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Transcript of 1 Marketing Management (Text book Chapter) Members #04Ms.Tanawan K. #08Mr.Noppadol S....
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Marketing Marketing ManagementManagement(Text book(Text book Chapter)Chapter)
MembersMembers
#04#04 Ms.Tanawan K.Ms.Tanawan K.
#08#08 Mr.Noppadol S.Mr.Noppadol S.
#10#10 Mr.Chonlakon B.Mr.Chonlakon B.
#11#11 Ms. Tippawan S.Ms. Tippawan S.
#13#13 Ms. Panpilas P.Ms. Panpilas P.
#18#18 Ms. Atchara N.Ms. Atchara N.
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Building Building Customer Customer SatisfactionSatisfaction, Value, and , Value, and Retention Retention
(Chapter 2)(Chapter 2)
33
Author BiographyAuthor Biography
Philip KotlerPhilip Kotler
His book “Marketing Management” is referred His book “Marketing Management” is referred to as the Bible of Marketingto as the Bible of Marketing
He is the S. C. JohnsonHe is the S. C. Johnson & Son Professor of & Son Professor of International Marketing at the Kellogg School International Marketing at the Kellogg School of Management, Northwestern Universityof Management, Northwestern University
It is rated as the “Best Business School for the It is rated as the “Best Business School for the Teaching of Marketing”Teaching of Marketing”
He received Master’s Degree at The University He received Master’s Degree at The University of Chicago and PhD at MIT, both in economicsof Chicago and PhD at MIT, both in economics
He did post-doctoral work in mathematics at He did post-doctoral work in mathematics at Harvard UniversityHarvard University
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Why do companies need to get Why do companies need to get customer satisfaction?customer satisfaction?
Now companies are facing their Now companies are facing their toughest competition.toughest competition.
A lot of competitors emergences in the A lot of competitors emergences in the same industriessame industries
Today’s customers have variety of Today’s customers have variety of products and brand choicesproducts and brand choices
Believing that customers estimate Believing that customers estimate which offer will deliver the most valuewhich offer will deliver the most value
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Customer ValueCustomer Value
Customer delivered valueCustomer delivered value1.1. Total customer valueTotal customer value
the bundle of benefit that customers the bundle of benefit that customers expect from given product or expect from given product or service.service.
2.2. Total Customer costTotal Customer cost
the bundle of cost customers expect the bundle of cost customers expect to incur in evaluating, obtaining, to incur in evaluating, obtaining, using, and disposing.using, and disposing.
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Determinants of customer delivered Determinants of customer delivered valuevalue
Image value
Personnel value
Product value
TotalCustomer value
Psychic cost
Time cost
Monetary cost
TotalCustomer cost
Customer Delivered value
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Customer satisfactionCustomer satisfaction
Person’s feelings of pleasure or Person’s feelings of pleasure or disappointment resulting from comparing a disappointment resulting from comparing a product’s perceived performance in relation product’s perceived performance in relation to his or her expectationsto his or her expectations
Perf
orm
anc
eExpect
ati
on
Perf
orm
ance
Expect
ati
on
Perf
orm
ance
Expect
ati
on
Dissatisfied
Satisfied Highly satisfied
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Four methods to track customer Four methods to track customer satisfactionsatisfaction
1.1. Complaint and suggestion systemComplaint and suggestion systemEasy for its customers to deliver suggestions and complaints Easy for its customers to deliver suggestions and complaints such as suggestion form, hot lines, e-mailsuch as suggestion form, hot lines, e-mail
2.2. Customer satisfaction surveysCustomer satisfaction surveysAlthough customers are dissatisfied, less than 5 percent of Although customers are dissatisfied, less than 5 percent of dissatisfied customers will complaindissatisfied customers will complain
3.3. Ghost shoppingGhost shoppingHire persons to pose as potential buyers to report on strong and Hire persons to pose as potential buyers to report on strong and weak pointsweak points
4.4. Lost customerLost customerContact customers who have stopped buying or switched to Contact customers who have stopped buying or switched to another suppliers to learn why this happenedanother suppliers to learn why this happened
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The Nature of High Performance The Nature of High Performance BusinessBusiness
Set Strategies to satisfy key stakeholders…
… and aligning resources and organization.
