Chapter 5Creating Customer Value, Satisfaction, and Loyalty

Concepts and Applications

Jover S. ChavezMarketing Management

Ateneo School of Medicine and Public Health12 May 2010

Concept 1Creating loyal customers is at

the heart of every business.

Concept 1

•Kotler▫Cisco Systems

“Make your customer thecenter of your culture.”

Creating loyal customers is at the heart of every business.

•LOCAL▫The Medical City

Patient Partnership Patient on Center Stage

Concept 1

•MEDICAL APPLICATIONS▫loyal patients▫loyal patients▫loyal patients

Creating loyal customers is at the heart of every business.

Concept 2

•CUSTOMER PERCEIVED VALUE (CPV)▫(total customer benefit)

– (total customer cost)

•Customers will seek out superior alternatives.▫more educated and

informed

Customers are value maximizers.

Concept 2 Customers are value maximizers.•Kotler

▫Dell Inc. vs. Hewlett-Packard Co.

•LOCAL▫Globe vs. SMART

•MEDICAL APPLICATION▫physician shopping

Concept 3

•Kotler▫Volvo’s safety…and more

The value proposition consists of the whole cluster of benefits the

company promises to deliver.

•MEDICAL APPLICATIONS▫hospitals▫wellness centers

•LOCAL▫Starbucks▫Fitness First

Concept 4The value delivery system is the

manner in which all these promises are kept.

•Kotler▫Superquinn

•LOCAL▫Rustan’s

•MEDICAL APPLICATIONS▫hospitals▫wellness centers

Concept 5

•pleasure•disappointment

Satisfaction is a function of product performance and buyer

expectations.

•TOTAL CUSTOMER SATISFACTION (TCS)▫high satisfaction high customer loyalty▫both a goal and a marketing tool

Concept 5Satisfaction is a function of product performance and buyer

expectations.

•Kotler▫Joie de Vivre Hospitality Inc.

•LOCAL▫Windows, Mac

•MEDICAL APPLICATIONS▫surgeries▫medical tourism

Concept 6Quality is the totality of features

and characteristics that bear on its ability to satisfy needs.

•customer-centered definition▫meeting or exceeding customer

expectations•conformance quality•performance quality

Concept 6Quality is the totality of features

and characteristics that bear on its ability to satisfy needs.

•Kotler▫General Electric

•LOCAL▫adidas

•MEDICAL APPLICATIONS▫therapeutics▫physician competence

Concept 7

•Marketing is the art of attracting and keeping profitable customers.

The 150-20 Rule: The most profitable 20% of customers may contribute 150% of profitability.

Concept 7

The 150-20 Rule: The most profitable 20% of customers may contribute 150% of profitability.

•Kotler▫“Profit Tiers”

•LOCAL▫BPI

•MEDICAL APPLICATIONS▫insurance▫patient classification

Concept 8

•precision marketing▫vs. mass marketing

Maximizing customer value means cultivating long-term customer

relationships.

•CUSTOMER RELATIONSHIP MANAGEMENT (CRM)▫managing detailed information and “touch

points” to maximize loyalty

Concept 8 Maximizing customer value means cultivating long-term customer

relationships.•Kotler

▫Four Seasons

•LOCAL▫McDonald’s PlayPlace

•MEDICAL APPLICATIONS▫personalizing treatment

Concept 9

•build relationships, not just sales

•acquiring new customers costs more▫5x more than satisfying and

retaining•companies lose 10% of

customers annually•5% defection 25-85%

profits

Attract and retain customers,but retain more.

Concept 9 Attract and retain customers,

but retain more.•Kotler

▫cellular carriers

•LOCAL▫cellular carriers

•MEDICAL APPLICATIONS▫patient retention, word of mouth

Concept 10

•Marketers must know their customers.

CRM requires building a customer database and doing datamining

to detect trends, segments, and needs.

Concept 10 CRM requires building a customer database and doing datamining

to detect trends, segments, and needs.

•Kotler▫Novartis

•LOCAL▫Online Banking

•MEDICAL APPLICATIONS▫patient records (physician)▫hospital patient database

Concept 1Creating loyal customers is at

the heart of every business.

Chapter 5Creating Customer Value, Satisfaction, and Loyalty

Concepts and Applications

Jover S. ChavezMarketing Management

Ateneo School of Medicine and Public Health12 May 2010