HINDUSTHAN COLLEGE OF ENGINEERING AND TECHNOLOGY

Department of management sciences

Marketing management – 16BA2203

UNIT III

ONE MARK :

1.DEFINE SALES PROMOTION

According to A.H.R. Delens: “Sales promotion means any steps that are taken for the
purpose of obtaining an increasing sale. Often this term refers specially to selling efforts
that are designed to supplement personal selling and advertising and by co-ordination helps
them to become more effective.”

Reference: http://www.yourarticlelibrary.com/sales/sales-promotion-meaning-definition-
objectives-and-importance-of-sales-promotion/25889/

2.DEFINE TRADE PROMOTION

Trade Promotion refers to marketing activities that are executed in retail between these two
partners. Trade Promotion is a marketing technique aimed at increasing demand for
products in retail stores based on special pricing, display fixtures, demonstrations, value-
added bonuses, no-obligation gifts, and more.

Reference: https://en.wikipedia.org/wiki/Trade_promotion_(marketing)

3.WHAT IS PERSONAL SELLING?

Face-to-face selling in which a seller attempts to persuade a buyer to make a purchase.

Reference: http://www.businessdictionary.com/definition/personal-selling.html

4.WHAT IS SALES FORCE MANAGEMENT?

Salesforce is an information system used in CRM marketing and management that help
automate some sales and Salesforce management functions. They are often combined with
a marketing information system, in which case they are often called customer relationship
management (CRM) systems.

Reference: http://www.mybusinessintegrated.com/services/salesforce-management/

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5.WHAT IS SALES FORCE MOTIVATION?

Sales force motivation involves creating a climate where everyone could give his/her best
performance.

Reference: RAJAN SAXENA

6.WHAT DO YOU MEAN BY TERRITORY?

A sales territory is the customer group or geographical area for which an individual
salesperson or a sales team holds responsibility. Territories can be defined on the basis of
geography, sales potential, history, or a combination of factors. Companies strive to
balance their territories because this can reduce costs and increase sales.

Reference: https://en.wikipedia.org/wiki/Sales_territory

7.WHAT IS MARKETING CHANNEL?

A marketing channel is a set of practices or activities necessary to transfer the ownership of

goods from the point of production to the point of consumption. It is the way products and
services get to the end-user, the consumer; and is also known as a distribution channel.A
marketing channel is a useful tool for management, and is crucial to creating an effective
and well-planned marketing strategy.

Reference: https://en.wikipedia.org/wiki/Marketing_channel

8.HYBRID CHANNELS.

Hybrid Marketing Channel is a part of Hybrid Marketing System and it simply means
engaging your customer through several marketing channels, for example: direct mail,
telemarketing, and billboards.

Reference: https://www.quora.com/What-is-a-hybrid-marketing-channel

9.EXPLAIN VMS.

A vertical marketing system (VMS) is one in which the main members of a distribution
channel—producer, wholesaler, and retailer—work together as a unified group in order to
meet consumer needs.

Reference: https://www.inc.com/encyclopedia/vertical-marketing-system.html

10.WHAT ARE BRICK AND CLICK COMPANIES?

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Bricks and clicks (aka clicks and bricks, click and mortar, bricks, clicks and flips, Womble
Store Method (WSM)or (WAMBAM) is a jargon term for a business model by which a
company integrates both offline (bricks) and online presences, sometimes with the third
extra flips (physical catalogs).

Reference: https://en.wikipedia.org/wiki/Bricks_and_clicks

11.WHAT IS CANNIBALIZATION?

In marketing strategy, cannibalization refers to a reduction in sales volume, sales revenue,

or market share of one product as a result of the introduction of a new product by the same
producer.

Reference: https://en.wikipedia.org/wiki/Cannibalization_(marketing)

12.WHAT IS MULTI CHANNEL MARKETING?

Multichannel marketing refers to the practice of interacting with customers using a

combination of indirect and direct communication channels – websites, retail stores, mail
order catalogs, direct mail, email, mobile, etc. – and enabling customers to take action in
response – preferably to buy your product or service – using the channel of their choice. In
the most simplistic terms, multichannel marketing is all about choice.

Reference: https://www.sas.com/en_us/insights/marketing/multichannel-marketing.html

13.CRM?

Customer relationship management (CRM) is a term that refers to practices, strategies and
technologies that companies use to manage and analyze customer interactions and data
throughout the customer lifecycle, with the goal of improving business relationships with
customers, assisting in customer retention and driving sales growth.

Reference: http://searchcrm.techtarget.com/definition/CRM

14.EXPLAIN VALUE PROPOSITION?

A value proposition is a business or marketing statement that a company uses to summarize

why a consumer should buy a product or use a service. ... Companies use this statement to
target customers who will benefit most from using the company's products, and this helps
maintain an economic moat.

Reference: http://www.investopedia.com/terms/v/valueproposition.asp

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SIX MARKS:

1.WRITE BRIEFLY ABOUT SIGNIFICANCE OF SALES PROMOTION.

Importance of sales promotion

a). Importance to Consumers.
b). Importance to Manufactures/Producers.
c). Importance to Dealers/Middleman.
d). Importance to Society & the nation.

Sales promotion is an important component of a promotion campaigning program.

It can be specific tool of the marketing strategy of an enterprise. Because of increasing
level of competition and costs of advertisement, producers largely use this technique as a
promotional tool.
Sale promotion techniques are not only useful to the producers and distributors, but
also are useful to consumers. The importance of sales promotion may be grouped as
follows:
importance to consumer
 Sufficient product knowledge
 Availability of product at reduced prices
 Increase in consumers buying confidence
 Increases in the quality of goods purchased
 Higher slandered of living
 Minimize exploitation
A) importance to producer / manufactur
 Increases in sales
 Regular sales of seasonal product
 Improve effectiveness of advertisement and personal selling
 Cooperation from middlemen
 Demand for product & services
 Able to capture new market
 Increase in goodwill
 Direct control

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 Effective steps to face the competition
 Improvement & new uses of the production
C) importance to dealers/ middle men
 Facilitates larger sales.
 More facilities & assistance
 Direct relation with customers
D) importance to the society & the nation
The importance of sales promotion programme for the society & the nation can be
summarized as below :-
 Increase in standard of living the people.
 Increase in employment opportunities.
 Development and expansion of transport, communication, baning, insurance and
warehousing facilities.
 Increase in Gross National Product and percapita income.
 Creation of healthy competition in national and international trade, etc.

Reference : http://smartlearningway.blogspot.in/2016/02/importance-of-sales-
promotion.html

2.WRITE THE OBJECTIVES AND VEHICLES IN TRADE PROMOTION.

