Advanced Marketing

Management

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 CHAPTER 1
Customer Satisfaction, Loyalty & CRM

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Chapter 1 – What we will cover
 Basic Marketing Concepts
 Understanding customer satisfaction and its
measurement
 Having insights on customer loyalty, importance
and benefits
 Insights on how to build loyal customers
 Understanding customer databases, customer
relationship management and strategies

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Basic Marketing Concepts

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Development of the Marketing Concept

Quality Create, deliver, and

Innovation communicate value

Production Produ Selling Marketing Societal

Mass production
ct
Unsought goods
Mass distribution Overcapacity

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The Production Concept

 Holds that consumers will favor products that are available

and highly affordable
 Managements should focus on improving production and
distribution efficiency
 One of the oldest philosophies that guides sellers
 Useful when
 Demand for a product exceeds supply
 Product’s cost is too high and improved productivity is
needed to bring it down

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 The Product Concept
 Holdsthat consumers will favor products that offer
the best quality/ performance/ features/ benefits
 Managements should devote their energies to
making continuous product improvements
 Some manufacturers mistakenly believe that if they
“build a better mousetrap,” consumers will beat a
path to their door just for their product.

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The Selling Concept
 Idea that consumers will not buy enough of the organization’s
products unless the organization undertakes a large-scale selling and
promotion effort.

 This concept is typically practiced with unsought goods (those that

buyers do not normally think of buying).

 To be successful with this concept, the organization must be good at

tracking down the interested buyer and selling them on the product
benefits

 Industries that use this concept usually have overcapacity. Their aim is
to sell what they make rather than make what will sell in the market
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The Marketing Concept

 Holds that achieving organizational goals depends on

determining the needs and wants of target markets and
delivering the desired satisfactions more effectively
and efficiently than competitors do.
 customer focus and value are paths to sales and profits
 The marketing and selling concepts are often confused.
The primary differences are:
 The selling concept takes an “inside-out” perspective
(focuses on existing products and uses heavy
promotion and selling efforts).
 The marketing concept takes an “outside-in”
perspective (focuses on customer needs, values, and
satisfaction).
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The Societal Marketing Concept

 Holds that the organization should determine the

needs, wants, and interests of target markets.

 It should then deliver the desired satisfactions more

effectively and efficiently than competitors in a way
that maintains or improves the consumer’s and the
society’s well-being.

 The societal concept calls upon marketers to balance

three considerations in setting their marketing
policies:
 Company profits.
 Customer wants.
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 Society’s interests.
Segmentation, Targeting and Positioning

Marketers start by dividing

SEGMENTATIO
N the market into segments

Marketers decide which

TARGETING segments present the
greatest opportunities

The firm develops a market

offering that it positions in
POSITIONING
the minds of the target
buyers

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Customer Satisfaction and its
Measurement

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Core Marketing Concept
Need
Market Want
Demand

Profitable
Customer
Relationship Products
Transaction &
Services
Relationship
Ideas

Value &
Satisfaction

Building and maintaining profitable customer relationships by delivering

superior customer value and satisfaction 13

- Philip Kotler
Customer Oriented Organization Chart

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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.

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Determinants of Customer Perceived Value

Total customer benefit Total customer cost

Product benefit Monetary cost

Services benefit Time cost

Personnel benefit Energy cost

Image benefit Psychological cost

CPV = TCB- 16

TCC
Customer Satisfaction
 Satisfaction is a person’s feelings of pleasure or
disappointment that result from comparing a product’s perceived
performance(or outcome) to expectations.

 If the performance falls short of expectations, the customer is

dissatisfied.

 If it matches expectations ,the customer is satisfied.

 If it exceeds expectations, the customer is highly satisfied or

delighted.
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Customer satisfaction and Product/ Service Quality

 Satisfaction will also depend on product and service

quality
 But what is Quality?
 Fitness for use
 Conformance to requirements
 Freedom from variation
 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 Satisfaction Requirements

 Proper research before hand

 Proper offering
 Proper pricing
 Proper availability

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How do buyers form their
expectations
 Past buying experiences

 Advice from friends and associates

 Marketer’s information and promises

 Competitors information and promises

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Total Customer Satisfaction

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Monitoring Customer Satisfaction
 Periodic Surveys

 Customer Loss Rate

 Monitoring competitive performances

 Mystery Shoppers

 Customer Complaints
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 Customer Loyalty, its
Importance and Benefits

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Customer Loyalty

Loyalty is a deeply held

commitment to re-buy 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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Importance of Customer Loyalty

 More size of the wallet

 High conversion rate
 Higher profitability
 Less costly
 Higher volume and frequency
 Resource planning

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Methods to Measure Customer
Loyalty
 Behavioral Measures: Customer’s regularity and frequency of
purchases as a sign of loyalty.
 Attitudinal Measures: Use of attitudinal data to indicate the
emotional and psychological connection
 Composite Measures: Combination of first two measurements.

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Attracting & Retaining Customers

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Customer Retention – Ways to
reduce churn

Equip staff with better training and tools

Prompt response to customer complaints
Design processes of least resistance
Effective organization structure to
address customer complaints
Provide incentives to effective staff
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Need for Customer Retention

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Customer Relationship
Management

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Customer Relationship Management
 Process of carefully managing detailed information about individual
customers and all customer “touch points” to maximise loyalty
 A customer “touch point” is any occasion on which a customer
encounters the brand/ product
 Actual experience
 Personal and mass communication
 Casual observation
 Companies use information gathered
 Personalized marketing
 Permission marketing
 Customer empowerment

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Framework for CRM

Identify prospects and customers

Differentiate customers by needs

and value to company

Interact to improve knowledge

Customize for each customer

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CRM Dimensions

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How does CRM Help an
Organization?
 Enhance the bottom-line
 Generation of leads
 Increased Referrals
 Customer Support
 Improve Product and Services

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