Harsh Arora 1 Defining customers value & satisfaction Session 1 Sem. II (Marketing Management)

Objective Customer loyalty Customer loyalty Customer satisfaction Customer satisfaction Customer Value Customer Value Harsh Arora 2

Background… Market Market ‘Public gathering that is held for buying and selling merchandize.’ ‘Public gathering that is held for buying and selling merchandize.’ Marketing: The anticipation, management, and satisfaction of demand through the exchange process. This is the process of revenue generation through customer satisfaction. Marketing: The anticipation, management, and satisfaction of demand through the exchange process. This is the process of revenue generation through customer satisfaction. Objective of marketing Objective of marketing Make and retain customer and maintain profitable relationship Make and retain customer and maintain profitable relationship Harsh Arora 3

Ultimate goal of the marketers 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.” (Richard L. Oliver, 1997) 4 Background…

Current challenges in marketing Current challenges in marketing Customers are becoming more knowledgeable day by day. Customers are becoming more knowledgeable day by day. Technology is improving at a very fast pace. Technology is improving at a very fast pace. Competition has increased the choices to the customers. Competition has increased the choices to the customers. Environment is a dynamic phenomenon. Environment is a dynamic phenomenon. All are not same (heterogeneity) All are not same (heterogeneity) Harsh Arora 5 Background…

However customers’ switch brands….. However customers’ switch brands….. Thus, customers are divided into 4 groups based on their brand loyalty status Thus, customers are divided into 4 groups based on their brand loyalty status Hard core loyal Hard core loyal Split loyal Split loyal Shifting loyal Shifting loyal Switchers Switchers Harsh Arora 6 Loyalty

HOW TO MANAGE LOYALTY ???? In this scenario………………….. Harsh Arora 7

Loyalty can be achieved if the customer is…………. Satisfied Therefore, ‘Total Customer Satisfaction’ is ‘ Perception – expectation’ But, it is said that ‘Link between customer satisfaction and loyalty is not proportional’ 8 Satisfaction

According to Kotler, “It is no longer enough to satisfy customers. You must delight them” According to Kotler, “It is no longer enough to satisfy customers. You must delight them” So, how will you, as a part to an organization, delight customer and thus loyal ??? So, how will you, as a part to an organization, delight customer and thus loyal ??? Harsh Arora 9 Loyalty

On an average 45 million customers visit its 29,000 restaurants in 121 countries (2003) On an average 45 million customers visit its 29,000 restaurants in 121 countries (2003) People swarm because they do not solely love burgers and want to buy it People swarm because they do not solely love burgers and want to buy it Customers are not flocking to buy burgers, they flock to buy a system… Customers are not flocking to buy burgers, they flock to buy a system… Harsh Arora 10 McDonalds system (QSCV)

Customers are value-maximizers Customers are value-maximizers They form an expectation of value and act on it They form an expectation of value and act on it If the offer lives up to the value expectation affect both satisfaction and repurchase probability If the offer lives up to the value expectation affect both satisfaction and repurchase probability Harsh Arora 11 Value

Therefore, the most important element for a business/marketer……… Therefore, the most important element for a business/marketer………“VALUE” {Customer Perceived Value (CPV)} ‘total customer value – total customer cost’ Harsh Arora 12 Value

Value In general; In general; Price is an indicator of value Price is an indicator of value perceived benefits Value = price (Kent B. Monroe, “Pricing: Making profitable decisions, 3 rd. Ed. McGraw Hill, 2003) (Or; Marketing 8 th ed. By: Roger A Kerin et. Al. McGraw Hill, 2006, chapter 13) Harsh Arora 13

Harsh Arora 14

Value What enables a producer to add a meaningful customer value to its product ? What enables a producer to add a meaningful customer value to its product ? The generic value chain model The generic value chain model (Michael E. Porter, 1985-Competitive Advantage: Creating and Sustaining Competitive Advantage) Harsh Arora 15

Value Delivery System Traditional value delivery sequence Traditional value delivery sequence Modern value delivery sequence Modern value delivery sequence

Conclusion Marketing is a value creating and value delivery process.

Harsh Arora 18