1.4 Managing Customer Relationships and Capturing Customer Value Flashcards
The first three steps in the marketing process—understanding the marketplace and customer needs, designing a customer value-driven marketing strategy, and constructing a marketing program—all lead up to the fourth and most important step…
What is it?
Engaging customers and managing profitable customer relationships.
Definition of Customer Relationship Management
Customer relationship management: The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.
It deals with all aspects of acquiring, engaging, and growing customers.
Customers often face a bewildering array of products and services from which to choose.
How do they decide?
A customer buys from the firm that offers the highest customer-perceived value
Definition of Customer-percieved value?
Customer-perceived value: The customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers.
What do customers act on when judging the value of a product or service?
Importantly, customers often do not judge values and costs “accurately” or “objectively.”
They act on perceived value.
Definition of Customer Satisfaction
Customer satisfaction: The extent to which a product’s perceived performance matches a buyer’s expectations.
If the product’s performance falls short of expectations, the customer is dissatisfied.
If performance matches expectations, the customer is satisfied.
If performance exceeds expectations, the customer is highly satisfied or delighted.
What do outstanding marketing companies go out of their way to do?
Outstanding marketing companies go out of their way to keep important customers satisfied.
How can a company properly aim to delight customers?
Companies aim to delight customers by promising only what they can deliver and then delivering more than they promise.
For companies interested in delighting customers, exceptional value and service become part of the overall company culture.
What are the benifits of a Delighted customer?
Delighted customers not only make repeat purchases but also become willing brand advocates and “customer evangelists” who spread the word about their good experiences to others.
What is the proper balance a customer-centerd firm must seek out?
Although a customer-centred firm seeks to deliver high customer satisfaction relative to competitors, it does not attempt to maximize customer satisfaction.
A company can always increase customer satisfaction by lowering its prices or increasing its services.
But this may result in lower profits. Thus, the purpose of marketing is to generate customer value profitably.
This requires a very delicate balance: The marketer must continue to generate more customer value and satisfaction but not “give away the house.”
What are the two extreems of a customer relationship?
At one extreme, a company with many low-margin customers may seek to develop basic relationships with them.
At the other extreme, in markets with few customers and high margins, sellers want to create full partnerships with key customers.
In between these two extremes, other levels of customer relationships are appropriate.
Example of a basic customer relationship
P&G’s Tide detergent does not phone or call on all of its consumers to get to know them personally. Instead, Tide creates engagement and relationships through product experiences, brand-building advertising, websites, and social media.
Example of a full partnership customer relationship
P&G sales representatives work closely with Walmart, Sobeys, and other large retailers that sell Tide.
Examples of marketing tools to develop stronger bonds with customers.
- Many companies offer frequency marketing programs that reward customers who buy frequently or in large amounts.
- Airlines offer frequent-flier programs, hotels give room upgrades to frequent guests
- Supermarkets give patronage discounts to “very important customers.”
- Loyalty rewards program.
Such programs can enhance and strengthen a customer’s brand experience.
Examples of Significant changes that are occurring in the nature of customer–brand relationships.
Digital technologies—the internet and the surge in online, mobile, and social media—have profoundly changed the ways that people on the planet relate to one another.
In turn, these events have had a huge impact on how companies and brands connect with customers and how customers connect with and influence each other’s brand behaviours.
What is the difference between how “Yesterdays” companes and todays companies market?
Yesterday’s companies focused mostly on mass marketing to broad segments of customers at arm’s length.
By contrast, today’s companies use online, mobile, and social media to refine their targeting and to engage customers more deeply and interactively.
The old marketing involved marketing brands to consumers.
The new marketing is customer-engagement marketing
Definition of Customer-engagement marketing.
Customer-engagement marketing: Making the brand a meaningful part of consumers’ conversations and lives by fostering direct and continuous customer involvement in shaping brand conversations, experiences, and community.
What is the goal of customer-engagement marketing
Its goal is to make the brand a meaningful part of consumers’ conversations and lives.
How has the internet and social media changed the landscape of marketing?
The burgeoning internet and social media have given a huge boost to customer-engagement marketing. Today’s consumers are better informed, more connected, and more empowered than ever before.
How has the internet and social media changed the control and information that consumers have about products and services?
Newly empowered consumers have more information about brands, and they have a wealth of digital platforms for airing and sharing their brand views with others.
How must marketers change their thinking in the face of the internet and social media?
Thus, marketers are now embracing not only customer relationship management but also customer-managed relationships, in which customers connect with companies and with each other to help forge and share their own brand experiences.
What is Brand Advocacy?
Beyond building brand loyalty and purchasing, marketers want to create brand advocacy, by which satisfied customers initiate favourable interactions with others about a brand.
What does greater consumer empowerment mean for companies?
Greater consumer empowerment means that companies can no longer rely on marketing by intrusion.
Instead, they must practise marketing by attraction—creating market offerings and messages that engage consumers rather than interrupt them.
Hence, most marketers now combine their mass-media marketing efforts with a rich mix of online, mobile, and social media marketing that promotes brand-consumer engagement, brand conversations, and brand advocacy among customers.