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Kotler Keller

Marketing Management 14e

Phillip

Kevin Lane

Creating Long-term Loyalty Relationships

Discussion Questions
1. What are customer value, satisfaction, and loyalty, and how can companies deliver them? 2. What is the lifetime value of customers, and how can marketers maximize it?

3. How can companies attract and retain the right customers and cultivate strong customer relationships?
4. What are the pros and cons of database marketing?
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Customer Value, Satisfaction, and Loyalty


Holistic Marketing
Inform Engage Energize

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Traditional Organization vs. Customer-Oriented Organization

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Customer Perceived Value


Customerperceived Value

Economic

Evaluating Functional Obtaining Using Psychological


Total Customer Benefit
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Disposing
Total Customer Cost
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Customerperceived value
Total customer benefit Total customer cost Monetary cost Time cost Energy cost

Determinants of Customer Perceived Value

Product benefit Services benefit Personal benefit

Image benefit
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Psychological cost
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Value Concepts - Caterpillar


Profit Price

Customer Value
-0$1,000 2,000 3,000 4,000 5,000 6,000

$6,000 $20,000 5,000 4,000 3,000 2,000 1,000 -019,000 18,000 17,000 16,000 15,000 14,000

Worth to farmer: $20,000

Cost to produce: $14,000


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Choice Processes and Implications

Friends with salesperson

Lowest purchase price wins.

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Customer Loyalty
A deeply held commitment to rebuy or repatronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior.
-- Oliver

Value Proposition Volvo


Core positioning: Safety

Other benefits: Good performance Design Environmentally friendly

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Satisfaction
A persons feelings of pleasure or disappointment that result from comparing a products perceived performance to (or outcome) to expectations.

Customer Satisfaction

Expectations

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Customer Expectations
Previous purchases Friends advice
Marketers / competitors
Expectations

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Monitoring Satisfaction
Influence of Customer Satisfaction

Measurement Techniques

Customer Complaints
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Measurement Techniques
Customer Loss Rate Surveys

Mystery Shopper
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Influence of Customer Satisfaction

Customer satisfaction

Speed of communication
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Customer Complaints
5%
Complain

54% - 70%
Buy again if resolved

95%
If resolved quickly

Tell 5 people

25%
Dissatisfied

95%
Stop buying

Tell 11 people

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Product and Service Quality


Performance Conformance

Quality

Satisfaction
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Profitability
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Maximizing Customer Lifetime Value

20% of Customers

80% of Profits

Customers
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Customer Profitability

Customer Profitability Analysis

Profitable

Unprofitable

Customer Lifetime Value

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A Profitable Customer
A person, household, or company that over time yields a revenue stream exceeding by an acceptable amount the companys cost stream for attracting, selling, and serving that customer.

Customer-Product Profitability Analysis

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Cultivating Customer Relationships


Customer Information Differentiate Customize Personalize Share

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Customer Relationship Management (CRM)

Personalizing Marketing
Customer Empowerment Customer Reviews & Recommendations
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Personalizing Marketing

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One-to-One Marketing
Identify prospects and customers Differentiate customers

Interact with each customer


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Customize
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Customer Empowerment

Brand Evangelists
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Customer Reviews/Recommendations
Create Buzz

Negative reviews

Customer ratings
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Customer Retention
Acquiring new customers costs

5x more
than retaining current customers The average company loses

10%
Of its customers yearly Reducing customer defections by 5% can increase profits from

25% to 85%
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Attracting and Retaining Customers


Manage customer base

Reduce Defections 1. Define and measure 2. Determine causes 3. Compare CLV to costs

Retention Dynamics
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The Marketing Funnel

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Building Loyalty
Interact with customers

Create institutional ties

Develop loyalty programs


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Databases & Database Marketing


Customer databases Name, address, telephone # Purchase history Demographics Psychographics Mediagraphics

Data mining

Data Warehouses
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