First Flashcards
Definition of Marketing?
Marketing is concerned with the firms relationship to customers
It can provide long-term value to firms if done right
Crucial in a market with multiple sellers and diverse customers
Marketing’s Dual Character
- Leadership philosophy: Strategic management, guiding activities of all members of an organization
- Managerial Function: Marketing Management, everyday-marketing, campaigns, research
The 4 P’s?
- Product
- Price
- Promotion
- Place
Product in the 4 P’s
- Product variety
- Quality
- Design
- Features
- Brand name
- Packaging
- Sizes
- Services
- Warranties
- Returns
Price in the 4 P’s
- List price
- Discounts
- Allowances
- Payment period
- Credit terms
Promotion in the 4 P’s
- Advertisement
- Personal selling
- Sales promotion
- Public relations
Place in the 4 P’s
- Channels
- Coverage
- Assortment
- Locations
- Inventory
- Transportation
- Logistics
The new additional 3 P’s?
- People
- Physical Evidence
- Processes
People in the additional 3 P’s
- Employees
- Customers
- Communicating culture and value
- Employee research
Physical Evidence in the additional 3 P’s
- Facility Design
- Equipment
- Signage
- Employee Dress
- Other tangibles
Processes in the additional 3 P’s
- Flow of activities
- Number of steps
- Level of customer involvement
What is the problem when only considering the 4 P’s?
It was invented in the 1940s and thus targets mass marketing over mass media
It is more product oriented than customer oriented and does not justice to service providers
-> relationship management
Relationship management?
Is the process of creating, maintaining and enhancing strong relationships with customers and other stakeholders
Basic three elements of relationship management
- Customer recruitment
- Customer retention
- Customer recovery
but only of profitable customers
Yearly profit of a customer
Long-term customers are more profitable
How come frims which don’t produce anything in a factory have so much value?
Today customers are value
Three key points for strong brands
- When they help acquire new profitable customers
- help extend existing customer relationships
- help prolong existing customer relationships
the main asset that brings cash flow is the customer
Customer Livetime Value
CLV
Customer Equity
Describes the sum of the lifetime values of all present and future customers
This means investments pay off when they increase the customer equity
What approaches are there for customer equity management?
- Static perspective
- Dynamic perspective
Static perspective
Focuses on the customers with the highest CLV
How can I retain these customers how can I gain them?
- No-cost upgrades
- Selection for downgrades/denied services
- Differential complaint handling
- Waiting time in call center
- Loyalty program status
- Special phone number
- Added services
Differential treatment for these customers
Dynamic persective
Focuses on those customers for which CLV increase has the highest return on investment
Which customers are reactiv
- Increasing relationship length
- Increasing relationship breath (# of transaction, cross-selling)
- Increasing relationship depth (frequency of purchases, purchase value)
- Reduce per-customer costs (migrate to self-service)
Customer Loyalty
Loyalty is a multidimensional construct (repurchase, word-of-mouth, cross selling intentions)
According to industry can either be contractual or non-contractual
Customer Loyalty
Net Promoter Score (NPS)
It asks the question:
“How likely is it that you would recommend our company/product/service to a friend?”
Scoring is based on a 0 to 10 Scale
- %Promoters (9, 10) - %Detractors = NPS
it is still not recommended to use NPS as a predictor for financial performance
CLV Modes
They are forward looking investment models based on
prediction. In these models, customer retention as well as the varying degree of customer cashflow
are considered directly or indirectly. The customer relationship is viewed as an investment or
asset.