Objectives of trade promotion:
Major objectives of trade promotions are:
1) convince retailers to carry the manufacturer’s products,
2) reduce the manufacturer’s inventories and increase the distributor’s or retailer’s
inventories,
3) support advertising and consumer sales promotions,
4) encourage retailers either to give the product more favorable shelf space or to
place more emphasis on selling the product,
5) serve as a reward for past sales efforts

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 Promotions built around price discounts and advertising or other allowances are
likely to have higher distributor/retailer participation levels than other type promotions
because a direct economic incentive is attached to the promotion
 Small retailers do not consider contests, sweepstakes, and sales quotas as being
important to their decision to participate in promotions; getting the full bene±t of such
promotions is di²cult due to their size
 Not all distributors or retailers will have the same reaction to promotions offered
 Manufacturer must carefully consider diFerences in attitudes when designing and
implementing trade promotion programs.

Reference : https://www.coursehero.com/file/p70b331/Major-objectives-of-trade-
promotions-are-1-convince-retailers-to-carry-the/

3.EXPLAIN THE ROLE OF A SALESPERSON.

Roles of a salesperson:
 Diagnostic
 Analyst
 Information Provider
 Strategist
 Tactician
 Change Agent

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Diagnostic:
This involves a salesperson in probing and finding the cause of a problem .Like an
expert doctor, a sales person diagnoses the needs of his or her customers ..He or she
also diagnoses the competitive forces present in the territory and their impact on his or
her product’s share. Another area of diagnoses is the strength and weakness of the
competitors sales team and distribution in the territory. Further more, he or she
diagnoses the major development in the territory and their implication to his or her
firm’s marketing.
For example, migration of people from one area to another are; or the increasing
popularity of cable T.V. in his or her are ;or the opening of a new shopping plaza, etc
are some of the trends which an alert salesperson is able to perceive .Not only is the
salesperson able to perceive these trends but is also able to understand their
implications for his or her organization.
Analyst:
Having diagnosed the need or the market forces the salesperson needs to analyse
customer needs and market trends and identify the linkages, if any. For example , he or
she needs to analyse the customer situation and its implication for his or her
organization .Likewise , he or she needs to analyse the t5rends in the market share of
competitors and his or her organization over the last several time periods.
Information Provider:
The salesperson is expected to play the role of an intelligence agent .In this role he or
she is expected to keep the management posted of any significant developments in the
territory .For example ,has there been any shift in the competitor’s strategy or tactics?
Has any new competitor entered the territory? Has the competitor announced any new
trade incentive policy? Any changes in customer situation like expansion or
diversification? Or any change in persons responsible for buying? The management
looks upon salespeople to provide them with these and several other such customer and
competitor information.
The customer also wants the salesperson to provide information on the product,
competition ; new developments in the product area. etc Thus the customer wants to

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keep abreast of developments and he sees salespersons as a provider of information in
all those areas.
Strategist:
Another role of the salesperson is that of a strategist. He or she being the “soldier in the
field” or the “ man in command” .has to evolve a strategy that can help him or her to be
a market leader. Since all other elements of the marketing mix are outside of his or her
decision arena., the only element that he or her can control are the time and route
planning .For example ,a salesperson may time the announcement of a price change in
his or her territory in such a way that it will give the firm maximum benefit, Likewise
evolving a strategy to sell to an aggressive customer is the role of a salesperson.
Tactician:
A salesperson is also a tactician In the sense that he or she evolves tactics to win over
the customer or to enhance dealer satisfaction. Tactics are short-term action plan
flowing from the strategy , which is a long0term action plan. For example choice of
words in the face to face negotiation with the customer is a matter of tactics ,Or how
much and when to give in is again a matter of tactic, So, a salesperson has to be good at
tactics if he or she wants to succeed.
Change Agent:
Last, we see a salesperson as a change agent in the market or the territory in which hen
or she operates ,For it is he or she who introduces new product ideas and influences the
life-styles and consumption patterns by making new products and services available in
the territory and influencing opinion leaders to accept them and recommend the same to
others .As we said earlier , the modern society owes a lot to salespeople , for it is they
who help upgrade lifestyle and the quality of living.

Thus, the role of a salesperson in today’s world is much more than the conventional
role of order taking.
Reference : http://www.citesales.com/78-role-salesperson.html

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4.EXPLAIN REQUIRED SELLING SKILLS?
Skills required by a sales person:
 Maintaining Self-Confidence
 Good Listening
 Persuasiveness
 Building Strong Relationships
 Self-Motivating

There are a lot of different ways to approach sales, but they all tend to rely on the same
skill set. Anyone can learn to be an effective salesperson, and good salespeople can
become great ones by honing the following sales skills.
Maintaining Self-Confidence
This is the most important skill a salesperson can cultivate.Why? Because all the other
skills are based on persistence. If you have every other sales skill listed below, but you
give up at the first hint of a “no,” then you'll never have a chance to use those skills.
The first time you speak to a prospect, they might not want to talk to you because
they're having a bad day... but if you call back a week later, they'll be eager to buy.
Self-confidence doesn't end with persistence; if you believe in yourself and your
product, your prospects will be inclined to believe as well. Self-confidence will also
incline you towards a more assertive closing approach, which is vital to your selling
success.
Good Listening
Most salespeople are natural talkers. Unfortunately, even a great speaker will only get
so far without a little listening. Taking the time to ask your prospect questions and
listen to the answers shows respect for them, and gives you a clearer idea of what they
want.
So how can you tell if you're doing enough listening? The next time you cold call a
prospect, ask an open-ended question and then hit the mute button and leave yourself
muted for at least a minute (or until you are sure the prospect is finished). By forcing
yourself to be quiet, you will notice right away how strong your urge is to jump in and
say something before the prospect has stopped talking.

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Persuasiveness
Emotion plays a major role in sales. There's an old saying that “features tell, benefits
sell.” Features are the facts about your product or service; benefits are their emotional
connotations. For example, a 0% interest rate on a credit card is a feature... being able
to save money while buying the things you need is a benefit! Persuasiveness is the skill
that allows you to convey these emotions to the customer. If you can make your
prospect feel how great it will be to own your product and how much their life will be
improved when they have it, you can sell it to them.
Building Strong Relationships
This sales skill is just as important to a salesperson's business life as it is to their
personal life. Building and maintaining healthy relationships is the key to developing a
strong network. And networking will allow you to reach far, far more prospects than
you could manage on your own.
Remember the theory of “Six Degrees of Separation?” Let's say you're trying to reach
the decision maker at a major company, but you don't know anyone who works there. A
call or two to your network contacts yields someone who knows someone who works
for your target; armed with that person's name and direct phone number, you now have
access to the prospect.
Self-Motivating
Even the best salesperson is a work in progress. You can always find a way to develop
your skills, work on your pitch, and learn more about the products and services you
sell. But the drive to constantly improve yourself has to come from within. Your
manager might direct you to make some changes if your sales start to plummet, but if
you are constantly working to become a better salesperson, you can start working on
the issue before it affects your numbers.

