Marketing Strategy Assignment 1 · Marketing Strategy Assignment 1 The Assignment… Critically...

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Marketing Strategy

Assignment 1

The Assignment…

Critically evaluate the role of the customer in formulating and influencing Marketing Strategy as presented by Piercy in his book ‘Market-Led Strategic Change’

You are required to illustrate your report with relevant examples using a company you are familiar with

Relevant Chapter for reading…

Chapter 2: pages 31-75 The customer is always right-handed:

customer satisfaction, customer sophistication

& market granularity

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TWO main parts to this chapter:

1.Contradictions in managing

customer satisfaction & loyalty

2.Examine shifts in markets which are

stretching our capabilities to adapt &

re-invent how we do business

The Customer Conundrum…

Saying you believe in customers –

but do not take the issue seriously…

In other words – treating customers

badly

Question…

Do you think that there is such a

thing as a bad customer?

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The Customer Is Right-Handed

• If companies do not care about customers, why should anyone else?

• Customer service is bad just about everywhere

– “we know better than the customer”

– “customers are stupid”

• What is it like dealing with our company?

– try the Service Encounter Diary

Customer Satisfaction & Customer Loyalty

• The goal is really customer loyalty/retention

because:

– retention enhances profitability dramatically

– costs of acquiring new customers are higher

than costs of retaining old customers

– it maximizes customer lifetime value

– the causes of customer defection are often

directly actionable

Customer Satisfaction and Customer Loyalty

• The result has been massive growth in

customer loyalty programmes

• There are two problems with this:

– customer satisfaction and customer

loyalty are not the same thing

Satisfaction is an attitude

Loyalty is a behaviour

– you cannot buy real loyalty that easily

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The Big Fat Lie - Satisfaction & Loyalty

• The big fat lie? ... that satisfied

customers will be loyal customers

• In most markets, customer

satisfaction drives loyalty only for

some customers, not all


• Customer loyalty is about how long

we keep a customer (or the share we

take of their business)

• Customer satisfaction is what people

think/feel about us


• Combining the behaviour (customer

loyalty) with the attitude (customer

satisfaction) identifies:

– Satisfied Stayers

– Happy Wanderers

– Hostages

– Dealers

– Defined on page 35 for you

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Customer Satisfaction V Customer Loyalty

Customer Loyalty

Customer

Satisfaction

High Low

High

Low

Satisfied

Stayers

Happy

Wanderers

Hostages Dealers

The Reality of Customer Satisfaction & Loyalty?

• Investments in customer satisfaction

produce loyalty only for a sub-set of

customers

• But customer dissatisfaction is a good

predictor of customer defection

• Satisfaction and dissatisfaction are

different things (not either end of the

same scale)

The Reality of Customer Satisfaction & Loyalty?

• We need to understand better why some

customers leave and others stay

• Avoid simplistic assumptions about customer

satisfaction and loyalty

• This is the basis for making effective

investments in customer satisfaction,

relationship marketing and loyalty programmes

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But Where Does That Leave Loyalty Programmes?

• Many loyalty schemes are crude and

simplistic - “plastic card syndrome”

• They are open to imitation, manipulation

and game-playing

• Many try to create Hostages not Satisfied

Stayers

• But the real issue is customer information

- and how well we use it

The Real Customer Problem

• Do we really know what service to

maximize - or do we invest in creating

“value” that customers do not want?

• Can we deliver what we promise?

• Can we track the impact of service and

quality on customer satisfaction?

The Real Customer Problem

• Have we become obsessed with the

trapping of customer service …

• … at the expense of focusing on the

substance of what drives value for our

customers?

• Do we measure customer satisfaction and

use it appropriately?

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Measuring Customer Satisfaction

• There are two important issues in

customer satisfaction measurement:

– how do you measure it?

– how do you use those measurements once

you have them?

Measurement Issues

• The technology of customer satisfaction measurement (CSM):

– developing different concepts of CS that can be evaluated

– designing effective data collection and reporting systems

– integrating CSM into organizational control systems

– developing systems for responding to dissatisfaction and customer complaints

In Practice ...

• What managers say about CSM is that:

– companies trivialize it

– it become part of interdepartmental power struggles

– people play political games

– it is used as crude management control to “punish” people

– the information is isolated not disseminated

– CSM is not accepted by the organization

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Research Suggests ...

