The customer is always right-handed:

Customer satisfaction, customer sophistication and

market granularity

Lecture 2
A route-map for market-
led strategic change
Part I Part II Part III
Customer value Developing a value-based Processes for managing
imperatives marketing strategy strategic transformation
The strategic pathway Change strategy

Market sensing
and learning
The Customer strategy
is always Strategic
right-handed gaps

Strategic
market choices
Strategic and targets
New Organization
marketing thinking and and processes
meets thinking for change
old marketing strategically
Customer value
strategy and
positioning
Implementation
Value-based process and
marketing internal
strategy Strategic marketing
relationships
and networks
 Agenda
• The customer conundrum
• The sophisticated customer
• Market shifts and quakes
– consumer market changes
– market granularity
– re-shaped business-to-business markets
• How can marketing processes respond to these
changes?
 The customer conundrum
• Customer service is bad all over
• Customer satisfaction and customer loyalty
– satisfaction and loyalty are not the same
• The real customer problem
– do we know what service to maximise?
– can we deliver what we promised?
– happy customers and happy employees?
• The problem is strategy
Customer satisfaction
versus
customer loyalty
Customer loyalty
High Low
High
Satisfied Happy
stayers wanderers

Customer
satisfaction
Hostages Dealers

Low
Customer expectations
and outcomes
The service and quality
we promise
High Low

Good I am in
OK. LOVE – I
You get what didn’t know
The service you pay for. you were this
good!
and quality
the customer OK.
I HATE you
receives bastards –
It’s bad,
but it’s what
you lied to me!
I expected.
Bad
Service and quality
versus customer
satisfaction
Impact of service and quality on
customer satisfaction/retention
High Low
High
Smart Over-
servicers servicers
Service and
quality level
Under- Non-
servicers servicers
Low
Customer satisfaction
and the internal
market
External customer satisfaction
High Low
High Synergy Internal
“happy”
customers euphoria
and “happy” “Never mind the
employees customer, what
Internal about the
squash ladder?”
customer
satisfaction Coercion Alienation
“you WILL be “unhappy”
committed to customers
customers, and “unhappy”
or else… employees
Low
 The sophisticated customer
Issue – customers and markets have changed:
– Customers wised up to marketing
– Know what marketers are up to
– Traditional marketing consistently underestimates
intelligence of customer

Many customer demands which we need to respond to:

 The sophisticated customer
• Who are you calling fickle – I just changed my mind?
• Value is what we say it is
• By the way, “free” is one of my favourite prices
• Loyalty is for sellers not buyers
• Quality or cheap? Both please
 The sophisticated customer
• Let’s play the waiting game and see what happens
• Make life simpler
• But not too simple
• But, I don’t like change
• Make it specially for me
• Instant gratification is just not fast enough
 The sophisticated customer
• But don’t make me angry
• And now entertain me
• And now peel me a grape
• Make all the bad stuff in the world go away
• There will be no secrets any more
 Market shifts and quakes –
Consumer markets
• The typical family
• The MySpace Generation
• Saga Louts
• The pink market
• The wealthy
• The poor
 Market shifts and quakes –
Consumer markets
• Ethnic markets
• The green and ethical consumer
• The Neo-Cromwellians
• Scared consumers
 Market shifts and quakes –
Market granularity
• Shift in focus from “megatrends” to “microtrends”
• Broad market trends average out important differences
• The issue shifts from huge cultural shifts to new “identity
groups”
Market shifts and quakes – Reshaped
business-to-business markets
• Dominant customers
• Impact of customer power
• Bad customers
– who play the rules
– who break the rules
– who make the rules
 How can marketing processes
respond?
• Radical and disruptive changes in market structures
have left traditional marketing behind
• The urgent challenge is to update how we “do” marketing
to reflect how customers and markets have changed