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21 Cards in this Set

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  • Back
What is Customer Perceived Value (CPV)
It is the difference between the prospective customer's evaluation of all benefits and all costs of an offering and the perceived alternatives.
What is total customer value?
It is the perceived monetary value of the bundle of economic,functional and psychological benefits customers expect from given marketing offering.
What is total customer cost?
It is the bundle of costs customers expect to incur in evaluating, obtaining, using and disposing of the given market offering, including monetary, time, energy.
What is loyalty?
Oliver defines loyalty as "A deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite situational influences
and marketing efforts having the potential to cause switching behavior."
How is loyalty gained?
The key to generating high customer loyally is to deliver high customer value.The value proposition consists of the whole cluster of benefits the company promises to deliver; it is more than the core positioning of the offering.For example, Volvo's core positioning has been "safety," but the buyer is promised more than just a safe car; other benefits include a long-lasting car, good service, and a long warranty period. Basically, the value proposition is a statement about the resulting experience customers will gain from the company's market offering and from their relationship with the supplier.
What is satisfaction from marketing point of view?
In general, satisfaction is a person's feelings of pleasure or disappointment
resulting from comparing a product's perceived performance (or outcome) in relation to his or her expectations. If the performance falls short of expectations, the customer
is dissatisfied. If the performance matches the expectations, the customer is satisfied.
If the performance exceeds expectations, the customer is highly satisfied or delighted.
How to measure customer satisfaction?
A number of methods exist to measure customer satisfaction. Periodic surveys can track customer satisfaction directly.Companies can monitor the customer loss rare and contact customers who have stopped buying or who have switched to another supplier to learn why this happened. Finally, companies
can hire mystery shoppers to pose as potential buyers and report on strong and weak points experienced in buying the company's and competitors' products.
What is Total Quality Management (TQM)?
Total quality management (TQM) is an organization-wide approach to continuously
improving the quality of all the organization's processes, products, and services.(Product and service quality, customer satisfaction, and company profitability are intimately
connected. Higher levels of quality result in higher levels of customer satisfaction, which support higher prices and (often) lower costs.)
What is a profitable customer?
A profitable customer is a person, household, or company
that over time yields a revenue stream that exceeds by an acceptable amount the company's
cost stream of attracting, selling, and servicing that customer. Note that the emphasis is on the lifetime stream of revenue and cost, not on the profit from a particular transaction.
What is Customer-Product Analysis?
Please see Fig. 5.3 on page 149.

Customer profitability analysis (CPA) is best conducted with the tools of an accounting technique called Activity-Based Costing (ABC). The company estimates all revenue coming from the customer, less all costs.When this is done for each customer, it is possible to classify customers into different profit tiers: platinum customers (most profitable),
gold customers (profitable), iron customers (low profitability but desirable), and lead customers (unprofitable and undesirable).
what is competitive advantage?
Competitive advantage is a company's ability to perform in one or more ways that competitors cannot or will not match.
What is the Customer Lifetime Value?
Customer lifetime value (CLV) describes the net present value of the stream of future profits expected over the customer's lifetime purchases. The company must subtract from the expected revenues the expected costs of attracting, selling, and servicing that customer, applying the appropriate discount rate (e.g., 10%-20%, depending on cost of capital and risk attitudes).
What is customer equity?
Customer equity is the total of the discounted lifetime values of all of the firm's customers.
What are the three drivers of Customer Equity?
-Value equity is the customer's objective assessment of the utility of an offering based on perceptions of its benefits relative to its costs.
-Brand equity is the customer's subjective and intangible assessment of the brand, above and beyond its objectively perceived value.
-Relationship equity is the customer's tendency to stick with the brand, above and beyond objective and subjective assessments of its worth.
What is Customer Relationship management(CRM)?
This is the process of managing detailed information
about individual customers and carefully managing all customer "touch points" to maximize customer loyalty. A customer touch point is any occasion on which a customer encounters the brand and product—from actual experience to personal or mass communications
to casual observation.
Essential parts of CRM are:
-Identify your prospects and customers. Do not go after everyone. Build, maintain, and mine a rich customer database with information derived from all the channels and customer
touch points.
