1. through Quality, Service, and Value
Chapter 2
Building Customer
Satisfaction
through Quality, Service, and Value
Marketing Management
Tenth Edition
Philip Kotler

2. Objectives
Define value & satisfaction - understand how to deliver them
The nature of high-performance businesses
How to attract & retain customers
Improving customer profitability
Total quality management

3. Determinants of Customer Delivered Value
Image value
Personnel value
Services value
Product value
Total
customer
value
Customer
delivered
value
Monetary cost
Time cost
Energy cost
Psychic cost
Total
customer
cost

4. Satisfaction is a person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to his or her expectations.

5. High Performance Business
Stake-
holders
Set strategies to satisfy key...
Processes
By improving
critical business...
Resources
Organization
and
aligning...

6. The Generic Value Chain
Firm infrastructure
Out-
bound
Logistics
Inbound
Logistics
Opera-
tions
Market-
ing
and
sales
Margin
Primary Activities
Support
Activities
Human resource management
Technology Development
Procurement
Serv-
ice

7. Levi Strauss’ Value-Delivery Network
Du Pont
(Fibers)
Order
Delivery
Order
Milliken
(Fabric)
Levi’s
(Apparel)
Order
Order
Sears
(Retail)
Customer
Delivery
Delivery
Delivery
Competition is between networks, not companies.
The winner is the company with the better network.

8. Satisfied Customers: Are loyal longer
Buy more (new products & upgrades)
Spread favorable word-of-mouth
Are more brand loyal (less price sensitive)
Offer feedback
Reduce transaction costs

9. Levels of Relationship Marketing
High
margin
Medium
Low
Many
customers/
distributors
Medium
number of
Few
Accountable
Reactive
Basic or
reactive
Proactive
Accountable
Reactive
Accountable
Proactive
Partnership

10. Customer Development Suspects Prospects Clients Advocates Partners
First-time
customers
Repeat
customers
Clients
Advocates
Partners
Inactive or
ex-customers
Disqualified
prospects

11. Customer/Product Profitability Analysis
Customers P1
Highly
profitable
product P2
Profitable P3
Losing P4
Mixed-bag
Products +
High
profit
customer + -
Mixed-bag
customer + -
Losing
customer

12. Competitive advantage
The Profit Triangle
Profit
Value creation
Internal operations
Competitive advantage

13. Quality
Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. #1

14. Review Define value & satisfaction - understand how to deliver them
The nature of high-performance businesses
How to attract & retain customers
Improving customer profitability
Total quality management