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Chapter 6

Chapter 6

8 Pages
133 Views

Department
Management (MGM)
Course Code
MGMA01H3
Professor
Ingrid L.Stefanovic

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INTRODUCTION
Final aspect of the marketing planning process is control – determining whether the objective
of achieving consumer satisfaction has been met and marketing plans realized
oAchieving these goals leads to competitive advantage and profits for firm
Total Customer Satisfaction means that a good or service fully and without reservation
conforms to the customer’s requirements
oObjective is to createraving fans
oRecognizes that goods and services must be designed for specific target markets
Financial measures only tells you where a company has been, it doesnt help you look forward
toward building success in the areas that lead to long-run competitive advantage
oKey success factors
Product Quality
After-Sale Service
Corporate Flexibility
Employee Innovativeness
What is customer satisfaction really? Here are some answers
oCustomers do not care about your system. They care about satisfaction; having
problems handled
oCustomers do not care how you track his order. They dont care about how you
execute, but that it gets done. They care about results.
oFigure out the definition of customer satisfaction and quality from the customer
perspective
Customer satisfaction comes down to the ability to better serve your customers
Customer satisfaction must be defined from an external, customer-based viewpoint
Total customer satisfaction must be a constant byword of managing every facet of the
marketing program
LIFETIME-CUSTOMER VALUE (LCV)
Total customer satisfaction leads to customer loyalty and a focus on existing customer loyalty
can generate spectacular gains
The Value of Customers
A Totally Satisfied Customers contributes 2.6 times as much revenue to a company as a
Somewhat Satisfied Customer
A Totally Satisfied Customer contributes 14 times as much revenue as a Somewhat
Dissatisfied Customer
A Totally Dissatisfied Customer actually decreases revenue at a rate equal to 1.8 times what a
Totally Satisfied Customer contributes to a business
Increased Sales
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Most firms operate by paying limited attention to the long-term relationship a firm has with
its customers, do not recognize the long-term value of this relationship
oDangerous strategy
The balance of power in the buyer-seller relationship is shifting to the buyer
Another way of thinking about customers is to recognize that a relationship developed with a
customer can provide long-term value to the firm as well as the customer
Lifetime-customer value (LCV) is the sum of all future-customer revenue streams minus
product and servicing costs, acquisition costs, and marketing costs
oThe sum of the value of a firms customers and prospects (total LCV) is customer
equity
Example: An average driver buys ten cars in Lifetime. You sell a young woman
her first car for profit of $2000, your LCV of that customer is potentially
$20,000. Assume the loyal customer will recommend your business to 5 others.
The combined LCV is now $100,000.
Therefore, whatever you sell you should appreciate that looking after
your existing customers is at least as important as looking for new ones
oCustomer loyalty is being recognized as a path to long-term profitability.
Expensive to acquire customers
oCosts include advertising, selling, setting up new accounts, and the customer learning
process.
oCost of retention is lower than cost of acquiring new customers
It is possible to increase profit primarily by retaining existing customers
oThe relative costs of generating cash inflows from existing customers are lower than
the costs for new customers
oAs these customers stay, sellers save money that they would have spent on replacing
them, and the costs of retaining existing customers are less than the costs of generating
new ones
oLoyal customers can positively influence new customers
Marketing Management consists of Customer Management and Marketing Mix Management
oCustomer Management concentrates on determining how to acquire customers, retain
them, and sell them additional products and services
oMarketing Mix Management focuses on products, pricing, marketing communications,
and distribution
Customer satisfaction leads to increasing levels of trust in the organization
oThe stock of trust that is built enhances the image of the company in the customer’s
view and leads to brand loyalty
Which leads to increased profits
The Value Vision
Most managers are taught to manage activity rather than value
The vision of an organization should be to add value for customer and employees
Activity is the process by which value is created
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Value is a subjective term that is defined by the customer; part of customer expectations,
which are a combination of cost, time, quantity, quality, and human factors.
oUsually complex and sometimes hidden, and they change
If a company wants to build value, it has to recognize that value starts with the customer
oCustomers cannot define what they want, clearly. Why?
When technology is involved, laypeople are unqualified to judge a product and
to specify what they want
Customers are focused on their problem, not on the suppliers good or service
Market Challenges
Escalating Customer Expectations
Customers expect firms to deliver better value, satisfy fragmenting markets, achieve closer
relationships with them, and respond faster to their needs
BETTER VALUE
The global marketplace provides many options, so providing better value as perceived by the
customer is essential
The competition to provide more customer value is intense
SATISFY FRAGMENTING MARKETS
With a growing number of products, customers expect to find products that serve their
particular tastes and needs more precisely
Business needs to be more in tune with market needs in order to identify and serve appropriate
market segments
ACHIEVE CLOSER RELATIONSHIPS WITH CUSTOMERS
Relationship marketing is when firms that are tuned in to customer needs precisely, start to
establish closer links with individual customers by using sophisticated databases
RESPOND FASTER
Competition and technological developments have also led to rising expectations for rapid
responses to customer needs
Competitive Forces and Cost Pressures
Competition leads to pressures to lower prices or to increase value
Responding to cost pressures while increasing customer satisfaction is a significant challenge
The Value-Adding Chain
Five Link chain that links the corporate vision and its human and material assets to the
customer’s requirements
oCulture of the organization must be right. Cultural factors spur people to design
systems that fit the culture
oSystems direct employee and management behaviour in the desired direction. They are
powerful, but could be lazy, winding, uncertain, and slow. When going in right
direction, they establish a force of tremendously effective power in the marketplace
oPerformance is affected by culture and systems
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Description
INTRODUCTION Final aspect of the marketing planning process is control determining whether the objective of achieving consumer satisfaction has been met and marketing plans realized o Achieving these goals leads to competitive advantage and profits for firm Total Customer Satisfaction means that a good or service fully and without reservation conforms to the customers requirements o Objective is to create raving fans o Recognizes that goods and services must be designed for specific target markets Financial measures only tells you where a company has been, it doesnt help you look forward toward building success in the areas that lead to long-run competitive advantage o Key success factors Product Quality After-Sale Service Corporate Flexibility Employee Innovativeness What is customer satisfaction really? Here are some answers o Customers do not care about your system. They care about satisfaction; having problems handled o Customers do not care how you track his order. They dont care about how you execute, but that it gets done. They care about results. o Figure out the definition of customer satisfaction and quality from the customer perspective Customer satisfaction comes down to the ability to better serve your customers Customer satisfaction must be defined from an external, customer-based viewpoint Total customer satisfaction must be a constant byword of managing every facet of the marketing program LIFETIME-CUSTOMER VALUE (LCV) Total customer satisfaction leads to customer loyalty and a focus on existing customer loyalty can generate spectacular gains The Value of Customers A Totally Satisfied Customers contributes 2.6 times as much revenue to a company as a Somewhat Satisfied Customer A Totally Satisfied Customer contributes 14 times as much revenue as a Somewhat Dissatisfied Customer A Totally Dissatisfied Customer actually decreases revenue at a rate equal to 1.8 times what a Totally Satisfied Customer contributes to a business Increased Sales www.notesolution.com
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