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Midterm review Notes.docx

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Wilfrid Laurier University
Laura Allan

BU121 Midterm Review Notes Unit 1: Business Planning TEXTBOOK First-rate business plan - This document is a formal, written expression of the entrepreneur‘s vision for converting ideas into a profitable, going business - The entry card for serious consideration by venture capitalists, banks and other sources of funding - 60 % of small, new companies have no business plan o Reason:  Entrepreneurs firmly believe in their ideas and their own ability to carry them through to success  Had little practice in writing formal documents - Entrepreneurs who prepare excellent business plans are more likely to attain success than those who do not o Reduces the chance of venture failure o Increased the rate of new business and new product development - Key: persuasion Why Write a Business Plan? - ― It is truly difficult to arrive somewhere unless you know where you want to go‖. - Much more than a document to persuade skeptical people to invest in your new venture o Also a detailed road map for converting your ideas and vision into a real, functioning business - Address a number of complex issues o How your product will be produced o The price at which it will sell o How and to whom it will be marketed o How it will compare with existing or potential competitors o What financial resources are needed and how these will be used - A carefully prepared and well-reasoned business plan will indeed help you with the process of planning o Explain what the new venture is trying to accomplish and how it will go about attaining these goals o The clearer the links between the goals sought and the means for accomplishing them, the more impressive/persuasive the business plan will be - Provide themselves with a clearer understanding of the best ways of proceeding - Often changes as new business develops Successful planning business model 1. Develop a simple, basic business plan 2. Start the business 3. Take the information that is gained from starting and running the new business and use it to refine the plan and obtain funding as this become necessary - Orderly, succinct, and persuasive fashion - Basic principles: o The plan should be arranged and prepared in proper business form  Start with a cover page (name/address of the company/contact information)  Followed by a clear table of contents  Followed by executive summary  Various appendices (detailed financial projections/complete resume) o The plan should be succinct  As short and succinct as possible o The plan should be persuasive  Begin strong, and continue strong  Executive Summary Executive Summary - The exec summary takes the place of the title slide - Clear, concise description of the problem, solution, business model and underlying magic - Don‘t explain the entire business plan – convey it‘s essence and it‘s energy - 2-3 pages max - Answer key questions briefly, but in enough detail that a reader can form a clear picture of what your new venture is all about. - Most important part of the business plan, worthy of special effort - First and best chance (or only) to generate interest in others (first impression) - Major sections followed in orderly arrangement o Background and purpose: A section describing your idea and the current state of your business o Marketing: A section describing the market for your product and service  Who wants to use/buy it and why they would want to do so  Describe target market and your value proposition o Competition: Information on the existing competition and how it will be overcome, pricing, and related issues  How you will build and sustain competitive advantage against current firms and future entrants o Development, production, and location  Where the new venture‘s products and services are in the process? o Management: A section describing the experience, skills, and knowledge of the new venture‘s management team o Financial Section: Provide information on the company‘s current financial state and offers projections for future needs, revenue, and other financial measures. o Risk factors: Discusses various risks the new venture will face and the steps the management team is taking to protect against them o Harvest or exit: Investors are interested in understanding precisely how they will gain of the company is successful  When and how the company might go public can often be very useful o Scheduling and milestones: Information on when each phase of the new venture will be completed should be included, so potential investors will know when key tasks will be completed. o Appendices: Detailed financial information and detailed resumes of the top management team should be presented. The Seven Deadly Sins for New Venture Business Plans 1. The plan is poorly prepared and has an unprofessional look - E.g. no cover page, a cover page without contact information, glaring typos - Investor reaction: ― I‘m dealing with a group of amateurs‖ 2. The plan is far too slick - E.g. it is bound like a book, is printed on shiny paper, and uses flashy graphics. - Investor reaction: ―What are they trying to hide behind all those fireworks?‖ 3. The executive summary is too long and rambling - It doesn‘t get right to the point - Investor reaction: ―If they cant describe their own idea and company succinctly, I don‘t want to waste my time with them‖. 4. It‘s not clear where the product is in terms of development - Does it exist or not? Can it be readily manufactured? - ―I can‘t tell whether this is real or just another pipe dream; I‘ll pass on this one‖. 