Competitive Strategies: Attracting, Retaining, and Growing Customers

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Chapter 18

• Competitive Strategies Attracting, Retaining,
  and Growing Customers

2
Discussion Connections

• More than three decades ago, Peter Drucker
  observed that a companys first task is to
  create customers.
• How to the following companies create customers
• Intel,
• Delta Airlines,
• Your university or college,
• American Online

3
What is Relationship Marketing?

Relationship Marketing is the Process of
Creating, Maintaining, and Enhancing Strong,
Value-Laden Relationships With Customers and
Other Stakeholders.
4
Customer Relationship Marketing

• Why the new emphasis on retaining and growing
  customers?
• Changing demographics, more sophisticated
  competitors, and overcapacity in many industries
  means fewer customers.
• Costs five times as much to attract a new
  customer as to keep a current one satisfied.
• Losing a customer means losing the entire stream
  of purchases over a lifetime of patronage - the
  customer lifetime value.

5
The Service Profit Chain
Employee Satisfaction Loyalty
Internal Quality
External Quality
Customer Value Satisfaction
Growth Profitability

• Loyalty
• Repeat Purchase
• Relationship
• Positive WOM

Customer Retention
Adapted From Heskett, J. L, Sasser, W. E. and
Schlesinger, L. A. (1997). The Service Profit
Chain. The Free Press New York.
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Customer Delivered Value (Fig. 18.1)
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Customer Satisfaction
Expectations are Based on Customers Past Buying
Experiences, the Opinions of Friends, Marketer
and Competitor Information and Promises.
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Customer Satisfaction

• Todays most successful companies are raising
  expectations and delivering performance to
  match.
• These companies embrace total customer
  satisfaction.
• Firm that seeks total customer satisfaction
  doesnt have to attempt maximum customer
  satisfaction.
• Purpose of marketing is to generate customer
  value profitably offer customer satisfaction
  without sacrificing profits.

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Loyalty - Customer SatisfactionPercent of
Customers That Intend to ReturnBy rating on
customer satisfaction scale 1-55 very
satisfied , 4 satisfied
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Customer Loyalty and Retention

• Highly satisfied (delighted) customers produce
  benefits
• They are less price sensitive,
• They remain customers longer,
• They talk favorably about the company and
  products to others.
• Tremendous difference between the loyalty of
  satisfied customers and completely satisfied
  customers.
• Delighted customers have emotional and rational
  preferences for products, and this creates high
  customer loyalty.

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Building Lasting Customer Relationships
Financial Benefits i.e. Frequency Marketing
Programs
Social Benefits i.e. Learning Individual
Customers Needs Wants
Marketing Tools to Build Stronger Bonds With
Consumers
Structural Ties i.e. Supply Customers With
Special Equipment
12
Customer-Product Profitability Analysis (Fig.
18.3)
13
Customer Value-Delivery Network
Customer
Retailer
Producer
Vendor
Order
Raw Material Supplier
Delivery
14
Total Quality Marketing

• Japan was the first country to award a national
  quality prize, the Deming prize.
• Mid-1980s, the U.S. established the Malcolm
  Baldridge National Quality Award.
• Europe has developed the ISO 9000 which is an
  exacting set of quality standards.
• Total quality has become a truly global concern.

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Total Quality Marketing

• Quality is the totality of features and
  characteristics of a product or service that bear
  on its ability to satisfy stated or implied
  needs.
• Marketers play a major role in helping their
  companies define deliver high quality products
  and services to target customers
• Must correctly identify the customers needs and
  requirements and communicate this to product
  designers,
• Marketing must deliver each marketing activity to
  high quality standards.

16
Review of Concept Connections

• Discuss customer value and satisfaction and how
  companies attract, retain, and grow profitable
  customers.
• Explain the roles of the company value chain,
  value-delivery network, and total quality in
  delivery of customer value and satisfaction.
• Explain the relationship between value,
  satisfaction, and loyalty.