Chapter #1: Intro to Market Based Management

Question 1

What are the 5 steps for market based management?

Answer 1

1) Customer focus (measure performance)
2) Analysis of markets (competitive position)
3) Tactical MKT based strategies (4Ps)
4) Strategic view of where we are and where we want to go
5) Implementation of MKT strategies (& financial impact)

Question 2

What are two trending reasons that customers these days are less brand loyal?

Answer 2

They expect more and have more choices

Question 3

Why should a company maintain a customer focused organisation?

Answer 3

To outperform competition

To consistently improve consumer satisfaction

and therefore…

Realise higher profit $$$

Question 4

High levels of customer satisfaction drive ____________.

Answer 4

Customer profitability

Question 5

Why do we work to identify customer profitability?

Answer 5

To find who to attract and who to avoid

Question 6

What does CSI stand for?

Answer 6

Customer satisfaction Index

Question 7

What is the Customer Satisfaction Index (CSI)?

Answer 7

The average of all customer satisfaction ratings

Question 8

Why do we calculate a company’s CSI?

Answer 8

It helps to forecast future revenue and profit

Question 9

What makes a good CSI metric?

Answer 9

• Past CSI metrics
• Against objective
• Against competitors

Question 10

Why is it important to manage customer dissatisfaction?

Answer 10

Customer retention increases profit

Question 11

Why do we want to keep a high percentage of satisfied customers

Answer 11

Satisfied customers buy more at a higher profit margin = overall higher profit margin for the business

Question 12

What percentage of customers are likely to share their positive experience when they had a positive experience?

Answer 12

25%

Question 13

What percentage of customers are likely to share their negative experience when they had a negative experience?

Answer 13

65%

Question 14

What percentage of customers who have a positive experience will tell 10 or more people about it?

Answer 14

23%

Question 15

What percentage of customers who have a negative experience will tell 10 or more people about it?

Answer 15

48%

Question 16

To estimate customer retention rates, a business will……

Answer 16

Conduct a customer survey

Question 17

Customer lifetime value increases exponentially with increases in __________

Answer 17

Customer retention

Question 18

Increases in customer retention in turn exponentially increases ____________.

Answer 18

Customer lifetime value

Question 19

Loyal customers typically have what impact on a business?

Answer 19

• Longer customer history
• More committed to company/brad
• Buy more
• More likely to recommend the brand

Question 20

Loyal customers have what 5 characteristics?

Answer 20

1) Long customer history
2) Above average purchase amount
3) High desire to repurchase (commitment)
4) Strong product preferences (over competitor options)
5) Would recommend the product/brand

Question 21

What are loyal customers?

Answer 21

Loyal customers are high performance customers who satisfy the 5 loyal customer characteristics

Question 22

What are repeat customers?

Answer 22

Great customers who buy often but score lower on purchase amount, product preference and customer recommendations

Question 23

What are captive customers?

Answer 23

Have a long customer history and average purchase amount but would leave if they could (they are dissatisfied captive customers)

Question 24

What are new customers?

Answer 24

Score low on all aspects of customer loyalty as they do not yet have the customer history to assess loyalty

Question 25

What are unprofitable customers?

Answer 25

Score low on all aspects of customer loyalty

Question 26

What is the goal of relationship marketing?

Answer 26

To manage the 5 customer loyalty classifications and obtain a higher overall level of loyalty and profitability

Question 27

Unprofitable customers are the result of ____________

Answer 27

Mismanaged customer selection - best approach (and hardest) is to help them leave

Question 28

New customers (first time or returning) require __________

Answer 28

Critical care. They have high expectations that need to be managed to lift their level of customer loyalty

Question 29

Loyal customers should be managed by ________

Answer 29

Being rewarded with special offers and service that are not offered to other customers