delighted customers have emotional and rational

preferences for products, and this creates high
customer loyalty.

• Therefore, the purpose of Marketing is to generate

customer value profitably.

 Copyright 1999 Prentice Hall

The Need for Customer Retention 18-5

The Key to Customer Retention is Superior Customer

Value and Satisfaction. Companies Must Consider:

New Lost
Customer Customer
Costs Costs

Customer
Lifetime
Value

 Copyright 1999 Prentice Hall

 18-6
Building Customer Satisfaction and
Loyalty by Relationship Marketing
Relationship Marketing Involves Creating, Maintaining, and
Enhancing Strong, Long-Term Relationships with
Customers and Other Stakeholders.
Methods for Building Relationships Include Offering:

Financial
Benefits

Social
Benefits

Structural
Ties
 Copyright 1999 Prentice Hall
 18-7
Value Chain
Support Activities

Firm Infrastructure
Human Resource Management
Technology Development
Procurement

Marketing
Inbound Outbound
Operations and Service
Logistics Logistics
Sales

Primary Activities

 Copyright 1999 Prentice Hall

Customer Value-Delivery Network 18-8

Delivery
Order
Customer

Delivery
Order Retailer

Delivery
Order

Producer

Delivery
Order

Vendor

Delivery
Raw Material
Order

Supplier
 Copyright 1999 Prentice Hall
 18-9
Total Quality Marketing

Necessary But May Quality is in the

Not Be Sufficient Eyes of the Customer

Does Not Pursuing Every Company

Cost More a Total Activity

Quantum
Quality Total Employee
Leaps Marketing Commitment
Strategy
Continuous High Quality
Improvement Partners

Cannot Save
Poor Product

 Copyright 1999 Prentice Hall

Competitor Analysis 18-10

Identifying Competitors

Assessing Competitors

Determining Objectives

Identifying Strategies
Assessing Strengths and
Weaknesses
Estimating Reaction
Patterns

Selecting Competitors to
Attack and to Avoid
 Copyright 1999 Prentice Hall
 18-11
Developing Competitive Marketing
Strategies
Basic Competitive Strategies

Overall Cost
Focus
Leadership

Differentiation Middle of
the Road

 Copyright 1999 Prentice Hall

Developing Additional Competitive 18-12

Marketing Strategies
Value Disciplines

Operational Customer
Excellence Intimacy

Product
Leadership
 Copyright 1999 Prentice Hall
 18-13
Competitive Positions
Competitive Positions Competitive Strategies

Market Leader Expand Total Market

Firm with the Largest Protect Market Share
Market Share Expand Market Share

Market Challenger
Runner-Up Firms that Full Frontal Attack
Fight Hard to Increase Indirect Attack
Market Share

Market Followers
Runner-Up Firms that Want
to Hold Their Share Without Follow Closely
Rocking the Boat Follow at a Distance

Market Nichers
Firms that Serve Small By Customer, Market,
Segments Not Being Quality-Price, Service
Pursued by Other Firms Multiple Niching

 Copyright 1999 Prentice Hall

Balancing Customer and 18-14

Competitor Orientations

Customer-Centered
Competition-Centered

No Yes

No Product Customer
Orientation Orientation

Yes
Competitor Market
Orientation Orientation

 Copyright 1999 Prentice Hall