Kotler Keller Marketing Management 14e Creating Long-term Loyalty - - PowerPoint PPT Presentation

Kotler • Keller

Phillip Kevin Lane

Marketing Management • 14e

Creating Long-term Loyalty Relationships

Discussion Questions

• 1. What are customer value, satisfaction, and

loyalty, and how can companies deliver them?

• 2. What is the lifetime value of customers, and

how can marketers maximize it?

• 3. How can companies attract and retain the

right customers and cultivate strong customer relationships?

• 4. What are the pros and cons of database

marketing?

Customer Value, Satisfaction, and Loyalty

Holistic M arketing

• Inform
• Engage
• Energize

Traditional Organization vs. Customer-Oriented Organization

Customer Perceived Value

Total Customer Cost Total Customer Benefit Customer- perceived Value

Functional Economic Psychological Evaluating Obtaining Using Disposing

=

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.

• CPV= TCB-TCC

Customer- perceived value

T

• tal customer

benefit T

• tal customer

cost Product benefit M onetary cost Services benefit Time cost Personal benefit Energy cost Image benefit Psychological cost

Determinants

• f Customer

Perceived Value

Value Concepts - Caterpillar

Worth to farmer: $20,000 Cost to produce: $14,000

Profit Price Customer Value $6,000 $20,000

• 0-

5,000 19,000 $1,000 4,000 18,000 2,000 3,000 17,000 3,000 2,000 16,000 4,000 1,000 15,000 5,000

• 0-

14,000 6,000

Choice Processes and Implications

Lowest purchase price wins. Friends with salesperson

reliability, durability, performance, and resale value accompanying services—delivery, training, and maintenance

• perating expenses

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
• M onitor customer values over time

“A deeply held commitment to rebuy or re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior.”

• - Oliver

Customer Loyalty

Consumers have varying degrees of loyalty to specific brands, stores, and companies

Top Brands in Customer Loyalty

• Apple iPhone
• Clairol
• Samsung
• M ary Kay
• Grey Goose
• Clinique
• Avis
• Wal-M art
• Google
• Amazon
• Bing
• J.Crew
• AT&T Wireless
• Discover Card
• Verizon Wireless
• Cheerios

In Jordan

• Fine
• Aramex
• Arab bank
• Nabeel
• Higeen
• M r chips
• Sha’rawi

Value Proposition

Core positioning:

• Safety

Volvo

Other benefits:

• Good performance
• Design
• Environmentally friendly

Consists of the whole cluster

• f benefits the company

promises to deliver; it is more than the core positioning of the offering.

Fine

• The value proposition is thus a promise about the

experience customers can expect from the company’s market offering and their relationship with the supplier. Whether the promise is kept depends on the company’s ability to manage its

value delivery system.

• The value delivery system includes all the

experiences the customer will have on the way to

• btaining and using the offering. At the heart of a

good value delivery system is a set of core business processes that help deliver distinctive consumer value.

Value Proposition

A person’s feelings of pleasure or disappointment that result from comparing a product’s perceived performance to (or outcome) to expectations.

Satisfaction

Customer Satisfaction

Expectations

Customer assessments of product performance depend on many factors, especially the type of loyalty relationship the customer has with the brand.

Customer Expectations

Expectations Previous purchases Friends advice M arketers’ / competitors

Korean automaker Kia found success in the United States by launching low-cost, high-quality cars with enough reliability to offer 10-year, 100,000 mile warranties

If marketers raise expectations too high, the buyer is likely to be disappointed. If it sets expectations too low, it won’t attract enough buyers

M onitoring Satisfaction

Customer Complaints M easurement Techniques Influence of Customer Satisfaction

M easurement Techniques

Customer Loss Rate M ystery Shopper Surveys

Influence of Customer Satisfaction

Customer satisfaction Speed of communication customer satisfaction is both a goal and a marketing tool

the Internet provides a tool for consumers to quickly spread both good and bad word

• f mouth

Customer Complaints

25%

Dissatisfied

5%

Complain

95%

Stop buying

54% - 70%

Buy again if resolved

95%

If resolved quickly

Tell 5 people Tell 11 people

Dallas travel Complaints

Product and Service Quality

Quality Profitability Satisfaction

Performance Conformance

• Quality is defined as “ fitness for use,”

“conformance to requirements,” and “ freedom from variation.”

• ASQ: Quality is the totality of features and

characteristics of a product or service that bear

• n its ability to satisfy stated or implied needs.

A company that satisfies most of its customers’ needs most of the time is called a quality company, but we need to distinguish between conformance quality and performance quality (or grade).

Satisfaction and Quality

• A Lexus provides higher performance quality

than a Hyundai: The Lexus rides smoother, goes faster, and lasts longer. Y et both a Lexus and a Hyundai deliver the same conformance quality if all the units deliver their respective promised quality.

Satisfaction and Quality

M aximizing Customer Lifetime Value

20% of Customers 80% of Profits

Customers 80–20 rule

80%

Customer Profitability

Customer Lifetime Value Customer Profitability Analysis Profitable Unprofitable

يرﺻﻣﻟا نطاوﻣﻟاو تﻻﺎﺻﺗﻻا ندرﻻا ﻲﻓ شﯾﺟﻟا ضرﻋو تﻻﺎﺻﺗﻻا

Customer Lifetime Value

A person, household, or company that

• ver time yields a revenue stream

exceeding by an acceptable amount the company’s cost stream for attracting, selling, and serving that customer.

A Profitable Customer

Customer-Product Profitability Analysis

Cultivating Customer Relationships

Customer Information

• Differentiate
• Customize
• Personalize
• Share

Customer Relationship M anagement (CRM )

Personalizing M arketing Customer Empowerment Customer Reviews & Recommendations

• CRM is the process of carefully managing

detailed information about individual customers and all customer “ touch points” to maximize loyalty.

• For a hotel, the touch points include

reservations, check-in and checkout, frequent- stay programs, room service, business services, exercise facilities, laundry service, and restaurants.

Customer Relationship M anagement (CRM )

Personalizing M arketing

knew their customers by name

Personalizing marketing is about making sure the brand and its marketing are as relevant as possible to as many customers as possible—a challenge, given that no two customers are identical.

One-to-One M arketing

Differentiate customers Interact with each customer Customize Identify prospects and customers

Customer Empowerment

Brand Evangelists “ The power is with the consumer,” Pantene and selling wigs donation for cancer patients M arketers are helping consumers become evangelists for brands by providing them resources and

• pportunities to demonstrate their

passion.

Doritos 30-second short films

Customer Reviews/ Recommendations

Customer ratings Negative reviews Create Buzz

Customer Retention

Acquiring new customers costs

5x more

than retaining current customers The average company loses

10%

Of its customers yearly Reducing customer defections by 5% can increase profits from

25% to 85%

Attracting and Retaining Customers

Reduce Defections 1. Define and measure 2. Determine causes 3. Compare CL V to costs Retention Dynamics M anage customer base

The M arketing Funnel

Building Loyalty

Develop loyalty programs Interact with customers Create institutional ties

Databases & Database M arketing

Customer databases

• Name, address, telephone #
• Purchase history
• Demographics
• Psychographics
• M ediagraphics

Data Warehouses Data mining

• CH 3,4
• Wednesday 28 / 3

QZ 2