Lecture Marketing management: Chapter 4 – Nguyễn Thị Trang Nhung

1
5
Creating Long-Term
Loyalty Relationships


Chapter 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
customers and cultivate strong customer
relationships?
What are the pros and cons of database
marketing?

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

5-2


Builds Relationships

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

1-3


Figure 5.1 Customer-Orientations

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

5-4


Dell Reestablished
Its Commitment to Value

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

5-5


What is Customer Perceived Value?
Customer perceived value is the difference between
the prospective customer’s evaluation of all the benefits
and all the costs of an offering and the perceived
alternatives.







Total Customer benefit is the perceived monetary of
the bundle of economic, functional, psychological benefit
customer expect from a given marketing offering by
product, services, personnel and image involve
Total Customer cost is the perceived bundle of cost
that customers expect to incur in evaluating, obtaining,
using and disposing of the given market offering
including monetary, time and psychic cost

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

5-6


Figure 5.2 Determinants of
Customer Perceived Value
Total customer benefit

Total customer cost

Product benefit

Monetary cost

Services benefit

Time cost

Personal benefit

Energy cost

Image benefit

Psychological cost

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

5-7


Caterpillar Maximizes
Customer Value

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

5-8


Steps in a
Customer Value Analysis









Identify major attributes and benefits that
customers value
Assess the qualitative importance of different
attributes and benefits
Assess the company’s and competitor’s
performances on the different customer values
against rated importance
Examine ratings of specific segments
Monitor customer values over time

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

5-9


What is Loyalty?
Loyalty is a deeply held commitment to rebuy or re-patronize a preferred product or
service in the future despite situational
influences and marketing efforts having the
potential to cause switching behavior.

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

5-10


Top Brands in Customer Loyalty










Apple iPhone
Clairol
Samsung
Mary Kay
Grey Goose
Clinique
Avis
Wal-Mart










Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Google

Amazon
Bing
J.Crew
AT&T Wireless
Discover Card
Verizon Wireless
Cheerios
5-11


Establishing Value

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

5-12


Measuring Satisfaction


Customer satisfaction is feeling of pleasure or
disappointment that result from comparing a
product perceived performance and to
expectation

Measuring
 Periodic surveys
 Customer loss rate
 Mystery shoppers
 Monitor competitive performance

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

5-13


Managing Customers

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

5-14


What is Quality?

Quality is the totality of features and
characteristics of a product or
service that bear on its
ability to satisfy
stated or implied needs.

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

5-15


Maximizing Customer Lifetime Value
Customer Profitability

Is a person, household, company
that over time yield a revenue

stream that exceed by an
acceptable a mount the company’s
cost stream for attracting, selling
and serving that customer

Customer Equity

Lifetime Value

Describe the net present value of
the stream of future profit expected
over customer life time purchase

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

5-16


Figure 5.3 Customer-Product
Profitability Analysis

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

5-17


Estimating Lifetime Value






Annual customer revenue: $500
Average number of loyal years: 20
Company profit margin: 10
Customer lifetime value: $1000

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

5-18


What is
Customer Relationship Management?
CRM is the process of carefully managing
detailed information about individual
customers and all customer touch points to
maximize customer loyalty.

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

5-19


Framework for CRM



Identify prospects and customers:
Differentiate customers by needs and value to

company: estimate customer value and customer time
line value





Interact with individual customer to improve your
knowledge about individual need and to build
stronger relationship
Customize product, service and message to
each customer

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

5-20


Amy’s Maximized Word of Mouth

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

5-21


Attracting and
Retaining Customers







Reduce the rate of defection
Increase longevity
Enhance share of wallet
Terminate low-profit customers
Focus more effort on high-profit customers

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

5-22


Figure 5.4 The Marketing Funnel

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

5-23


Loyalty Programs

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

5-24


Database Key Concepts





Customer database
Database marketing
Mailing list





Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Business database
Data warehouse
Data mining

5-25