Marketing Module 2 Customer Relationship

Principles of Marketing
Governor Pack Road, Baguio City, Philippines 2600

Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11- ABM
Email: email@uc-bcf.edu.ph; Website: www.uc-bcf.edu.ph
MODULE 2 – MKTG Subject Teacher:
Customer Relationship
Learning Objectives:
At the end of this module, student must be able to:
a. Define relationship marketing
b. Explain the value of customers
c. Identify and describe relationship development strategies
How would you react if this happened to you in your pursuit of perpetual joy? Would you go
insane? Would you go crazy? Would you ignore? Will you act?
These questions may be insignificant to you right now since you have no ―jowa‖ to experience
this but if we relate this to business, this is actually a serious matter.
Loyalty now a days are often not given the importance it deserves when it comes to
relationships and that includes relationships of businesses to customers.
Customer loyalty is a measure of a customer's likeliness to do repeat business with a company

or brand. It is the result of customer satisfaction, positive customer experiences, and the overall value
of the goods or services a customer receives from a business.
Hence, satisfying your customer is key to maintaining a good relationship with them otherwise
they will look for others that will satisfy them.
In this module we will learn how to give importance to our valued customers not only by
satisfying them with our performance but with our connection to them.
The Value of Customer Relations and Customer Service

A. ―There is only one Boss: The Customer‖
As stated in the previous module, the Marketing Process begins, continues, and ends
with consumers. We will now look into marketing strategy and the many major activities and
related components involved in developing and implementing such strategy. Customers or
consumers stand in the center. (Marketing: An Introduction, 7th Edition, 2005)
Principles of Marketing Page 1 of 11

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Before we continue, let‘s look at the definition of a customer and how some leading
business people view customers.
―A customer is an individual or business that purchases the goods or services produced

by a business. The customer is the end-goal of businesses since it is the customer who pays for
supply and creates demand. Businesses will often compete through advertisements or sales in
order to attract a larger customer base… Businesses often follow the adage ―the customer is
always right‘, because happy customers will continue to buy goods and services. Companies
closely monitor the relationships that they have with their customers, eliciting feedback to see
if new products should be created or adjustments be made to what is currently offered…
(‖Investopedia – Sharper Insight. Smarter Investing,‖ 2017).
―There is only one boss. The customer. And he can fire everybody in the company, from
the chairman, own down, simply by spending his money somewhere else‖ (Sam Walton,
founder of Wal-Mart).
―For many companies, 20% of the customers generate 80% of the profits. These
companies would be better off by focusing more on that 20%, and by searching for other
customers similar to that 20%, and focusing less on the other 80% of their current customers.
―(Tom MurckoBI, founder and CEO of, WebFinance, Inc.)
The American Marketing Association has these definitions. ―Traditionally, a consumer is

the ultimate user or consumer of goods, ideas, or services. However, the term also is used to
imply the buyer or decision maker as well as the ultimate consumer. A mother busying cereal
for consumption by a small child is often called the consumer although she may not be the
ultimate user.‖ On the other hand, AMA stated this: ―A customer is the actual or prospective
purchaser of products or services.‖ (AMA, 2003)
For purposes of our discussions in out modules, we will consider ―consumers‖ and
―customers‖ as referring to the same subject.
B. ―Is the Customer Always Right?‖
Who championed the slogan: ―the customer is always

right‖?
―Do you agree to the saying/adage: ―The Customer is

Always Right?‖
For whatever reason, this seems to be a question that is

frequently asked, especially if you are working as a part timer
in some fast food restaurants. People we know often come to
us and ask us questions on this matter like as if they are
investigating an incident.
According to the authors of a ―Principles of Marketing‖ book, ―No. The customer isn’t
always right. But you want to make them feel like they are.” ‘Right‘ and ‗Wrong‘, even in
situations much more than a mere customer service misunderstanding, are hard to sort out.
Think of the sworn-but completely disremembered – eyewitness testimony that has convicted
so many innocent people.
―So in working with customers, your goal needs to be the polar mouth opposite of trying
to play detective, by and large. It‘s not your goal to make it clear to the customer how
inaccurate their position is. Instead, focus on putting yourself in your customer‘s shoes, their
eyes in your sockets, until you understand why they feel, and in fact, ―are… right.‖ ―They‘re
your customer, after all.‖ (Stan, 2002)

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―More than a century ago, the legendary retailer Chicago’s Marshal Field, championed
the fatalist slogan ―The customer Is always right‖ (from an article in Forbes Magazine, Apr.
23,2012, p.78, entitled ―Jeff Bezos Gets It‖ by George Anders‖)
C. Customer Relationship Management

