chapter 7 Flashcards
customers as strangers (relationship marketing)
A firms primary goal with these strangers is to initiate communication with them in order to attract and acquire their business. Thus, the primary marketing efforts directed towards such customers deal with familiarizing them with the firms offerings and subsequently encouraging them to give the firm a try
Relationship marketing
essentially represents a paradigm shift within marketing - away from an acquisition/transaction focus toward a retention/relationship focus. Relationship marketing is a philosophy of doing business, a strategic orientation, that focuses on keeping and improving relationships with current customers rather than on acquiring new customers. This philosophy assumes that many consumers and business customers prefer to have an ongoing relationhsip with one organization than to switch continually among providers in their search for value
Customers as acquaintances (relationship marketing)
once customer awareness and trial are achieved, familiarity is established and the customer and the firm become acquaintances, creating the basis for an exchange relationship. A primary goal for the firmat this stage of the relationship is satisfying the customer. In the acquaintace stage, firms are generally concerned about providing a value proposition to customers that is comparable with that of competitors. For a customer an acquaintanceship is effective as long as the customer is relatively satisfied and what is being received in the exchange iss perceived as fair value.
Customers as friends (relationship marketing)
As a customer continues to make purchases from a firm and to receive value in the exchange relationship, the firm begins to acquire specific knowledge of that customers needs, allowing it to create an offering that directly addresses the customers situation. The provision of a unique offering ( a differential value) transforms the exchange relationship from acquaintance to friendship. This transition requires the development of trust, particulalry in service exchange relationships.
Customers as partners (relationship management)
As a customer continues to interact with a firm, the level of trust often deepens and the customer may receive more customized product offerings and interactions. The trust developed in teh friendship stage is a necessary but not sufficient condition for a customer-firm partnership to develop. That is, the creation of trust leads to (ideally) the creation of commitment - and that is the condition necessary for customers to extend the time perspective of a relationship.
The key to success in the partnership stage is the firms ability to organize and use information about individual customers more effectively than competitors. Customers benefit from, and therefore desire to commit to, relationships with firms whose knowledge of their needs translates into a delivery of highly personalized and customized offerings.
three types of customer expectations
1) transactional expectations - where the customer is looking for solutions to their needs at an acceptable price, and they do not appreciate contacts from the supplier or service provider in between purchases
2) Active relational expectations: where the customer is looking for opportunities to interact with the supplier or service provider if they wanted to. In this sense, they are also seeking contact, but they seldom respond to invitations to interact.
The goal of relationship marketing
to build and maintain a base of committed customers who are profitable for the organization
Benefits to customers (relationship marketing)
they receive greater value relative to what they expect from competing firms
Consumers are more likely to stay in a relationship when the “gets” exceeds the “gives”
Confidence benefits (relationship marketing)
Confidence benefits comprise feelings of trust or confidence in the provider, along with a sense of reduced anxiety and comfort in knowing what to expect.
social benefits (relationship marketing)
over time, customers develop a sense of familiarity and, even, a social relationship with their service providers. these ties make it less likely that they will switch, even when they learn about a competitor that might have better quality or a lower price
Special treatment benefits (relationship marketing)
special treatments include getting the benefit of the doubt, being given a special deal or price or getting preferential treatment, as exemplified by the following quote from the research. Interestingly, the research showed that special treatment benefits, while important, were deemed less important than the other types of benefits received in service relationships
types of switching barriers (that influence consumers decisions to exit from relationships with firms and, therefore, facilitate customer retention
customer inertia: Sometimes customers simplistically state that its just not worth it to switch
switching costs: In many instances, customers develop loyalty to an organization in part because of costs involved in changing to and purchasing from a different firm. switching costs include time investment, money or effort, set up costs, search costs etc.
relationship bonds
1) financial bonds: Customer is tied to the firm primarily through financial incentives - lowe prices for g reater volume purchases or lower prices for customers who have been with the firm a long time.
Level 2) social bonds: Level 2 retention marketers build long term relationships through social and interpersonal as well as financial bonds. Customers are viewedas clients, not nameless faces, and become individuals whose needs and wants the firm seeks to understand. (e.g. often used in law, accountancy or architects)
Level 3: Customization bonds: Involve more than social ties and financial incentives, although there are common elements of leve 1 and 2 strategies. feed back into the bank to help customize services to fit developing customer needs.
–> mass customization and customer intimacy. Both these strategies suggest that customer loyalty can be encouraged through intimate knowledge of individual customers and through the development of one to one solutions that fit the individual customers needs.
Level 4: structural bonds: are the most difficult to imitate: they involve structural as well as financial, social and customization bonds between the customer and the firm. Structural bonds are created by providing services to the client that are frequently designed right into the service delivery system of that client. Often, structural bonds are created by providing customized services to the client that are technology based and make the customer more productive.
some customers may not be wanted why
irritating
Intrustive
Time consuming
Unattractive (will not value the benefits offered)
wrong segment/not profitable in the long term
