PRIN OF MARKETING
PRIN OF MARKETING MKT 301
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This 20 page Class Notes was uploaded by Vinnie Haley on Saturday September 26, 2015. The Class Notes belongs to MKT 301 at Clemson University taught by James Gaubert in Fall. Since its upload, it has received 83 views. For similar materials see /class/214201/mkt-301-clemson-university in Marketing at Clemson University.
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Date Created: 09/26/15
Chapter 6 Perspective on Consumer Behavior I Consumer Behavior Consumer Behavior dynamic interaction of affect and cognition behavior and the environment in which human beings conduct the exchange aspects product and service purchases of their lives Consumer behavior represents psychology of marketing Psychology involves study of the mind Social Psychology process used to understand social phenomena and their in uences on social behavior Theory of Planned Behavior social psychology theory attempts to explain how attitudes behaviors and norms in uence consumer behavior Decision making process combination of rational and emotional factors Consumer behavior involves shopping process itself 0 Relationship w product and company evolve 0 Individual amp societal perceptions of product change 0 Relationship w product develops over time 11 Consumer Decision Making Process Consumer DecisionMaking Process steps that consumers take to identify and evaluate choice options high and low involvement High Involvement cognitive amp verbal processs left brain processing significant decision being made Low Involvement links to brain pathways that have already been formed low risk purchases Decision Making Process 1 Problem Opportunity Recognition needwant is determined 2 Info Search involve exploring different sources of info to f ful ll needwant 3 Evaluation of Alternatives 4 Purchase Decision 5 Post purchase evaluation using consumer behavior optimizes the effectiveness effectiveness can be either enhanced or limited by product category as well as interest level of consumers Three Categories of Products 1 Approach consumers gain enjoyment from 2 Avoidance products not regularly consider unless product would reduce likelihood of something unpleasant happening 3 Utilitarian products neither enjoyed nor used as a precaution Consumer purchase decision are in uenced by personal psychological situational and social factors a Personal In uences on Decision Making Selfidentity personality lifestyle age and life stage vocation and level of af uence Selfidentity individual s understanding that he or she is unique Has been shown to predict intentions which extend to purchase behavior Personality sense of consistency internal causality and personal distinctiveness Expressed through patterns of behavior Lifestyle way of life that individuals express by choosing how to spend their time and personal resources Expressed though choices Life Stage similar life events experienced by a group of individuals of varying chronological and cognitive ages Af uence determines the opportunity to purchase certain products or services or limitations consumer decision making process for luxury item focuses on items meaning to consumer not physical presence Emotional Factors that in uence Af uent Purchase Decision Process 1 Adventure Journey of Reinvention 2 Desire to foster health and wellness 3 Connecting and Building Personal Relationships b Psychological In uence on Decision Making perception motivation attitudes and beliefs learning Perception cognitive impression of incoming stimuli that in uences the individual s actions and behaviors stimuli are generated through the senses stimuli are processed overtly can also be processed subconsciously Subliminal Perception processing of stimuli by a recipient who is not aware of the stimuli being received Motivation set of conditions that create a drive toward particular action to fulfill a need or want Motivation involves working from the inside out to match current conditions to a desired condition Attitude state of readiness based on experience that in uences a response to something Three components of attitudes what one feels what one does what one knows Belief sense of truth about something what individuals know can in uence attitudes Learning knowledge that is acquired through experiences Learning Process Drive internal stimulus that encourages action E environmental stimulus that in uences particular action Response Consumer s reaction to drive amp cues Reinforcement reduction in drive resulting from positive experience used to create positive customer experience amp loyalty c Situational In uence on Decision Making Purchase environment Digital environment Time Context d Social In uence on Decision Making Culture subculture global groups social class gender roles family Culture shared values beliefs and preferences of a particular society Subcultures groups of people within a broader society who share similar behaviors and values 5 dimensions of Differentiating Cultural Values 1 Power Distance 2 Uncertainty Avoidance 3 Individualism vs Collectivism 4 Masculinity vs Feminity 5 Longterm vs ShortTerm Orientation Chapter 7 Consumer Insight I Consumer Insight Consumer Insight is perceived meanings of data collected from the study of consumer behavior Its insight about consumers Includes a broad range of info that is obtained and interpreted to create detailed perspectives on customers Insight de ned as the act or result of apprehending the inner nature of things or seeing intuitively Consumer Market Insight an indepth understanding of customer behavior that is more qualitative than quantitative describes role played by the productbrand in question in the life of its consumers holistic approach responsibility for consumer insight is typically assigned to marketing strategy departments Knowledge Management Consumer Innovation Marketing Intelligence Marketing Research to Consumer Insights Bene ts of understanding consumer insight Responsive product development process Targeted