PART 3.

CONNECTING WITH CUSTOMERS

MKTG302 MARKETING MANAGEMENT

PART 3. CONNECTING WITH

CUSTOMERS

PART 3. CONNECTING WITH CUSTOMERS

Outline
Chapter 5. Creating Long-Term Loyalty Relationships
Chapter 6. Analyzing Consumer Markets
Chapter 7. Analyzing Business Markets
Chapter 8. Tapping into Global Markets

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Chapter 5. Creating Long-Term

Loyalty Relationships

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Questions
What are customer value, satisfaction, and loyalty, and

how can companies deliver them?

What is the lifetime value of customers, and how can
marketers maximize it?
How can companies attract and retain the right customers
and cultivate strong customer relationships and
communities?
How do customers new capabilities affect the way
companies conduct their marketing?

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Successful marketers are those who

carefully cultivate customer
satisfaction and loyalty.

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Customer Value, Satisfaction, and Loyalty

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Customer Value, Satisfaction, and Loyalty

CUSTOMER-PERCEIVED VALUE
Defining value
Applying value concepts
Choice process and implications
Delivering high customer value

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Loyalty has been defined as

a deeply held commitment to rebuy or

repatronize a preferred product or service in
the future despite situational influences and
marketing efforts having the potential to
cause switching behavior.

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Customer Value, Satisfaction, and Loyalty

TOTAL CUSTOMER SATISFACTION
Satisfaction is a persons feelings of

pleasure or disappointment that result from

comparing a product or services perceived
performance (or outcome) to expectations.

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Customer Value, Satisfaction, and Loyalty

MONITORING SATISFACTION
Measurement techniques
Influence of customer satisfaction

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Quality is the totality of features and

characteristics of a product or service
that bear on its ability to satisfy stated
or implied needs.

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Customer Value, Satisfaction, and Loyalty

PRODUCT AND SERVICE QUALITY
Impact of quality: Higher levels of quality
result in higher levels of customer satisfaction,
which support higher prices and (often) lower
costs.

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Maximizing Customer Lifetime Value

Marketing is the art of attracting and
keeping profitable customers.

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Maximizing Customer Lifetime Value

The well-known 8020 rule states that 80 percent
or more of the companys profits come from the
top 20 percent of its customers.

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Maximizing Customer Lifetime Value

CUSTOMER PROFITABILITY
A profitable customer is a person, household, or

company that over time yields a revenue stream

exceeding by an acceptable amount the companys cost
stream for attracting, selling, and serving that customer.

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Maximizing Customer Lifetime Value

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Maximizing Customer Lifetime Value

MEASURING CUSTOMER LIFETIME

VALUE
Customer lifetime value (CLV) describes the net present

value of the stream of future profits expected over the

customers lifetime purchases.

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Maximizing Customer Lifetime Value

ATTRACTING AND RETAINING

CUSTOMERS
Reducing defection
Retention dynamics (marketing funnel)
Managing the customer base

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Maximizing Customer Lifetime Value

BUILDING LOYALTY
Interact closely with customers
Develop loyalty programs
Create institutional ties

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Maximizing Customer Lifetime Value

BRAND COMMUNITIES
A brand community is a specialized community of

consumers and employees whose identification and

activities focus around the brand.

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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 loyalty.

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Cultivating Customer Relationships

CUSTOMER RELATIONSHIP MANAGEMENT.
Personalizing marketing
Customer empowerment
Customer reviews and recommendations

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Keywords
Customer-perceived value, loyalty, total customer
satisfaction, satisfaction, quality, profitable customer,
customer profitability, customer lifetime value (CLV),
attracting and retaining customers, marketing funnel,
loyalty dynamics, customer loyalty, brand community,
customer relationship management (CRM)

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Chapter 6. Analyzing Consumer

Markets

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Questions
What is organizational buying?
What buying situations do business buyers face?
Who participates in the business-to-business buying process?
How do business buyers make their decisions?
In what ways can business-to-business companies develop

effective marketing programs?

How can companies build strong loyalty relationships with
business customers?
How do institutional buyers and government agencies do their
buying?

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Business organizations do not only sell; they also

buy vast quantities of raw materials, manufactured
components, plant and equipment, supplies, and
business services.

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What is Organizational Buying?

Organizational buying is the decision-making

process by which formal organizations establish

the need for purchased products and services
and identify, evaluate, and choose among
alternative brands and suppliers.

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What is Organizational Buying?

The business market consists of all the

organizations that acquire goods and services

used in the production of other products or
services that are sold, rented, or supplied to
others.

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What is Organizational Buying?

Features of Business Markets
Fewer, larger buyers
Close supplier customer relationship
Professional purchasing
Multiple buying influences
Derived demand
Inelastic demand
Fluctuating demand

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What is Organizational Buying?

Buying Situations
Straight rebuy
Modified rebuy
New task

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Participants in Buying Process

The Buying Center includes:
Initiators
Users
Influencers
Deciders
Approvers
Buyers
Gatekeepers

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Stages in Buying Process

1. Problem recognition
2. General need description
3. Product specification
4. Supplier search
5. Proposal solicitation
6. Supplier selection
7. Order-routine specification
8. Performance review

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Stages in Buying Process

Problem recognition
The buying process begins when someone in the

company recognizes a problem or need that can

be met by acquiring a good or service.

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Stages in Buying Process

General need description
The buyer determines the needed items general

characteristics and required quantity.

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Stages in Buying Process

Product specification
The buying organization now develops the items

technical specifications. Often, the company will

assign a product-value-analysis engineering team
to the project.

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Stages in Buying Process

Supplier search
The buyer next tries to identify the most

appropriate suppliers through trade directories,

contacts with other companies, trade
advertisements, trade shows, and the Internet.

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Stages in Buying Process

Supplier search
Online resources:
Catalog sites
Vertical markets
Pure Play auction company
Spot (or exchange) markets
Private exchanges
Barter markets
Buying alliances

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Stages in Buying Process

Proposal solicitation
The buyer next invites qualified suppliers to

submit written proposals. After evaluating them,

the buyer will invite a few suppliers to make
formal presentations.

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Stages in Buying Process

Supplier selection
Before selecting a supplier, the buying center will

specify and rank desired supplier attributes, often

using a supplier-evaluation model.

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Stages in Buying Process

Order-routine specification
After selecting suppliers, the buyer negotiates the

final order, listing the technical specifications, the

quantity needed, the expected time of delivery,
return policies, warranties, and so on.

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Stages in Buying Process

Performance review
The buyer periodically reviews the performance

of the chosen supplier(s). The performance

review may lead the buyer to continue, modify, or
end a supplier relationship.

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B2B Marketing Programs

Communication and branding activities
Systems buying and selling
Role of supportive services

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B2B Customer Relationship

Basic buying and selling
Bare bones
Contractual transaction
Customer supply
Cooperative systems
Collaborative
Mutually adaptive
Customer is king

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Keywords
organizational buying, business market, straight rebuy,
modified rebuy, new task, buying center, problem
recognition, general need description, product specification,
supplier search, proposal solicitation, supplier selection,
order-routine specification, performance review