1. Marketing Management (Text book Chapter)
Members
#04 Ms.Tanawan K.
#08 Mr.Noppadol S.
#10 Mr.Chonlakon B.
#11 Ms. Tippawan S.
#13 Ms. Panpilas P.
#18 Ms. Atchara N.

2. Building Customer Satisfaction, Value, and Retention (Chapter 2)

3. Author Biography Philip Kotler
His book “Marketing Management” is referred to as the Bible of Marketing
He is the S. C. Johnson & Son Professor of International Marketing at the Kellogg School of Management, Northwestern University
It is rated as the “Best Business School for the Teaching of Marketing”
He received Master’s Degree at The University of Chicago and PhD at MIT, both in economics
He did post-doctoral work in mathematics at Harvard University

4. Why do companies need to get customer satisfaction?
Now companies are facing their toughest competition.
A lot of competitors emergences in the same industries
Today’s customers have variety of products and brand choices
Believing that customers estimate which offer will deliver the most value 4

5. Customer Value Customer delivered value Total customer value
the bundle of benefit that customers expect from given product or service.
Total Customer cost
the bundle of cost customers expect to incur in evaluating, obtaining, using, and disposing. 5

6. Determinants of customer delivered value
Total
Customer value
Total
Customer cost
Product value
Monetary cost
Personnel value
Time cost
Image value
Psychic cost 6

7. Customer satisfaction
Person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance in relation to his or her expectations
Performance
Expectation
Performance
Expectation
Expectation
Performance
Dissatisfied
Satisfied
Highly satisfied 7

8. Four methods to track customer satisfaction
Complaint and suggestion system
Easy for its customers to deliver suggestions and complaints such as suggestion form, hot lines,
Customer satisfaction surveys
Although customers are dissatisfied, less than 5 percent of dissatisfied customers will complain
Ghost shopping
Hire persons to pose as potential buyers to report on strong and weak points
Lost customer
Contact customers who have stopped buying or switched to another suppliers to learn why this happened 8

9. The Nature of High Performance Business
Set Strategies to satisfy key stakeholders…
… and aligning resources and organization.
… by improving critical business processes…
Resources
Organization
Stakeholders
Process
Keys to Success High Performance Business

10. Keys to Success High Performance Business
Stakeholders
The companies must be defined their stakeholder and their need
In Traditional companies, pay attention to satisfy their stockholders
High-Performance companies, take good care of ;
Customers
Employees
Suppliers
Distributors
Process
Resources
Organization
Stakeholders

11. Keys to Success High Performance Business
Process
Traditional : work flow from Department to Department
High-Performance : use linking work processes
Reengineering work flow
Building cross-functional team
Improvement of core business
Stakeholders
Process
Resources
Organization

12. Keys to Success High Performance Business
Resources
Traditional : usually owned and controlled company’s properties
High-Performance : use
“outsources service”
better quality
lower cost
“core competence”
competitive advantage
being significant
Stakeholders
Process
Resources
Organization

13. Keys to Success High Performance Business
Organization & Organization Culture
Company’s organization consists of its structures, policies and “corporate culture”
Corporate culture is “the shared experiences, stories, beliefs, and norms that characterize an organization”
Encourage company organization to be “visionary company” or “comparison company”
Successful companies may need to adopt a new view to craft their strategy
Stakeholders
Process
Organization
Resources
“High-performance companies
are set up to deliver value and satisfaction”

14. Delivering customer value and satisfaction
VALUE CHAIN
It identifies nine activities that create value and cost in a specific business.
The Five Primary Activities are:
Inbound logistics – bringing materials into the business
Operations – converting them into final products
Outbound logistics – shipping out final products
Marketing and sales – marketing them
Service – servicing them

15. Delivering customer value and satisfaction
VALUE CHAIN
The Four Support Activities are:
Procurement
Technology development
Human resource management
Firm infrastructure
The firm task is to examine its cost and performance in each value-creating activity and to look for the ways to improve it.
The firm’s success depends on how well each department performs its work and how well the various activities are coordinated.

16. Delivering customer value and satisfaction
SUPPLY CHAIN or Value-Delivery Network
Competition is between networks, not companies.
The winner is the company with the better network.
Delivery
Delivery
Suppliers
Distributors
Customers
Order
Order

17. Attracting and Retaining Customers
ATTRACTING CUSTOMERS
Companies have to spend considerable time and resources searching for
new customers in order to grow their profits and sales.
Customers Acquisition
Lead Generation – advertising, sending direct mail, making phone calls
Lead Qualification – interviewing, checking on their financial standing
Account Conversion – making presentations, answering objections, negotiating final terms

18. Attracting and Retaining Customers
COMPUTING THE COST OF LOST CUSTOMERS
The companies must pay attention to the rate that they lose customers (customer defection rate). 
There are four steps in trying to reduce the defection rate:
Define and measure its retention rate.
Distinguish the causes of customer attrition and identify those that can be managed better.
Estimate how much profit it loses when it loses customers.
Figure out how much it would cost to reduce the defection rate.

