Marketing Decision Making

BM032-3-3

BUILDING CUSTOMER
RELATIONSHIP
 LEARNING OUTCOME

Building Customer Relationship through

Satisfaction, Value and Quality
Delivering Customer Value and
Satisfaction and Retaining Customer
Implementing Total Quality Marketing

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 What is Marketing?

Simple Definition: Marketing is managing

profitable customer relationships.

Goals:
1. Attract new customers by promising
superior value.
2. Keep and grow current customers by
delivering satisfaction.

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 Core Marketing Concepts

Products
Needs, wants, and
and demands Services

Core
Marketing
Concepts
Markets
Value, satisfaction,
and quality

Exchange, transactions,
and relationships

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 Needs, Wants, & Demands
Need:
State of felt deprivation including
physical, social, and individual needs.
Physical need:
Food, clothing, shelter, safety
Social need:
Belonging, affection
Individual need:
Learning, knowledge, self-expression

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 Wants:
Form that a human need takes, as shaped by
culture and individual personality.

Wants + Buying Power = Demand

Needs and Wants Fulfilled through a

Marketing Offer :
Some combination of products, services,
information, or experiences offered to a
market to satisfy a need or want.

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 Need / Want Satisfiers
Products Services
Persons - Activity or benefit
Places offered for sale that
Organizations is essentially
Information intangible and does
Ideas not result in the
ownership of
anything.

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 Marketing Myopia

Sellers pay more attention to the specific

products they offer than to the benefits
and experiences produced by the
products.
They focus on the wants and lose sight
of the needs

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 Delivering Customer Value
and Satisfaction and
Retaining Customer

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 Value & Satisfaction

If performance is lower than expectations,

satisfaction is low

If performance is higher than expectations,

satisfaction is high

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 How Do Consumers Choose Among
Products and Services?
Value Gained From Owning a Product and Costs of
Obtaining the Product is

Customer Value

Products Perceived Performance in Delivering Value Relative to

Buyers Expectations is
Customer Satisfaction

Total Quality Management

Involves Improving the Quality of Products, Services, and
Marketing Processes

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 Marketing Management Philosophies

Consumers favor products that are

Production Concept available and highly affordable.
Improve production and distribution.

Consumers favor products that offer

Product Concept the most quality, performance, and
innovative features.

Selling Concept Consumers will buy products only if

the company promotes/ sells these
products.

Marketing Concept Focuses on needs/ wants of target

Societal Marketing Concept
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markets & delivering satisfaction
better than competitors.
Focuses on needs/ wants of target
markets & delivering superior value.
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 How Do Consumers Choose
Choose Among Products and
Services
Customer Value - benefit that the customer
gains from owning and using a product
compared to the cost of obtaining the product.

Customer Satisfaction - depends on the

products perceived performance in delivering
value relative to a buyers expectations.
Linked to Quality and Total Quality
Management (TQM).

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 New Marketing Challenges
New
Marketing
Landscape &
Information
Technology Nonprofit
Marketing

Emerging
Ethical
Concerns
Challenges Globalization

Changing
World
Economy

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 Customer Value

Customer Perceived Value (CPV) =

Total customer value Total customer cost

Determinants of Customer-Delivered Value

Total Product Services Personal Image

Customer Value Value Value Value
Value
Customer-
Perceived
value
Total
Customer Monetary Time Energy Psychic
Cost Cost Cost Cost
Cost
Kotler and Keller, 2009
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 The relationship between the consumer's expectations of
Product
product quality to the actual amount paid for it. E.g. New car
Value design, special edition of a certain models with better quality.

The expectation on all services beyond the core

Services
products/services offered to the customers and how they satisfy
Value customers expectation. E.g. the time when salesperson giving
briefing of the features of the car, test-driving experience, etc

The contributions that the product/service will contribute to

Personal
customers in facilitating them to adhere to their community value
Value system. E.g. hybrid car to save the environment

The enhancement of customers identity / establishment of

Image
customers self esteem with the product/service. E.g. buy
Value expensive model to impress others.

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 Monetary The amount of money paid in exchange for the car.
Cost

The OPPORTUNITY COST of time spent fact-finding/searching

Time
info for the car
Cost

The financial cost of physically getting to a marketplace, i.e.

Energy
showroom, service centre, etc
Cost

The stress of having to think about a transaction or

Psychic
psychological factors that influence a person when getting the
Cost product. Eg. Disagreement by family members for onself to get
a Toyotas car, bad/good service experienced in buying the car.
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 Customer Satisfaction
Customer Satisfaction
Customer Satisfaction Results When a Companys
Performance Has Fulfilled a Buyers Expectations.

Performance Exceeds Expectations-

Customer is Delighted
Products Actual Performance

Buyers Expectations Are Based On:

Customers Past Buying Experiences
Opinions of Friends & Associates
Marketer/ Competitor Information &
Promises

Performance Below Expectations -

Customer is Dissatisfied

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 Total Customer Satisfaction

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.

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 The Need for Customer Retention
The Key to Customer Retention is Superior Customer
Value and Satisfaction. Companies Must Consider:

New Lost
Customer Customer
Costs Costs

Customer
Lifetime
Value

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 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
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 Value Chain
Support Activities

Firm Infrastructure
Human Resource Management
Technology Development
Procurement

Marketing
Inbound Outbound
Operations and Service
Logistics Logistics
Sales

Primary Activities

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 Customer Value-Delivery Network

Delivery
Order
Customer

Delivery
Order
Retailer

Delivery
Order

Producer

Delivery
Order

Vendor

Delivery
Raw Material
Order

Supplier
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 Delivering Customer Value

- Customer perceived value (CPV) is the

difference between the prospective
customers evaluation of all the benefits and
all the costs of an offering and the perceived
alternatives.
Total customer value is the perceived
monetary value of the bundle of economic,
and functional benefits customers expect from
a given market offering.

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 Delivering Customer Value

- Total customer cost is the bundle of costs

customers expect to incur in evaluating,
obtaining, using and disposing of the given
market offering, including monetary, time,
energy and psychic costs.

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 Delivering Customer Value

- Customer perceived value is thus based on

the different between what the customer gets
and what he or she gives for different possible
choices.
- The customer gets benefits and assumes
costs.

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 Delivering Customer Value

- The marketer can increase the value of the

customer offering by some combinations of
raising functional or emotional benefits and /or
reducing one or more of the various types of
costs.

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 CPV Analysis
No Details Perceived Value Rating
(range from 1 to 10, worst to best)

Caterpillar Hitachi
Model 188 Model H144S
Product The machine needs to deliver certain levels
8 7
Benefit of durability and resale value

Services The length of worldwide warranty offered

8 9
Benefit by the product

Personnel The ways in how the sales persons approach

8 8
Benefit me.. knowledgeable staff, responsive staff

Image Corporates image and reputation. This is a

8 8
Benefit made in China product

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 Monetary The offered price does not really suit within
7 8
Cost my comfortable buying range

Time The length of the delivery process is pretty

6 7
Cost long

Energy
Maintenance cost, repairing cost in long run 6 6
Cost

Psycholog Some of my staff do not like this product

5 4
ical Cost due to the past accidents records

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 Delivering Customer Value

- In the decision-making theory on Caterpillar

versus Hitachi; there are several things
Caterpillar can succeed in selling to this buyer.
- First, it can increase total customer value by
improving product, service, personnel and / or
image benefits.
- Second, it can reduce the buyers non-monetary
costs by reducing the time, energy and psychic
costs.
- Third, it can reduce its products monetary cost to
the buyer.

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