The customer is always right-handed: Customer satisfaction, customer sophistication and market granularity Lecture 2

A route-map for market-led strategic change Part I Customer value imperatives Part II Developing a value-based marketing strategy Part III Processes for managing strategic transformation The strategic pathway Change strategy Market sensing and learning strategy The Customer is always right-handed Strategic gaps Strategic market choices and targets Strategic thinking and thinking strategically New marketing meets old marketing Organization and processes for change Customer value strategy and positioning Implementation process and internal marketing Value-based marketing strategy Strategic relationships and networks

Agenda The customer conundrum The sophisticated customer Market shifts and quakes consumer market changes market granularity re-shaped business-to-business markets How can marketing processes respond to these changes?

The customer conundrum Customer service is bad all over Customer satisfaction and customer loyalty satisfaction and loyalty are not the same The real customer problem do we know what service to maximise? can we deliver what we promised? happy customers and happy employees? The problem is strategy

Customer satisfaction versus customer loyalty High Low High Satisfied stayers Happy wanderers Customer satisfaction Hostages Dealers Low

Customer expectations and outcomes The service and quality we promise High Low Good I am in LOVE – I didn’t know you were this good! OK. You get what you pay for. The service and quality the customer receives OK. It’s bad, but it’s what I expected. I HATE you bastards – you lied to me! Bad

Service and quality versus customer satisfaction Impact of service and quality on customer satisfaction/retention High Low High Smart servicers Over- servicers Service and quality level Under- servicers Non- servicers Low

Customer satisfaction and the internal market External customer satisfaction High Low High Synergy “happy” customers and “happy” employees Internal euphoria “Never mind the customer, what about the squash ladder?” Internal customer satisfaction Coercion “you WILL be committed to customers, or else… Alienation “unhappy” customers and “unhappy” employees Low

The sophisticated customer Issue – customers and markets have changed: Customers wised up to marketing Know what marketers are up to Traditional marketing consistently underestimates intelligence of customer Many customer demands which we need to respond to:

The sophisticated customer Who are you calling fickle – I just changed my mind? Value is what we say it is By the way, “free” is one of my favourite prices Loyalty is for sellers not buyers Quality or cheap? Both please

The sophisticated customer Let’s play the waiting game and see what happens Make life simpler But not too simple But, I don’t like change Make it specially for me Instant gratification is just not fast enough

The sophisticated customer But don’t make me angry And now entertain me And now peel me a grape Make all the bad stuff in the world go away There will be no secrets any more

Market shifts and quakes – Consumer markets The typical family The MySpace Generation Saga Louts The pink market The wealthy The poor

Market shifts and quakes – Consumer markets Ethnic markets The green and ethical consumer The Neo-Cromwellians Scared consumers

Market shifts and quakes – Market granularity Shift in focus from “megatrends” to “microtrends” Broad market trends average out important differences The issue shifts from huge cultural shifts to new “identity groups”

Market shifts and quakes – Reshaped business-to-business markets Dominant customers Impact of customer power Bad customers who play the rules who break the rules who make the rules

How can marketing processes respond? Radical and disruptive changes in market structures have left traditional marketing behind The urgent challenge is to update how we “do” marketing to reflect how customers and markets have changed