Reference : https://www.thebalance.com/essential-sales-skills-2917617
5.WHAT ARE THE OPTIONS FOR COMPENSATION PLANS FOR A SALES
MANAGER?
 Straight Salary
 Salary plus Commission

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  Commission Only
 Territory Volume
 Profit Margin
1. Straight Salary:

Straight salary sales compensation plans aren’t very common, but they do have a place in
some organizations. With this type of structure, you’d pay your sales people a
straight—albeit competitive—salary like all of your other employees, and nothing else. No
bonuses, no commissions, and few, if any, sales incentives.

This type of compensation plan is most often used when the industry you operate within
prohibits direct sales, when sales people work as part of small groups or teams and all
contributions are equal, when your sales team is relatively small, or when your sales people
are expected to spend much of their time on other responsibilities other than selling.

However, these plans don’t tend to offer motivation to sales people, as there are no
incentives for them to work harder.

2. Salary plus Commission

Salary plus commission sales compensation plans are possibly the most common plans
used today. They’re structured in a way that sales people receive a lower base salary along
with commission pay that makes up the majority of the total compensation.

Organizations use salary plus commission sales compensation plans when there are
opportunities to support all sales people on this structure and when there are proper metrics
in place for tracking sales to ensure that the splits are fair and accurate.

This type of plan is often the better choice as opposed to straight salary because it offers
motivation to increase productivity and to achieve goals. It also offers more stability—sales
people will still get some type of pay even if they’re in training, when sales are low during
certain months, or if market conditions get volatile. However, it can be more complex to
administer.

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3. Commission Only

Commission only sales compensation plans are exactly what they sound like—you pay
your sales people for the sales they bring in and nothing else. There is no guarantee of
income.

These types of plans are easier to administer than salary plus commission and provide
better value for your money paid as they are based solely on sales achieved. They also tend
to attract fewer candidates, but do attract the most top-performing and hardest working
sales professionals who know they can make a good income because they know how to
sell. On the other hand, though, they can create aggression within your sales team and low
income security, which can lead to a high turnover rate, and sales rep burnout from stress.
4. Territory Volume

Territory volume sales compensation plans are most often used in team-based corporate
cultures. They work through the calculation of territory volume at the end a compensation
period. The total sales for the territory are then split equally among all of the sales reps who
worked that territory. This plan works best when your sales territories are clearly outlined,
when your sales team supports each other to reach common goals, and when your
territories are rich enough to support competitive wages.

5. Profit Margin

Last but not least, we have profit margin sales compensation plans. These plans
compensate sales people based on how well the company is performing. Profit margin
plans are most often used by startups that have a lack of liquidity. It’s best to use the profit
margin plan if you know that your sales people are able to support themselves through your
lean periods, when you can also incorporate long-term incentives such as stock shares, and
when you have other incentives and job benefits to attract sales people, such as flex time.

Reference : https://www.cpsa.com/articles/5-different-types-of-sales-compensation-plans

6.EXPLAIN PUSH STRATEGY AND PULL STRATEGY.

Push and Pull Strategies:

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Push and pull strategies are promotional strategies used to get the product to its target
market.

1.Push Strategy

A push strategy places the product in front of the customer, via a form of advertisement, to
make sure the consumer is aware of the existence of the product. This type of strategy
works well for low value items and impulse buy items . The different ways a company can
use a push strategy to increase awareness of a product include:

Push-Pull Strategy

 At trade shows and showrooms, businesses can demonstrate the product's features to
potential customers.
 Companies can encourage retailers to stock a product. Sometimes a company has to
negotiate with a retailer to stock a specific item because retailers have limited store space
and need to stock items they know will sell.
 Companies can create a supply chain so that retailers can obtain the product in sufficient
quantities.

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Push strategies work best for merchants that already have an established relationship with
users. For example, cell phone providers proactively send (i.e. push) advertisements via
text or MMS messages to mobile customers regarding promotions and upgrades. This
permission-based marketing can be effective if personalized for the user based on
personalized preferences, usage and buying behavior. However, push strategies are also
effective for building demand for high-priced services (e.g., enterprise software) that are
targeted to specific markets.

2.Pull Strategy

A pull strategy stimulates demand and motivates customers to actively seek out a specific
product. It is aimed primarily at the end users. A strong and visible brand is needed to
ensure the success of a pull strategy. The different ways a company can use a pull strategy
to promote a brand include:

 Advertising strategies that include mass media promotion of a product

 Customer relationship management that makes existing customers aware of new
products that will fill a specific need
 Referrals
 Sales promotions and discounts

Using these strategies will create a demand for the product. With that demand, retailers will
be encouraged to seek out the product and stock it on their shelves. For instance, Apple
successfully uses pull strategies to launch iPhones or iPads. Likewise, music has also fallen
under pull strategies due to digitization and the emergence of social networking websites.
Music platforms such as iTunes, Groove shark and Spotify are reflective of the power shift
from providers to consumers. Merchants must adapt their strategies to pull in demand,
rather than push products--in this case, music--to consumers.

Most businesses will use a combination of push and pull strategies in order to successfully
market a product.

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 Reference:https://www.boundless.com/marketing/textbooks/boundless-marketing-
textbook/integrated-marketing-communications-12/selecting-the-promotion-mix-for-a-
particular-product-84/push-and-pull-strategies-425-4128/images/push-pull-strategy/

7.EXPLAIN THE CAUSES AND STRATEGIES TO MANAGE CHANNEL

CONFLICT.
Causes of channel conflict:
 Goal incompatibility
 Ambiguous Roles
 Different Perceptions
 Manufacturer dominating the Intermediaries
 Lack of Communication
Strategies to manage Channel conflict :
 Subordinate Goals
 Exchanging employees
 Trade associations
 Co-optation
 Diplomacy, Mediation and Arbitration
 Legal resource

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Causes of channel conflict:

 Goal incompatibility: Different partners in the channel of distribution have

different goals that may or may not coincide with each other and thus result in
conflict.

E.g. The manufacturer wants to achieve the larger market share by adopting the
market penetration strategy i.e. offering a product at low price and making the
profits in the long run, whereas the dealer wants to sell the product at a high cost i.e.
market skimming strategy and earn huge profits in the short run.

 Ambiguous Roles: The channel partners may not have a clear picture of their role
i.e. what they are supposed to do, which market to cater, what pricing strategy is to
be adopted, etc.

E.g. The manufacturer may sell its products through its direct sales force in the
same area where the authorized dealer is supposed to sell; this may result in the
conflict.

 Different Perceptions: The channel partners may have different perceptions about
the market conditions that hampers the business as a whole thereby leading to the
conflict.

E.g. The manufacturer is optimistic about the change in the price of the product
whereas the dealer feels the negative impact of price change on the customers.

 Manufacturer dominating the Intermediaries: The intermediaries such as the

wholesaler, distributor, retailer, etc. carry the process of distribution of goods and
services for the manufacturer. And if the manufacturer makes any change in the
price, product, marketing activity the same has to be implemented with an
immediate effect thereby reflecting the huge dependence of intermediaries on the
manufacturer.