… by improving critical business processes…
ResourcesResources OrganizationOrganization
StakeholdersStakeholders
ProcessProcess
Keys to Success High Performance Keys to Success High Performance BusinessBusiness
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Keys to Success Keys to Success High Performance BusinessHigh Performance Business
The companies must be defined their The companies must be defined their stakeholder and their needstakeholder and their need
In Traditional companies, pay attention In Traditional companies, pay attention to satisfy their stockholdersto satisfy their stockholders
High-Performance companies, take good High-Performance companies, take good care of ;care of ;
CustomersCustomers EmployeesEmployees SuppliersSuppliers DistributorDistributor
s s
StakeholdersStakeholders
ProcesProcesss
ResourceResourcess
OrganizationOrganization
StakeholdersStakeholders
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Keys to Success Keys to Success High Performance BusinessHigh Performance Business
Traditional : Traditional : work flow from work flow from Department to Department to DepartmentDepartment
High-Performance :High-Performance :use linking work use linking work processesprocesses
StakeholdersProcessProcess
ResourcesResources OrganizatioOrganizationn
ProcessProcess
Reengineering Reengineering work flowwork flow
Building cross-Building cross-functional teamfunctional team
Improvement of Improvement of core businesscore business
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Keys to Success Keys to Success High Performance BusinessHigh Performance BusinessResourcesResources
Traditional : Traditional : usually owned usually owned and controlled and controlled company’s company’s propertiesproperties
High-Performance :High-Performance :use use
““outsources outsources service”service” better quality better quality lower costlower cost
““core competence”core competence” competitive competitive
advantageadvantage being significantbeing significant
StakeholdersProcessProcess
ResourceResourcess
OrganizatioOrganizationn
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Keys to Success Keys to Success High Performance BusinessHigh Performance BusinessOrganizationOrganization & Organization Culture& Organization Culture Company’s organization consists ofCompany’s organization consists of its
structures, policies and “corporate culture” Corporate culture is “the shared experiences,
stories, beliefs, and norms that characterize an organization”
Encourage company organization to be “visionary company” or “comparison company”
Successful companies may need to adopt a new view to craft their strategy“High-performance companies are set up to deliver value and
satisfaction”
Stakeholders
ProcessProcess
OrganizatioOrganizationn
ResourcesResources
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Delivering customer value and Delivering customer value and satisfactionsatisfactionVALUE CHAINVALUE CHAIN It identifies nine activities that create value and cost in a It identifies nine activities that create value and cost in a
specific business.specific business.
The Five Primary Activities are:The Five Primary Activities are:
1.1. Inbound logistics Inbound logistics – bringing materials into the business– bringing materials into the business
2.2. OperationsOperations – converting them into final products – converting them into final products
3.3. Outbound logistics Outbound logistics – shipping out final products– shipping out final products
4.4. Marketing and sales Marketing and sales – marketing them– marketing them
5.5. ServiceService – servicing them – servicing them
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Delivering customer value and Delivering customer value and satisfactionsatisfactionVALUE CHAINVALUE CHAIN
The Four Support Activities are:The Four Support Activities are:
1.1. ProcurementProcurement
2.2. Technology developmentTechnology development
3.3. Human resource managementHuman resource management
4.4. Firm infrastructureFirm infrastructure
The firm task is to examine its cost and performance in each value-The firm task is to examine its cost and performance in each value-creating activity and to look for the ways to improve it.creating activity and to look for the ways to improve it.
The firm’s success depends on how well each department performs its The firm’s success depends on how well each department performs its work and how well the various activities are coordinated.work and how well the various activities are coordinated.
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Delivering customer value and Delivering customer value and satisfactionsatisfactionSUPPLY CHAIN or Value-Delivery NetworkSUPPLY CHAIN or Value-Delivery Network
Competition is between Competition is between networksnetworks, not companies. , not companies. The winner is the company with the better network.The winner is the company with the better network.
Delivery Custome
rsSuppliers
Distributors
Delivery
Order Order
Attracting and Retaining Attracting and Retaining CustomersCustomersATTRACTING CUSTOMERSATTRACTING CUSTOMERSCompanies have to spend considerable time and resources searching forCompanies have to spend considerable time and resources searching for
new customers in order to grow their profits and sales.new customers in order to grow their profits and sales.