-Differentiate customers in terms of (1) their needs and (2) their value to your company. Spend proportionately more effort on the most valuable customers.
-Interact with individual customers to improve your knowledge about their individual needs and to build stronger relationships.
-Customize products, services, and messages to each customer.
-Reducing the rate of customer defection.
-Increasing the longevity of the customer relationship. The more involved a customer is with the company, the more likely he or she is to stick around.
-Enhancing the growth potential of each customer through "share-of-wallet," cross-selling, and up-selling.(example Harley D.)
-Making low-profit customers more profitable or terminating them.
-Focusing disproportionate effort on high-value customers.
Differentiate b/n Mass Marketing and One-to-One Marketing.
Please check out page 155, Fig.5.1
Describe how to build customer loyalty.
How much should a company invest in building loyalty so that the costs do not exceed the gains? We need to distinguish five different levels of investment in customer relationship building:
1. Basic marketing. The salesperson simply sells the product.
2. Reactive marketing. The salesperson sells the product and encourages the customer to call if he or she has questions, comments, or complaints.
3. Accountable marketing. The salesperson phones the customer to check whether the product is meeting expectations. The salesperson also asks the customer for any product or service improvement suggestions and any specific disappointments.
4. Proactive marketing. The salesperson contacts the customer from time to time with suggestions about improved product uses or new products.
5. Partnership marketing. The company works continuously with its large customers to help improve their performance. (General Electric, for example, has stationed engineers at large utilities to help them produce more power.)
Sketch Customer Relationship Management
Please see page 158, table 5.2 for super usefull illustration of the consept.
What are the five main steps a company can take in order to reduce customer defection?
-the company must define and measure its retention rate.
-the company must distinguish the causes of customer attrition and identify those that can be managed better.
-the company needs to estimate how much profit it loses when it loses customers. In the case of an individual customer, the lost profit is equal to the customer's lifetime value— that is, the present value of the profit stream that the company would have realized if the customer
had not defected prematurely
-ompany needs to figure out how much it would cost to reduce the defection rate. As long as the cost is less than the lost profit, the company should spend the money.
-And finally nothing beats listening to customers.
Please list major methods to form Strong Customer Bonds?
I. Adding Financial Benefits
-Frequency programs (FPs) are designed to provide rewards to customers who buy frequently and in substantial amounts.67 Frequency marketing is an acknowledgment of the fact that 20 percent of a company's customers might account for 80 percent of its business.
-Club membership can be open to everyone who purchases a product or service, or it can be limited to an affinity group or to those willing to pay a small fee.Fees and membership conditions prevent those with only a fleeting interest in a company's products from joining.These clubs attract and keep those customers who are responsible for the largest portion of business.
II. Adding Social Benefits
III. Adding Structural Ties
-1. Create long-term contracts.
2. Charge a lower price to consumers who buy larger supplies.
3. Turn the product into a long-term service.
Write a summary of the chapter.
Customers are value-maximizers. They form an expectation
of value and act on it. Buyers will buy from the firm that they perceive to offer the highest customer-delivered value, defined as the difference between total customer value and total customer cost.
2. A buyer's satisfaction is a function of the product's perceived
performance and the buyer's expectations. Recognizing that high satisfaction leads to high customer
loyalty, many companies today are aiming for TCS—total customer satisfaction. For such companies,customer satisfaction is both a goal and a marketing tool.
3. Losing profitable customers can dramatically affect a firm's profits. The cost of attracting a new customer is estimated to be five times the cost of keeping a current customer happy. The key to retaining customers is relationship marketing.
4. Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. Today's companies have no choice but to implement total quality management programs if they are to remain solvent and profitable.
Marketing managers have two responsibilities in a quality-centered company. First, they must participate in formulating
strategies and policies designed to help the company win through total quality excellence. Second, they must deliver marketing quality alongside production quality.
Companies are also becoming skilled in Customer Relationship Management (CRM), which focuses on meeting
the individual needs of valued customers. The skill requires building a customer database and doing datamin-ing to detect trends, segments, and individual needs.