5. No clear answer is provided to the question: ―Why would anyone ever want to buy one?‖ - Many entrepreneurs seem to assume that their new product or service is so great that it will virtually sell itself. - ―These are truly amateurs‖ 6. There is no clear statement of the qualification of the management team - ―They probably have no relevant experience‖ 7. Financial projections are largely an exercise in wishful thinking (optimism) - ―They have no idea what it‘s like to run a company‖ *** If one or more of these errors or problems are present in a business plan, it is likely to be rejected by potential investors, no matter how good other aspects of the plan may be. Lecture – The Art of the Start – Guy Kawasaki The most important things an entrepreneur must accomplish…  Make meaning: o The best reason to start an organization is to make meaning—to create a product or service that makes the world a better place. So your first task is to decide what is driving you, the reasons that keep you going.  Make mantra: o Forget mission statements; they‘re long, boring, and irrelevant. No one can ever remember them—much less implement them. Instead, take your meaning and make a mantra out of it. This will set your entire team on the right course. o Ex. PepsiCo – Refresh Everything o Ex. AWAKE Chocolate – Stay AWAKE (straight-forward, obvious)  Get going: o Take action on your business plan and start creating and delivering your product or service. o Don‘t focus on pitching, writing and planning. o ―Don‘t worry about being embarrassed. Don‘t wait to develop the perfect product or service. Good is good enough. There will be plenty of time for refinement later. Its not how great you start – it‘s how great you end up.‖  Define a business model: o No matter what kind of organization you‘re starting, you have to figure out a way to make money. The greatest idea, technology, product, or service is short-lived without a sustainable business model. o Business model is essentially on how you going to make money. o Take the information that is gained from starting and running the new business and use it to refine the plan and obtain funding as this become necessary  Weave a MAT (milestones, assumptions, tasks): o Major milestones you need to meet on a certain date (key dates), a way for you to track your progress o Assumptions that are built into your business model; key ideas/facts/things that is the basic of what you are doing. (Potential market place, sales cycle, etc.) o Tasks you need to accomplish to create an organization. This will enforce discipline and keep your organization on track when all hell breaks loose – Ex. Rent space, file a legal document. The Art of Writing the Business Plan Business plan: Cost of living document (execution and implementation)  Write for the right reasons o Due-diligence stage of courting an investor o Forces the founding team to work together o Makes the team consider issues it glossed over in the euphoria o Uncovers holes in the founding team **The process is more important than the destination **Write deliberate, act emergent: Be very conscious, and got to deal with reality and be flexibility, allow it to change as needs arises. Unit 2: Business Communications TEXTBOOK The task of preparing a written business message or a presentation is easier and more efficient if you have a systematic process to follow. For business messages ad oral presentations, your writing should be as follows: 4 principles of business writing  Purposeful o Writing to solve problems and convey information  Persuasive o Want your audience to believe and accept your message  Economical o Try to present ideas clearly buy concisely  Audience oriented o Concentrate on looking at a problem from the reader‘s perspective instead of seeing it from your own. 3x3 Writing Process - Breaks the entire task into three phases:  Prewriting o Analyze  Decide on your purpose o Anticipate  Profile the audience o Adapt  What techniques can you use to adapt your message to its audience and the audience‘s anticipated reaction?  Tone/empathy, the ―you‖ view  Writing o Research  Gather data to provide facts o Organize  Group similar facts together  Organize direct message with the big idea first, followed by an explanation and an action request in the closing o Compose  Prepare a first draft, usually writing quickly  Revising o Revise *takes the most time – major component of the writing process  Edit your message to be sure it is clear, conversational, concise, and readable o Proofread  Take the time to read over every message carefully (spelling, grammar, punctuation, and format) o Evaluate  Decide whether this message will achieve your purpose Lecture – Communication that “Stick” – Chip Heath & Dan Heath What Sticks?  Sticky message = understandable, memorable, and effective in changing thought or behavior o Urban legends  Are ideas born interesting or made interesting? o CSPI and movie popcorn  Interesting but not sensational, truthful but not mind-blowing, and important but not ‗life or death‘ 6 principles of stickiness: SUCCESs Model Curse of Knowledge: Once we know something it is hard (almost impossible) to remember what it was like not to know something. We cannot longer experience how it was like lacking the information. This leads to massive miscommunication because we think the other person knows as much as us.  A huge gap in sharing knowledge.  