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 E.g. If the manufacturer changes the promotional scheme of a product with the
intention to cut the cost, the retailer may find it difficult to sell the product without
any promotional scheme and hence the conflict arises.

 Lack of Communication: This is one of the major reasons that lead to the conflict
among the channel partners. If any partner is not communicated about any changes
on time will hamper the distribution process and will result in disparity.

E.g. If retailer urgently requires the stock and the wholesaler didn’t inform him
about the availability of time may lead to the conflict between the two.

Strategies to manage Channel conflict :

In order to overcome the destructive channel conflict some solutions are listed
below:

 Subordinate Goals: The channel partners must decide a single goal in terms of
either increased market share, survival, profit maximization, high quality, customer
satisfaction, etc. with the intention to avoid conflicts.
 Exchanging employees: one of the best ways to escape channel conflict is to swap
employees between different levels i.e. two or more persons can shift to a dealer
level from the manufacturer level and from wholesale level to the retailer level on a
temporary basis. By doing so, everyone understands the role and operations of each
other thereby reducing the role ambiguities.

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 Trade associations: Another way to overcome the channel conflict is to form the
association between the channel partners. This can be done through joint
membership among the intermediaries. Every channel partner works as one entity
and works unanimously.
 Co-optation: Under this, any leader or an expert in another organization is included
in the advisory committee, board of directors, or grievance redressal committees to
reduce the conflicts through their expert opinions.
 Diplomacy, Mediation and Arbitration: when the conflict becomes critical then
partners have to resort to one of these methods.

In Diplomacy, the partners in the conflict send one person from each side to resolve
the conflict.

In Mediation, the third person is involved who tries to resolve the conflict through
his skills of conciliation.

In Arbitration, when both the parties agree to present their arguments to the
arbitrator and agree to his decision.

 Legal resource: When the conflict becomes crucial and cannot be resolved through
any above mentioned ways, the channel partners may decide to file a lawsuit.

Thus, it is a fundamental responsibility of every organization to maintain

harmonious relations with its channel partners as the conflict between these may
result in huge losses for each involved in the channel including the manufacturing
company.

Reference : https://www.cpsa.com/articles/5-different-types-of-sales-compensation-
plans

8.HOW WILL YOU REDUCE DEFECTION AND ALSO EXPLAIN

RETENTION DYNAMICS.
Here are three simple yet most effective ways of reducing defection:

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  Find out the average retention rate
 Find out reasons for defection
 Cost of retention vs defection
1.Find out the average retention rate – To determine the defection rate, first you need
to find out what is the average retention rate of a product. If the average is 90%
retention, then only if the average drops down to 70% can you know that defection rate
has suddenly gone high.
Without a solid drop from the average, it will be difficult to control defection because
there will be minimal brand switching at all time. Thus, finding out the average
retention rate is the first step in reducing defection rate.
2.Find out reasons for defection – What are the reasons that the customer is leaving
your brand and switching over to the competitor? For example – Many customers
switch smartphones because they want upgraded technology with every new purchase.
So if you are a smart phone manufacturer, you have to upgrade your own products from
time to time. The Samsung galaxy series is the perfect example. Customers are not
leaving Samsung smart phones as of now because the company is regularly offering up
gradation. Thus, finding out the reason for high customer defection is the second step to
reduce defection rate.
3.Cost of retention vs defection – If you find the reason for customer defection, then
the cost associated with bringing back the customer might vary. For example – If the
customer wants improvement in customer service, then it can be done very easily by
training existing manpower. But if customer wants major design changes in the
product, then it can be very costly and tedious, and can be implemented in the long run
but not immediately. Thus, the customer who requires product changes will defect from
your brand because retaining that customer was very costly.
Reference : http://www.marketing91.com/how-to-reduce-customer-defection-and-
bring-down-defection-rate/
Customer retention dynamics:
As competition for customers intensifies acquisition costs rise. Therefore retaining the
loyalty of your customers becomes ever more important. But how do you even begin to
measure customer retention? Many businesses make the mistake of examining a single

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 dimension. For instance, banks will tend to look at # of checking accounts opened
versus # closed. But this is highly misleading. PNT’s unique Customer Retention
Dynamics starts with clear definitions:

 Who is a customer? – A surprisingly hard question for many firms to answer from a
data perspective. Who is a loyal customer?
 Which accounts are open and active from a marketing perspective (especially after
removing data “noise” from system conversions and other sources)?
 How is the customer relationship changing across time, segments, divisions,
geography and other dimensions?

Our experience has shown that actual customer attrition is often much lower than
thought but may be worse in key, profitable segments. Further, retained customers
may be reducing their balances with you over time – a far more serious problem.
After completing a thorough analysis we work with your team to execute fact-
based, measurable programs targeted at your specific retention challenges.

Reference : http://www.pntmarketingservices.com/solutions/mi/customer-retention-
dynamics

9. WRITE THE DETERMINANTS OF CUSTOMER PERCEIVED VALUE.

Customer perceived value (CPV) 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

 Total customer cost

Total customer benefit: is the perceived monetary value of the bundle or economic,
functional, and psychological benefits customers expect from a given market offering.

Total customer cost : is the bundle of costs customers expect to incur in evaluating,
obtaining , using, and disposing of the given marketing offering.

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The components in the above mentioned figure can be broken down as follows:

1. Product benefit accounts for the attributes of the product, which might entice a potential
consumer to decide to choose this product over others. In case of Red bull, it will be the
taste of the drink which has been especially designed to suit the tastes of westerners.

2. Services benefit accounts for the attributes of the services offered along with the
product. Any kind of help, instructions or assistance offered with the product would fall
under this. In case of Red bull, the nutritional content, ingredients, customer helpline
numbers etc. will make up this benefit.

3. Personnel benefits include the customer’s perception of the utility value of the
personnel in the system of the product to him/her. Better, knowledgeable and well trained
personnel assisting a customer would be a great help. In case of red bull, distribution of
free red bull drinks during events by the ‘red bull girls’, will entice their target customer to
buy the product and in a way add value to the product in terms of utility and satisfaction.

4. Image benefit includes the image that a brand/product holds in the market. Reputation
and image together form a very crucial part of a customer’s transactions with a brand
depending upon circumstances he/she has experienced during his buying process. In case of

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Red bull, it dominates the energy drink market with its image among the customers. People
associate red bull with something that gives them an instant burst of energy (the tagline –
‘red bull gives you wings’ helps too)

5. Monetary cost encompasses the literal cost incurred by a customer in order to obtain the
product. The cost (in terms of money) that a customer incurs in travelling to the nearest
store that sells red bull and the cost per can multiplied by the number of cans purchased is
the total monetary cost in the case of red bull.

6. Time cost is the total amount of time that has been invested by a customer during his
buying process. The time taken for the customer to reach a store and to buy the can of red
bull is the time cost here.

