MAR 3023961

1
MAR 3023-961

• Basic Marketing
• Fall 2003St. Petersburg
• October 1, 2003
• Relationship Marketing
• Rich Gonzalez University of South Florida

2
Agenda October 1, 2003

• Assignment AUpdate
• Dunkin Donuts Video
• Relationship Marketing
• Exam 1
• For October 8

3
URLs

• None

4
For Today October 1

• Chapter 6Relationship Marketing(Note Video Case
  on Dunkin Donuts on p. VC-8)
  
• VALS Survey Exercise

5
For October 8

• Chapter 11 - Product(Note Video Case on Dunkin
  Donuts on p. VC-14)
  
• Possible ArticleCheck Listserv
• Send Out Complaint Letter

6
Assignment A update

• Problems, questions?
• Advance copies in folder, please.
• Plan B

7
Assignment A

• Identify a complaint (product or service)
• Write a complaint letter (preferably not an
  e-mail)
  
• Find out name of whom to send it to
• Send it
• Resolve complaint (various outcomes are
  possible)
  
• Write up a one page summary
• All details for this assignment on the web site

8
Last Time

• Segmentation
• Positioning

9
Mantras

• 1--The purpose of a business is to create a
  customer.
  
• 2--It is the customer who determines what a
  product/service is.
  
• 3--Know your customer(s).

10
Relationship Marketing

• Long Term vs. Short Term

11
The Basic Question

• Why should a company worry about starting,
  maintaining, and expanding a relationship with
  customers, suppliers, partners?
  

12
Avg. U.S. Corporation LOSES

• 50 Of Its Customers In 5 Years
• 50 Of Its Employees In 4 Years
• 50 Of Its Investors In

13
Transaction-based Marketing
Buyer and seller exchanges characterized by
limited communications and little or no ongoing
relationship between the parties.

Short-Term Context
Whats Harley Davidsons Short-Term Problem?
14
Relationship Marketing
The development, growth and maintenance of
cost-effective, high-value relationships with
individual customers, suppliers, distributors,
retailers and other partners for mutual benefit
over time.
Long-Term Context
Whats Harley Davidsons Long-Term Problem?
15
Comparing Transaction-Based and Relationship
Marketing Strategies
Characteristic
Transaction Marketing
Relationship Marketing
Time orientation
Short-term
Long-term
Organizational goal
Make the sale
Emphasis on retaining customers
Customer service priority
Relatively low
Key component
Customer contact
Low to moderate
Frequent
Degree of customer commitment
Low
High
Basis for seller-customer interactions
Conflict manipulation
Cooperation trust
Source of quality
Primarily from production
Companywide commitment
16
Customer Relationship Management

• The combination of strategies and technologies
  that empowers relationship programs.
  
• CRM software systems make sense of vast customer
  data.
  
• Systems simplify complex business processes while
  emphasizing best interests of customer.

17
Forms of Customer-Marketer Interaction
Ongoing Relationship
Relationship Marketing
Cooperation
Conflict
Transaction-Based Marketing
One-time Transaction
18
Buyer-Seller Interactions
Customer Relationship Management
Transaction- Based Marketing
Relationship Marketing
Cooperation
Integration
Conflict
19
Relationship Marketing Orientation
Customer Service
Quality
Marketing
Relationship Marketing
20
Buyer Seller Relationships

• Many customers are seeking ways to simplify their
  lives, and relationships provide a way to do
  this.
  
• Customers find comfort with brands that have
  become familiar through their ongoing
  relationships with companies.
  
• Such relationships often lead to more efficient
  decision-making my customers and higher levels of
  customer satisfaction.

21
Relationship Marketing Continuum

• Level (1) Focus on Price (2) Social Interactions
  (3) Interdependent Partnership

22
Frequency Marketing
Frequent buyer or user marketing program that
rewards customers who purchase a good or service
with cash, rebates, merchandise, or other
premiums.
Loyalty ProgramsDelta Miles
23
Affinity Program
A marketing effort sponsored by an organization
that solicits responses from individuals who
share common interests and activities.

Credit Cards
24
Is Customer Sat Important?

• Sure. What produces Customer Sat?
• Performance - Expectations C.S.
• But its also about VALUE

25
Relationships Built on Value

• Who defines what the value is?
• Systematically or casually, customers do a VALUE
  ANALYSIS
  

26
Customer Value Analysis

• Customers May or May Not Tell You About Their
  Value Analysis
  
• Why Might Customers Not Tell You About It?

27
1. Customer Value Analysis

• I expect you to have mastered the basics of your
  product/service. If you havent, I will switch to
  a different source.
  
• Even if you have the basics, that alone is not
  enough to keep me loyal.

28
2. Customer Value Analysis

• I expect you to go beyond the basics and provide
  me with what I value.
  
• If you do, you will have a loyal customer. If
  not, my business is up for grabs.

29
3. Customer Value Analysis

• Some things you do irritate me, but they are not
  important enough to drive me away. Besides, your
  competitors do the same thing.
  

30
4. Customer Value Analysis

• Some things you do, I dont care anything
  about.
  

31
Databases help companies in many ways

• Selecting their best customers
• Calculating the lifetime values of their
  business
  
• Creating a meaningful dialogue that builds
  genuine loyalty

32
Lifetime Value of a Customer
The revenues and intangible benefits (referrals,
customer feedback, etc.) that a customer brings
to the seller over an average lifetime, less the
amount the company must spend to acquire, market
to, and service the customer.
33
Lifetime Customer Value

• Average Sale Amount (ASA)
• Number of Sales Per Year (SPY)
• Average (Actual) Customer Tenure (ACT)
• ASA SPY ACT LCV

34
Lifetime Customer Value --Pizza Customer

• ASA 18
• SPY 26
• ACT 4.8 years
• 18 26 4.8 2,250 LCV

35
Customer Acquisition Costs

• New Customers5-9 times more than servicing
  existing customers

36
Why Relationships?

• Retaining customers is far more profitable than
  losing them.
  
• Customers typically generate more profits for
  firm with each additional year of the
  relationship.
  
• A 5 percent gain in customer retention can lead
  to an 80 percent increase in profits.

37
Partnership
Affiliation of two or more marketers to assist
each other in the achievement of common goals.

38
Strategic Alliance
Long-term partnership formed to create a
competitive advantage.
Blockbuster and Movie Companies
39
(No Transcript)
40
Database Marketing
The use of information technology to analyze
customer data.
Firms Know a LOT About You
41
Supply (Value) Chain
Sequence of suppliers that contribute to the
creation and delivery of a good or service.

42
Results of Effective Supply Chain Management

• Increased innovation
• Decreased costs
• Improved conflict resolution within the chain
• Improved communication and involvement among
  members of the chain