MKT101 - Chapter 2

Building Customer
Satisfaction, Value
and Retention
Customer Value
Customer Delivered Value is the difference between total customer
value and total customer cost.
Total Customer Total Customer

Value Cost
• The bundle of benefits that the • The bundle of costs that
customer expects from a given customers expect to incur in
product or service. evaluating, obtaining, using and
disposing the product or service.
• Consists of the Product Value,
Services Value, Personnel Value, • Consists of the Monetary Cost,
and Image Value. Time Cost, Energy Cost and
Psychic Cost.
MKT101 – Principles of Marketing Management Chapter 2-Building Customer Satisfaction, Value and Retention
2
Customer Satisfaction
Satisfaction is a person’s feelings of pleasure or disappointment resulting
from comparing a product’s perceived performance in relation to his or her
expectations.
High Customer High Customer High Customer

Value Satisfaction Loyalty
Michael Lanning, in Developing Profitable Value, says that a firm must

develop a superior value proposition and a superior value-delivery system. A
firm’s value proposition is much more than it’s positioning on a single attribute; it
is about the resulting experience customers will have from the offering and their
relationship with the supplier.
MKT101 – Principles of Marketing Management 3 Chapter 2-Building Customer Satisfaction, Value and Retention
Companies that deliver high Stakeholders
customer value resulting to
consistently high customer Processes
satisfaction are simply called as

high performance businesses.
Resources Organization
Fig. 3 A High Performance Business
MKT101 – Principles of Marketing Management 4 Chapter 1-Marketing in the 21st Century

Although businesses have traditionally paid the most attention
to their stockholders, today they recognize that unless
they nourish other stakeholders - customers, employees,
suppliers, distributors - the business may never earn
sufficient profit for the stockholders.
Stakeholders
A company can accomplish its satisfaction

goals only by managing and linking work
process. As a result, they are
reengineering the work flows and building Processes
cross-functional teams that are responsible
for each process.
To carry out work processes, a company needs to
Resources own, lease or rent resources – the labor power,
materials, machines, information, energy and other
resources.
A core competency is an internal activity that is essential or
central to its overall performance and success. A core competency has
three characteristics:
1. a source of competitive advantage that makes a significant
contribution to perceived customer benefits.
2. it has a potential breadth of applications to a wide variety
of market
3. It is difficult for competitors to imitate.
Value Chain
Value Chain is a tool for identifying ways to create more customer value.
It identifies relevant activities that create value and cost in a specific business.
Value Chain
Many companies today are reengineering their business, creating cross-
disciplinary teams to more smoothly manage these five core business processes.
New Product Inventory Customer Order-to- Customer

Realization Management Acquisition and remittance Service
Retention
• Researching, • Developing and • Efficiently • Providing quick,
developing, managing cost- • Effectively receiving and satisfactory
and launching effective attracting, approving customer
new, high- inventory levels developing and orders, service,
of raw materials, retaining answers, and
quality semi-finished shipping goods
products. customers. and collecting problem
materials, and
finished goods. payments. resolution.
Value Delivery Network – partnering with suppliers and distributors to deliver superior value.
Relationship Marketing 👪
The task of creating customer loyalty. Relationship Marketing is the key to
customer retention.
Customer Development Process
The process involved in keeping and attracting customers.
Customer Lifetime Value
The present value of the profit stream that the company would realize
during the customer’s lifetime. The concept of Customer Lifetime Value allows
firms to look at customers not on transactional mode but on relationship mode.
CLTV in a year can be seen as the sales multiplied by the profit margin and
number of transactions within a year.
CLTV = S x PM x n
Suppose that Juan buys Milk Tea everyday at Bloopers. The milk tea is sold
at P100 at 60% profit margin, find Juan’s CLTV for 4 years.
A profitable customer is a person, household, or company that over time

yield’s a revenue stream that exceeds by an acceptable amount the company’s
cost of acquiring and keeping that customer.
Five Levels of Investment in Customer-Relationship Building
Basic Marketing
• Simply selling the product.
Reactive Marketing
• Selling the product and encouraging customers to offer questions, comments or complaints.
Accountable Marketing
• Following up after the sale to see whether the product meets expectations and to ask for
improvement suggestions and any specific disappointments.
Proactive Marketing
• Contacting customers periodically with suggestions about improved product uses or helpful new
products.
Partnership Marketing
• Working continuously with customers to find ways to perform better.
Levels of Relationship Marketing 👪
High Margin Medium Margin Low Margin
Many
Basic or
Customers/ Accountable Reactive
Reactive
Distributors
Medium
Number of
Proactive Accountable Reactive
Customers/
Distributors
Few Customers/
Partnership Proactive Accountable
Distributors
To build stronger customer bonds, a company can add financial benefits,

social benefits and structural benefits.
Special Topic: Total Quality Management
TQM is an organization-wide approach to continually

improving the quality of all processes, products and
services. Quality is the totality of features and
characteristics of a product that bear on its ability to satisfy
stated or implied needs.
Today’s companies must implement TQM to remain
profitable, because total quality is vital to value creation
and customer satisfaction.

MKT101 - Chapter 2

Uploaded by

Copyright:

Available Formats

MKT101 - Chapter 2

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

MKT101 - Chapter 2

Uploaded by

Copyright:

Available Formats

Building Customer

Total Customer Total Customer

High Customer High Customer High Customer

Michael Lanning, in Developing Profitable Value, says that a firm must

satisfaction are simply called as

Fig. 3 A High Performance Business

MKT101 – Principles of Marketing Management 4 Chapter 1-Marketing in the 21st Century

A company can accomplish its satisfaction

New Product Inventory Customer Order-to- Customer

A profitable customer is a person, household, or company that over time

To build stronger customer bonds, a company can add financial benefits,

TQM is an organization-wide approach to continually

You might also like