7. Energy cost refers to the energy spent by the buyer during the entire process of buying
the product. It is a little complicated to calculate this in definable terms for red bull as
energy can’t be measured in anything except the scientific denotation of ‘work done’.

8. Psychological cost is the total mental effort made during acquiring and using the product
from the moment it was bought to the moment it was consumed. It is also very difficult to
measure this as it would take lots of data to biologically decide what goes where.

Reference : https://manansilawat15.wordpress.com/2013/08/21/customer-perceived-value-
2/.

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FIFTEEN MARKS:

1.STATE THE THREE SALES THEORIES.

 Stimulus response theory

 Product oriented selling
 Need satisfaction theory

1.stimulus response theory:

When considering an S-R association one can assume that the nature and strength of the
response and hence the association between the stimulus and response will depend upon
such things as:
 The perceived strength of the stimulus
 The nature of the stimulus
 Frequency of application of stimulus
 The perceived value and relevance of the stimulus
 The person who the stimulus is applied.

2.product oriented theory :

Product-oriented companies keep in mind the adage, “Build a better mousetrap and world
will beat a path to your door.” This strategy assumes that if you offer a superior product or
service, customers will buy from you without your having to resort to discounts or other
gimmicks. Product-oriented companies work with marketing departments to learn what

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the marketplace wants, developing or modifying products to meet these needs. A pizzeria
that offers pies with real cheese and fresh toppings might not have to offer two-for-one or
other discounts if its competitors sell lower-quality pizzas.

Need satisfaction theory:

Though we have titled this article as a theory but in practice it is more practical that a Sales
Person must adopt to close a deal. This also highlights that the product in question to be
sold must have a utility creating a need for the potential customer or prospect to buy the
same. We have therefore titled the article as Need Satisfaction Theory.

The need satisfaction theory is based on the interactive approach. The selling process is
seen as one that involves mutual satisfaction, i.e. both the buyer and the seller gets
satisfied. This theory is based on a win-win situation both for Sales Person and the Prospect
or Customer.

The theory states that the salesperson should explore and identify the prospect’s needs and
expectations before he or she presents the product to the prospect and closes the deal. Here
the salesperson should actively listen to the buyer’s objections and then answer them
keeping the customer needs in mind. It is believed that unless the sales people know their
prospects needs and have in depth Product knowledge they can never sell, create and retain
a satisfied customer.

This Need Satisfaction Theory has three stages which are:

1. Need Development.
2. Need Identification.
3. Need Satisfaction

The need development stage demands the salesperson to probe the prospects and actively
listen to them. Open ended probes like What do you do when you have an epidemic in this
area, Doctor or Tell me Doctor what has been your experience in using our firm’s drugs?
etc have to be used at this stage. An open-ended probe or for that matter all probes help

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the prospect to get over his or her anxieties, concerns, tensions and even gives such
information to the sales person which the sales person may not be able to get to know
otherwise. The sales person has to listen patiently while the prospect is revealing such
potential information of his/her needs which may ultimately result in selling the product.
The attention paid by the sales person also reassures the prospect that the salesperson is not
selfish and is interested in detailing the product in a way that will benefit the prospect.

An alert sales person will be able to identify the prospect’s needs even before the latter
does. But an effective sales person knows only when the prospect identifies the needs will
he or she be able to understand better the benefits offered by the sales person. In the need
identification stage the sales person probes listens and sums up what the potential customer
has listened. Summing up and giving a feed back to the prospect is important as it ensures a
mutual understanding of the needs.

The Need Satisfaction stage sees the sales person making a presentation on Product
features and how they will benefit the prospect and is able to answer the latters objection
much more convincingly. Presentation and explanation skills are required at this stage by
the sales person for closing the deal (selling).On the part of buyer the probing, listening and
responding skills may help him / her to make the proper selection of the product before
purchasing for satisfying his/her needs.

Reference : http://www.citeman.com/244-need-satisfaction-theory-of-selling.html and

RAJAN SAXENA.

2. ELABORATE ON THE FUNCTIONS OF SALES MANAGER.

 Sales management planning

 Sales budgets and quotas
 Manpower planning
 Organizing the sales effort
 Sales force motivation
 Monetary compensation plans
 Control

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1.Sales management planning:

Analysis:

The sale manager has to analyze the developments in different products, territories,
customer accounts in terms of sales , market value , and profitability in comparison to
competition . he also has to analyze market evolution over a period of time, structural
changes in the market arising out of technological changes , and the political , legal and
economic climate in the territories: government policies; and interest groups.

Sales objective / goals:

Based on the analysis the manager can now determine the sales objectives or goals. In the
first place these represents the management’s expectations from the sales team itself, and
these flows from corporate and marketing objectives./ these can be classified into two main
groups : (a) quantitative and (b) qualitative.

Sales strategies/ tactics:

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Sales strategies are the blueprints for action that marshal and reconcile the sales function’s
resources with environmental constraints . a sales manager has to decide on market
penetration , concentration and a segment strategy.

Unlike strategies , tactics are short-term in nature,. They are designed for immediate results
.thus, tactics fill in the operational details of a strategy and specifically spell out each
individual’s responsibilities.

Implementation:

Once you have your actions planned and organized, implementing them is the next step.
Although it may sound easy, there are many real time and real world problems you may
face while implementing a sales plan. For example – The customers of the new territory
might not respond to the new air conditioners entering the market. On the other hand, the
product might be picked up readily by the customers and you might not be able to adapt
with the unexpected demand which can make your brand lose face from the start

Review and feedback or control phase:

As in any planning process, the fifth and very important step in the sales planning process
is to measure the results. Unlike advertising, sales results are very easy to measure because
everything is documented and recorded. For example – the air conditioning company will
measure the total sales of the geographic territory in study. At the same time it will find out
the competitors sales as well for record keeping.

2.Salesbudgets and quotas:

A sales budget is an important first step in structuring an overall budget for your small
business. With an accurate projection of future sales, a small business owner makes well-
informed decisions, keeps expenses in line and protects his company from failing.

Sales Quota is the sales goal set for a product line, company division or sales
representative. It helps the managers to define and stimulate sales effort. Sales quota is the
minimum sales goal for a set time span. Generally sales quotas are set slightly higher than

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the estimated sales so as to stretch the sales force effort. Sales quotas are developed
through the study of annual territory marketing plan. In this the plan for developing new
accounts and expanding existing accounts is given by the representatives.

3.Manpower planning:

Manpower planning is the process of estimating or projecting the number of personnel

required for a project (with different skill sets) over a predefined period of
time. Manpower. Strategic Planning. Scenario Planning or Contingency Planning.

4.Organizing the sales effort:

The task of a sales manager is to organize the resources in such a way that it helps to
achieve the sales objectives. One of the most important resources is the sales team. The
Sales Manager has to organize them in such a way that their maximum potential of the
team is used and also the brands objectives are achieved at the lowest cost.