Customers AcquisitionCustomers Acquisition Lead Generation Lead Generation – advertising, sending direct mail, – advertising, sending direct mail,
making phone callsmaking phone calls Lead QualificationLead Qualification – interviewing, checking on their – interviewing, checking on their
financial standingfinancial standing Account ConversionAccount Conversion – making presentations, answering – making presentations, answering
objections, negotiating final termsobjections, negotiating final terms
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Attracting and Retaining Attracting and Retaining CustomersCustomersCOMPUTING THE COST OF LOST CUSTOMERSCOMPUTING THE COST OF LOST CUSTOMERS The companies must pay attention to the rate that they lose The companies must pay attention to the rate that they lose
customers customers ((customer defection rate)customer defection rate). .
There are There are fourfour steps in trying to reduce the defection rate: steps in trying to reduce the defection rate:
1.1. Define and measure its retention rate.Define and measure its retention rate.
2.2. Distinguish the causes of customer attrition and identify Distinguish the causes of customer attrition and identify those that can be managed better.those that can be managed better.
3.3. Estimate how much profit it loses when it loses customers.Estimate how much profit it loses when it loses customers.
4.4. Figure out how much it would cost to reduce the defection Figure out how much it would cost to reduce the defection rate.rate.
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Attracting and Retaining Attracting and Retaining CustomersCustomersTHE NEED FOR CUSTOMER RETENTIONTHE NEED FOR CUSTOMER RETENTION Building relationshipsBuilding relationships Caring for the customers afterwardCaring for the customers afterward The key to customer retention is The key to customer retention is customer satisfactioncustomer satisfaction.. The company should measure customer satisfaction The company should measure customer satisfaction
regularly.regularly. The company must listen and respond quickly to the The company must listen and respond quickly to the
complaints.complaints.
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Attracting and Retaining Attracting and Retaining CustomersCustomersTHE NEED FOR CUSTOMER RETENTIONTHE NEED FOR CUSTOMER RETENTION
The importance of satisfying and retaining current customersThe importance of satisfying and retaining current customers Acquiring new customers can cost five times more than Acquiring new customers can cost five times more than
the costs involved in satisfying and retaining customers.the costs involved in satisfying and retaining customers. The average company loses 10% of its customers each The average company loses 10% of its customers each
year.year. A 5% reduction in the customer defection rate can A 5% reduction in the customer defection rate can
increase profits by 25% to 85%.increase profits by 25% to 85%. The customer profit rate tends to increase over the life of The customer profit rate tends to increase over the life of
the retained customerthe retained customer
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Relationship MarketingRelationship MarketingThe customer development processThe customer development process
Suspects
Disqualified Disqualified prospectsprospects
Partners
Prospects
Repeat customers
Advocates
Members
ClientsInteractive Interactive
or or ex-customersex-customers
First time customers
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Five different levels of Five different levels of investment in customer-investment in customer-relationship building:relationship building:
1.1. Basic marketingBasic marketing
2.2. Reactive marketingReactive marketing
3.3. Accountable marketingAccountable marketing
4.4. Proactive marketingProactive marketing
5.5. Partnership marketingPartnership marketing
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The likely level of relationship The likely level of relationship marketingmarketing
Many Many customers/ customers/ distributorsdistributors
AccountableAccountable ReactiveReactive Basic or Basic or ReactiveReactive
Medium Medium number of number of customers/customers/distributorsdistributors
ProactiveProactive AccountableAccountable ReactiveReactive
Few Few customers/ customers/ distributorsdistributors
PartnershipPartnership ProactiveProactive AccountableAccountable
High margin Medium margin Low margin
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Three value-building Three value-building approachesapproaches
Adding financial benefitsAdding financial benefits
- Frequency marketing programs - Frequency marketing programs (FMPs)(FMPs)
- Club membership program- Club membership program
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Three value-building approaches Three value-building approaches (con’t)(con’t)
Adding social benefitsAdding social benefits Social actions affecting buyer-seller relationshipSocial actions affecting buyer-seller relationship
Good thingsGood things Bad thingsBad thingsInitiative positive phone calls Initiative positive phone calls Make only callbacksMake only callbacksMake recommendationMake recommendation Make justificationMake justificationCandor in languageCandor in language Accommodative Accommodative
languagelanguageUse phoneUse phone Use correspondenceUse correspondenceShow appreciationShow appreciation Wait fir misunderstandingsWait fir misunderstandingsGet to problemsGet to problems Only respond to Only respond to
problemsproblemsRoutinize responsesRoutinize responses Fire drill and Fire drill and
emergency emergency responsivenessresponsiveness
Accept responsibilityAccept responsibility Shift blameShift blamePlan the futurePlan the future Rehash the pastRehash the past
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Adding structure tiesAdding structure ties- To supply customers with special To supply customers with special
equipment or computer linkages that equipment or computer linkages that help customers manage their order, help customers manage their order, payroll, inventory, and so onpayroll, inventory, and so on
- To provide proprietary software To provide proprietary software programs, marketing research, sale programs, marketing research, sale training, and sales leads to loyal training, and sales leads to loyal customerscustomers
Three value-building approaches Three value-building approaches (con’t)(con’t)
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Customer ProfitabilityCustomer Profitability
Marketing is the art of attracting and Marketing is the art of attracting and keeping profitable customers.keeping profitable customers.
