BLAME IT ON THE CONSUMERS.

A NEW, MORE ANALYTICAL

MARKETING MODEL IS NEEDED,
ONE THAT SHEDS MORE LIGHT ON THE MYRIAD OF
CUSTOMER NEEDS
AND UNDERSTANDS THE VALUE OF RELATIONSHIPS.”

Loy alt y – A Ma rk eter s C o n u n d r u m

Group 5 Mukta(28), Ankit(29), Manjith(31), Somya(33), Varun(34)
Presentation Outline

1)Types of customer
2)What is a Loyal Customer
3)What drives customer loyalty today
4)Why talk about Loyalty
5)Customer Life Cycle
6)Types of loyalist
7)Product hierarchy
8)Success/Failure stories
9)Proposed model
10)
11)
12)
13)
14)
15)
Types of customer
 Loyal Customers: They represent no more
than 20 percent of our customer base, but
make up more than 50 percent of our sales.
 Discount Customers: They shop our stores
frequently, but make their decisions based on
the size of our markdowns.
 Impulse Customers: They do not have buying
a particular item at the top of their “To Do” list,
but come into the store on a whim. They will
purchase what seems good at the time.
 Need-Based Customers: They have a specific
intention to buy a particular type of item.
 Wandering Customers: They have no specific
need or desire in mind when they come into
the store. Rather, they want a sense of
experience and/or community.
 What is a Loyal Customer

 Definition: Customers with a long record

of repeat purchases from a preferred
provider caused by their psychological
and emotional bond with that provider.

Loyal customer
 Loyalty
 A deeply held commitment to re-
buy or re-patronize a preferred product
or service in the future despite situational
influences and marketing efforts having
the potential to cause switching.
 Satisfaction
 A person’s feelings of pleasure or
disappointment
resulting from comparing a product’s perc
eived performance
Loyalty and Satisfaction:

Zone of indifference
 What drives customer loyalty today ?

Complete
Customer
“ Relationship ” Cu
st
Custome Experience e
Pe r m
o
r cost r
of ve cei
using va d
lu
your e
product

P rim a ry PService Brand ** Relationshi

d riv e rs
Price * p

•Purchase price •P h y s ica l p ro d u ct •E th ics •L o y a lty P ro g ra m s

•Effort •S e rv ice p ro d u ct •Im a g e •C o B ra n d s
•Time •S e rv ice d e liv e ry •R e p u ta tio n •A llia n ce s
•S e rv ice •P o sitio n in g •S p e cia l tre a tm e n t
e n v iro n m e n t •A ffin ity
• •C u sto m e r
co m m u n ity
Customers want an end - to - end relationship experience
Why talk about Loyalty

 Mature Industry
 Increasing competition


 Focus on getting more customers

 Market share Vs. share of customer


 Competitive advantage
 Price
 Service quality
 Loyal relationships
Customer Life Cycle (CLC):
Why are loyal customers more
profitable?

 They buy more (revenues)

 They are less costly to serve (cost)
 They pay higher prices
 They generate more Word-of-mouth

Price Premium
Referrals
Reduced Operating Costs
Increased Purchases

Base Profits
1 2 3 4 5 6
Years
Cost of Acquisition
Source: F. Reichheld & T.A. Teal (1996), The Loyalty Effect.
Loyalty Status
 Market may be segmented by
customer loyalty patterns. Loyalty could
be for


 Product/Brand.(People buying same

soap/tooth paste)

 Store/Shop. (People buying from
Shopper’s stop)

 Manufacturer. (People buying cars made by
Maruti)

Types of loyalist:
Types of Loyal Customers
+ Frequency of Purchases -
+

Hard Core Split loyal

loyal
Attachment

Shifting Loyal Switchers

-
Some useful Stats:
Varying Levels of Brand Loyalty in Different
Product Categories
Factors affecting brand
loyalty



 What is a product?
 Any offering by a company to a market
that serves to satisfy customer needs
and wants.
 It can be O b je ct


Id e a

S e rvice
Product Hierarchy
Product Family

 Group of products derived from the same

platform.
 Several product families form Product Line
 Brand
 A name becomes a brand when
consumers associate it with a set of
tangible and intangible benefits that
they obtain from the product or
service
 It is the seller’s promise to deliver the

same bundle of benefits/services

consistently to buyers

 Shampoos are a Product Line

Dandruff control shampoos are a Product Type 

A sachet of Clinic All Clear is

an example of an Item

Clinic All Clear is a Brand

BRAND LOYALTY
INITIATIVES
 Jet Airways Frequent Flyer 
 Vodafone- Zoo Zoo 
 K-Series –Balaji Telefilms 


Success Stories- Jet Airways
Frequent Flyer

A d d e d a d va n ta g e s
A d d itio n a lLu g g a g e
Prio rity Ta g g in g
Lo u n g e A cce ss
G u a ra n te e d R e se rva tio n s



 Success Stories- Vodafone
Zoo Zoo
O n e o f th e m o st su cce ssfu l
m a rke tin g ca m p a ig n s is Z O O
Z O O ca m p a ig n b y V o d a fo n e
E ssa r.
It la u n ch e d a n o n lin e co n te st
fo r V o d a fo n e cu sto m e rs,
ch riste n e d th e 'C o m p le te th e
Z o o zo o S to ry' to b e h o ste d o n
b o th Fa ce b o o k a n d V o d a fo n e 's
o fficia l In d ia w e b site .
Tie U p w ith S h o p p e rs S to p
O fficia l Fa n C lu b
C a le n d a rs and o th e r
a cce sso rie s a n d m e rch a n d ise
Failure: K Serials
 Initially Super Hit
 Took Customer Survey and changed the
story according to that
 Extended them too long against the
customer wishes
Failure: K Serials
Proposed Loyalty Model
Building Loyalty
 Interact with customers
 Good customer relationship
 Develop loyalty programs
 Frequency programs
 Club membership programs

 Focus on customer delight

 Create institutional ties
 Utilize the Advertising Mediums
Marketing model for a brand
Conclusion:
Customers new perspective of Rewards
( Loyalty ) ---- Immediate gratification
1.Cash value
---- More Choice
2.Redemption
---- Feel Good factor
options
3.Aspiration
---- Does it make sense
value
---- Ease of availing reward
4.Relevance
Loyalty initiatives are not short5.Convenience
term marketing tools. They should
•deliver tangible value in proportion to the value the customer brings to the
company
•offer right mix of Product, Price, Service Delivery & Relationship benefits
•Communication to be transparent, timely and focused
•Consistent across all customer touch points
Loyalty initiatives must also be profitable
•Treat profitable and unprofitable customers differently
•Get your metrics in place ---- measure costs & returns


 Thank
You