We are discussing here a few methods of organizing the sales force (team) which are based
on firms strategy and needs of the products to be sold

Product Based

The sales manager may organize the sales team on the basis of an individual product. This
form of organization is commonly seen in multi-product companies like Larsen and
Toubro. The advantage is to determine profit contribution from each product. But the
disadvantage is that the same customer may be called upon by different sales people selling
different products. This means more cost of serving this customer. If the customer is not
satisfied with one product or has a problem in one product, he/ she may express it to other
salesperson from the company. In fact, the salesperson may not be aware of the problem,
thus further angering the customer. Some companies have tried to resolve this through their
sales reporting systems which may go up to the group manager

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Territory Form

A sales territory represents a continuous set of customer and prospect accounts bounded by
the geographical limits. Some of the common forms of territory design are clover leaf,
circular and straight line. These also reflect the routing plan of the salesperson.

It is necessary that each territory is large enough to motivate sales people and must possess
equal opportunities for earning. Also, the need of the salespeople to spend as many nights
as possible at home must be considered. This is important both from the individuals
motivation and cost perspective.

Today, the sales person manger has computer based models and quantitative information
that can help him / her to design most profitable sales territories. The limitation of this form
of organization is that the salesperson may not give adequate time or equal time to all the
products. Many a time, it has been observed that salesperson spend more time selling fast
moving products or those that help them earn more commission. Also, they may not spend
adequate time on all customer accounts. In reality, they may be spending more time with
easier? customers.

Customer or Segment based Organization

Another form of sales organization is customer or segment based. Here, the salesperson is
allotted a market segment or customer in a particular industrial group.

Hence, in a packaging firm, the sales force may be organized as being food and beverages,
petroleum, and other light engineering products. This helps the firm to focus on market
segment and their specific requirements. It also enables the firm to maintain a lean sales
organization and hence keep the costs down. But the problem here is that if a segment or
customer has not been served well by the salesperson it can affect the future of the
organization itself.

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We can observe from the above, no single method or combination of methods is the right
choice. The need is to be deduced from various reports of the market and the best methods
required has to be implemented by the Sales Manager. Ultimately the firm should end up
with increased revenues and higher profits whatever the methods are adopted.

5.sales force management:

One of the most difficult problem a sales manager faces is the motivation of the sales force.
Motivation is the process that produces goal-directed behavior in an individual. It helps to
initiate desired behavior in an individual and direct it toward the attainment of
organizational goals. Motivation consists of three elements - need, drive and goal.
Satisfaction of the need in the individual cuts off the drive in him to work toward
satisfaction of the need. The effectiveness of the sales force plays a crucial role in the
success and growth of an organization. In order to attain the goals of the organization, it is
essential that the sales force is highly motivated. Motivation in the sales function refers to
the amount of effort a salesperson is willing to expend in the selling job. While some
salespersons are self-motivated, there are others who need to be motivated to perform.

6.Monetary compensation plans:

Straight salary:

A straight salary compensation plan for salespeople is used for one of several reasons. It is
first used when a new sales rep is brought into a company. It is also used when a new
territory is opened or a person needs time to come up to speed and perform at the proper
level. A salaried compensation for a period of time gives a new person that opportunity.
Another reason to use salary only is when management is trying to motivate a salesperson
to achieve key success factors that are not revenue or sales volume related. Salary only
compensation is also used when is difficult to determine an individual's impact on the total
selling effort.

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Commissions :

Having a compensation plan based entirely on commissions is an excellent way to motivate

highly aggressive selling behavior. Straight commission is the right choice if the goal is to
turn sales reps loose in a market or territory to maximize sales volume. Straight
commission assumes that the non-selling tasks have been minimized in their importance at
the expense of sales volume. Another consideration of a straight commission plan is
companies have a harder time controlling sales force activities. Straight commission sales
commission plans can be very motivational. Individuals who are motivated to improve their
financial compensation are motivated to improve their sales production.

Combination plans :

Combination sales commission plans offer both a base salary plus an incentive based on
production. These pay plans are popular with many companies because they have many
advantages while avoiding many of the limitations of the other plans. The salesperson gets
a stable salary that smoothes out the highs and lows. Management gets the advantage of
having more ability to direct and reward their salespeople to perform tasks and activities
not directly related to short-term revenue. The incentive portion of the plan motivates a
salesperson to increase sales revenue and profitability. The incentive program can be
structured in a tiered format to incentivize top sales reps to achieve on an open-ended basis.
All revenues a sales rep brings in above their quota, is very profitable business for a
company. The company gains additional revenue and profit, but the fixed expenses for the
wage and benefits for the sales rep does not increase.

7.Control :

Finally the sales manager has to ensure that goals are achieved .This involves performance
review and thus a productivity analysis of the salesperson. In the performance review ,the
sales manager has to review whether the targets ,in terms of sales, market coverage, new
customer development and profit have been achieved .this is done through invoices, sales
report, interviews with customers, and a structured performance appraisal format. The sales
manger must then advise and help the sales person to overcome any negative feedback.

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Reference : RAJAN SAXENA

3.WRITE IN DETAIL ABOUT CHANNEL FUNCTIONS AND FLOW.

Channel functions:

 Information
 Promotion
 Negotiation
 Ordering
 Financing
 Risk Taking
 Physical Possession
 Payment
 Title

A marketing channel performs the work of moving goods from producers to consumers. It
overcomes the time, place and possession gaps that separate gaps that separate goods and
services from those who would use them. Members in the marketing channel perform a
number of key functions and participate in the following marketing flows:

 Information: The collection and dissemination of marketing research information

about potential and current customers, competitors, and other actors and forces in
the marketing environment.
 Promotion: The development and dissemination of persuasive communications
about the offer designed to attract customers.
 Negotiation: The attempt to reach final agreement on price and other terms so that
transfer of ownership or possession can be effected
 Ordering: The backward communication of intensions to buy by the marketing-
channel members to the manufacturer
 Financing: The acquisition and allocation of funds required to finance investors at
different levels of the marketing channel
 Risk Taking: The assumption of risks connected with carrying out the channel ork

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  Physical Possession: The successive storage and movement of physical products
from raw materials to the final customers
 Payment: Buyers paying their bills through banks and other financial institutions to
the sellers
 Title: The actual transfer of ownership from one organization or person to another

Channel flows:

 Product flow
 Negotiation flow
 Ownership flow
 Information flow
 Promotion flow

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The product flow refers to the movement of the physical product from the manufacturer
through all the parties who take physical possession of the product until it reaches the
ultimate consumer. The negotiation flow encompasses the institutions that are associated
with the actual exchange processes. The ownership flow shows the movement of title
through the channel. Information flow identifies the individuals who participate in the flow
of information either up or down the channel. Finally, the promotion flow refers to the flow
of persuasive communication in the form of advertising, personal selling, sales promotion,
and public relations.

