MARKETING MANAGEMENT

14th edition

5
Creating
Customer Value,
Satisfaction, and
Loyalty

Kotler Keller
 Value and Satisfaction
•Perceived Value
– The customer’s evaluation of the difference
between benefits and costs.
– Customers often do not judge values and
costs accurately or objectively.
•Customer Satisfaction
– Product’s perceived performance relative to
customer’s expectations.

CHP: 1&5-2
 Determinants of
Customer Perceived Value
Total customer benefit Total customer cost

Product benefit Monetary cost

Services benefit Time cost

Personal benefit Energy cost

Image benefit Psychological cost

CHP: 1&5-3
 Determinants of Customer-Delivered
Value
Total
Product Personal
customer
value value
value
Customer-
delivered
value
Total
Monetary Energy
customer
cost cost
cost

CHP: 1&5-4
 Loyalty

A deeply held commitment to re-buy

or re-patronize a preferred product
or service in the future despite situational
influences and marketing efforts having
the potential to cause switching behavior.

CHP: 1&5-5
The Value Proposition

The whole cluster of benefits the

company promises to deliver
CHP: 1&5-6
Measuring Satisfaction
Periodic
Periodic Surveys
Surveys

Customer
Customer Loss
Loss Rate
Rate

Mystery
Mystery Shoppers
Shoppers

Monitor
Monitor competitive
competitive
performance
performance

CHP: 1&5-7
Product and Service Quality

Quality is the totality of features and

characteristics of a product or
service that bear on its
ability to satisfy
stated or implied needs.

CHP: 1&5-8
Total Quality Management

TQM is an organization-wide
approach to continuously
improving the quality of
all the organization’s processes,
products, and services.

CHP: 1&5-9
Maximizing Customer Lifetime Value

Customer
Profitability

Customer Lifetime
Equity Value

CHP: 1&5-10
 Framework for CRM

Identify prospects and customers

Differentiate customers by needs

and value to company

Interact to improve knowledge

Customize for each customer

CHP: 1&5-11
 CRM Strategies
Reduce
Reduce the
the rate
rate of
of defection
defection

Increase
Increase longevity
longevity

Enhance
Enhance “share
“share of
of wallet”
wallet”

Terminate
Terminate low-profit
low-profit
customers
customers
Focus
Focus more
more effort
effort on
on
high-profit
high-profit customers
customers
CHP: 1&5-12
The Marketing Funnel

CHP: 1&5-13
 The Customer-Development
Process
Suspects

Prospects Disqualified

First-time Repeat
customers customers Clients Members

Partners
Ex-customers

CHP: 1&5-14
Building Loyalty

Partnership

Proactive

Accountable

Reactive

Basic
CHP: 1&5-15
Forming Strong Customer Bonds

Add financial
benefits

Add social Add structural

benefits ties

CHP: 1&5-16