Kotler05_media.ppt 2997KB Aug 31 2008 10:31:14 PM

(1)

MARKETING MANAGEMENT

12th_edition

5 Creating

Customer Value,

Satisfaction, and

Loyalty

(2)

5-2

Chapter Questions

• What are customer value, satisfaction, and loyalty, and how can companies deliver

them?

• What is the lifetime value of customers?

• How can companies both attract and retain customers?

(3)

5-3

(4)

5-4

(5)

5-5

eBay epitomizes the

(6)

5-6

Figure 5.2 Determinants of

Customer-Delivered Value

(7)

5-7

(8)

5-8

Loyalty

A deeply held commitment to re-buy or re-patronize a preferred product

(9)

5-9

The Value Proposition

(10)

5-10

(11)

5-11

(12)

5-12

Measuring Satisfaction

Periodic Surveys Periodic Surveys

Customer Loss Rate Customer Loss Rate

Mystery Shoppers Mystery Shoppers

Monitor competitive performance

(13)

5-13

Countrywide

received the

#1 customer

satisfaction

rating from

J.D. Power

and

(14)

5-14

Product and Service Quality

Quality is the totality of features and characteristics of a product or

service that bear on its ability to satisfy

(15)

5-15

Quality

Conformance quality

(16)

5-16

Total Quality Management

TQM is an organization-wide approach to continuously

improving the quality of

(17)

5-17

Maximizing Customer Lifetime Value

Customer Profitability

Customer Equity

(18)

5-18

(19)

5-19

Estimating Lifetime Value

• Annual customer revenue: $500 • Average number of loyal years: 20 • Company profit margin: 10

(20)

5-20

Drivers of Customer Equity

Value Equity

Relationship Equity

(21)

5-21

(22)

5-22

Framework for CRM

Identify prospects and customers

Differentiate customers by needs and value to company

Interact to improve knowledge

(23)

5-23

Harrah’s

targets

(24)

5-24

CRM Strategies

Reduce the rate of defection Reduce the rate of defection

Increase longevity Increase longevity

Enhance “share of wallet” Enhance “share of wallet”

Terminate low-profit customers

(25)

5-25

Table 5.1

Mass vs. One-to-One Marketing

Mass

• Average customer • Customer anonymity • Standard product

• Mass production • Mass distribution • Mass advertising • One-way message • Economies of scale

One-to-One

• Individual customer • Customer profile

• Customized market offering

• Customized production

(26)

5-26

Customer Retention

• Acquisition of customers can cost 5 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%.

(27)

5-27

Describing Market Dynamics

(28)

5-28

Figure 5.4 The

Customer-Development Process

Prospects Suspects

Disqualified

First-time

customers _customersRepeat Clients Members

(29)

5-29

Building Loyalty

Partnership

Proactive

Accountable

Reactive

(30)

5-30

(31)

5-31

Figure 5.5

(32)

5-32

Reducing Customer Defection

• Define and measure retention rate.

• Distinguish causes of customer attrition.

• Estimate profit loss associated with loss of customers.

(33)

5-33

Forming Strong Customer Bonds

Add financial benefits

Add social benefits

(34)

5-34

(35)

5-35

(36)

5-36

Database Key Concepts

• Customer database • Database marketing • Mailing list

• Business database • Data warehouse

(37)

5-37

(38)

5-38

Using the Database

To identify prospects To identify prospects

To target offers To target offers

To deepen loyalty To deepen loyalty

To reactivate customers To reactivate customers

(39)

5-39

Focus

on

(40)

5-40

Marketing Debate

 _{Online Versus Offline Privacy?}

Take a position:

1. Privacy is a bigger issue in the

online world than in the offline world. 2. Consumers receive more benefit than risk from marketers knowing

(41)

5-41

Marketing Debate

Choose a business and show how you would go about developing a