Reference : http://www.opentextbooks.org.hk/ditatopic/34128

4.ELABORATE ON CHANNEL DESIGNS DECISIONS & CHANNEL

MANAGEMENT DECISIONS.

Channel design decisions:

 Analyzing Customers’ Desired Service Output Levels

 Establishing the Channel Objectives & Constraints

 Identifying the Major Channel Alternatives

 Evaluating the Major Channel Alternatives

Designing a channel system calls for analyzing customer needs, establishing channel
objectives, & identifying & evaluating the major channel alternatives.

Analyzing Customers’ Desired Service Output Levels

Channels produce 5 service output levels:

1. Lot size: # of units that the marketing channel permits a typical customer to
purchase on a purchase occasion
2. Waiting time: Average time that customers of that channel wait for receipt of the
goods.

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 3. Spatial convenience: Degree to which the marketing channel makes it easy for
customers to purchase the product.
4. Product variety: assortment breadth.
5. Service backup: add-on services provided by the channel (installation, repairs,
credit).

Establishing the Channel Objectives & Constraints

 Channels objectives vary with product characteristics.

 Channel design must take into account the strengths & weaknesses of different
types of intermediaries.
 Channel design is also influenced by the competitors’ channels.
 Channel design must also adapt to the larger environment.
 Legal regulations & restrictions also affect channel design.

Identifying the Major Channel Alternatives

A channel alternative is described by three elements:

1. Types of intermediaries.

Depends on the service outputs desired by the target market & the channel’s
transactions costs. The company must search for the channel alternative that
promises the most long-run profitability.

2. Number of intermediaries.

 Exclusive distribution

 Selective distribution

 Intensive distribution

3. Terms & responsibilities of channel members

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 The producer must determine the rights & responsibilities of the participating
channel members, making sure that each channel member is treated respectfully &
given the opportunity to be profitable.

Evaluating the Major Channel Alternatives

Each alternative needs to be evaluated against three criteria.

1. Economic Criteria
o The first step is to determine whether a company sales force or a sales
agency will produce more sales.
o The next step is to estimate the costs of selling different volumes through
each channel.
o The final step is comparing sales & costs.

Each channel will produce a different level of sales & costs.

2. Control Criteria

The agents may concentrate on other customers’ products or they may lack the
skills to handle our products.

3. Adaptive Criteria

The channel members must make some degree of commitment to each other for a
specified period of time.

Channel management decision:

 Selecting Channel Members

 Motivating Channel Members
 Evaluating Channel Members

 Modifying Channel Arrangements

After a company has chosen a channel alternative, individual intermediaries must be
selected, motivated & evaluated.
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Selecting Channel Members
For some producers this is easy; for others it’s a pain in the ass.
Anyway, in order to select them, producers should determine what characteristics
distinguish the better intermediaries (years in business, other lines carried, solvency,
reputation, etc.)

Motivating Channel Members

Constant training, supervision & encouragement. Producers can draw on the following
types of power to elicit cooperation:

 Coercive power. Manufacturer threatens to withdraw a resource or terminate a

relationship if intermediaries fail to cooperate. Produces resentment.
 Reward power. Manufacturer offers intermediaries extra benefits for performing
specific acts.
 Legitimate power. Manufacturer requests a behavior that is warranted by the
contract.
 Expert power. Manufacturer has special knowledge that the intermediaries value.
 Referent power. Intermediaries are proud to be identified with the manufacturer.

Evaluating Channel Members

Underperformers need to be counseled, retrained or re-motivated. If they do no shape up, it
might be best to terminate their services.

Modifying Channel Arrangements

Periodic modification to meet new conditions in the marketplace. Modification is necessary
when:

 Distribution channel is not working as planned.

 Consumer buying patterns change.
 Market expands.
 New competition arises.
 Innovative channels emerge.
 Product moves into later stages in the product life cycle.

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3 levels of channel adaptation can be distinguished:

1. Adding or dropping individual channel members.

2. Adding or dropping particular market channels.
3. Developing a totally new way to sell goods in all markets.

Reference ; https://www.mbaboost.com/kotler-summary-chapter-18-selecting-managing-
marketing-channels/

5. HOW TO MAXIMIZE CUSTOMER LIFETIME VALUE.

 Build long-term relationships

 Create brand loyalty
 Always up sell and cross-sell
 Choose the right rewards and incentives
 Use multiple touch points to deliver superior customer service

1. Build long-term relationships

There was a time when hiring salespeople who’d do anything short of holding customers at
gunpoint to get a sale was a good idea. However, when your aim is to boost CLV, you want
to bury that sort of short-term thinking in the ground and find stellar salespeople who can
build long-lasting customer relationships, which are your company’s foundation.

Try these three unique tips to build long-term relationships:

 Be honest – This means always having your customer’s best interests at heart,
regardless of whether you get a smaller sale, or lose a sale to a competitor. You
and your customer are both aware your agenda for building a relationship is to
generate business. Shifting your agenda to something altruistic will show the
customer you see them as more than just a pay cherub.
 Share – You have a plethora of skills and knowledge beyond the breadth of
what you’ve been tasked to provide. Share it for free to boost your client’s

38
 confidence in your abilities, while also exposing them to a range of other
products and services.
 Be a partner – Create a strategic partnership or alliance with your customer’s
business. A mutually beneficial relationship is the best and easiest way to build
trust. Create a lifetime customer by referring their business, acquiring their
products or using their services.

Building long term relationships is a simple, effective method for increasing your CLV.
While it may take a little extra time, care and consideration, it’s a great way to increase
revenues from existing customers without simultaneously increasing your expenses.

2. Create brand loyalty

Anyone who says ‘brand loyalty is dead’ lives in a world where Apple doesn’t exist. Apple
is a leader in brand loyalty because of its consistent quality, customer service and the
values it totes in its mission statement. Brand loyalty increases your Customer Lifetime
Value because it encourages trials of a new product, facilitates repeat purchases and
therefore extends the lifetime of your customers. Three major determining factors of brand
loyalty are the quality of products, customer service and ‘shared values’.

It goes without saying customers will keep returning if you’re offering consistently high
quality products or service, with exceptional customer service. For example, Clickfox’s
study revealed poor customer service (48%) and low brand quality (35%) are the biggest
deterrents when it comes to brand loyalty.

In other research, 64% of participants said shared values were the primary reason for
maintaining a relationship with their brand. ‘Clearly communicating your brand’s
philosophy or higher purpose’, or in layman’s terms, showing your heart is in the right
place has become very important to today’s consumers. So choose a philosophy, which
reflects your consumers beliefs and demonstrate them through sponsorship, events or
anything you can think of. Be sure to brand all marketing efforts consistently, so consumers
keep returning to what’s comfortable and familiar.

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Keep your product quality high, provide exceptional customer service and repeatedly
demonstrate your company’s mission statement to build brand loyalty and elevate your
company’s CLV.

