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Chapter 18
Competitive Strategies: Attracting,
Retaining, and Growing
Customers
1
What is Relationship
Marketing?
Relationship Marketing is the
Process of Creating, Maintaining,
and Enhancing Strong, ValueLaden Relationships With
Customers and Other
Stakeholders.
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Customer Relationship
Marketing
Why the new emphasis on retaining and
growing customers?



Changing demographics, more sophisticated
competitors, and overcapacity in many industries
means fewer customers.
Costs five times as much to attract a new
customer as to keep a current one satisfied.
Losing a customer means losing the entire
stream of purchases over a lifetime of patronage
- the customer lifetime value.
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Customer Delivered Value
(Fig. 18.1)
4
Customer Satisfaction
Expectations are Based on
Customer’s Past Buying Experiences,
the Opinions of Friends, & Marketer
and Competitor Information and
Promises.
Product Falls
Short of
Expectations
Product
Matches
Expectations
Customer is
Dissatisfied
Customer is
Satisfied
Product
Exceeds
Expectations
Customer is
Highly
Satisfied
or
Delighted!
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Customer Satisfaction
Today’s most successful companies are raising
expectations – and delivering performance to
match.
These companies embrace total customer
satisfaction.
Firm that seeks total customer satisfaction doesn’t
have to attempt maximum customer
satisfaction.
Purpose of marketing is to generate customer
value profitably – offer customer satisfaction
without sacrificing profits.
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Customer Loyalty and
Retention
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.
Tremendous difference between the loyalty of satisfied
customers and completely satisfied customers.
Delighted customers have emotional and rational
preferences for products, and this creates high
customer loyalty.
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Building Lasting Customer
Relationships
Financial Benefits
i.e. Frequency Marketing
Programs
Social Benefits
i.e. Learning Individual
Customer’s Needs & Wants
Marketing Tools to
Build Stronger Bonds
With Consumers
Structural Ties
i.e. Supply Customers With
Special Equipment
8
Customer-Product Profitability
Analysis (Fig. 18.3)
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Discussion Connections
More than three decades ago, Peter Drucker
observed that a company’s first task is “to create
customers”.
How to the following companies create
customers:




Intel,
Delta Airlines,
Your university or college,
American Online
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Customer Value-Delivery
Network
Customer
Producer
Delivery
Order
Retailer
Vendor
Raw Material Supplier
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Total Quality Marketing
Japan was the first country to award a
national quality prize, the Deming prize.
Mid-1980’s, the U.S. established the
Malcolm Baldridge National Quality Award.
Europe has developed the ISO 9000 which
is an exacting set of quality standards.
Total quality has become a truly global
concern.
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Total Quality Marketing
Quality is the totality of features and
characteristics of a product or service that bear
on its ability to satisfy stated or implied needs.
Marketers play a major role in helping their
companies define & deliver high quality products
and services to target customers:


Must correctly identify the customers’ needs and
requirements and communicate this to product
designers,
Marketing must deliver each marketing activity to
high quality standards.
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Steps in Analyzing
Competitors (Fig. 18.4)
Identifying the
company’s
competitors
Assessing competitor’s
objectives, strategies,
strengths and weaknesses,
and reaction patterns
Selecting which
competitors to
attack or avoid
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Basic Competitive Strategies
Overall Cost
Leadership
Focus
Differentiation
Middle of
the Road
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Competitive Strategies: Value
Disciplines
Companies Gain
Leadership Positions by
Delivering Superior Value
to their Customers
Through These
Strategies:
Operational
Excellence
Customer
Intimacy
Product
Leadership
16
Competitive Marketing
Strategies
Firms Competing in a Given Target Market Differ in their
Objectives and Resources so May Choose the Following
Forms:
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Market
Leader
Competitive Marketing
Strategies
Firm With the Largest Market
Share
Expand the
Total Market
Protecting
Market Share
Expanding
Market Share
Motorola, a market
leader, is looking to
expa nd total mar ket, so it
emphasizes the over all
need for pagers, while
making it cle ar tha t
its product can fulfill that
need.
Runner-Up Firms that Fight
to Increase Market Share
Attack the
Market Leader
Avoid the
Market Leader
Attack Other
Firms
Acquire Smaller
Firms
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Here, Oldsmobile is making cars that resemble its
foreign competitors, then appealing to customers to
buy these domestic cars.
Competitive Marketing
Strategies
Runner-Up Firms that Want
to Hold Their Share Without
Rocking the Boat
Follow
Closely
Follow at a
Distance
Firms that Serve Small Segments
Not Pursued by Other Firms
End-User
Specialist
Geographic
Market
Specialist
Customer-Size
Specialist
QualityPrice
Specialist
Service
Specialist
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Balancing Customer and
Competitor Orientations
Customer-Centered
Competition
-centered
No
No
Yes
Product Orientation
Competitor Orientation
Yes
Customer Orientation
Market Orientation
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Review of Concept
Connections
Discuss customer value and satisfaction and how
companies attract, retain, and grow profitable customers.
Explain the roles of the company value chain, valuedelivery network, and total quality in delivery of
customer value and satisfaction.
Discuss the need to understand competitors as well as
customers through competitor analysis.
Explain the fundamentals of competitive marketing
strategies based on creating value for customers.
Illustrate the need for balancing customer and
competitor orientations in becoming a truly marketcentered organization.
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