Marketing Management by Kotler Chapter 4.ppt

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Assignment: Marketing Management
Assignment on: Creating Customer Value and customer Relationships
Submitted to: Ma’am Maria Kanwal
Names Roll no.
Umar Farooq 1504
Hammad Ahmad 1626
Muhammad Amir 1558
University of Education Lahore,
Multan Campus

2. Marketing Management
Chapter 4Chapter 4
Creating Customer Value and Customer
Relationships
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3. Building Customer Value and Satisfaction
 Customer perceived value (CPV)—the
difference between the prospective
customer’s evaluation of all the benefits and
all the costs of an offering and the perceived
alternatives.
 The Marketer can increase the value of the
customer offering by raising economical,
functional or emotional benefits or reducing
one or more costs.
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4. Organizational Chart
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5. 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
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6. 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
 Monitor customer values over time
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7. Delivering High Customer Value
 Loyalty- 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.
 Value Delivery System- The set of core
business processes that help deliver
distinctive consumer value.
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8. The Value Proposition
The whole cluster of
benefits the
company promises
to deliver
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9. Total Customer Satisfaction
 A person’s feelings of pleasure or
disappointment that result from comparing a
product’s perceived performance (or
outcome) to expectations.
 If the performance falls short of expectation,
the customer is dissatisfied. If it matches,
the customer is satisfied and if it exceeds,
the customer is delighted.
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10. Measuring Satisfaction
Periodic SurveysPeriodic Surveys
Customer Loss RateCustomer Loss Rate
Mystery ShoppersMystery Shoppers
Monitor Competitive
Performance
Monitor Competitive
Performance
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11. Product and Service Quality
 Quality (or grade) is the totality of features
and characteristics of a product or service
that bear on its ability to satisfy stated or
implied needs.
 Forms
 Conformance quality
 Performance quality
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12. Maximizing Customer Lifetime Value
Customer
Profitability
Profitability
analysis
Measuring
Lifetime
Value
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13. Customer Profitability
 A profitable customer is one that over time
yields a revenue stream that exceeds by an
acceptable amount the company’s cost
stream for attracting, selling, and servicing
that customer.
 Marketers can assess customer profitability
individually by marketing segment or by
channel.
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14. Customer Profitability Analysis (CPA)
 Best conducted with an accounting technique
called Activity-Based Costing (ABC).
 Estimate all revenue coming from the
customer, less all costs that go into serving
that customer.
 Companies that fail to measure their cost
correctly, are also not measuring their profit
correctly and are likely to misallocate their
marketing effort.
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15. Customer Profitability Analysis (CPA)
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16. Measuring Customer Lifetime Value
 Describes the net present value of the stream
of future profits expected over the customer’s
lifetime purchases.
 The company must subtract from its expected
revenues the expected cost of attracting,
selling and servicing the account of that
customer and applying the appropriate
discount rate (say, between 10-20 percent).
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17. Cultivating Customer Relationships
 Customer relationship management
(CRM) is the process of carefully managing
detailed information about individual
customers and all customer “touch points” to
maximize customer loyalty.
 Touch point—any occasion on which a customer
encounters the brand and product.
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18. CRM Steps
1. Identify your prospects and customers.
2. Differentiate customers in terms of their
needs and their value to your company.
3. Interact with individual customers.
4. Customize products, services, and
messages to each customer.
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19. CRM Strategies
Reduce 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 customers
Focus more effort on
high-profit customers
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20. Customer Retention
 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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21. Building Loyalty
 Interact with customers
 Develop loyalty programs
 Frequency programs
 Club membership programs
 Personalize marketing
 Create institutional ties
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22. Customer Database and Database
Marketing
 Customer database—an organized
collection of comprehensive information
about individual customers or prospects that
is current, accessible, and actionable for
marketing purposes.
 Database marketing—the process of
building, maintaining, and using customer
databases and other databases to make
contact, facilitate transactions, and build
customer relationships.
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23. Data Warehouse and Datamining
 Data warehouse—organized data where
marketers can capture, query, and analyze it
to draw inferences about an individual
customer’s needs and responses.
 Data mining—statisticians extract useful
information about individuals, trends, and
segments from the mass of data.
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24. Using the Database
To identify prospectsTo identify prospects
To target offersTo target offers
To deepen loyaltyTo deepen loyalty
To reactivate customersTo reactivate customers
To avoid mistakesTo avoid mistakes
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25. Downside of Database Marketing and
CRM
 Large investment
 Difficulty in getting everyone to be customer
oriented
 Not all customers want an ongoing
relationship
 Assumptions behind CRM may not always
hold true
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