marketing strategies Ef ciency through supply amp demand II Marketing Research Marketing Research acquisition and analysis of information used to identify and de ne marketing opportunities that connect consumers to marketers lSt marketing research project 1879 NW Ayer amp Son lSt continuous study Charles Parlin Curtis Publishing Co Research studious inquiry or examination investigation experimentation aimed at the discovery and interpretation of facts either applied or pure Applied Research attempts to answer questions related to practical problems Pure Research attempts to expand understanding of the unknown Two types of marketing research consumer or business to business Purpose of marketing research is to help decision makers make better decisions Marketing research produced info info most valuable when its translated into consumer insight Uses of Marketing Research id amp de ne marketing opportunities and problems generate re ne and evaluate marketing actions Monitor marketing performance Improve understanding of marketing as a process Major concern regarding internet market research is ability to translate results obtained from Internet to generate population 5 major steps in Marketing Research Process 1 De ne the problem 2 Design the research 3 Conduct the research 4 Analyze the Research 3 5 Address the problem in a research report Research gmestion question the research is designed to answer Developing the problem statement involves considering the known facts as they relate to what is occurring and why Isolating symptoms from causes a Design the Research id any available info that may assist in answearing all or part of the question might be previous research research conducted by others Two classi cation of info sources primary amp secondary Primary Data info that is collected to address a current research question surveys Seconda Data information that has been previously collected for another purpose comes from a wide range of sources Syndicated Research information collected on a regular basis using standardized procedures and sold to multiple customers from a related industry Research Desigp framework or plan for a study that guides the collection and analysis of the data Three types of Research Design Exploratory Research marketing research design used to generate ideas in a new area of inquiry useful in dividing a broad research problem into smaller problems Descriptive Research marketing research design that is used to describe marketing variables by answering who what when where and how questions more structured than exploratory research EXplanatog Research marketing research designed used to understanding the 39 quot 39 391 between 39 J J J and J r J variables aka casual research used to further study relationships Qualitative Research collection of techniques designed to identify and interpret information obtained through the observations of people subjective Quantitative Research process to collect a large number of responses using standardized questionnaire where the result can be summarized into numbers for statistical analysis Qualitative Research Techniques Focus Groups collection of small of ppl who were recruited using specific criteria with the purpose to discuss predetermined topics Structured Interviews series of discussions held oneon one EthnogIaphic research type of observational research where researchers immerse themselves in a specific consumer environment appropriate research technique depends on scope of project capabilities of moderator project timeline lnding Data collection Options for Quantitative Research Telephone In Person Mail Online Primary Motivations for Web use by consumers are Researching Shopping Socializing Sur ng Internet Research Panel quot quot of 39 J39 39J 39 who agree for some predetermined incentive to participate in questionnaires on a variety of topics as determined by the owner and manager of the panel probability sampling not used to recruit members Aspects of Panel Management Panelist relationship management Incentive program development amp admin Maintaining historical record Monitoring completion rates amp response times Cleaning and Refreshing the panel Periodic Reprofiling Regular reporting on composition amp response rates Compliance w laws and regulations telephone to intemet Question structure contribute to bene ts of Internet research Measurement process of quantifying how much one variable s set of features or characteristics are possessed in another variable Measurement plan involves two primary elements 1 Determining properties that best represent the concept being studied from the research question 2 Determining the appropriate scale to measure questions about the concept Four Types of Scales Nominal measurement in which numbers are assigned to characteristics of objects or groups of objects solely for identifying the objects Ordinal Scale measurement in which numbers are assigned to characteristics of objects or groups of objects to re ect the order of the objects Interval Scale measurement in which numbers assigned to the characteristics of the objects or groups of objects legitimately allow comparison of the size of the differences among and between objects used for satisfaction levels Ratio Scale measurement in which the numbers assigned to the characteristics of the object have an identifiable absolute zero Questionnaire organized set of question that a researcher desires respondents to answer Questionnaires Performed Range of Functions Keeping respondents motivated to complete the survey Translating research objectives into research questions Providing a consistent question format for each respondent Facilitating ease of data analysis ClosedEnded Question specific survey answer choices available to respondents Coding numbering of the answer choices for each question in closedended question OpenEnded Question allows for unrestricted survey responses after determining the individual question structure overall design of questionnaire must be considered Primary elements of a questionnaire