Chapter 3

Marketing department should be viewed as Superior

customer value delivery system.
Customer perceived value
Fig 3.1
Total customer satisfaction
Satisaction is a person!s eelings o pleasure or disappointment
rom comparing a product!s perceived perormance in relation to
his or her e"pectations.
#igh satisaction or delight creates an emotional bond with the
brand or company$ not %ust a rational preerence.
Customer expectation: raising e"pectations and
delivering perormance to match.
Delivering high customer value: &esign superior value
proposition aimed at speciic target through superior
value delivery system.
'rand value and customer value.
Measuring satisfaction: (evel o satisaction.
Complaint and suggestion systems$ customer
satisaction surveys$ ghost shopping$ lost
customer analysis.
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The nature of high performance business
Fig 3.)
Stakeholder
*mployee satisaction
Customer satisaction
Stockholder satisaction
Processes
Core business processes through cross+unctional team.
Resources
,utsourcing
Core competencies and distinctive capabilities
Competitive advantage
Organization and organization culture
Corporate culture
Delivering customer value And satisfaction
Value chain : *mphasis should be put on the smooth management
o core business processes-
1. .he market sensing process
). .he new oering reali/ation process
3. .he customer ac0uisition process
1. .he customer relationship management process
2. .he ulillment management process
The value network system!upply chain"
Attracting and retaining customers
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#ttracting customers
.he challenge is not to produce satisied customer but to
produce delighted and loyal customer.
From suspects to prospects
Computing the cost of lost customer
Customer churn or deection 3adding water to a leaking bucket4
Five steps to reduce the deection rate-
1. &eine and measure retention rate.
). &istinguish the cause o customer attrition and identiy those
that can be managed better.
3. *stimate how much proit would have lost when lose
customers. 3customer lietime value4
1. *stimate how much it cost to reduce the deection rate.
2. (istening to customers.
The need for customer retention
.he key to customer retention is customer satisaction.
(isten to customer complaints.
Measuring customer lifetime value C$V"
5t represents the value o the stream o uture proit e"pected over
the customer!s lietime purchase.
.wo ways to strengthen customer retention-
1. *rect high switching barriers.
). &eliver high customer satisaction.
Customer relationship management C%M"
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6im is to produce high customer e0uity that is the total o the
discounted lietime value o all the irm!s customers.
.hree drivers-
&'Value e(uity value management"
Customer!s ob%ective assessment o the utility 3beneit vs
cost4.
Sub+drivers 30uality$ price convenience4
&ierentiated$ comple" or need to be evaluated products.
2')rand e(uity )rand management"
Customer!s sub%ective and intangible assessment o the brand
Sub+drivers 3brand awareness$ customer!s attitude towards
the brand$ customer perception o the brand4
(ess dierentiated$ emotional impact
3'%elationship e(uity %elationship management"
Customer!s tendency to stick with the brand
Sub+drivers 3loyalty program$ special recognition and
treatment program$ community building program$ knowledge
building program4
5mportant where personal relationship count or.
!teps in attracting and keeping customers fig 3'*"
7in+back strategies or inactive or e"+customers.
+ive level of investment to build customer relationship-
1. 'asic marketing
). 8eactive marketing
3. 6ccountable marketing
1. 9roactive marketing
2. 9artnership marketing
.he likely level o relationship marketing depends on
the number o customers and the proit margin level. 3ig 3.:4
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+orming !trong customer bonds: the basic
Si" points 3page ;<4
6dding inancial beneits 3F9s4
6dding Social beneits
6dding structural ties
Create long+term contracts
Charge a lower price to customers who buy larger
supplies regularly
.urn the product into a long+term service.
Customer profitability, company profitability and T-M
)=+<= rule
)=+<=+3= rule
Company could improve its proit by iring its worst
customers.
9roitable customer- revenue stream rom the customer vs
cost stream o the company
Customer+product proitability analysis 3ig 3.;4
6llocating marketing investment according to customer value
3ig 3.<4
.ncreasing company profitability
Sustainable competitive advantage
(everageable advantage
Customer advantage
.mplementing T-M
6ll departments should make sustainable contribution to
.>M.
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