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Creating Customer Value, Satisfaction, and Loyalty 5
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What are customer value, satisfaction, and loyalty, and how can companies deliver them? What is the lifetime value of customers? How can companies cultivate strong customer relationships? How can companies both attract and retain customers? What is database marketing? Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-2 Chapter Questions
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-4 Ritz Carlton - Famous for its Exceptional Service
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-5 Figure 5.1 Organizational Charts
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Customer perceived value is the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-6 What is Customer Perceived Value?
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-8 Figure 5.2 Determinants of Customer Perceived Value Image benefitPsychological cost Personal benefitEnergy cost Services benefitTime cost Product benefitMonetary cost Total customer benefitTotal customer cost
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Identify major attributes and benefits that customers value Assess the qualitative importance of different attributes and benefits Assess the company’s and competitor’s performances on the different customer values against rated importance Examine ratings of specific segments Monitor customer values over time Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-9 Steps in a Customer Value Analysis
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Loyalty is 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. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-10 What is Loyalty?
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-11 Top Brands in Customer Loyalty Avis Google L.L. Bean Samsung (mobile phones) Yahoo! Canon (office copiers) Land’s End Coors Hyatt Marriott Verizon KeySpan Energy Miller Genuine Draft Amazon
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-12 The Value Proposition The whole cluster of benefits the company promises to deliver
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-13 Measuring Satisfaction Periodic Surveys Customer Loss Rate Mystery Shoppers Monitor Competitive Performance
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What is Quality? Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-14 Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.
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CRM is the process of carefully managing detailed information about individual customers and all customer touchpoints to maximize customer loyalty. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-15 What is Customer Relationship Management?
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Framework for CRM Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-16 Identify prospects and customers Differentiate customers by needs and value to company Interact to improve knowledge Customize for each customer
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-17 CRM Strategies Reduce the rate of defection Increase longevity Enhance “share of wallet” Terminate low-profit customers Focus more effort on high-profit customers
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-18 Focus on CRM
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Acquisition of customers can cost five times more than retaining current customers. The average customer loses 10% of its customers each year. A 5% reduction to the customer defection rate can increase profits by 25% to 85%. The customer profit rate increases over the life of a retained customer. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-19 Customer Retention
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-20 Database Key Concepts Customer database Database marketing Mailing list Business database Data warehouse Data mining
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-21 Using the Database To identify prospects To target offers To deepen loyalty To reactivate customers To avoid mistakes
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Analyzing Consumer Markets and Buyer Behavior
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■ How do cultural, social, personal, and psychological factors influence consumer buying behavior? ■ How does the consumer make a purchasing decision? We will address the following questions:
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Cultural Factors Influencing Buyer Behavior - Culture - Subculture - Social class HOW AND WHY CONSUMERS BUY
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Culture. Culture is the most fundamental determinant of a person’s wants and behavior. Subculture. Each culture consists of smaller subcultures that provide more specific identification and socialization for their members. Social class. Social classes are relatively homogeneous and enduring divisions in a society. Cultural Factors Influencing Buyer Behavior
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Culture is the fundamental determinant of a person’s wants and behaviors acquired through socialization processes with family and other key institutions. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-26 What is Culture?