Broadly defined, ―customer relationship management‖ is the overall process of building
and maintaining profitable customer relationship by delivering superior value and satisfaction
to customers and the general buying public. The aim of CRM is to produce high customer
equity which is the worth or value of the satisfaction received by the customer. The key to
building strong, lasting relationships is the creation of superior customer value and satisfaction,
which may be illustrated by the following:
Poor product, goods, or service

Below average performance
Shoddy workmanship, etc.
DISSATISFIED
Rude employees, bad service CUSTOMER
Unfulfilled promises
Good product or service
Performance fulfilled expectations SATISFIED CUSTOMER
Courteous employees
On-time delivery, etc.
Performance exceeded expectations
Going “the extra mile”
DELIGHTED
Pleasant buying experience CUSTOMER
Consistently good performance by everybody
Obviously, a company wants more ―satisfied‖ customers and ―zero‖ or minimal

dissatisfied ones. There will be instances when the company fall short on its promises and
delivers wrong or faulty products. The company should not ―give up‖ on dissatisfied customers
– it should find out the reasons for the dissatisfaction and try to correct the situation right away
in order to win back the dissatisfied customer. Customers can not satisfy themselves, can they?
At the same time, it should also attempt
to convert the Satisfied Customers to Delighted
ones, bearing in mind that highly satisfied
customers buy more and return to the stores
often, talk favorably about the company –
they make the best ‗spokespersons‘ for the
company – and remain loyal longer.
Companies must try to determine the

level at which they want to build with different
segments and groups of customers, and come
up with various marketing tools and tactics to
develop stronger bonds with them. In return for
creating and giving value for customers, the
company captures value from them in the
form of profits and continued patronage.
Marketers should also remember that

they are not alone, that they need to work
closely with and invite collaboration from their
partners inside and outside the company, so
they will all work together in winning customers.
In addition to being good at customer
relationships, they must work as partners.

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Relationship Marketing
Relationship Marketing is about forming long-term relationships with customers. Rather than
trying to encourage a one-time sale, relationship marketing tries to foster customer loyalty by
providing exemplary products and services. This is different than most normal advertising practices
that focus on a single transaction; watch ad A and buy product B. Relationship marketing, by
contrast, is usually not linked to a single product or offer. It involves a company refining the way they
do business in order to maximize the value of that relationship for the customer.
Relationship marketing mainly involves the improvement
of internal operations. Many customers leave a company not
because they didn‘t like the product but because they were
frustrated with the customer service. If a business streamlines its
internal operations to satisfy all service needs of their customers,
customers will be happier even in the face of product
problems.
Technology also plays an important role in relationship

marketing. The internet has made it easier for companies to
track,
Customers are offered, personalized ads, store,
specialanalyze, and expedited
deals, and the utilize vast as
service amounts
a tokenofof
appreciation for their loyalty.
Social media sites allow business to engage their customers in an informal and ongoing way. In
the past, it would have been impossible to keep useful records about every single client, but
technology makes it easy for companies to automate their marketing efforts.
Branding is the final component or relationship marketing. A company can form a long-term
relationship with client if that client feels like the brand they purchase reflects who they are or who
they want to be. Customers are less inclined to switch to a different brand if they think that switch
makes a statement about their identity.
A. Who Employs Relationship Marketing?

Many types of companies have something to gain from developing long-term
relationships with their customers. Smaller businesses often serve a steady stream of regulars,
and make little effort to draw in new customers. Imagine a small restaurant that sees a steady
stream of business from the morning commute. Their daily presence is a large part of the
business that restaurant does every day.
Larger companies typically invest the most in carrying out sophisticated relationship
marketing campaigns. In some major companies, relationship marketing is a strategy that
affects every department with a client facing purpose (sales, customer service, shipping etc.
Industry leaders constantly face competition from new companies who claim to provide
similar goods with a higher-quality-level or service. Holding onto their existing customers is the
only way they can maintain their position at the top of their industry. This is true for businesses in
all industries, from cell phones to baby food.
B. Examples of Relationship Marketing

Ikea – the Swedish furniture
maker has a worldwide base of
intensely loyal customers. When the
company changed the font in their
ubiquitous catalog, Ikea lovers took
to the Internet to air their complaints.
Rather than alienate their customers
for a trivial reason, Ikea changed the
font back in the next catalog.