The best example is tapping or humming a very simple worldwide recognizable song for someone. The other person will have no idea what the song is, and the tapper/hummer can‘t believe the song is not guessed. This because he hears the song in his head, so he is poised by the Curse of Knowledge. There are 2 ways to beat the Curse of Knowledge: 1) Don‘t learn anything. (This doesn‘t sound very practical) 2) Transform your ideas into a sticky message.  Simplicity o Simple = core + compact  get to the core we want to say, and say it in the compact way. o Find the ―core‖ of the message  strip the message to the core  Helpful concept called ―Commander‘s intent‖  A technique used in the army to pass along the most essential information through the chain of command. It forces officers to light the most important goal of an operation, with loss of certain details but with still the core message alive. This because ‗No well laid out plan survives contact with the enemy.‘ Like: ‗My intent is to have Third Battalion cleared Hill 4305 to protect the flank of the Third Brigade‘. Not a lot of details and you can lose the ability to execute the plan, but you can never lose the responsibility of executing the intent.  Matter of forced prioritization  Don‘t ‗bury the lead‘ - Is when you express the core of the message in the middle or at the end of the story and let it be overshadowed by too much information that isn‘t core. The lead, a term used in the reporter and newspaper industry, is the most essential part of story, the 1st sentence, the headline. In newspapers you get the most important info first and the less important info at the end, to trigger your attention from the start. o Communicate the core in a compact way  Use proverbs  Simple but profound  Use existing schema: take something really complex but change it to really simple  Use something that attached something that already exist in someone‘s brain  Ex. Buy more stock, make more money (in your knowledge)  Use analogies  Ex. Hollywood: In pitching a Hollywood movie a producer would describe it in terms of other hits: E.g., Speed will be Die-Hard on a bus, or Alien will be Jaws on a spaceship.  Use generative metaphors  Use metaphors to generate new perception  Ex. Disney called their customers their guests like home and uses the term "cast member" to describe their amusement park employees. This tells employees how to behave: Even if you are just sweeping the park you are "on stage" and need to behave.  Contrast this to the poor choice by Subway to call their employees "sandwich artists". It is completely useless as a guide to behavior: In no way does Subway wants their employees to innovate when making sandwiches, they should instead follow the rules precisely.  Unexpected o By being unexpected you can grasp the audience attention, but surprise doesn‘t last. You create interest and curiosity. Use unexpectedness to break schemas of guessing what comes next. o Get audience to pay attention  Need surprise and interest (break the pattern)  Use surprise to break the pattern and gets the attention, use interest to keep their attention o Violate expectations  Be counterintuitive – uncommon sense  Nordstrom‘s – a fashion store that is well known for its far-reaching customer service o Intend to provide customer service at the expense of efficiency o ‗We iron shirts for our clients.‘ ‗We giftwrap presents bought in other stores.‘ ‗We keep your car warm in wintertime.‘ o Generate interest and curiosity  Open gap in knowledge  Give context  Fill those gaps  Concrete o Makes ideas clear and things understandable by using concrete images. o Humans react on sensory/concrete information. Do not use abstract ideas; our brains respond best to concrete data. o Fill with concrete images  ―Sour grapes‖  Brown eyes, blue eyes  Hamburger Helper  Credible - To offer something verifiable, a sort of ‗Try before you buy‘ or ‗See for yourself‘. Use Authorities or sometimes better anti-authorities. o Believable o External credibility – get someone to talk to that has authorities  Experts/celebrities/anti-authorities - Stephen Hawking, Michael Jordan  Anti-authority (most effective way)  Regular people who act as ambassadors of our ideas by their personal experiences o Internal credibility  Vivid details  use the details, people are most likely to believe one side in the other  Statistics  very risky  Need to establish a relationship and related to something that they can understand (human terms)  Testable credential most effective: you will believe if you check it out yourself  ‗Where is the beef?‘ o Wendy‘s claimed they had more beef then other hamburger competitors. And this was true.  Emotions o Make people care and emotional like charity. o Make them feel something  For people VS abstractions or statistics  People feel people, not abstractions or statistics  Mother Theresa o Power of association  Appeal to self-interest  people mostly care about themselves  Emphasize benefits VS features o ―Imagine‖  Appeal to identity  Stories o Get people to act on stories like on concrete data  Need simulations and inspiration o Mental flight simulators for the brain o Inspiration stories  Jared V.s ―7 under 6‖ - Subway uses stories that tell people about possibilities  Simple o Eat subs and lose weight – ―Subway saved my life‖  Unexpected o Lost weight eating fast food  Concrete o Oversized pants  Credible o Anti-authority  Emotional o Individual vs. mass, reaching potential – self-interest  Story o Inspiring challenge plot o Spotting a story  Challenge plot  Connection plot  Creativity plot Disc & Emotional Intelligence LAB MANUAL (p.g.118 – 135) Leaders often find that their cognitive intelligence is the threshold for their success, and they do need solid IQ smarts and a good education to get in the door and to keep up with technical and professional developments.  