Marketing Management

1. Marketing Management Dawn Iacobucci

2. Customer Evaluations Chapter 12

3. Marketing Framework

4. Customer Evaluations Marketers are interested in Customer satisfaction Customer perceptions of quality Customer intention to repurchase Customer likelihood of word of mouth, etc. Marketers want to convert new customers to satisfied, to customers who purchase frequently and finally to loyal customers

5. Comparative Evaluation

6. Low Involvement Purchases Comparison process may be instantaneous and quickly forgotten Purchasing toothpaste Expectations are usually latent If do not receive what expected, expectations become more explicit Toothpaste tastes different

7. High Involvement Purchases Comparison process is deliberative and conscious Purchasing athletic shoes Customers think about purchases Customers have expectations that must be met

8. Discussion Questions Using the comparative evaluation model.. Can you describe a low involvement purchase that prompted you to experience dissatisfaction? Can you describe a high involvement purchase that prompted you to experience dissatisfaction?

9. Search Purchases Qualities are obvious from visual examination Purchasing shoes Comparative process is straightforward holistic, attribute-by-attribute, etc.

10. Experiential Purchases Evaluation cannot be completed until there is trial or consumption Purchasing a travel package Expectations may not be fully formed prior to purchase Experience and expectations simultaneously shape the evaluation

11. Credence Purchases Customers don�t have the expertise to evaluate Purchasing dental services Customers evaluate what they can Can�t evaluate dentist�s abilities so evaluate timeliness of appointment, courtesy of staff, appearance of offices, etc.

12. Sources of Expectations Your own experience Your friends� advice Marketing information Third party communications

13. 1. Own Experiences Direct experiences Visited the coffee shop previously, expect a similar experience Indirect experiences Visited the same coffee shop in another city, expect roughly the same experience First time using a realtor, expect it to be a cross between dealing with a bank manager and salesperson

14. 2. Friends� Advice If have little expertise, ask friends Friends have similar preferences, and they receive no commercial gain People may also seek experts� opinions Companies actively try to prompt positive word of mouth

15. 3. Marketing Information Marketing mix information originating with the company Positioning claims made in ads Suggestions of quality inferred from price point Frequency of sales/coupons Exclusivity of distribution outlets Performance descriptions from salespeople Least trusted source

16. 4. Third Party Communications Customers can get expectations from Movies, internet, Consumer Reports, etc. These sources are usually out of the marketers control Customerd consider this information to be especially valid and objective

17. Discussion Questions Which of the four sources of expectations influences you the most? Why? Which source influences you the least? Why?

18. Customer Experiences Customers evaluate the core of the purchase Reliable performance, tangible cues to quality, etc. Customers also evaluate the interpersonal aspects of service when applicable Responsiveness, competence, empathy, etc.

19. Customer Experiences Both core and supplemental components contribute to satisfaction but differently If the core is good, satisfaction is not affected much because the customer expects the core to be good If the core is bad, dissatisfaction occurs Supplemental components can affect both satisfaction and dissatisfaction

20. Customer Experiences Every point of interaction between company and customer is evaluated Flowcharts are used to depict interactions Flowcharts have been used to Generate quality measures at each stage Identify points of likely repeated problems Suggest system redesigns for efficiency

21. Example: Hotel

22. Discussion Question Can you develop a high level flowchart for your interactions with your university?

23. Three Levels of Expected Quality Ideal Some segments are demanding Predicted (expected) Most expect average-level quality Adequate For unimportant purchases, many expect only a basic market offering Zone of tolerance Range of performance deemed acceptable

24. Value Value is the tradeoff of the quality of the purchase compared with the price paid and other costs incurred

25. Discussion Question What has more value a Honda Civic or a Honda Accord? Why?

26. Expectations Are Dynamic Expectations vary across time �What have you done for me lately� Every industry experiences this Expectations vary across cultures

27. Measuring Quality & Satisfaction Marketers can rarely set precise measures of quality standards and expect to conform Marketing involves measuring perceptions Marketers� measures are subjective and imperfect, but the numbers can be used to gauge performance relative to past or competitive performance

28. Measuring Quality & Satisfaction Information obtained from measurement should be actionable Not just a single question, �are you satisfied� To assess and improve performance, information needs to be available in each market for each segment on a number of criteria

29. Example: Measuring Satisfaction

30. Measuring Quality & Satisfaction Some researchers have found that greater sales can lead to lower levels of customer satisfaction Positive word of mouth converts more buyers, the segment becomes larger with a greater variety of expectations which may lead to dissatisfaction

31. Dissatisfaction When customers are dissatisfied, empowered front-line employees should Redress the problem Empathize with the customer Offer a perk for the customers troubles

32. Customer Relationships Marketers want to go beyond satisfaction to loyalty Repeat purchasing, word of mouth, attachment to the brand Customer satisfaction is first step in a longer-term relationship

33. RFM RFM: recently, frequently, monetary value Most desirable customers have bought the most recently, buy the most frequently and have the highest monetary value Process RFM is evaluated and coded The importance of R vs. F vs. M is judged A single score for each customer is computed

34. Example: RFM

35. Discussion Question Think about your relationships with retailers. Of these relationships, which do you think you are most valuable in terms of RFM?

36. CRM Customer Relationship Management Takes planning, money and constant work Requires ongoing monitoring of customers Incoming calls, website viewing habits, purchasing, catalogs and emails sent to them, returns, etc. Companies need to design information systems that Integrate inputs from all relevant touchpoints Make information available in useful formats for managerial usage

37. CRM Database Variables

38. CLV Customer lifetime value Assessing customers in terms of their worth to a company When calculating CLV Get the assumptions as right as possible Use the numbers as guides as to which customers to try to please and which customers to let defect

39. CRM and CLV Calculating CLV is important because It fits a strategic initiative to serve certain segments of customers better It begins to identify those segments

40. Example: CLV

41. Example: CLV

42. Discussion Question Can you define satisfaction and express the importance of satisfaction in terms of RFM and CLV?