3. Always up sell and cross-sell

The difference between me walking out of McDonalds with a cheeseburger and me

walking out with a cheeseburger combo and an apple pie is sadly not self-control. Rather,
my purchase decision rests upon the words, ‘Would you like a combo with that?’
McDonalds has it all figured out. When you increase the average dollars of each sale, you
make more over the customer’s lifetime.

Up sell and cross-sell to give your CLV a quick boost. To avoid confusion, I’ll
establish the difference between up selling and cross-selling. When you up sell, you
increase the value of the same product or service, for example upgrading a cheeseburger to
a combo. You sell a more expensive model or additional features, which add value to the
product, whereas when you cross-sell, you’re selling additional products to the customer,
i.e. apple pie.

One critical thing to remember when up selling and cross-selling is to always provide
honest, targeted information. Unrelated recommendations damage the credibility of
relevant ones, so resist the urge to cross-sell a bunch of products at the same time. Relay
the benefits tailored to the customer, and don’t over promise what your service or product
can deliver.

The concept of up selling and cross selling to increase the revenues is not a new one, it’s
just most businesses don’t do it well. Up sell and cross-sell with honest, targeted delivery,
and you’ll find your average sale increasing without having to bump up any expenses.

4. Choose the right rewards and incentives

Companies spout all kinds of offers to get attention, but you need an incentive scheme,
which not only grabs your customers’ attention, but holds it too. Your rewards system can

40
increase your CLV by promoting customer loyalty and increasing profitability in the long-
term.

Therefore, stay away from discounts, and instead offer exclusive products or value-added
services. A study by Chubbies found the lifetime value of customers acquired through
discounts was lower than customers who weren’t acquired this way. As if that wasn’t
enough to turn you off, studies have shown discounts decrease the perceived quality of
items, while free gifts maintain quality perceptions and increase deal value.

Thus, when you’re choosing your incentive scheme, always remember to:

 Communicate – Raise awareness and educate your customers on potential

rewards. Many customers aren’t aware they even exist.

 Make your rewards attainable – Achievable rewards are engaging for high-value
customers, provided they are equitable and competitive with others in the
industry.

 Make them complimentary – Choose rewards, which compliment your brand.

i.e. don’t give away chocolate if you’re a health and fitness brand.

 Use free gifts – Use products as rewards to encourage trials and increase
successful cross-selling.

Choosing the right incentive structure means your customers won’t be the only ones
reaping the rewards. Steer clear of heavy discounts and use your rewards system to increase
customer retention, and boost your CLV without compromising your bottom line.

5. Use multiple touch points to deliver superior customer service

According to a study by Harris Interactive, 56 per cent of participants would switch to

another company if an alternative offered more options to connect with them. If you’re
looking to increase customer loyalty and subsequently your CLV, manage and organize all
available communication channels well.

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Having multiple points of contact, whether it’s via face-to-face, telephone, web or social
media allows customers to choose how they’d like to be contacted. Sixty per cent of
consumers don’t want to be contacted over the phone about special offers, information and
upgrades, while 75 per cent prefer contact via email or text message.

Social network tools give you the opportunity to connect and engage with your customers
at any time of day, whenever it’s convenient to them. Not only this, moving traffic to other
channels minimises costs and increases purchase paths, although the downside is lost
opportunities for cross-selling.

That being said, having multiple touch points prevents potentially loyal customers from
leaving due to unwanted contact by phone, email or face-to-face interaction, and raises
your company’s Customer Lifetime Value when executed well.

Reference : http://blog.clientheartbeat.com/increase-customer-lifetime-value/

6.HOW WILL YOU MEASURE CUSTOMER SATISFACTION.

Ways of measuring customer satisfaction include:

 Survey customers
 Understand expectations
 Find out where you are failing
 Pinpoint specifics
 Assess the competition
 Try to measure the emotional aspect
 Loyalty measurement
 A series of attribute satisfaction measurement
 Intentions to repurchase
 Monitoring
 Feedback cards

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1.Survey customers

 Surveying customers is the only probable way of getting customer feedback unless
they contact you.
 Most people are busy and have no time to pass redress.
 You can provide survey through several ways such as emails and use of phone calls.
 To get credible feedback you need to allow customers to answer questions on
weighted scale.
 You can conduct repeated surveys, over time, to measure changing comments from
customers.

2.Understand expectations

 Understanding what customers expect from you will provide ground to satisfy their
expectations by giving them enjoyable service.
 Making an effort to discover what customers expect from you in terms of service
and products is the way to satisfying their needs.

3.Find out where you are failing

 On situations where you are not fulfilling customer requirements, it is credible to

find out where you are failing.
 Incidences where products are less than advertised should not arise.
 Find out if employees are making promises that cannot be met.
 Take strides and attend seminars that will equip you with better managerial skills.
 Know the chain of communication so as to know where communication faults are
and foster amendments.

4.Pinpoint specifics

 Whether a customer is satisfied or not, you need to collect information to help you
assess the situation.

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  Collect information about what customers purchased, what they liked and they did
not like, their actual purchase expectation and their suggestions for improvement.

5.Assess the competition

 Have the initiative to know why customers consider other brands above yours.
 Through the survey, invite customers to come and compare and contrast your
services and products and make judgment on what you are not offering.

6.Try to measure the emotional aspect

 Customer experiences after buying a given product are attributed to quality.

 Feedback from customers in relation to quality, reliability and extent satisfaction
should be matched.
 Comments customers make are a measure of their satisfaction.
 Customers showing dissatisfaction prompts change of strategy.

7.Loyalty measurement

 Customer loyalty is the likelihood of repurchasing products or services.

 Customer satisfaction is a major predictor for repurchasing and it is influenced by
explicit performance of the product, value and quality.
 Loyalty is basically measured when a customer recommends to a friend, family
member about given product.
 Overall satisfaction, repurchasing and likelihood of recommending to a friend are
indicators of customer satisfaction.

8.A series of attribute satisfaction measurement

 This strategy takes into account the affective and cognitive pattern.
 Affective behavior is intrigued to liking and disliking owing the benefits the
product is attached with.
 Customer satisfaction is influenced by perceived quality the product is attached
with and it is regulated by expectations of the product or service.

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  Customer attitude towards a product are as a result of product information through
advertisement and any experience with the product whether perceived or real.
 Cognition is the judgment on whether the product is useful or not useful.
 Judgment is always intended use of application and use of occasions for which the
product is purchased.

9.Intentions to repurchase

 Future hypothetical behavior that indicates repurchasing the product is a measure of

satisfaction.
 Satisfaction can influence other post purchasing trend through use of the word of
mouth or social media platform.

10.Monitoring

 Monitoring can be directed at phone, email and chat communications.

 Monitoring includes automated phone interactions designed by companies to help
give real world glimpse.

11.Feedback cards

 Dishing out cards will help gauge customer comments.

Reference: www.insightsfromanalytics.com/blog/bid/.../How-to-Measure-Customer-
Satisfaction

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