19. Attracting and Retaining Customers
THE NEED FOR CUSTOMER RETENTION
Building relationships
Caring for the customers afterward
The key to customer retention is customer satisfaction.
The company should measure customer satisfaction regularly.
The company must listen and respond quickly to the complaints.

20. Attracting and Retaining Customers
THE NEED FOR CUSTOMER RETENTION
The importance of satisfying and retaining current customers
Acquiring new customers can cost five times more than the costs involved in satisfying and retaining customers.
The average company loses 10% of its customers each year.
A 5% reduction in the customer defection rate can increase profits by 25% to 85%.
The customer profit rate tends to increase over the life of the retained customer

21. Relationship Marketing The customer development process
Suspects
Disqualified prospects
Prospects
First time customers
Repeat customers
Clients
Interactive or ex-customers
Members
Advocates
Partners

22. Five different levels of investment in customer-relationship building:
Basic marketing
Reactive marketing
Accountable marketing
Proactive marketing
Partnership marketing

23. The likely level of relationship marketing
High margin
Medium margin
Low margin
Many customers/ distributors
Accountable
Reactive
Basic or Reactive
Medium number of customers/
distributors
Proactive
Few customers/ distributors
Partnership

24. Three value-building approaches
Adding financial benefits
- Frequency marketing programs (FMPs)
- Club membership program

25. Three value-building approaches (con’t)
Adding social benefits
Social actions affecting buyer-seller relationship
Good things Bad things
Initiative positive phone calls Make only callbacks
Make recommendation Make justification
Candor in language Accommodative language
Use phone Use correspondence
Show appreciation Wait fir misunderstandings
Get to problems Only respond to problems
Routinize responses Fire drill and emergency responsiveness
Accept responsibility Shift blame
Plan the future Rehash the past

26. Three value-building approaches (con’t)
Adding structure ties
To supply customers with special equipment or computer linkages that help customers manage their order, payroll, inventory, and so on
To provide proprietary software programs, marketing research, sale training, and sales leads to loyal customers

27. Customer Profitability : The Ultimate Test

28. Customer Profitability
Marketing is the art of attracting and keeping profitable customers.
A profitable customer is a person or company that over time yields a revenue stream that exceeds by an acceptable amount the company’s cost stream of attracting, selling, and servicing that customer.

29. Customer Profitability
In order to determine if a client is truly profitable, many different factors must be taken into consideration, including the cost of sales efforts, commissions paid on the revenue generated by the customer, and the wages, time, and equipment expended in maintaining customer service and support.
It is possible for a profitable customer to become unprofitable over time, if the volume of business is reduced and the client demands more attention.

30. The Ultimate Test The 80-20 rule (Pareto's Principle)
Vilfredo Pareto created the mathematical formula to describe the unequal distribution of wealth in his country
The 80% of income in Italy was received by 20% of the Italian population.
How to apply with marketing?
The top 20% of the customer may generate as much as 80% of the company’s profits.

31. The Ultimate Test The 20-80-30 rule
The 20 % of customers bring 80 % of the revenue of which 30% is spent for maintaining the bottom line customers (unprofitable customers).
It is important to find out which customers are the 20% best customers for the company, so that we can treat them differently in order to acquire, upgrade and retain them.

32. The 20-80-30 rule Percentage Profit Income (THB) 100% 5 million 20%
30% non-profit

33. The Ultimate Test How to overcome 30% of non-profit?
There are 2 options
(1). Increase the price of its less profitable
products or eliminate them
(2). Try to sell its profit-making products to the
unprofitable customers.

34. Implementing Total Quality Management
Total quality management (TQM)
It is an organizational approach to improve the quality of all organization ‘s process, product, and service.

35. Marketing Managers
Formulate strategies and policies to help company win through total quality excellence.
Deliver marketing quality alongside production quality.

36. Marketers
Bear responsibility for identifying the customers’ needs and requirement.
Communicate customer expectations properly to product designers.
Make sure the customers’ orders are filled properly and on time.
Check whether the customers have received proper technical assistance in the use of product.
Stay in touch with the customers after the sale to make sure whether they are satisfied.
Gather customer ideas for product and service improvement.