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Direct Recruitment – the direct

mail marketing firm sends out
handwritten birthday cards to clients
and associates every year. This
simple, personal touch helps clients
feel like Direct Recruitment cares
about them as people rather than
simply consumers.
American Airlines – The airline

maintains a comprehensive frequent
flyer program that rewards customer
loyalty with the promise of free flights,
upgrades, and discounts.
Dell – Dell computers created

a special online store for high volume
corporate customers. By tailoring the
ordering process to the specific
customer‘s needs. Dell was able to
expedite many of the hassles
corporate technology buyers face.
Providing a higher level of service
leads to increased loyalty.
Vyvanse – the makers of the

popular ADHD drug created an
extensive online portal that included
videos, forums, expert articles, and
mobile apps to help those who suffer
from ADHD. Rather than relying on
the strength of the product alone, the
drug makers created a place for
users to gather and interact that was
linked back to the company.
Four Brand Benefits

In order to establish a long-term relationship with their customers, firms must create value
based on several benefits since customers‘ needs are multi-faceted. Contrary to popular belief,
offering the lowest price may not exactly be the correct route to attain loyal customers as there are 4
benefits customers look for, as shown in the next exhibit, which are the functional benefit, emotional
benefit, social benefit, and economic benefit. The first 3 benefits are also known collectively as the
Jobs-to-be-Done (JTBD), a concept introduced by Harvard professor Clayton Christensen.
1. Functional Benefit
A good functional benefit offers a compelling reason to switch preference. This is
done by understanding and contextualizing pain points of consumers and creating features or
attributes that remove those pain points. The bigger the pain point, the higher the possibility of
launching a crusade beyond selling product or service.
Examples of Functional Benefit:

 San Miguel Beer has lemon and apple flavors to attract those who do not like the bitter
taste of beer to attract new category customers or users.

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 Omron launched an electronic blood pressure monitor and has since sold millions of units
even if it is more expensive than the stethoscope. Omron targeted housewives and those
with medical conditions who want to be more empowered to know their blood pressure
reading without depending on doctors, a de facto saving, considering the cost of each visit
to the doctor.
2. Emotional Benefit
The emotional benefit distinguishes a marketing company from a mere trading
company because of the effort to consider positive feelings provided to the customers, and to
create an emotional connection with its customers.
Examples of Emotional Benefit:

 In comparing the same product bought as a gift in two department stores, the one with a
Rustan‘s gift wrapper imparts a meaning that the gift recipient is important to the giver
because of its premium association, something that other department stores may not be
able to communicate as well.
 Adding fragrance to clothes makes users perceive clothes were whiter even when they
were not, hence, the manufacturing of a detergent with added fragrance.
3. Social Benefit
The social benefit takes into consideration how customers want to be perceived by
others when using a product or service.
Examples of Social Benefit:

 Considering different brands of vehicles that can bring passengers from point A to point B;
using a luxury car like BMW can help make the driver or passenger perceived to be
successful than those riding average car brands.
 Holding a cup of Starbucks coffee offers the consumers a sophisticated self-image than
holding a cup of low cost coffee.
Exactly the reason why these fake brands exist:

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4. Economic Benefit
To the consumers, the right price is no more than the perceived value, with the
difference between customer value and customer cost known as surplus. The higher the total
benefits, the higher the price can command. The higher the surplus, the more compelling the
price will be. The exception is if the price is too low, it may create doubt for the quality of the
product. Total customer value includes not just product and service, but also the brand image
and personal value; while total customer cost includes not just the amount paid, but also the
time and energy spent.
Examples of Economic Benefit:

 Buffet meals offered by restaurant chains now include cross-over features among
company-owned restaurants located beside each other. Saisaki customers can cross-over
to Dad‘s, and Kamayan. Similarly, Dusit Thani Hotel in Makati has its Sunday‘s Brunch, where
consumers can get food from the Pantry Café, as well as their UMU Japanese restaurants,
making them express ―suki‖ even if the price is relatively higher than regular restaurants.
 Senior citizens may prefer smaller community-type malls like Waltermart and City Malls for
better convenience, as big-box stores (e.g. hypermarket) and large malls entail a lot of
effort for them to exert before getting to buy what they really needed.
Exhibit 1: Four Brand Benefits

FUNCTIONAL BENEFIT Why should I buy your product or service?
EMOTIONAL BENEFIT How will I feel when I own and use the product or service?
SOCIAL BENEFIT How will others perceive me when I use your product or service?
ECONOMIC BENEFIT Why is your offer priced the way it is?
Formulating benefits holistically by identifying all 4 instead of limiting to just the functional
benefit is advisable. Let‘s use Waters Distribution as an example.
Exhibit 2: Jobs-to-be-Done of Waters Philippines