including the following Introduction an overview that introduces the general context of the survey Screening If any restrictions exist on the desired respondents for the survey WarmUp opening questions that determine general knowledge of the topic of the questionnaire Body Main collection of survey question Classi cation Question questions that group respondents into various categories such as age income gender or level of education Sample Plan can represent opinion of broader population Sample de ned as a speci c part of the population that is selected to the represent the population Population total group of individuals that meet the criteria being studied Census Survey that collects response for each member of the population Sample Plan identi es who will be sampled how many people will be sampled and the procedure that will be used for sampling Sample Error refers to any differences between the sample results and the actual results that would emerge from a census of the population Sampling Procedure involves selecting either a probability sample or a nonprobability sample as pa1t ofyour sample plan Probability Sample procedure whereby each member of a population has a known and non zero chance ofpossibly being selected to a sample Simple random sample equal chance of being selected Systematic sample skip interval used from a list Strati ed Sampling population is subdivided into speci c groups Nonprobability Sample procedure whereby each member of a population does not have an equal chance Convenience sample samples created out of convenience Purposive sample judgment is used to create the sample based on perception Snowball sample where 1 r J help id 39 J r J for the sample Quota sample predetermined categories are used to identify respondents based on that predetermined criteria Nonsampling Error any bias that emerges in the study for an reason other than sampling error Validity strength of the conclusion Reliability level of consistency III Marketing Information System Marketing Information System a series of steps that include collection analysis and presentation of information for used in making marketing decisions Management information system is a set of producers and methods for the regular planned collection analysis and presentation of information used in making management decisions Marketing IS is intended to bring together various streams of marketing data within an organization 4 Primary Elements of Marketing Information System 1 Internal company data 2 Marketing intelligence systems 3 Marketing decision support system 4 Marketing Research Systems Marketing Intelligence System system that gathers processes assess and makes available marketing information in a format that allows the marketing activity to function more effectively assist in strategic planning and policy development Competitive Intelligence involves systematic tracking of competitive actions and plans and is a significant activity within a business Marketing Decision Support System MDSS software and associated infrastructure that connect the marketing activity to a company database contains analytical tools to provide critical data to decision makers Marketing Research System collection of the results of marketing research studies conducted by a company marketing information system o en refereed to customer relationship management system CRM CRM comprised of activities that are used to establish develop and maintain customer relationships Cookies small files containing certain personal information Chapter 9 Segmenting Targeting and Positioning I Segmentation ion Market quot 339 the division of consumer markets into meaningful and distinct customer groups Mass Marketing the communicating a product or service message to as broad a group of people as possible with the purpose of positively in uencing sales Idea of MM is the broader the audience the more potential for sales No longer the ability to easily reach a large audience Increasingly vast number of product and brand choices for a consumer Consumers are overwhelmed with options Many brands in product categories offer specific attributes that appeal to certain customers and not to others Consumers differ in their wants needs perceptions values and expectations Segmentation identifies groups of consumers who have similar market responses within their group but whose responses differ from other groups Segmentation allows businesses to look at consumers as several different groups instead of one mass market Allows the targeting of marketing dollars more effectively Value of market segmentation can be measured through increased market share for a given segment Most basic form of market segmentation involves demographic or psychographic criteria Also rely on other criteria such as attitudes or values Conduct market segmentation through marketing research studies Criteria to qualify as a true segment Be a critical mass Be a homogenous set Differ from other segments Have similar core attributes such as economic attitude and behavior Be robust and replicable over time 11 Segmentation Base Segmentation Base is a group of characteristics that is used to assign segment members Choice of segmentation base can be most critical decisions that in uence the success of market segmentations Consumers typically divided into groups by demographic psychological values behavioral and needs variables Demographic segmentation divides the market into groups based on criteria such as age gender family size family life cycle income occupation education religion ethnicity generation nationality and sexual orientation Provide the most common bases for segmenting customer groups Easiest information to obtain may not provide the greatest amount of insight into why consumers behave differently Psychographic segmentation assigns buyers into different groups based on lifestyle class or personality characteristics People belonging to a particular demographic group can have dramatically different psychographic characteristics Values Segmentation considers what