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Fundamentals in Marketing

Management (002)

Connecting with Customers


(Customer Needs, Wants, Values
& Loyalty)
Si Thu Aung
Connecting with Customers
Customer Needs
1. Stated Needs Wants an inexpensive
car
2. Real Needs Wants a car with a low
operation cost
3. Unstated Needs Wants good service from the
dealer
4. Delight Needs
Wants the DVD system in
the car
5. Secret Needs
Wants to be seen by friends as a
smart buyer
Customer Needs, Wants, and
Demands
Customer Basic
Needs Human
Requirement
s

Customer directed to specific


Wants objects that might
satisfy the need

Customer Wants for specific


Demands products backed by an
ability to pay
Customer Value
Customer Perceived Value (CPV)
Customer Perceived Value (CPV) =
Total Customer Benefits Total
Customer Costs
Case Study : Caterpillar Vs Komatsu

: Car Showrooms Vs Car Auctions


The Value Chain
Michael Porter proposed the value chain as
a tool for identifying ways to create more
customer value.
Identifies 9 strategically relevant activities

5 primary activities

4 support activities
The Value Chain
The Value Chain (Task of Company)
Examine Costs and Performance in each value-creation
activity and look for ways to improve it.
Estimate Competitors costs and performances as
benchmarks to compare
Study the Best of Class Practices of the worlds best
companies
The Company Success depends not only on how well
each department perform but also how well the
company coordinates various department to manage
these 5 core business process
Five Core Business Process
1. The Market Sensing Process

2. The new offering realization Process

3. The customer acquisition Process

4. The customer relationship management


Process

5. The fulfillment management process


Holistic Marketing Framework
A holistic marketing orientation can help
capture customer value.
Integrates

Value Exploration

Value Creation and

Value Delivery activities


Value Exploration (Holistic Mkt)
How can a company identify new value opportunities ?

Cognitive Space

Understanding of customers needs and dimensions

Competency Space

Three characteristics

Resource Space

Partnerships
Value Creation (Holistic Mkt)
How can a company efficiently create more
promising new value offerings ?
Marketers must

Identify new customer benefits from


customers perspective
Utilize Core Competencies

Partner effectively with firms


Value Delivery (Holistic Mkt)
How can a company uses its capabilities
and infrastructure to deliver the new value
offerings more efficiently ?
The company must proficient at

Customer relationship management

Internal Resource Management

Business Partner Management


The Value Delivery Process
1. Choosing the Value

2. Providing the Value

3. Communicating the Value


1. Choosing the Value
Marketers segment the market

Select the appropriate market target

Develop the offerings value proposition


for the chosen market target
Also known as STP ( Segmentation,
Targeting, Positioning )
2. Providing the Value
The value should be provided
through
Specific Product features

Service development

Pricing

Sourcing & Making the Offering

Distributing & Serving


3. Communicating the Value
The Value should be communicated through

Sales Force

Advertising

Other Communicating Tools to announce &


promote the product

{ Therefore, the value creation and delivery


process begins before there is a product and
continues while it is being developed and after
it is available to the target market }
Customer Satisfaction
Customer Satisfaction

Customer Satisfaction = Customer Expectation (CE)

Vs Customer Perceived Value


(CPV)
If CPV falls short of CE => Customer Dissatisfied

If CPV is equal to CE => Customer Satisfied


If CPV exceeds CE => Customer Delights
Building Customer Loyalty
Customer Loyalty

Total Satisfaction = loyalty = Increased


Checks
However, the link between loyalty and
satisfaction is not proportionately connected
Xerox found that totally satisfied customers
are six times more likely to repurchase in 18
months than their very satisfied customers
Building Loyalty

1. Interacting with Customers

2. Developing Loyalty Programs

3. Personalizing Marketing

4. Creating Institutional Ties


1. Interacting with Customers
Listening to customers is crucial
Creates mechanism that keeps senior
managers plugged in to front-line
customer feedbacks
Be a customer advocate, take customers
side on issues, understand their point of
view
Customer evangelists are especially
valuable
2. Developing Loyalty Program
Two Customer Loyalty Programs that company
offers
Frequency Programs
Design to provide rewards to customers who buy frequently
& in substantial amounts
Can help built long-term loyalty with high CLV
1st firm to introduce FP in an industry gains the most benefit
Club Membership Programs
Either open to everyone who purchases a product or service
or limited to an affinity group
Open clubs are good for building a database or snagging
customers from competitors
Limited clubs are more powerful long-term loyalty builders
3. Personalizing Marketing
Company personnel can create strong
bonds with customers by individualizing &
personalizing relationships
The right technology is an essential
ingredient
E-Commerce companies are using
personalization than customized information
4. Creating Institutional Ties
Company may supply special equipment or
computer linkages to help customers manage
their orders, payroll, inventory and so on.
Customers are less inclined to switch if it
involves high capital costs, high search costs,
or the loss of loyal-customer discounts
Eg. McKesson Pharmaceutical Wholesaler

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