BENEFIT JOBS TO BE DONE COMPANY STRATEGIES
Functional Benefit Make money for the family. Generous commission per unit. Prompt
commission release. Additional incentives
from sale of direct and indirect recruits.
Emotional Benefit Feel good by being recognized. Regular recognition program. Regular
meeting/get together with sales leaders.
Social Benefit Be perceived as successful by Five-star travel that can be posted in
friends and families. social media. A car plan that can be
emulated by both friends and neighbors.
Economic Benefit Start a business with low capital Buy a start-up kit at P399. Attend training.
and high management support. Focus on retailing and sponsoring, and the
company is in charge of the rest.
The Value of Customers

Customer value measures a product or service's worth and compares it to its possible
alternatives. This determines whether the customer feels like they received enough value for the price
they paid for the product/service.
We can look at customer value as insight into buyer's remorse. If customers feel like the total
cost of an item outweighs its benefits, they're going to regret their purchase. Especially if there's a
competitor who's making a better offer than yours for a similar product or service.
Understanding customer value and how to calculate it can help your business price products fairly
and reduce friction within the customer experience.
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How to Measure Customer Value

For some businesses, customer value boils down to dollars and cents. However, it's important
to remember that customers give more to your company than just what's listed on the price tag.
There are also time costs, energy costs, and emotional costs that customers weigh when making a
buying decision.
Similarly, there are different types of benefits that influence customer decisions. Some
examples include tangible benefits — like how the product will help them achieve goals — as well as
image benefits — like how owning this product or service will change one's social status in the eyes of
their peers and colleagues.
To measure customer value, we first need to recognize these different types of costs and
benefits. The graphic below can help by summarizing the factors you should be addressing when
calculating customer value.
1. Identify customer benefits.

While the graphic above highlights some general benefits, here are some specific one you can
consider:
 The quality of your product or service
 The ability to provide a better solution
 Your brand's reputation
 Your unique customer experience
 The quality of your customer service team
 The social advantages of partnering with your business
2. Total customer costs.

When measuring customer costs, it helps to differentiate between tangible and intangible. That way
you can calculate the total of your monetary costs and compare it to your other costs.
Tangible Costs:
 The price of your product or service
 Installation or onboarding costs
 The cost of accessing your product or service
 Maintenance costs
 Renewal costs
Intangible Costs:
 Time invested in buying your product or service
 A poor customer experience
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 Physical or emotional stress induced from buying or installing your product

 A poor brand reputation
 Time spent understanding how your product or service works
If you will search about customer value online, you will get a result where they are applying a
formula to compute or to represent customer value quantitatively. However, this will not be a part of
our modules but it will be helpful to know that there are more to know about marketing than what we
covered in the modules.
Relationship Development Strategies

Successful businesses don‘t communicate with prospects and customers for special sales.
Today, making your company indispensable is a vital key to marketing success. It‘s a terrific way to
add value, enhance your brand and position against your competition. Here are seven relationship-
building strategies that will help you transform your company into a valuable resource:
1. Communicate Frequently
How often do you reach out to customers? Do the bulk of your communications focus on
product offers and sales? For best results, it‘s important to communicate frequently and vary the
types of messages you send. Instead of constant barrage of promotions, sprinkle in helpful
newsletters or softer-sell messages. The exact frequency you choose will depend on your industry
and even seasonality, but for many types of businesses, it‘s possible to combine e-mail, direct
mail, phone contact, and face to face communication to keep prospects moving through your
sales cycle without burning out on your messages.
2. Offer Customer Rewards

Customer loyalty or reward programs work well for many types of businesses, from retail to
cruise and travel. The most effective programs offer graduated rewards, so the more customers
spend, the more they earn. This rewards your best, most profitable clients or customers and cuts
down on low-value price switchers-customers to switch from program to program to get entry-
level rewards. Whenever possible, offer in-kind rewards that remind your customers of your
company and its products and services.
3. Hold Special Events

The company-sponsored golf outing is back. With the renewed interest in retaining and up-
selling current customers, company-sponsored special events are returning to the forefront. Any

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event that allows you and your staff to interact with your best customers is a good bet, whether
it‘s a springtime golf outing, a summertime pool party or an early fall barbecue. Just choose the
venue most appropriate for your unique customers and business.
4. Build Two-Way Communication

When it comes to customer relations, ―listening‖ can be every bit as important as ―telling‖. Use
every tool and opportunity to create interaction, including asking for feedback through your web
site and e-newsletters, sending customer surveys (online or offline) and providing online message
boards or blogs. Customers who know they‘re ―heard‖ instantly feel a rapport and a relationship
with your company.
5. Enhance Your Customer Service