customers prefer and what motivates customer response to marketing activities Can be used to segment consumers effectively by re ecting consumer perception EX Life long learning integrity respect and honesty Behavioral Segmentation allocated consumers into groups based on their knowledge attitudes uses or responses to a product or service Markets can be segmented into non users eX users of a product High levels vs low levels of product usage Segmented by loyalty Needs Segmentation assigns consumers into groups based on their current and desired level of interaction with a particular market category Consumers asked to rate their level of agreement with statements about how they feel about aspects of the category being studied a Segmenting Business Markets Primary business segmentation variables Demographics Geographics Benefits sought Loyalty Usage rates Unique business market variables Customer operating characteristics Purchasing approaches Situational factors Personal characteristics III Targeting Targeting Market Targeting is the process of evaluating and selecting the most viable market segment to enter Strategic questions involve Where and who types of questions Tactical questions involve what and how questions Marketing targeting begins with established product or service Target marketing occurs when a business identifies a market segment it wants to serve and then develops a product for that segment Concept of targeting involves the prioritization of segments and the allocation of resources Targeting allows business to build efficiencies through the use of appropriate advertising media and relevant messages for a given target Should be based on understanding of consumer preferences and needs Generational Marketing involves grouping customers by ages and socioeconomic factors Cohort marketing looks at intervals with similar life experience at different times in their history Life stage marketing considers those common events that individual families face regardless of age Behavioral Targeting recent development that optimizes the online ad potential for product and services In some cases products or services are developed before a market opportunity is sought lots of risk Three Market Coverage Choices when Targeting Undifferentiated Marketing 0 A company treats the market as a whole focusing on what is similar among the needs of the customer rather than what is different 0 Products that appeal to the greatest number of potential buyers 0 Can be costeffective 0 Most successful when used in a market with limited or no competition or when product has wide appeal Differentiated Marketing 0 Separates and targets different market segments with a unique product or service tailored to each segment 0 Increase total sales because of broader appeal through greater relevance across market segments and a stronger position within each segment 0 aka multi segment marketing 0 Increase costs associated with targeting different market segments with relevant message Niche Marketing Serving a small but well defined consumer segment 0 Aka concentrated marketing or focused marketing 0 Best suited for companies with limited resources or companies with exclusive products a Global Targeting Many different ways brands can adopt global strategy Standardizing core products with limited localization for all markets Creating valueadded element for selective markets Practicing specific competitivebased strategies for each market Implementing a universal targeting strategy and marketing miX b Selecting a Target Three general factors should be considered 0 Attractiveness 0 Size and Growth potential 0 Brand objectives and resources to form the basis for competition Attractiveness of the segment is determined by the level of competition within the segment and the various strategies used by the brands competing in the segment Size and growth potential includes variability and viability of the segment Brand objectives and resources represent the basis on which the company has to compete VI Positioning Positioning the placement of a product or service offering in the minds of consumer targets Unique Selling P quot39 USP is an 1 39 ofthe 39 J ofa brand Development of marketing programs to meet the requirements of target customers Positioning is how your target customers de ne you in relation to your competitors Communication of a USP can provide a good basis for successful positioning Positioning of a brand results in a value proposition being presented to the target market Value proposition is the entire set of bene ts upon which the brand is differentiated it is intended to specifically relevant to the target Three Types of Positioning Functional Positioning based on attributes of product and their corresponding benefits and is intended to communicate how customers can solve problems or ful ll needs ex High quality Symbolic Positioning based on characteristics of the brands that enhance the selfesteem of customers Experiential Positioning based on characteristics of the brand that stimulate sensory of quot 39 39 i ex Joy Value can be created from many different positioning strategies Positioning strategies can be based on speci c product attributes different ways the product can be used different types of users differences between the product and a competitor s product and comparison to other product classes Search Engine Optimization the process of enhancing web site traf c either through organic or compensated means Key to search engine optimization is selection of the keywords Perceptual Map de nes the market based on consumer perceptions of attributes or characteristics of competing products Represents consumer perceptions of a group of brands by evaluating category attributes such as price quality speed fuel economy and appearance Can identify important competitors and indicate if their current position needs to be changed c Selecting a Position Selection of a position should re ect an understanding of the external marketing environment and the competitive advantage that can be created as