To move beyond that threshold they need to be adept at relationships, influencing and leading staff and teams effectively. The path for exhibiting this excellence is based on emotional intelligence The most powerful and sustainable way to build those relationships requires using the four emotional intelligence skills:  Empathy o Understanding the emotions people are communicating and responding o Key to building trust, engagement, and passion  Assertiveness o Communicates what is needed up front and the requirement of accountability is clear o Ability to speak up, to make your points, to say no when called for  Impulse control o Ability to manage impulses, be patient and to control the desire to be angry o Thoughtful engagement on complex matters‘ help all involved recognize that big problems tae time to resolve successfully o Most influential and primary of all skills  Optimism o Hopefulness o Leaves no doubt about your belief that the problem will be resolved 3 EQ factors that differentiated these “superstar” CEO from the rest:  Empathy  Self Regard o Combinations of feeling good about yourself as well as having an accurate reading of your strengths and weaknesses  Assertiveness ** Related to human resource  True use for hiring, training, and to access people in businesses  To determine whether you fit the job or not LECTURE Is EQ the same as IQ? - People with the highest levels of IQ outperform those with average IQ just 20% of the time, while people with average IQs outperform those with high IQs 70% of the time. - IQ does not and cannot predict success in life – it can predict on average 6% of success in a given job. IQ – book smart  Gate that you have to get through, need to have a certain amount of IQ in order to get in to a certain job. Is EQ the same as Personality?  DISC = Personality – how you describe someone Difference between EI, IQ, and personality Personality - Way you describe a person/what a person is like. It is shaped and set by age 5. You can change minor components, but not the core. - A static trait EI - Street smart - It is your emotional/social skills that influence how you act - It takes baby steps and conscious thoughts and reflection, but it can be developed and it goes up as your grow up as you have different experiences - The key to it is having balance, not a high score. - It is also twice as indicative of success in comparison to IQ. - NOT a static trait - We can actually do something about EI, and from a business perspective it has a huge success factor –used to select people, pick skill sets in particular jobs, train people, develop things IQ – Cognitive - Your book smarts. - IQ is something that you are born with, and get stronger and stronger, but it is fully developed by age of 17 **IQ-EQ-Personality overlapped and works together Models/Measure of EI -The Encyclopedia of Applied Psychology suggest that there are 3 major EI measures:  Peter Salovey and John Mayer‘s MSCEIT o Referring EI to the constellation of abilities through which people deal with their own emotions and those of others o Define EI as the ability to perceive emotional information and use it to guide thought and actions o Distinguished it from cognitive intelligence (IQ)  Reuven Bar-On‘s EQi o First scientifically validated, and most widely used o Found that ten of sixteen skills and perspectives assessed by Benchmarks were strongly associated with one or more emotional intelligence measures  Higher levels of certain emotional intelligence components appear to be connected to better performance in those ten areas  Participative management  Putting people at ease  Self-awareness  Balance between personal life and work  Straightforwardness and composure  Building and mending relationship  Doing whatever it takes  Decisiveness  Confronting problem employees  Change management  Daniel Goleman‘s ECI (Emotional Competence Inventory) o Focus on 4 basic competencies  Self-awareness  Social awareness  Self-management  Social skills Basic Model of Disc - 4 personality styles D style – Dominant, Direct, Decisive - Active, positive movement in an antagonistic environment - High ego strength, seeks authority - Impatient - Greatest fear – Being taken advantage of - Desires change - Does many things at once - Responds to direct confrontation  ―D‖ measures how a person solves problems and responds to challenges - Active and aggressive instead of contemplative Antagonized response: aggressive Emotion measured: anger I style – Influencing, interactive, interested in people - Active, positive movement in a friendly environment - Emotional - People-oriented - Greatest fear – Rejection - Disorganized - Optimistic - Encouraging  ―I‖ measures how a person attempts to influence or persuade others - Verbal and persuasive instead of non-verbal and reserved Antagonized response: negotiate Emotion measured: optimism S style – Stable, steady, secure - Passive aggressive in a favorable environment - Loyal gentle team player - Person of substance - Greatest fear – Loss of security - High level of trust - Possessive - Resists change, adapts slowly  ―S‖ measures the pace at which a person under takes activities and responsibilities - Resists change, slow instead of flexible and fast paced Antagonized response: Passive Emotion measured: emotional expression