Presentation on theme: "MARKETING STRATEGY O.C. FERRELL • MICHAEL D. HARTLINE"— Presentation transcript:
1 MARKETING STRATEGY O.C. FERRELL • MICHAEL D. HARTLINE 5Managing CustomerRelationships
2 Understanding Customer Behavior The Consumer Buying Process:Depicts the possible range of activities that may occur in making purchase decisionsInvolves considering which product to buy AND considering where to buy itChoice of a suitable merchant may take precedence over the choice of a specific product
4 Need Recognition Need: Want: Demand: Occurs when the consumer’s current level of satisfaction does not equal their desired level of satisfaction.Want:A consumer’s desire for a specific product that will satisfy the need.Demand:When the want for a specific product is backed up by the customer’s ability and willingness to pay for the product.
6 Discussion QuestionMany people criticize marketing as being manipulative based on the argument that marketing activities create needs where none previously existed. Marketers that are often implicated include the makers of SUVs, tobacco products, diet programs, exercise equipment, and luxury products. Also, any marketer that targets children or the elderly is often seen as manipulative. Are consumers being manipulated into believing that they need certain products, or are marketers creating products that fulfill previously unmet needs? Explain.
7 Information Search (1 of 2) Marketing stimuli can stimulate a desire for information:Passive Information SearchActive Information SearchSources of information:Internal SourcesPersonal SourcesExternal Sources
8 Information Search (2 of 2) Time, effort and expense dedicated to information search depends on:Degree of risk involved in the purchaseFinancial riskSocial riskEmotional riskPersonal riskAmount of expertise with the product categoryActual cost of the searchEvoked set:A narrowed down set of alternatives that the customer is considering
9 Evaluation of Alternatives Customers evaluate products as bundles of attributesBrand attributesProduct featuresAesthetic attributesPriceCustomers place different levels of importance on attributesImportant considerations in the evaluation stage:Products must be in the evoked setConsumers’ choice criteria must be understoodMarketing programs must be designed to influence consumers’ opinions about product or brand image
10 Purchase DecisionPurchase intention and the act of buying are distinct conceptsPotential intervening factors between intention and buying (car example):Unforeseen circumstancesAngered by the salesperson or sales managerUnable to obtain financingCustomer changes mindKey issues in the purchase decision stage:Product availabilityPossession utility
11 Postpurchase Evaluation Four possible outcomes in the postpurchase stage:(1) Delight(2) Satisfaction(3) Dissatisfaction(4) Cognitive DissonanceCognitive dissonance is more likely to occur when:Dollar value of the purchase increasesOpportunity cost of rejected alternatives is highPurchase decision is very involving or emotionalFirm’s ability to manage dissatisfaction and cognitive dissonance is:A key to creating customer satisfactionA major influence on word-of-mouth communication
12 Factors Affecting the Consumer Buying Process Decision-Making ComplexityHigh/Low ComplexityIndividual DifferencesDemographics, perceptions, motives, interests, attitudes, opinions, lifestyles, etc.Social InfluencesCulture, subculture, social class, reference groups, opinion leaders, etc.Situational Influences
14 Understanding Business Buying Behavior Four types of Business Markets:Producer markets (a.k.a. commercial markets)Reseller marketsGovernment marketsInstitutional marketsUnique Characteristics of Business MarketsThe Buying CenterHard and Soft CostsReciprocityMutual Dependence
15 The Business Buying Process (1) Problem Recognition(2) Develop Product Specifications(3) Vendor Identification and Qualification(4) Solicitation of Proposals or Bids(5) Vendor Selection(6) Order Processing(7) Vendor Performance Review
16 Managing Customer Relationships Customer Relationship Management (CRM):“A holistic process of identifying, attracting, differentiating, and retaining customers.”CRM Stakeholders:EmployeesSupply Chain PartnersLateral PartnersCustomers
17 Strategic Shift from Acquiring Customers to Maintaining Clients Exhibit 5.3
18 Discussion QuestionOne of the common uses of CRM in consumer markets is to rank customers on profitability or lifetime value measures. Highly profitable customers get special attention, while unprofitable customers get poor service or often “fired.” What are the ethical and social issues involved in these practices? Could CRM be misused? How and why?
19 Developing Relationships in Consumer Markets Increase share of customer rather than market shareServe current customers rather than focus on acquiring new customersThe 80/20 Rule:20% of the customers provide 80% of the profit
20 Stages of Customer Relationship Development Exhibit 5.4
22 Developing Relationships in Business Markets Relationships must be built on win-win strategiesChanges in business relationships:A change in buyers’ and sellers’ rolesAn increase in sole sourcingAn increase in global sourcingAn increase in team-based buying decisionsAn increase in productivity through better integration
23 Quality and Value: (1 of 2) The Keys to Developing Customer Relationships Understanding the Role of QualityThe core product is not enoughSupplemental products are criticalDelivering Superior Quality (four issues)Understand customers’ expectations, needs, and wantsTranslate customer research into specifications for qualityDeliver on specificationsPromise only what can be delivered
24 Components of the Total Product Offering Exhibit 5.5
25 Marketing Strategy in Action This Mercedes ad illustrates the power of the Mercedes brand in making its products instant classics.What other name brands can you think of that exude quality? What separates these firms from other companies making similar products?
26 Quality and Value: (2 of 2) The Keys to Developing Customer Relationships Understanding the Role of ValueA simple formula for value:A more useful formula for value:Core Product, Supplemental Product, and Experiential QualityMonetary and Nonmonetary CostsCompeting on Value
27 Customer Satisfaction: Retaining Customers Over the Long Term Satisfaction vs. Quality vs. ValueExpectationsCustomer Satisfaction and Customer RetentionUnderstand what can go wrongFocus on controllable issuesManage customer expectationsOffer satisfaction guaranteesMake it easy for customers to complainCreate loyalty programsMake customer satisfaction measurement an ongoing priority
28 Examples of Customer Satisfaction Guarantees Exhibit 5.7
29 Customer Satisfaction Metrics Lifetime Value of a Customer (LTV)Average Order Value (AOV)Customer Acquisition/Retention CostsCustomer Conversion RateCustomer Retention RateCustomer Attrition RateCustomer Recovery RateReferralsViral Marketing
30 Discussion QuestionWhy do you think many firms do such a poor job of understanding the needs, wants, and expectations of their customers? Do they buy into the “better mousetrap” philosophy and believe that quality is the only necessary requirement of maintaining customer relationships? Explain.