a result of differentiation Position selected should do the following Deliver a valued bene t to the target Be distinctive with respect to competitors Offer a superior bene t Be dif cult to copy Be affordable to the target Provide required revenues and pro ts to the brand Chapter 8 The Brand 1 Brand Brand promise to deliver speci c bene ts associated with products amp services to consumer stand for speci c attributes meaningful to consumers attributes brand posses form connection w consumers desires creates perception of value Product vs Brand Factory produced vs marketing communication amp exper Duplicated Outdated vs Unique amp Timeless Generic vs Personality Opportunities for Brands command price premium greater market share perceived value greater brand extension amp purchase frequency Long term nancial strength amp supply chain Brand Extension taking existing brand into new categories and opportunities Digital Brand Strategy Marketing activities using digital medium to connect consumers to brands marketing generally perceived as neither culturally or personally relevant challenge is to establish relevancy wo over commericizing culture 11 Brand Equity Brand Equity power of a brand through creation of distinct image to in uence consumer behavior differential effect of brand knowledge on consumer response to brand s marketing activates Brand K ledge set of 39 quot that consumers hold in memory regards to brand s features bene ts users perceived quality and overall attitude as result of prior marketing activates strong brands can survive Price Wars Price Wars business cut prices to takes sales from competitors Applications of Brand Equity Brand Alliances Outsourcing Channel Switching Relationship Building Brand Stretching Channel Switching creating new product distributions or moving distribution ow of products from one channel to another Brand Stretching extending a brand to new products spread costs across wider base Outsourcing procuring certain services from a 3rd part to lower costs amp focuses resources a Brand Valuation Brand Valuation Process of quantifying the nancial bene ts that result in owning a brand brand value can be included on a balance sheet 2 Types of Brand Valuation Additive common product amp brand separate Inclusive product amp brand together brand and product attributes create true value which can be translated in to potential sales revenue b Building Brand Equity factors the create positive brand image loyalty commitment customer equity equity ascribed to brand is re ected behaviorally through loyalty Brand Loyalty 2 components purchase amp attitudinal purchase loyalty greater market share and attitudinal loyalty greater market prices Loyalty in uence brand pro tability Commitment psychological attachment consumer has to brand amp how relevant it is to the consumer Brand Equity created from consumer knowledge translated into consumer behavior ConsumerBased Brand Equity differential effect that brand knowledge has on consumer response to marketing efforts c Global Brand Equity 4 Ideas In uence Strategies to Create Global Brand Equity 1 Id emerging global customers 2 build stronger links between country specific marketing activates that support global infrastructure 3 realize opportunities to transfer products to various countries 4 Gaining economies of scale by sharing human and financial resources in creating amp managing brands d B2B Bran Equity B2B purchase process is more formal rational III Building Strong Brands Strong Brands occupies distinct position in consumers mind based on relevant benefits and creates emotional connection between consumers and business provide 3 things to consumers save time project right message provide identity provides consumers w ability to project style and preference to others through choices maid Three Essential Elements of A Powerful Brand 1 Values that characterize the brand 2 Purpose of Brand other than making 3 Future environment brand wants to facilitate Factors that can create strong brand existing completive environment relevancy business capabilities a Brand Positioning What should my brand stand for Brand Positioning location brand occupies in marketplace relative to competitors Achieved on a Hierarchy Attributes motivations easily copied Bene ts bene ts attributes provide aka problemsolution Value emotional connection between brand amp consumer aspirations Brand Personality Characteristics that make the brand unique Brand Positioning can be strengthen if position re ects brand personality b Brand Name Selection Guidelines distinguishable amp describe productservices memorable amp distinctive yet appropriate avoid limiting can t be extended into new segments exportable to international markets protected as intellectual property Brand Architecture involves naming and organizing of brands within a broader portfolio c Brand Sponsorship products amp services can be launched in 2 forms Manufacture Brand national Private Label Retail Reseller Manufactured Brands owned by manufactured as opposed to retailer or reseller traditional dominate brand choices available to consumer in retail stores Private Label created by retailers resellers increasingly appeared in retail environment d Licensing Licensing assigning rights for a fee for one company to use another company s brand for specific products over specific time affordability stature of brand Consistency amp relevancy of imagine to companies target market e CoBranding Cobranding collaboration of multiple brands in marketing on specific product Brand Alliance relationship short merger between two different companies to create marketing opportunities form of brand extension V Brand Development Brand Strategy process where offer is positioned in the consumer s mind to produce a perception of advantage defines brand architecture that is used for brand development Brand Development offer many options line extensions brand extensions mulitbrand offerings amp entirely new brands Line Extensions addition to an existing product line retains the currently