MM 601, IBMP, Thammasat University, Semester 2/2552 Session I : Introduction and Overview Customer Value, Satisfaction and Retention.

MM 601, IBMP, Thammasat University, Semester 2/2552

Session I : Introduction and Overview Customer Value, Satisfaction and Retention

Agenda

• Course Organization

• Course Materials

• Tasks of Marketing

• Major Concepts & Tools of Marketing

• How has marketing management changed?

• What are customer value, satisfaction, and loyalty, and how can company delivers them?

Course Organization

• Part I - Understanding Marketing Management

• Part II - Analyzing Marketing Opportunities• Part III - Developing Marketing Strategies• Part IV – Developing Marketing Offerings

Course Materials

• Text Reading – Marketing Management, Kotler & Keller, 13th Edition

• Mini Cases

• Marketing Plan

What is Marketing? (Social Definition)

Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others.

What is Marketing? (Managerial Definition)

Marketing is an organizational functionand a set of processes for creating,

communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its

stakeholders.

Marketing Management

Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers throughcreating, delivering, and communicatingsuperior customer value.

What is marketed?

GoodsGoods

ServicesServices

Events & ExperiencesEvents & Experiences

PersonsPersons

Places & PropertiesPlaces & Properties

OrganizationsOrganizations

InformationInformation

IdeasIdeas

Simple Marketing System

Industry(a collection

of sellers)

Market(a collection

of Buyers)

Goods/services

Money

Communication

Information

Structure of Flows

Manufacturermarkets

Resourcemarkets

MoneyMoney MoneyMoney

Consumermarkets

IntermediarymarketsGoods, servicesGoods, services Goods, servicesGoods, services

Services,Services,moneymoney

Governmentmarkets

Services,Services,moneymoney

ServicesServices

Services,Services,moneymoney

ResourcesResources ResourcesResources

MoneyMoney MoneyMoney

TaxesTaxes

Taxes,Taxes,goodsgoods

Taxes,Taxes,goodsgoods

Taxes,Taxes,goodsgoods

Company Orientations toward the Marketplace

Production ConceptProduction ConceptConsumers prefer products that are widely available and inexpensive

Mass Production, Cost Leadership, Wide Coverage

Product Concept Product Concept Consumers favor products that offer

the most quality, performance, or innovative features

Best Quality, Performance, Innovative Product

Marketing ConceptMarketing ConceptFocuses on needs/wants of target

markets & delivering valuebetter than competitors

Target Market, Customer’s need, Coordinated Marketing, Profitability

Selling ConceptSelling ConceptConsumers will buy products only if

the company aggressivelypromotes/sells these products

High Sales Volume, Short Term Oriented

Company Orientations toward the Marketplace

Selling & Marketing Concepts

FactoryExistingproducts

Selling andpromotion

Profits throughsales volume

Startingpoint Focus Means Ends

(a) The selling concept

MarketIntegratedmarketing

Profits throughcustomer

satisfactionCustomer

needs

(b) The marketing concept

Holistic Marketing Concept

Holistic Marketing Concept

Develop, design, implement marketing programs, processes and activities

that recognizes their breadth, and interdependencies.

Relationship Marketing, Internal Marketing, Integrated Marketing, Socially responsible marketing

Company Orientations toward the Marketplace

Company Orientations toward the Marketplace

• Developing marketing strategies

• Capturing marketing insights

• Connecting with customers

• Building strong brands

• Shaping market offerings

• Delivering value• Communicating

value• Creating long-term

growth

Marketing Management Tasks

Customer Value

• The customers will buy from the firm

that they perceive offers the highest

customer delivered value.

Determinants of Customer Delivered Value

Image valueImage value

Personnel valuePersonnel value

Services valueServices value

Product valueProduct value

Totalcustomer

value

Totalcustomer

value

Monetary costMonetary cost

Time costTime cost

Energy costEnergy cost

Psychic costPsychic cost

Totalcustomer

cost

Totalcustomer

cost

Customerdelivered

value

Customerdelivered

value

Customer Satisfaction

• 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

• Satisfaction is a function of perceived performance and expectations

Customer Expectation

• Is based upon the customer’s past buying

experiences, the opinions of friends and

associates, and marketer and competitor

information and promises.

Satisfied Customer

• Are loyal longer

• Buy more (new products & upgrades)

• Spread favorable word-of-mouth

• Are more brand loyal (less price sensitive)

• Offer feedback

• Reduce transaction costs

Customer Loyalty

• 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.

Tracking and Measuring Customer Satisfaction

• Complaints and Suggestion Systems

• Periodic Survey

• Ghost Shopping (Mystery shoppers)

• Lost Customer Analysis

• Monitor competitive performance

• Intense competition and maturity of market increase the costs of attracting new customers.

• It costs much less to service an existing customer than to create a new one.

• Acquisition of customers can cost 5 times more than retaining current customers.

• Repeat purchases and loyal customers are the main driver of profitability for most businesses.

Retaining Customers

Forming strong customer bonds

Adding Financial Benefits

- Frequency Marketing Programs

Adding Social Benefits

- Brand Communities

Adding Structural Ties

- Special equipment or computer software, EDI

Customer Profitability

The 80/20/30 rule of customer profitability

• The top 20% of clients generate 80% of total profit

• The bottom 30% of clients consume half of all profits generated by other customers

The Profit Triangle

Valu

e cr

eatio

n

Competitive advantage

Internal operations

ProfitProfitProfitProfit

Marketing Overview

3 C 3 C’’ss 3 C 3 C’’ss

Customer Competitor Company

SS(Segment)

TT(Target)

PP(Position)

Market Research

4 P 4 P’’ss 4 P 4 P’’ssPrice PlaceProduct Promotion

The Four Ps

The Four Ps & The Four Cs

Product

Promotion

Place

Price

MarketingMix

CustomerSolution

CustomerCost

Communication

Conven-ience