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Nationalities Religions Racial groups Geographic regions Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-27 Subcultures
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The average American: chews 300 sticks of gum a year goes to the movies 9 times a year takes 4 trips per year attends a sporting event 7 times each year Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-28 Fast Facts About American Culture
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Reference Groups Family Roles and Statuses Social Factors Influencing Buyer Behavior
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Reference Groups; consist of all of the groups that have a direct (face-to-face) or indirect influence on a person’s attitudes or behavior. Groups that have a direct influence on a person are called membership groups. Some primary membership groups are family, friends, neighbors, and co-workers, Social Factors Influencing Buyer Behavior
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The family is the most important consumer- buying organization in society, and it has been researched extensively. Marketers are interested in the roles and relative influence of the husband, wife, and children in the purchase of a large variety of products and services. These roles vary widely in different cultures and social classes. Family
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A person participates in many groups, such as family, clubs, or organizations. In general, people choose products that communicate their role and status in society. Roles and Statuses
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Görev: Mission “Çarşı’dan bir gömlek al!” «Buy a shirt from the market» Çarşı MaleFemale Kahve Molası Costs 60 $ Time 12 min Costs 650 $ Time 198 min
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Age and Stage in the Life Cycle Taste in clothes, furniture, and recreation is also age-related, which is why smart marketers are attentive to the influence of age. Similarly, consumption is shaped by the family life cycle. Personal Factors Influencing Buyer Behavior
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A lifestyle is the person’s pattern of living in the world as expressed in activities, interests, and opinions. Lifestyle portrays the “whole person” interacting with his or her environment. Psychographics is the science of measuring and categorizing consumer lifestyles. Lifestyle
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Motivation, A need becomes a motive when it is aroused to a sufficient level of intensity. A motive is a need that is sufficiently pressing to drive the person to act. Psychological Factors Influencing Buyer Behavior
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Psychologists have developed theories of human motivation. One of the best known—the theory of Abraham Maslow,
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Upper uppers Lower uppers Upper middles Middle Working Upper lowers Lower lowers Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-42 Social Classes
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Within a class, people tend to behave alike Social class conveys perceptions of inferior or superior position Class may be indicated by a cluster of variables (occupation, income, wealth) Class designation is mobile over time Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-43 Characteristics of Social Classes
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Age and Stage in the Life Cycle Occupation and Economic Circumstances Lifestyle Personality and Self-Concept Personal Factors Influencing Buyer Behavior
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THE CONSUMER BUYING DECISION PROCESS Five-Stage Model of the Consumer Buying Process
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How do cultural, social, personal, and psychological factors influence consumer buying behavior? How does the consumer make a purchasing decision?
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Buyer’s Decision Product choice Brand choice Dealer choice Purchase amount Marketing Stimuli OtherStimuli ProductPricePlacePromotionTechnologicalPoliticalCulturalBuyer’sCharacteristicsBuyer’s Decision Process CulturalSocialPersonalPsychological Problem recognition Information search Evaluations of alternatives Purchase decision Post purchase behavior Model of Consumer Buyer Behavior
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As this model indicates, a consumer’s buying behavior is influenced by cultural, social, personal, and psychological factors.
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We can distinguish five roles that people might play in a buying decision. An initiator first suggests the idea of buying the product or service. An influencer is the person whose view or advice influences the decision. A decider actually decides whether to buy, what to buy, how to buy, or where to buy. A buyer makes the actual purchase, while a user consumes or uses the product or service. THE CONSUMER BUYING DECISION PROCESS
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Complex buying behavior Dissonance-reducing buyer behavior Habitual buying behavior Variety-seeking buying behavior Buying Behavior
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Stage 1: Problem Recognition Stage 2: Information Search Stage 3: Evaluation of Alternatives Stage 4: Purchase Decision Stage 5: Postpurchase Behavior The Stages of the Buying Decision Process
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The buying process starts when the buyer recognizes a problem or need. This need can be triggered by internal stimuli or external that then becomes a drive. Marketers can develop marketing strategies that trigger consumer interest and lead to the second stage in the buying process. Stage 1: Problem Recognition
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At the milder search state of heightened attention, a person simply becomes more receptive to information about a product. At the active information search level, a person surfs the Internet, talks with friends, and visits stores to learn more about the product. Stage 2: Information Search
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Consumers form judgments largely on a conscious and rational basis. The consumer sees each product as a bundle of attributes with varying abilities of delivering the benefits to satisfy this need. Stage 3: Evaluation of Alternatives
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Two factors can intervene between the purchase intention and the purchase decision. The first factor is the attitudes of others. The second factor is unanticipated situational factors Stage 4: Purchase Decision
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The buyer’s satisfaction with a purchase is a function of the closeness between the buyer’s expectations and the product’s perceived performance. If performance falls short of expectations, the customer is disappointed; if it meets expectations, the customer is satisfied; if it exceeds expectations, the customer is delighted Stage 5: Postpurchase Behavior
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Our best advertisement is a satisfied customer.
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