Assignment on: Customer life time value, Customer

Equity & Buyer Decision Process

Course Name: Principles of Marketing
Course Code: 4203

Submitted To:
Ms. Sadia Afroze
Assistant Professor
Department of AIS
Faculty of Business Administration
University of Dhaka

Submitted By:
Md. Sharif Hassan
ID: 11427024



Date of Submission: June 13, 2014.
Question1: Companies want to capture customer life time values and build customer
equity. Explain two concepts and how do marketers build such customer equity.
Answer1:
Customer life time value means the value of the entire stream of purchases that a customer would
make over a lifetime of patronage. Firms do not want to capture a customer for one purchase
rather they want to conserve the customer through their service to make the customer loyal.
Customer life time value focuses on the satisfaction and conservation of the customer. For
example: Mr. Rahim is a loyal customer of Menz Club (A outfit store for Men). If he buys till his
death worth of Tk. 200000 outfit from Menz Club then this Tk. 200000 is the customer life time
value for Menz Club of Mr. Rahim.
On the other hand Customer equity is the total combined customer life time values of all the
companys current and potential customers. For Example: Store has 10 customers. Everyone has
TK. 100000 life time value. Then the customer equity of the firm will be Tk. 100000*10 = Tk.
1000000.
Marketers can build customer equity capturing customer life time value by following some
techniques. First of all firms have to spend money in advertising to attract customers to come to
their store and purchase their products. In this case company must keep in mind to serve quality
products at a competitive price. Again firms may give special offers and return customers awards
as a result customers will be keen to spend more for that product. If the firm is able to
consistently exceed the expectation of the customers, firm will no longer required to spend
money to convince the customers to shop in their store and with this customers life time value
increases. Additionally satisfied customers offer the most powerful form of advertising and that
is word of mouth. Through this media firm will get new customers along with the existing value
of the old customers and this advertising will cost nothing to the firm. As a result customers will
increase as well as the life time value of the loyal customers increases. With more profitable
loyal customers there will be higher customer equity. This is how the customer equity increases
capturing customer life time values.

Question 2: Using the buyer decision process trace a recent purchase you have made. Be
sure to examine each of the five stages of the buyer decision process and detail your
experience in each stage. What could the seller have done to make your buying experience
better? Did you experience any cognitive dissonance? Explain it.
Answer 2:
Recently I have purchased a bicycle. My buying decision process for purchasing the bicycle is
given below.
Need Recognition: Recently I have found that many of my friends had purchased bicycle to go
to their offices as well as to universities. When I met with my friends they told me about the
benefits of bicycle. They told me that it is good to do cycling. It also saves time to reach to your
destination. Talking with my friends I was convinced and feeling interested to buy a bicycle
which I can use to go to office and university that would save my time, money and keep my body
fit.
Information Search: After feeling the need for a bicycle I started looking for information about
different bicycles. I asked my friends which companys bicycles are good. All of my friends
suggested me that Meghna group bicycles and Lion bicycles are export quality and they regularly
export bicycles to different parts of the world. Then I queried about bicycles of Meghna group
and Lion cycles in websites and look for different models and also visited some outlets of
bicycle stores. I gathered information about different models from websites and personal
contracts. Based on the information I was able to short list some of the models according to my
criteria.
Evaluation of Alternatives: In my evaluation process I have focused on three factors they
specialized parts, style and price. I have short listed three models at beginning. They were
Veloce legion 50, Veloce Legion Legacy and Core project 1.5 from lion cycle. But when I
ranked them according to my needs I ranked Veloce Legion legacy as my first choice, then Core
project 1.5 and then Veloce legion 50. I chose Veloce Legion legacy because it has included a
SRAM Avid BB5 disk brake and also used SRAM shifter, SRAM rear derailleur and SRAM
front derailleur. Those are the core and heart of a bicycle. They have also used a top quality SR
SUNTOUR XCM with Hydraulic Lock Out fork. The color and style was superb which go with
my image and the price was only Tk. 24500 and it was in my budget.
Purchase Decision: Based on my preferences I chose to purchase Veloce Legion legacy. So at
last I purchased Veloce Legion legacy from Cycle life outlet situated at Satmasjid road.
Post Purchase Behavior: I was satisfied with my purchase of Veloce Legion legacy. It gives a
great feeling and experience. I enjoyed riding my bicycle. It is smooth and has low weight as
result it has great grip. It is very comfortable to ride the cycle. So I did not find any cognitive
dissonance from the purchase.
I felt that marketer should add a technique which could make my buying experience better.
Marketer could introduce test ride facility which could help me to evaluate the differences
between the cycles more accurately because I had to guess many things at the time of buying.
This test ride could make the evaluation process more easier.