1. The customer is always right-handed: Customer satisfaction, customer sophistication and market granularity
Lecture 2

2. A route-map for market-led strategic change
Part I
Customer value
imperatives
Part II
Developing a value-based
marketing strategy
Part III
Processes for managing
strategic transformation
The strategic pathway
Change strategy
Market sensing
and learning
strategy
The Customer
is always
right-handed
Strategic
gaps
Strategic
market choices
and targets
Strategic
thinking and
thinking
strategically
New marketing
meets
old marketing
Organization
and processes
for change
Customer value
strategy and
positioning
Implementation
process and
internal
marketing
Value-based
marketing
strategy
Strategic
relationships
and networks

3. Agenda The customer conundrum The sophisticated customer
Market shifts and quakes
consumer market changes
market granularity
re-shaped business-to-business markets
How can marketing processes respond to these changes?

4. The customer conundrum
Customer service is bad all over
Customer satisfaction and customer loyalty
satisfaction and loyalty are not the same
The real customer problem
do we know what service to maximise?
can we deliver what we promised?
happy customers and happy employees?
The problem is strategy

5. Customer satisfaction versus customer loyalty
High
Low
High
Satisfied
stayers
Happy
wanderers
Customer
satisfaction
Hostages
Dealers
Low

6. Customer expectations and outcomes
The service and quality
we promise
High
Low
Good
I am in
LOVE – I
didn’t know
you were this
good!
OK.
You get what
you pay for.
The service
and quality
the customer
receives
OK.
It’s bad,
but it’s what
I expected.
I HATE you
bastards –
you lied to me!
Bad

7. Service and quality versus customer satisfaction
Impact of service and quality on
customer satisfaction/retention
High
Low
High
Smart
servicers
Over-
servicers
Service and
quality level
Under-
servicers
Non-
servicers
Low

8. Customer satisfaction and the internal market
External customer satisfaction
High
Low
High
Synergy
“happy”
customers
and “happy”
employees
Internal
euphoria
“Never mind the
customer, what
about the
squash ladder?”
Internal
customer
satisfaction
Coercion
“you WILL be
committed to
customers,
or else…
Alienation
“unhappy”
customers
and “unhappy”
employees
Low

9. The sophisticated customer
Issue – customers and markets have changed:
Customers wised up to marketing
Know what marketers are up to
Traditional marketing consistently underestimates intelligence of customer
Many customer demands which we need to respond to:

10. The sophisticated customer
Who are you calling fickle – I just changed my mind?
Value is what we say it is
By the way, “free” is one of my favourite prices
Loyalty is for sellers not buyers
Quality or cheap? Both please

11. The sophisticated customer
Let’s play the waiting game and see what happens
Make life simpler
But not too simple
But, I don’t like change
Make it specially for me
Instant gratification is just not fast enough

12. The sophisticated customer
But don’t make me angry
And now entertain me
And now peel me a grape
Make all the bad stuff in the world go away
There will be no secrets any more

13. Market shifts and quakes – Consumer markets
The typical family
The MySpace Generation
Saga Louts
The pink market
The wealthy
The poor

14. Market shifts and quakes – Consumer markets
Ethnic markets
The green and ethical consumer
The Neo-Cromwellians
Scared consumers

15. Market shifts and quakes – Market granularity
Shift in focus from “megatrends” to “microtrends”
Broad market trends average out important differences
The issue shifts from huge cultural shifts to new “identity groups”

16. Market shifts and quakes – Reshaped business-to-business markets
Dominant customers
Impact of customer power
Bad customers
who play the rules
who break the rules
who make the rules

17. How can marketing processes respond?
Radical and disruptive changes in market structures have left traditional marketing behind
The urgent challenge is to update how we “do” marketing to reflect how customers and markets have changed