Chap 4 – Framework of Marketing Management

what is customer perceived value?
difference between the prospective customers evaluation of all the benefits and all the costs of an offering and the perceived alternatives. it is a useful framework to assess total customer benefit and cost of competitors and adjust increase benefit or decrease cost if they are a disadvantage.
what is total customer value?
perceived monetary value of the bundle of economic, functional, and psychological benefits customers expect from a given market offering because of the products, services, personnel, and image involved
what is total customer cost?
perceived bundle of costs that customers expect to incur in evaluating, obtaining, using and disposing of the given market offering including monetary, time, energy, psychic costs.
what is loyalty?
a deeply held commitment to rebuy or repatronize a preferred product/service in the future despite situational influences and marketing efforts having the potential to cause switching behavior
what is a value proposition?
consists of the whole cluster of benefits a company promises to deliver.
what is a company’s value delivery system?
all the experiences the customer will have in obtaining and using the offering.
what is satisfaction?
person’s feelings of pleasure or disappointment that result from comparing a product’s perceived performance (or outcome) to expectations. a highly satisfied customer is likely to be loyal longer, buy more as new offerings come out, upgrade existing product, pay less attention to competing brands and less sensitive to price. the link between satisfaction and loyalty is not proportional. high satisfaction or delight creates an emotional bond with brand/company leading to loyalty.
what is quality?
totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. conformance vs performance quality distinction.
name the 6 roles marketers play in deliver high quality goods to target customers
1. correctly identifying customer needs and requirements
2. communicate customer expectations to designers
3. orders are filled correctly and on time
4. provide customers with proper instructions, training, technical assistance
5. stay in touch with customers after sale to ensure ongoing satisfaction
6. gather customer ideas for product improvements
what is a profitable customer?
person, household or company that over time yields a revenue stream that exceeds by an acceptable amount the company’s cost for attracting, selling, and servicing that customer.
what is a customer profitability analysis (CPA)?
the company estimates all revenue coming from the customer, less all costs (including production, distribution, and all company resources that go into serving that customer). best conducted with ABC (activity based costing) accounting technique. it helps classify customers into different profit tiers and different marketing and competitive activities.
what is customer lifetime value CLV?`
describes the net present value of the stream of future profits expected over the customer’s lifetime purchases.
what is customer relationship management CRM?
process of carefully managing detailed information about individual customers and all customer touch points to maximize customer loyalty. a touch point is any occasion the customer encounters the brand from actual experience, mass communication, casual observation. CRM is important as a major driver of profitability is aggregate value of customer base
Name the 4 step framework for CRM marketing
Peppers and Rogers – one on one marketing adaptation to CRM marketing
1. identify your prospects and customers
2. differentiate customer in terms of their needs and their value to company
3. interact with individual customers to improve knowledge about needs and build strong relationships
4. customize products, services, messages to customer
reducing customer churn
1. define and measure retention rate
2. distinguish the cause of customer attrition and which can be managed better
3. compare lost profit equal to customer lifetime value from a lost customer to the cost of lowering defection rate
what are 4 key marketing activities to build customer loyalty?
1.interacting with customers,
2.developing loyalty programs,
3.personalizing marketing,
4. creating institutional ties
Customer development process
1. potentials
2. prospects (disqualified prospects)
3. first time customers
4. repeat customers
5. clients
6. members
7. advocates
8. partners
what is a customer database?
organized collection of comprehensive information about individual customers or prospects that is current, accessible, and actionable for such marketing purposes as lead generation, sale of product, maintain customer relationships
what is database marketing?
process of building , maintaining, and using customer databases and other databases to make contact, facilitate transactions, build customer relationships.
what is a data warehouse?
marketers capture, query, and analyze data collected from customer touch points to draw inferences about an individual customers needs and responses.
5 ways companies can use their databases
1. identify best prospects by sorting through response to marketing efforts
2. match specific offer with a specific customer for upsell
3. deepen customer loyalty by remembering preferences and offering incentives
4. reactivate customer purchasing through reminders, timely promotions
5. avoid serious mistakes such as sending two different pricing offers on same product
what is the downside of database marketing and CRM?
large investment in building the system, difficult to get everyone to use it, customer resent personal data collection, assumption behind CRM not always true-