A profitable customer A profitable customer isis a person or a person or company that over time yields a company that over time yields a revenue stream that exceeds by an revenue stream that exceeds by an acceptable amount the company’s acceptable amount the company’s cost stream of attracting, selling, and cost stream of attracting, selling, and servicing that customer.servicing that customer.
Customer ProfitabilityCustomer Profitability
In order to determine if a client is truly In order to determine if a client is truly profitable, many different factors must be profitable, many different factors must be taken into consideration, taken into consideration, including the including the cost of sales efforts efforts, commissions, commissions paid on the paid on the revenue generated by the customer, and the revenue generated by the customer, and the wageswages, , timetime, and equipment expended in , and equipment expended in maintaining maintaining customer service and support. and support.
It is possible for a profitable customer to It is possible for a profitable customer to become unprofitable over time, if the volume become unprofitable over time, if the volume of business is reduced and the client of business is reduced and the client demands more attention.demands more attention. 2929
The Ultimate TestThe Ultimate Test
The 80-20 rule (Pareto's Principle)The 80-20 rule (Pareto's Principle) Vilfredo Pareto created the mathematical Vilfredo Pareto created the mathematical
formula to describe the unequal distribution formula to describe the unequal distribution of wealth in his countryof wealth in his country
The 80% of income in Italy was received by The 80% of income in Italy was received by 20% of the Italian population.20% of the Italian population.
How to apply with marketing?How to apply with marketing? The top 20% of the customer may generate The top 20% of the customer may generate
as much as 80% of the company’s profits.as much as 80% of the company’s profits.3030
The Ultimate TestThe Ultimate Test
The 20-80-30 ruleThe 20-80-30 rule The 20 % of customers bring 80 % of the The 20 % of customers bring 80 % of the
revenue of which 30% is spent for revenue of which 30% is spent for maintaining the bottom line customers maintaining the bottom line customers (unprofitable customers).(unprofitable customers).
It is important to find out which customers It is important to find out which customers are the 20% best customers for the company, are the 20% best customers for the company, so that we can treat them differently in order so that we can treat them differently in order to acquire, upgrade and retain them.to acquire, upgrade and retain them.
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The 20-80-30 ruleThe 20-80-30 rule
Percentage Profit Income (THB)
100% 5 million
20% 4 million
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70% profit
30% non-profit
The Ultimate TestThe Ultimate Test
How to overcome 30% of non-profit?How to overcome 30% of non-profit?
There are 2 optionsThere are 2 options
(1). Increase the price of its less profitable(1). Increase the price of its less profitable
products or eliminate themproducts or eliminate them
(2). Try to sell its profit-making products to (2). Try to sell its profit-making products to the the
unprofitable customers.unprofitable customers.
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ImplementingImplementing Total Quality Total Quality ManagementManagement
Total quality management Total quality management (TQM)(TQM)
It is an organizational approach to It is an organizational approach to improve the quality of all improve the quality of all organization ‘s process, product, organization ‘s process, product, and service.and service.
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Marketing ManagersMarketing Managers
Formulate strategies and policies Formulate strategies and policies to help company win through to help company win through total quality excellence.total quality excellence.
Deliver marketing quality Deliver marketing quality alongside production quality.alongside production quality.
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MarketersMarketers Bear responsibility for identifying the Bear responsibility for identifying the
customers’ needs and requirement. customers’ needs and requirement. Communicate customer expectations properly Communicate customer expectations properly
to product designers.to product designers. Make sure the customers’ orders are filled Make sure the customers’ orders are filled
properly and on time.properly and on time. Check whether the customers have received Check whether the customers have received
proper technical assistance in the use of proper technical assistance in the use of product.product.
Stay in touch with the customers after the sale Stay in touch with the customers after the sale to make sure whether they are satisfied.to make sure whether they are satisfied.
Gather customer ideas for product and service Gather customer ideas for product and service improvement.improvement.