Lecture 2

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

2. Part I Customer value imperatives Part II Developing a value-based marketing strategy Part III Processes for managing strategic transformation A route-map for market-led strategic change 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. 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 The customer conundrum

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

6. The service and quality we promise Customer expectations and outcomes 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. Impact of service and quality on customer satisfaction/retention Service and quality versus customer satisfaction 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 Synergy “happy” customers and “happy” employees Internal euphoria “Never mind the customer, what about the squash ladder?” High 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. 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 The sophisticated customer

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

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

17. 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 How can marketing processes respond?