Do you have a dedicated staff or channel for resolving customer problems quickly and
effectively? How about online customer assistance? One of the best ways to add value and
stand out from the competition is to have superior customer service. Customers often make
choices between parity products and services based on the perceived ―customer experience‖.
This is what they can expect to receive in the way of support from your company after a sale is
closed. Top-flight customer service on all sales will help you build repeat business, create positive
word-of-mouth and increase sales from new customers as a result.
6. Launch Multicultural Programs

It may be time to add a multilingual component to your marketing program. For example, you
might offer Spanish-language translation of your Web site or use ethnic print and broadcast
media to reach niche markets. Ethnic audiences will appreciate marketing communications in
their own languages. Bilingual customer service will also go a long way toward helping your
company build relationships with minority groups.
7. Visit the Trenches

For many entrepreneurs, particularly those selling products and services to other businesses,
it‘s important to go beyond standard sales calls and off-the-shelf marketing tools in order to build

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relationships with top customers or clients. When was the last time you spent hours, or even a full
day, with a customer-not yours sales staff, but you, the head of your company? There‘s no better
way to really understand the challenges your customers face and the ways you can help meet
them than to occasionally get out in the trenches. Try it. You‘ll find it can be a real eye-opener
and a great way to cement lasting relationships.
References:
 Go, J., & Escareal-Go, C. (2017). Principles and Practices in Marketing in the Philippine Setting.
14 Ilang-Ilang St., New Manila, Quezon City, Philippines: Josiah and Carolina Go Foundation.
 Medina, R. (2008). Principles of Marketing. Manila Philippines: Rex Bookstore, Inc.
 Ligaya, E. F., Jerusalem, V. L., Palencia, J. M., & Palencia, M. M. (2017). Principles of Marketing.
Sampaloc, Manila, Philippines: Fastbooks Educational Supply, Inc.
 Ilano, A. B. (2019). Principles of Marketing. Manila Philippines: Rex Bookstore, Inc.
 https://blog.hubspot.com/service/customer-value

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Principles of Marketing

Governor Pack Road, Baguio City, Philippines 2600

MODULE 2 – MKTG Subject Teacher:

Customer loyalty is a measure of a customer's likeliness to do repeat business with a company

The Value of Customer Relations and Customer Service

Principles of Marketing Page 1 of 11

MODULE 2 – MKTG Subject Teacher:

―A customer is an individual or business that purchases the goods or services produced

The American Marketing Association has these definitions. ―Traditionally, a consumer is

B. ―Is the Customer Always Right?‖

Who championed the slogan: ―the customer is always

―Do you agree to the saying/adage: ―The Customer is

For whatever reason, this seems to be a question that is

Principles of Marketing Page 2 of 11

MODULE 2 – MKTG Subject Teacher:

C. Customer Relationship Management

Poor product, goods, or service

Obviously, a company wants more ―satisfied‖ customers and ―zero‖ or minimal

Companies must try to determine the

Marketers should also remember that

Principles of Marketing Page 3 of 11

MODULE 2 – MKTG Subject Teacher:

Technology also plays an important role in relationship

A. Who Employs Relationship Marketing?

B. Examples of Relationship Marketing

Principles of Marketing Page 4 of 11

MODULE 2 – MKTG Subject Teacher:

Direct Recruitment – the direct

American Airlines – The airline

Dell – Dell computers created

Vyvanse – the makers of the

Four Brand Benefits

Examples of Functional Benefit:

Principles of Marketing Page 5 of 11

MODULE 2 – MKTG Subject Teacher:

Examples of Emotional Benefit:

Examples of Social Benefit:

Exactly the reason why these fake brands exist:

Principles of Marketing Page 6 of 11

MODULE 2 – MKTG Subject Teacher:

Examples of Economic Benefit:

Exhibit 1: Four Brand Benefits

ECONOMIC BENEFIT Why is your offer priced the way it is?

Exhibit 2: Jobs-to-be-Done of Waters Philippines

The Value of Customers

MODULE 2 – MKTG Subject Teacher:

How to Measure Customer Value

1. Identify customer benefits.

2. Total customer costs.

MODULE 2 – MKTG Subject Teacher:

 Physical or emotional stress induced from buying or installing your product

Relationship Development Strategies

2. Offer Customer Rewards

3. Hold Special Events

Principles of Marketing Page 9 of 11

MODULE 2 – MKTG Subject Teacher:

4. Build Two-Way Communication

5. Enhance Your Customer Service

6. Launch Multicultural Programs

7. Visit the Trenches

Principles of Marketing Page 10 of 11

MODULE 2 – MKTG Subject Teacher:

Principles of Marketing Page 11 of 11