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Session I : Introduction and Overview
Customer Value, Satisfaction and Retention
MM 601, IBMP, Thammasat University, Semester 2/2552
Agenda
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Course Organization
Course Materials
Tasks of Marketing
Major Concepts & Tools of Marketing
How has marketing management changed?
What are customer value, satisfaction, and
loyalty, and how can company delivers
them?
Course Organization
• Part I - Understanding Marketing
Management
• Part II - Analyzing Marketing Opportunities
• Part III - Developing Marketing Strategies
• Part IV – Developing Marketing Offerings
Course Materials
• Text Reading – Marketing Management,
Kotler & Keller, 13th Edition
• Mini Cases
• Marketing Plan
What is Marketing? (Social Definition)
Marketing is a societal process by which
individuals and groups obtain what they
need and want through creating, offering,
and freely exchanging products and
services of value with others.
What is Marketing? (Managerial Definition)
Marketing is an organizational function
and a set of processes for creating,
communicating, and delivering
value to customers and for managing
customer relationships in ways that
benefit the organization and its
stakeholders.
Marketing Management
Marketing management is the art and science
of choosing target markets and getting,
keeping, and growing customers through
creating, delivering, and communicating
superior customer value.
What is marketed?
Goods
Services
Events & Experiences
Persons
Places & Properties
Organizations
Information
Ideas
Simple Marketing System
Communication
Industry
(a collection
of sellers)
Goods/services
Money
Information
Market
(a collection
of Buyers)
Structure of Flows
Resources
Money
Resource
markets
Services,
money
Services,
money
Manufacturer
markets
Goods, services
Taxes,
goods
Taxes
Government
markets
Taxes,
goods
Services,
money
Money
Resources
Money
Consumer
markets
Services
Taxes,
goods
Money
Intermediary
markets
Goods, services
Company Orientations toward the Marketplace
Production Concept
Consumers prefer products that are
widely available and inexpensive
Mass Production, Cost Leadership,
Wide Coverage
Product Concept
Consumers favor products that offer
the most quality, performance, or
innovative features
Best Quality, Performance,
Innovative Product
Company Orientations toward the Marketplace
Selling Concept
Consumers will buy products only if
the company aggressively
promotes/sells these products
High Sales Volume, Short Term
Oriented
Marketing Concept
Focuses on needs/wants of target
markets & delivering value
better than competitors
Target Market, Customer’s need,
Coordinated Marketing, Profitability
Selling & Marketing Concepts
Starting
point
Focus
Means
Ends
Factory
Existing
products
Selling and
promotion
Profits through
sales volume
(a) The selling concept
Market
Customer
needs
Integrated
marketing
Profits through
customer
satisfaction
(b) The marketing concept
Company Orientations toward the Marketplace
Holistic Marketing
Concept
Develop, design, implement marketing
programs, processes and activities
that recognizes their breadth,
and interdependencies.
Relationship Marketing, Internal
Marketing, Integrated Marketing,
Socially responsible marketing
Company Orientations toward the Marketplace
Marketing Management Tasks
• Developing marketing
strategies
• Capturing marketing
insights
• Connecting with
customers
• Building strong brands
• Shaping market
offerings
• Delivering value
• Communicating
value
• Creating long-term
growth
Customer Value
• The customers will buy from the firm
that they perceive offers the highest
customer delivered value.
Determinants of Customer Delivered Value
Image value
Personnel value
Services value
Total
customer
value
Product value
Customer
delivered
value
Monetary cost
Time cost
Energy cost
Psychic cost
Total
customer
cost
Customer Satisfaction
• Satisfaction is a person’s feelings of pleasure
or disappointment resulting from comparing a
product’s perceived performance (or outcome)
in relation to his or her expectations
• Satisfaction is a function of perceived
performance and expectations
Customer Expectation
• Is based upon the customer’s past buying
experiences, the opinions of friends and
associates, and marketer and competitor
information and promises.
Satisfied Customer
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Are loyal longer
Buy more (new products & upgrades)
Spread favorable word-of-mouth
Are more brand loyal (less price sensitive)
Offer feedback
Reduce transaction costs
Customer 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.
Tracking and Measuring Customer Satisfaction
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Complaints and Suggestion Systems
Periodic Survey
Ghost Shopping (Mystery shoppers)
Lost Customer Analysis
Monitor competitive performance
Retaining Customers
• Intense competition and maturity of market
increase the costs of attracting new customers.
• It costs much less to service an existing customer
than to create a new one.
• Acquisition of customers can cost 5 times more
than retaining current customers.
• Repeat purchases and loyal customers are the
main driver of profitability for most businesses.
Forming strong customer bonds
 Adding Financial Benefits
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Frequency Marketing Programs
 Adding Social Benefits
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Brand Communities
 Adding Structural Ties
- Special equipment or computer software, EDI
Customer Profitability
The 80/20/30 rule of customer profitability
• The top 20% of clients generate 80% of total profit
• The bottom 30% of clients consume half of all
profits generated by other customers
The Profit Triangle
Profit
Competitive advantage
Marketing Overview
3 C’s
Customer
Competitor
Company
Market Research
T
S
(Segment)
Product
P
(Target)
Price
4 P’s
(Position)
Place
Promotion
The Four Ps
The Four Ps & The Four Cs
Marketing
Mix
Place
Product
Customer
Solution
Price
Customer
Cost
ConvenPromotion ience
Communication