Relationship Selling Mark W. Johnston Greg W. Marshall McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Value Creation in Buyer-Seller Relationships Chapter 3

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Learning Objectives Understand the concept of perceived value and its importance in relationship selling Explain the relationship of the roles of selling and marketing within a firm Explain why customer loyalty is so critical to business success 3-4

Learning Objectives Recognize and discuss the value chain Identify and give examples for each category of communicating value in the sales message Understand how to manage customer expectations 3-5

Exhibit Factors Affecting Marketing Communications Mix

Value is Related to Customer Benefits Utility – the want-satisfying power of a good or service Types of Utility Form Place Time Ownership 3-7

Increasing Value to the Customer Raise benefits Reduce costs Raise benefits and reduce costs Raise benefits by more than the increase in costs Lower benefits by less than the reduction in costs 3-8

Exhibit Generic Value Chain

Lifetime Value of a Customer Lifetime value of a customer – present value of the stream of future profits expected over a customer’s lifetime of purchases Firing a customer – encouraging a customer to find alternative sources from which to purchase 3-10

Communicating Value in the Sales Message Product quality Channel deliverables (supply chain) Integrated marketing communications (IMC) Synergy between sales and marketing 3-11

Communicating Value in the Sales Message Execution of marketing mix programs Quality of the buyer-seller relationship (trust) Service quality Salesperson professionalism 3-12

Communicating Value in the Sales Message Brand equity Corporate image/reputation Application of technology Price 3-13

Product Quality Performance Features Reliability Conformance Durability Serviceability Aesthetics Perceived quality 3-14

Channel Deliverables (Supply Chain) Excellent supply chain management systems can add tremendous value to customers Supply chain – encompasses every element in the channel of distribution FedEx and Wal-Mart are examples of companies with exemplary supply chain management systems FedEx Wal-Mart 3-15

Integrated Marketing Communications Solid IMC allows salespeople to solidify their client relationships by referring to a well-known, consistent corporate message Clients expect and deserve consistency in the way a firm’s value-added message is put forth 3-16

Customers and other external stakeholders Firm’s internal value chain IMC - Communicating the Message Employees and other internal stakeholders Message 3-17

Synergy Between Sales and Marketing Seamless organizational processes focused on managing customer relationships strengthen the value proposition When sales and marketing are not synergistic, the customer is marginalized 3-18

Execution of Marketing Mix Programs Product Place - for distribution, or getting the product into the hands of the customer Price Promotion - marketing communications 3-19

Quality of the Buyer-Seller Relationship Trust - a belief by one party that the other party will fulfill its obligations Trust is essential to successful relationship selling Trust signifies that a salesperson has the customer’s long-term interests at heart 3-20

Service Quality Services differ from goods in that they exhibit these unique properties: Intangibility Inseparability Variability Perishability These properties create opportunities to add value to the firm’s overall product offerings 3-21

Dimensions of Service Quality Reliability Responsiveness Assurance Empathy Tangibles 3-22

Brand Equity Brand equity – the value inherent in a brand name in and of itself How might applying the concept of brand equity influence how you “brand yourself” in customer relationships? 3-23

Corporate Image/Reputation A strong, positive corporate image Provides a leg up on the competition Brings confidence to clients Can overcome other issues in making a sale 3-24

Application of Technology Technology can add substantial value to customer relationships Example: Pharmaceutical companies like Pfizer and Merck have developed sophisticated software for specific clients Pfizer Merck Strategic Partnerships – formalized relationships where companies share assets for mutual advantage 3-25

Price Value – amount by which benefits to a customer exceed cost of doing business with a seller (including a product’s price) Low price may be a marketing strategy 3-26

Managing Customer Expectations Customer expectations management – underpromise and overdeliver to create customer delight Customer delight – exceeding customer expectations to a surprising degree; a powerful way to gain customer loyalty 3-27

Role Play

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