1

CH5
Creating Long-Term
Loyalty Relationships
 Figure 5.1 Customer-Orientations

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 What is
Customer Perceived Value?
 Customer perceived value is the
difference between the prospective
customer’s evaluation of all the benefits
and all the costs of an offering and the
perceived alternatives.

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 Figure 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

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 PRM
• PARTNERING WITH OTHERS OUTSIDE THE COMPANY

• PARTNERING WITH OTHERS INSIDE THE COMPANY

(INTERNAL MARKETING- Aimed at ensuring that staff in the marketing
department and other departments share the organisation’s goals and
have sufficient training and power to respond appropriately in different
situations )

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 CRM
IT IS THE OVERALL PROCESS OF
BUILDING AND MAINTAINING PROFITABLE
CUSTOMER RELATIONSHIPS BY
DELIVERING SUPERIOR CUSTOMER
VALUE AND SATISFACTION.

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 Framework for CRM
 Identify prospects and customers
 Differentiate customers by needs and value to
company
 Interact to improve knowledge
 Customize for each customer

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 Database Key Concepts
 Customer database  Business database
 Database marketing  Data warehouse
 Mailing list  Data mining

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 Using the Database
 To identify prospects
 To target offers
 To deepen loyalty
 To reactivate customers
 To avoid mistakes

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Creating Customer loyalty and
retention-EstimatingLifetime
Value of a Customer (CLV)

6-10
 CAPTURING VALUE FROM
CUSTOMERS
• CREATING CUSTOMER LOYALTY AND RETENTION

• GROWING SHARE OF MARKET, SHARE OF CUSTOMER

• BULIDING CUSTOMER EQUITY

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 What is Loyalty?

Loyalty is 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.

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 Measuring Satisfaction
 Periodic surveys
 Customer loss rate
 Mystery shoppers
 Monitor competitive performance

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 Growing share of customer

The portion of the customer’s purchasing that a company gets in its product
Categories.

Eg., AMAZON .COM now offers customers a wide variety of products including
E-Books, music, DVDs, Gifts, Toys, Consumer electronics, office products,
Jewellery etc., AMAZON uses a customer’s purchase history, previous product
searches and other data to compare customer’s profile with similar buyers and to
Recommend products that might be of interest.

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 Building Customer Equity

The total combined customer lifetime values

of all of the company’s current and potential
customers.

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 MEASURING RETURN ON
MARKETING INVESTMENT (ROMI)

IT IS THE NET RETURN FROM A MARKETING INVESTMENT DIVIDED BY

THE COSTS OF THE MARKETING INVESTMENT. IT MEASURES THE
PROFITS GENERATED BY INVESTMENTS IN MARKETING ACTIVITIES.

Estimating Return on Social Media? The pepsi failure.

50% of American marketing budget spent on social media, resulting in 4 million

Likes and 80 million votes on pepsi’s social causes, finally ending with a very poor
Sales result- DROP OF THEIR MARKET SHARE BY 5% !

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 A CONCEPTUAL VIEW OF ROMI
Marketing Investments

Marketing Returns

Improved customer value

And satisfaction
Cost of
marketing
Increased Increased
Investment
Customer Customer
Attraction Retention

Increased customer lifetime

values & customer equity

Return on marketing investment

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 Figure 5.3 Customer-Product
Profitability Analysis

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 Performance Marketing

Financial Social Responsibility

Accountability Marketing

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 Holistic Marketing

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 What is a Marketing Plan?

A marketing plan is the

central instrument for
directing and coordinating
the marketing effort.
It operates at a strategic and tactical level.

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