C style – correct, controlled, compliant - Cautious, tentative response designed to reduce antagonistic factors in an unfavorable environment - Perfectionist - Sensitive - Greatest Fear – Criticism - Accurate - Asks many questions - Requires details  ―C‖ measures how a person responds to the rules and regulations set by others - Comply with rules instead of seeks independence Antagonized response: Passive Emotion measured: fear Axes:  Active/passive  resulting styles: assertiveness/receptiveness  Task/people  resulting styles: control/openness So what is it? EQi Model of Emotional Intelligence Intra-personal  Self Awareness & Self Expression o Self-Awareness o Assertiveness o Independence o Self-Regard o Self-Actualization Inter-personal  Social Awareness & Interaction o Empathy o Social Responsibility o Interpersonal Relationships Stress Management  Emotional Management & Control o Stress Tolerance o Impulse Control Adaptability  Change Management o Reality testing o Flexibility o Problem solving General Mood  Self-Motivation o Optimism o Happiness *** All together  effective performance Why does it Matter? Human Potential = (Innate Intelligence + Technical Skills) x Emotional Intelligence  Daniel Goleman, after studying competency data for outstanding performers in several hundred organizations, reported that ―for jobs of all kinds, emotional competencies were twice as prevalent among distinguishing competencies as were technical skills and purely cognitive abilities combined… for individuals in leadership positions, 85% of their competencies were in the EI domain. ** IQ and TQ are only going to get you to the door; EQ separates you.  71% of hiring managers in the US value EI in an employee more than IQ – recent study of 2,662 by Career Builder o Reason#1: ability to remain calm under pressure o Reason#2: ability to resolve conflict effectively Impact of EI on Human Resources The value of EI in business: Two Decades of research show that emotional intelligence contributes to bottom line performance because it leads to: • More successful hiring • Decreased attrition rates – less turnover • Reduced training costs – easily trained • Higher levels of productivity and success • Greater individual performance • Better leaders and managers • Stronger relationships with employees and customers CRITICAL THINKING **Lab manual & slides What is Critical Thinking?  ―…An approach to reading, thinking, and learning that involves asking questions, examining our assumptions, and weighing the validity of arguments.‖  ―…Can be developed as a frame of mind – a set of strategies that we will use as we determine whether or not to believe what we read or hear.‖  Improves your arguments to make your communication more effective and persuasive Claims  ―The major conclusion of a piece of writing that the author is trying to persuade you to accept‖  Look for cues/indicator words  Uncontested vs. Contestable claims  Uncontested claim:  Conditions in which people may accept a claim without challenge  Claim that is obvious, an event that already happened that is not new to you  Contestable claim:  Make sure the evidences are solid, back up the argument  Examine and evaluate the evidence given to justify the claim  Application  Present ideas with clarity and emphasis; use visuals  Put your claim up front and use cue words  Use headings and subheadings to make your logic transparent Finding Claims Read the following passage. What is the main claim being made by the author? What cues did you use to locate the claim? Is it a contestable claim? “Put six pots of jam on a table and offer people a $1 coupon towards buying jam. Some people will stop, try, and buy the jam. But then put 24 pots of jam on the table and offer the same $1 coupon. Many more people will stop, of course, but surprisingly to say, only one-tenth as many people will actually buy the jam. Why? Too much choice, according to the research of Sheena Igenyar, a professor at the Columbia Business School in New York. In everyday life in Western societies, people are faced with an overwhelming variety of choices. Whether you are choosing a box of cereal, a career, music to listen to, a travel destination, or even a mate, it may be helpful to realize that too much choice can be crippling. In fact, when limits are placed on our choices, these limits free us to act.”  Main claim: ―too much choice can be crippling‖ (should be a little bit more up front) Cue word: ―it may be helpful o realize that‖ - It is contestable Evidence  ―A statement in response to the question: Why is this true?‖  Examples of evidence: statistics and survey  Cue/indicator words: based on the fact that/firstable/in the study  Argument = claim + evidence  Quality of evidence: source need to be clear  Accuracy, precision, sufficiency, representativeness, authority, clarity  Application  Clearly state the meaning/significance of the evidence  Present arguments in form of claim and supporting evidence  Treat evidence as claims – provide evidence to show soundness Examining Evidence  Read the passage and state the major claim that is being made. Identify and evaluate the evidence presented on the basis of:  Accuracy: sources are reliable  Precision  Sufficiency: no evidence about sales  Representativeness  Authority  Clarity of expression: debatable (not well written but it is understandable) Underlying Assumptions  ―A logical link that fills the gap between the evidence and the claim‖  Underlying assumptions are implicit, unstated  Need to be examined explicitly  What the writer must believe to have written that  What must be true for the claim to follow from the evidence?  