utilized brand name keeps customers from switching brands Two types of methods Horizontal maintains products w similar price but varies other attributes Vertical varying product line by price and quality Bundling refers to practice of marketing two or more products in a single package Brand Extension involves taking an existing brand into a new category save marketing investment amp build bran stature need emotional connection Cannibalization loss of sales of an existing product with a portfolio to a new product in the same portfolio VI Managing Brands Brand Management overall coordination of a brand s equities to create long term brand growth through overseeing marketing mix strategies Category Management management of multiple brands in a product line what was traditionally held by product brand managers portfolio decisions and marketing activates across different products customer experience amp social media Intellectual Property collection of nonphysical assets owned by an indivual or company that are a result of innovation amp legally protected from being copied or unauthorized use United States Patent and Trademark Office Counterfeiting most common form of brand protection violation indirect harm direct harm indirect social cost Chapter 5 Value for Customers I Customer Value Customer Value is the difference between the bene ts a customer receives and the total cost incurred from acquiring using and disposing of a product buyers make decision based on value they perceive a product with deliver buyers weigh the difference between perceived costs and the perceived bene ts Customer Perceived Value Perceived Bene ts 7 Perceived Costs Functional Use as the purpose for seeking a product often there are additional costs to owning a product Value Map examines the tradeoffs customers make between costs and bene ts when making a purchase decision Fair Value Zone products that fall in this zone are perceived to deliver bene ts equal to the products total costs Products below or to the right of the line have perceived bene ts than costs Products above line are perceived to deliver fewer bene ts than costs How companies can alter perceived value 1 Increase the perceived bene ts 2 Decrease the perceived costs 3 combination of the either 11 Customer Satisfaction Customer Satisfaction is the degree to which a product meets or exceeds customer expectations Emotional experience will be either positive neutral or negative Initial level of satisfaction is normally determined at the time a product is purchased Creating satis ed customers requires company manage customer expectations and while maintaining quality of products and services Bene ts of Highly Satis ed Customers l Loyalty 2 Product Champions 3 Reduced Costs 4 Larger Share of Wallet result in greater pro tability of company amp increase in revenue due to satis ed customers buying other products company offers a Measuring Customer Satisfaction Surveys tells managers how well company is performing in marketplace must be compared to previous rating or competitors ratings Independent Organizations JD Power and Associates American Customer Satisfaction Index ACSI b Customer Loyalty Customer Loyalty degree to which a customer will select a particular brand when a purchase from that product category is being considered buyer s feeling of attachment to particular product brand company Loyal customers generate pro t but not most pro table Customer Pro tability Analysis determines which customer are pro table o Assigning actual market cost to customer 0 Based on actual costs required to perform marketing activ Pareto Principle 8020 rule 0 80 of pro ts generated by 20 of customers Customer Lifetime Value present value of all pro ts expected to be earned in the future from a customer Revenue collected in future is worth less use discount rate 1015 5 Pieces of Info Needed to Calculate CLV 1 Customer avg purchases per year 2 Pro t margin earned on those purchases 3 Cost to service the customer 4 Customer Retention Rate 5 Firm s Discount Rate CLV used to determine which customers to focus of relationship marketing Customers can add value to company in addition to lifetime value via product champions c Customer Retention Replacing lost customers is critical to grow sales amp pro ts or maintain levels Companies that work to retain current customers have higher level of pro t 111 Relationship Marketing Relationship Marketing organizational commitment to developing and enhancing long term mutually bene cial relationships with pro table or potentially pro table customers In past the value of customers was determined based on most recent purchase Transactionbased view point Today focus marketing efforts on building longterm mutually bene cial relationships with pro table or potentially pro table customers Goal in developing customer relations is to increase customer loyalty and retention Company can lose 50 of customers over 5 year period Costs 67 times more to recruit new customers than retain existing Small increase in retention rate can have profound impact on pro ts Michael Porter s Business Differentiate From Competitors Strategies Core product or service Price Total Relationship amp Customer Experience Requires delivery of superior customer value which results from high product quality and great customer service Different reasons customers seek relationships with company added value they receive reduced anxiety throughout purchase process sense ofbelonging VI Customer Relationship Management Customer Relationship Management comprised of the activities that are used to establish develop and maintain customer sales develop and maintain of pro table customer relationships Internal process management of info acquired from customers EXtemal processes connect company to customers 4 Steps in developing OnetoOne Relationship with Customers 1 ID and gather as much info about customers as possible 2 Differentiate customers based on needs and values 3 Talk to customers 4 Customize products
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