705721 Marketing Management

EK BUNCHUAek@ba.cmu.ac.th

Department of MarketingFaculty of Business Administration

Chiang Mai University

Building Customer Satisfaction,Building Customer Satisfaction,Value, and RetentionValue, and Retention

Building Customer Satisfaction,Building Customer Satisfaction,Value, and RetentionValue, and Retention

VIT business school

1. Customer Satisfaction

The level of a person’s felt state resulting from comparing a product’s perceived performance in relation to the person’s expectations

P < E P = E P > E

Dissatisfied Satisfied Delighted(Highly satisfied)

What A Highly Satisfied Customer Does

Stays loyal longer Buys more as the company introduces new products a

nd upgrades existing products Talks favorably about the company and its products Pays less attention to competing brands and advertisi

ng and is less sensitive to price Offers product/service ideas to the company Costs less to serve than new customers because transa

ctions are routinized

How Customers Handle Dissatisfaction

Take no action Take some form of public action

Seek redress directly from business firms Take legal action to obtain redress Complain to business, public, or governmental

agencies Take some form of private action

Stop buying product/brand or boycott seller Warn friends about the product and/or seller

Methods of Tracking and Measuring Customer Satisfaction

Complaintand

suggestionsystems

Customersatisfaction

survey

Ghostshopping

Lostcustomeranalysis

2. Customer Perceived Value

The difference between total customer value and total customer cost

Total Customer Value The bundle of benefits customers expect from a

given product or service Total Customer Cost

The bundle of costs customers expect to incur in evaluating, obtaining, and using the product or service

Total customer costTotal customer costTotal customer valueTotal customer value

Determinants of Customer Perceived Value

Productvalue

Servicesvalue

Personnelvalue

Imagevalue

Monetarycost

Timecost

Energycost

Psychiccost

Customerperceived

value

Customerperceived

value

ProfitMargin

CustomerServices

Marketing& Sales

OutboundLogisticsOperations

InboundLogistics

Firm Infrastructure

Human Resource Management

Technology Development

Procurement

Pri

ma

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cti

viti

es

Su

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ort

Ac

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tie

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Value Chain

3. Retaining Customer

The need for customer retention Offensive marketing typically costs more than defensive marketing

Offensive marketing is designed to obtain an objective, usually market share, from a target competitor.

Whereas, Defensive marketing warfare strategies are a type of marketing warfare strategy designed to protect a company's market share, profitability, product positioning, or mind share.

It requires much effort and cost to induce satisfied customers to switch away from their current suppliers

Customer Development Process

SuspectsSuspects

1st-timecustomers1st-time

customers

Disqualifiedprospects

Disqualifiedprospects

Repeatcustomers

Repeatcustomers

AdvocatesAdvocates

PartnersPartners

ClientsClients

AttractingNew

Customers

ProspectsProspects

Inactive orex-customers

Inactive orex-customers

RetainingCustomers

RetainingCustomers

RetainingCustomers

New Product Adoption Process

Customer Relationship Management(CRM) The task of creating strong

customer loyalty andretaining customers

Trial

Interest

Adoption

Evaluation

Awareness

Levels of CRM

Accountable ReactiveBasic orReactive

Proactive Accountable Reactive

Partnership Proactive Accountable

High margin Medium margin Low margin

Many customers

Medium numberof customers

Few customers

Customer Equity

The aim of CRM is to produce high customer equity The more loyal customers, the higher customer equity Three drivers of customer equity:

Value equity Brand equity Relationship equity

(a) Value Equity

The customer’s objective assessment of the utility of an offering based on perceptions of its benefits related to its costs

Subdrivers of value equity: Quality Price Convenience

(b) Brand Equity

The customer’s subjective and intangible assessment of the brand, above and beyond its objectively perceived value

Subdrivers of brand equity: Brand awareness Customer attitude toward the brand Customer perception of the brand ethics

(c) Relationship Equity

The customer’s tendency to stick with the brand, above and beyond objective and subjective assessments of its worth

Subdrivers of relationship equity: Loyalty programs Special recognition and treatment programs Community building programs Knowledge building programs

Retention Building Approaches

Adding financial benefits Frequency programs Club membership programs

Adding social benefits Customization and customerization

Adding structural ties Create long-term contracts Charge a lower price to consumers who buy more Turn the product into a long-term service

4. Total Quality Marketing Strategy

Quality The totality of features and characteristics of a

product or service that bear on its ability to satisfy stated or implied needsPerformance qualityConformance quality

Total Quality Management (TQM) An organization-wide approach to continuously

improving the quality of all the organization’s processes, products, and services

Roles of Marketers in Total Quality Marketing Management

Marketers bear the major responsibility for correctly identifying the customers’ needs and requirements

Marketers must communicate customer expectations correctly to product designers

Roles of Marketers in Total Quality Marketing Management

Marketers must make sure that the customers’ orders are filled correctly and on time

Marketers must check that customers have received proper instructions, training, and technical assistance in the use of the product

Roles of Marketers in Total Quality Marketing Management

Marketers must stay in touch with customers after the sale to make sure that they are satisfied and remain satisfied

Marketers must gather and convey customer ideas for product and service improvements to the appropriate company departments

5. Internal Marketing

The task of successfully hiring, training, and motivating able employees who want to serve the customers well

Company

Employees Customers

Interactive Marketing

External M

arketingInte

rnal

Mar

ketin

g

A High-Performance Business Environment

Employee Satisfaction

Internal Marketing

Higher-quality products and services

Customer Satisfaction

Stockholder Satisfaction

Breakthroughinnovations

Continuousimprovements

Businessgrowth

Sales& Profits