Reality assumptions vs. Value assumptions  Reality: the way the things really are  Value: the way the things should be (people have different value comes from different culture)  Application  Make it clear that each piece of evidence is relevant by articulating your underlying assumptions and reasoning explicitly  Question your assumptions Causal Claims  Arguing ―that certain events or factors (causes) are responsible for bring about other events or situations (effects)‖  Cause and effect relationships are an important aspect of understanding – basis of cases  May be multiple or Rival causal explanations due to:  Differences between groups  This occurs whenever an author says that an outcome is caused by a specific difference between groups.  Whenever an author presents a difference between groups causal claim, we must ask ourselves if there is any other differences between these groups that may be relevant? If there are any other such differences, we have a plausible rival cause.  Correlation between characteristics  Post hoc ergo propter hoc fallacy (after this therefore because of this)  This is a fallacy, an error in our reasoning. Just because an event is followed by another event, it does not necessarily mean that that particular event caused the other.  Application  Think through all possible causes – address them explicitly  Examine soundness of causal argument Techniques of Persuasion  Factors that affect persuasiveness:  Quality of evidence presented + evidence omitted  Soundness of causal argument  Extent to which reader/listener agrees with underlying assumption(s)  Language and writing style  Rhetoric - use of language to convince  Must know and consider your audience  Anticipate and counter objections  Negative evidence, rival causes, debatable assumptions  Limit your claims when you have no rebuttal Use of Rhetoric  ―The use of language to persuade‖  Be complete  Present your reasoning in full and clear detail  Use an appropriate tone for the audience  Use vivid and precise language  ―The intelligent use of rhetoric… goes hand-in-hand with the development of a sound, logical argument.‖  ―You must expose and criticize the bare bones of the argument – the claims, evidence, and assumptions, independent of the rhetorical devices… added for impact and readability.‖ MARKETING Unit 3 Textbook – Understanding the Customer The marketing Concept - Create customer value - Deliver customer satisfaction - Build relationship Identifying consumer needs, and then producing the goods or services that will satisfy them while making a profit for the organization It involves…  Focusing on customer wants, so the organization can distinguish its products from competitors‘ offerings  Integrating all of the organization‘s activities, including production, to satisfy theses wants  Achieving long-term goals for the organization by satisfying customer wants and needs legally and responsibly ** Ex. Enterprise Rent-A-Car found that its customers didn‘t want to have to drive to its offices. Therefore, Enterprise began delivering vehicles to customer homes or places of work. ** Ex. Disney found that some of its patrons really disliked waiting in lines. In response, Disney began offering FastPass at a premium price, which allows patrons to avoid standing in long lines waiting for attractions. Production Orientation: An approach in which a firm works to lower production costs without a strong desire to satisfy the needs of customers (industrial revolution in North America) - Does not consider whether what the firm produces most efficiently also meets the needs of the marketplace  By implementing the marketing concept, an organization looks externally to the consumers in the marketplace and commits to customer value, customer satisfaction, and relationship marketing. Customer Value The ratio of benefits to the sacrifice necessary to obtain those benefits, as determined by the customer; reflects the willingness of customers to buy a product - Core business strategy - Rooted in the belief that price is not the only thing matters ** Ex. Automobile Industry – Lexus adopted a customer-driven approach, with particular emphasis on service. The service quality goal is to treat each customer as one would treat a guest in one‘s home, to pursue the perfect person-to-person relationship, and to strive to improve continually.  Enabled Lexus to establish a clear quality image and capture a significant share of the luxury car market. Customer Satisfaction The customers‘ feeling that a product has met or exceeded expectations Building Relationships Relationship marketing: A strategy that focuses on forging long-term partnerships with customers by offering value and providing customer satisfaction  Companies benefits from repeat sales and referrals o Costs fall because it is less expensive to serve existing customers than to attract new ones. - Keeping an existing customer costs about ¼ of what it costs to attract a new one. - Retaining a customer is more than 60%, landing a new one is less than 30%  Benefits from stable relationship with suppliers o Essential to producing high quality products while cutting costs  Customer Relationship Management (CRM) - Process used by organizations to track and organizes information about current and prospective customers.  Loyalty programs (frequent-buyer clubs) o Excellent way to build long-term relationship o Ex. Airl
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