• Internal barriers to the effective use of

CSM:

– internal politics (conflict and struggles for power)

– market simplification (CS does not really matter)

– customer fear (asking CS questions raises customer

expectations)

– corporate culture (CS is a low management priority)

– market complacency (we already know what customers

want)


• Internal barriers to the effective use of

CSM:

– resources/capability (too difficult)

– logistics (who is the real customer?)

– cost barriers (CSM is too expensive)

– perceived market drivers (specs and price drive

the market not CS)

– credibility (people do not believe the results)


• These internal barriers stand between

managerial uses of CSM data and the

impact on market strategies

• The real issue for making CSM effective

is not the technology but the people and

the culture in the company

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The Customer Satisfaction Measurement Process

Managerial Uses

of Customer Satisfaction

Measurement

Internal

Processual

Barriers

Market

Strategies

Quality/Operations Management Staff Pay and Promotions

Staff Training and Evaluation

Strategic Management Control

Internal politics Market simplification Customer fear Corporate culture Market complacency

Resources/capability Logistics Cost barriers Perceived market drivers

Credibility

Service and Quality Competitive differentiation

High Profit/ Volume

Low Cost/Price

Internal Markets and External Markets

• Ignoring the internal market (people in the

company) when we look at customer satisfaction:

– may reduce capability to deliver satisfaction in the

external market

– can destroy employee enthusiasm for superior customer

service

– generates “game-playing” to beat the system

• The challenge may be “marketing our customers

to our employees”


• If you compare internal customer (employee)

attitudes with external customer attitudes, you

may find:

– synergy

– coercion

– alienation

– internal euphoria

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Customer Satisfaction and the Internal Market

External Customer Satisfaction

Internal

Customer

Satisfaction

High Low

High

Low

Synergy

“Happy customers

and “happy”

employees

Internal Euphoria

“Never mind the

customer, what

about the squash

ladder?”

Alienation

“Unhappy”

customers

and “unhappy”

employees

Coercion

“You WILL be

committed to

customers -

or else….”


• Managers really need to know where they

are on this issue

• Employee “buy-in” is a powerful

resource - but do you have it?

• Implemented badly, customer satisfaction

measurement may do more harm than

good in building superior customer value

The Sophisticated Customer…

Page 48:

‘The reason why marketing has to change

is because customers and markets have

changed’

Page 49:

‘Customers everywhere have wised-up’

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• Consumer market changes: page 62

• The typical family

• By 2021 a third of UK households will be

living alone – ‘solo pound’

• Women – key breadwinners

• Men becoming husbands/fathers later

• LAT’s

RC: Greetings Cards…page 62/63

• ‘For Mummy and Daddy On Your

Wedding Day’

• ‘Congratulations On Your Divorce’

• ‘Happy Christmas to Mum and

Boyfriend’

• The world has changed and greetings

cards messages reflect this change



• The MySpace generation

• The young who live online

• Saga louts

• SKIers, WOOFies

• The pink market

• ‘Womenomics’ – increased purchasing power

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• The wealthy

• The poor

• The ethnic markets

• The green and ethical consumer

• The Neo-Cromwellians

• Scared consumers

Key Learning Points - The Customer Conundrum

Many organizations have not come as far as

they think in getting better at delivering the

service their customers want

Managers have a responsibility to know

what it feels like to be a customer of their

company

Enhanced customer loyalty/retention brings

major advantages


Customer satisfaction and loyalty are not

the same thing - do not assume they are

when you look at marketing investments

Customer satisfaction and customer

dissatisfaction are not the same thing -

they are influenced differently - so treat

them differently

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Loyalty programmes are not about loyalty,

they are about information

You need to know what level and type of

customer service matters to different

customers, and not maximize service that does

not create customer value

Measuring customer satisfaction is a way

forward


Using CSM effectively means taking

seriously a range of internal company and

process barriers

In many situations, satisfying external

customers means satisfying internal

customers first (but not exclusively!)

The Assignment…

Critically evaluate the role of the customer in formulating and influencing Marketing Strategy as presented by Piercy in his book ‘Market-Led Strategic Change’

You are required to illustrate your report with relevant examples using a company you are familiar with

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Specifically…

Critically evaluate the role of the customer in formulating and influencing Marketing Strategy

Piercy -‘Market-Led Strategic Change’

Illustrate your report with relevant examples

Pages 60-61…

Patricia Seybould…

…Managers no longer determine

the destiny of the company –

customers do

So – a good grade?

Address the question

A variety of academic sources

Good Harvard Style

Well compiled Bibliography

A good match with references and

the Bibliography

Marketing Strategy Assignment 1 · Marketing Strategy Assignment 1 The Assignment… Critically...

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