2. Creating Customer Value, Satisfaction, and Loyalty 5

3.   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

5.  Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-4 Ritz Carlton - Famous for its Exceptional Service

6.  Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-5 Figure 5.1 Organizational Charts

7.  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?

9.  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

10.   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

11.  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?

12.  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

13.  Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-12 The Value Proposition The whole cluster of benefits the company promises to deliver

14.  Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-13 Measuring Satisfaction Periodic Surveys Customer Loss Rate Mystery Shoppers Monitor Competitive Performance

15.  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.

16.  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?

17.  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

18.  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

19.  Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-18 Focus on CRM

20.   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

21.  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

22.  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

23.  Analyzing Consumer Markets and Buyer Behavior

24.  ■ 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:

25.   Cultural Factors Influencing Buyer Behavior - Culture - Subculture - Social class HOW AND WHY CONSUMERS BUY

26.   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

27.  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?

28.   Nationalities  Religions  Racial groups  Geographic regions Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-27 Subcultures

29.   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

30.   Reference Groups  Family  Roles and Statuses Social Factors Influencing Buyer Behavior

31.   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

32.   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

33.   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

34.  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

35.   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

37.   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

40.   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

41.   Psychologists have developed theories of human motivation. One of the best known—the theory of Abraham Maslow,

43.   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

44.   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

45.   Age and Stage in the Life Cycle  Occupation and Economic Circumstances  Lifestyle  Personality and Self-Concept Personal Factors Influencing Buyer Behavior

46.  THE CONSUMER BUYING DECISION PROCESS Five-Stage Model of the Consumer Buying Process

47.   How do cultural, social, personal, and psychological factors influence consumer buying behavior?  How does the consumer make a purchasing decision?

48. 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

49.   As this model indicates, a consumer’s buying behavior is influenced by cultural, social, personal, and psychological factors.

50.   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

51.   Complex buying behavior  Dissonance-reducing buyer behavior  Habitual buying behavior  Variety-seeking buying behavior Buying Behavior

53.   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

54.   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

55.   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

56.   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

57.   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

58.   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

59. Our best advertisement is a satisfied customer.