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18-1 PRINCIPLES OF MARKETING Chapter 18 Competitive Strategies: Building Lasting Customer Relationships Defining Customer Value = Total Customer Value (Product, Service, Personnel, & Image Values) Total Customer Cost (Monetary, Time, Energy, & Psychic Costs) Customer Delivered Value (Profit to the Consumer) 18-2 Customer Satisfaction 18-3 Product’s Actual Performance Customer Satisfaction Results When a Company’s Performance Has Fulfilled a Buyer’s Expectations. Performance Exceeds ExpectationsCustomer is Delighted Buyer’s Expectations Are Based On: Customer’s Past Buying Experiences Opinions of Friends & Associates Marketer/ Competitor Information & Promises Performance Below Expectations Customer is Dissatisfied Total Customer Satisfaction 18-4 • Highly satisfied (delighted) customers produce benefits: – They are less price sensitive, – They remain customers longer, – They talk favorably about the company and products to others. • Delighted customers have emotional and rational preferences for products, and this creates high customer loyalty. • Therefore, the purpose of Marketing is to generate customer value profitably. The Need for Customer Retention 18-5 The Key to Customer Retention is Superior Customer Value and Satisfaction. Companies Must Consider: New Customer Costs Customer Lifetime Value Lost Customer Costs Building Customer Satisfaction and Loyalty by Relationship Marketing Relationship Marketing Involves Creating, Maintaining, and Enhancing Strong, Long-Term Relationships with Customers and Other Stakeholders. Methods for Building Relationships Include Offering: Financial Benefits Social Benefits Structural Ties 18-6 18-7 Value Chain Support Activities Firm Infrastructure Human Resource Management Technology Development Procurement Inbound Logistics Operations Outbound Logistics Primary Activities Marketing and Sales Service Order Raw Material Supplier Delivery Order Vendor Delivery Order Producer Delivery Order Retailer Delivery Order Customer Delivery Customer Value-Delivery Network 18-8 18-9 Total Quality Marketing Necessary But May Not Be Sufficient Does Not Cost More Quantum Leaps Quality is in the Eyes of the Customer Pursuing a Total Quality Marketing Strategy Every Company Activity Total Employee Commitment High Quality Partners Continuous Improvement Cannot Save Poor Product Competitor Analysis Identifying Competitors Assessing Competitors Determining Objectives Identifying Strategies Assessing Strengths and Weaknesses Estimating Reaction Patterns Selecting Competitors to Attack and to Avoid 18-10 Developing Competitive Marketing Strategies Basic Competitive Strategies Overall Cost Leadership Focus Differentiation Middle of the Road 18-11 Developing Additional Competitive Marketing Strategies Value Disciplines Operational Excellence Product Leadership Customer Intimacy 18-12 18-13 Competitive Positions Competitive Positions Competitive Strategies Market Leader Expand Total Market Protect Market Share Expand Market Share Firm with the Largest Market Share Market Challenger Runner-Up Firms that Fight Hard to Increase Market Share Full Frontal Attack Indirect Attack Market Followers Runner-Up Firms that Want to Hold Their Share Without Rocking the Boat Follow Closely Follow at a Distance Market Nichers Firms that Serve Small Segments Not Being Pursued by Other Firms By Customer, Market, Quality-Price, Service Multiple Niching Balancing Customer and Competitor Orientations 18-14 Competition-Centered Customer-Centered No Yes No Yes Product Orientation Customer Orientation Competitor Orientation Market Orientation