Department of Marketing
MKW1120 Marketing Theory and Practice Your true value depends entirely on what you are compared with. (Bob Wells)
Overview
Lecture 2B: Marketing and Value
The importance of value in marketing Customer value, customer satisfaction and customer retention Customer centered companies The importance of relationships
Department of Marketing
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Delivering value to customers
The marketing philosophy holds that achieving organisational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors do.
The role of culture in delivering value
Corporate culture is the key to long-term success. Culture has many levels and aspects. The most accessible part of culture is norms, which are shared beliefs about appropriate behaviour and the mental models people use to simplify and make sense of it. Internal marketing = one part of a marketing organisation marketing its capabilities to another part the organization
Department of Marketing
Department of Marketing
Market culture
The overarching culture of a business relating to the attention it focuses on markets. The level of belief that the ultimate purpose of the business is to create superior customer value, profitably. The degree to which practices, systems and skills across the business are focused on creating value for customers and the business. The strength of a firms market culture is determined by the behaviours of all people across the business.
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Customer value and satisfaction
Retaining profitable customers is often difficult as todays customers have vast product, brand, price and supplier choices. A consumer will form an expectation of value and act upon it. Once a consumer has used a product, they will compare its actual value with the value expected; this influences their satisfaction and repurchase behaviour.
Value Satisfaction Repurchase behavior
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Customer value
Customers will buy from the firm that they believe can provide them with the highest customer delivered value, or the difference between total customer value and total customer cost. When customers decide on the value they get from a product or service, they will only consider the features that are important to them. Customers perceptions of the value of a product or service is a strong predictor of purchase and their experience with the product will influence future choice. An important part of the experience is customer satisfaction.
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Customer satisfaction
Customer satisfaction is the customers conscious evaluation of a product or service feature, or of the product or service itself. Satisfaction judgments are influenced by many factors: past experiences, the information and promises made by marketing organisations and their competitors, and what seems like fair value. Sometimes quality is hard to judge, e.g. professional services such as dentists. Generally, customer satisfaction with a purchase depends on the products performance relative to the buyers expectations.
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Customer-centred companies
Customer-centred company
A company that focuses on customer outcomes when designing its marketing strategies. Successful companies track customers perceptions so that they know what they are doing well and how they compare to competitors. The purpose of marketing is to generate customer value profitably.
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Measuring customer satisfaction and loyalty
Tools for assessing, measuring and tracking customer satisfaction and loyalty are continually increasing in sophistication and may include: Customer satisfaction and loyalty surveys. > Any problem associated with CS surveys?
Complaint and suggestion systems.
Mystery shopping and customer interviews. Lost customer analysis.
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Capturing value from customers
Focus on the individual customer with collaborative value creation enabling firms to get closer to customised value. Co-creation involving consumers and other partners working with the firm. Co-creating value through customers experiences to strengthen customer relationships. Outcomes = customer loyalty, retention & profitability Customer lifetime value = the amount by which revenues from a given customer over time exceed the companys costs of attracting, selling to and servicing that customer.
Retaining customers by building customer relationships
Totally satisfied customers are more likely to be loyal customers. The relationship between satisfaction and loyalty varies across industries and competitive situations. Satisfaction alone does not achieve loyalty.
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Customer satisfaction and customer loyalty
As satisfaction increases, so does loyalty. In some industries, there is little difference between the loyalty of less satisfied customers and those who are merely satisfied, but a big difference between satisfied and completely satisfied customers. High customer satisfaction creates an emotional affinity for a product, not just a rational preference, and this leads to loyalty.
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Relationships in marketing
As companies shift their focus from single sales encounters, they are beginning to develop strategies and actions that recognise how ongoing relationships contribute to customer retention.
The focus is on retaining profitable customers often known as key customers and holding their loyalty by totally satisfying them. Some customers do not want a relationship with a company, for example, in the case of impulse buying.
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Customer relationship management
The overall process of building and maintaining profitable customer relationships by delivering superior value and satisfaction. Three customer-value-building approaches: 1. 2. 3. Financial benefits: frequent-flyer programs, room upgrades, other loyalty programs Social benefits: social bonding, personalized services Structural ties: B2B setting, online electronic system, EDI
Sustainability and the societal marketing concept
The societal marketing concept is relevant to sustainability and holds that an organisation should determine the needs, wants and interests of target markets. Superior value should be delivered in a way that maintains or improves the consumers and the societys wellbeing. Consumers (Satisfaction)
Society (Human Welfare)
Societal Marketing Concept
Company (Profits)
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Go Green The competitive advantage of sustainability
Guidelines for developing environmentally responsible products includes action on:
Product attributes Pricing for economic value Physical distribution Marketing communications
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Summary
The focus of marketing is on customers and customer value Processes must be in place to manage the interaction between the organisation and its customers
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