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MARKETING STRATEGY O.C. FERRELL • MICHAEL D. HARTLINE

MARKETING STRATEGY O.C. FERRELL • MICHAEL D. HARTLINE. 5. Managing Customer Relationships. The Consumer Buying Process: Depicts the possible range of activities that may occur in making purchase decisions Involves considering which product to buy AND considering where to buy it

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MARKETING STRATEGY O.C. FERRELL • MICHAEL D. HARTLINE

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  1. MARKETING STRATEGYO.C. FERRELL • MICHAEL D. HARTLINE 5 Managing Customer Relationships

  2. The Consumer Buying Process: Depicts the possible range of activities that may occur in making purchase decisions Involves considering which product to buy AND considering where to buy it Choice of a suitable merchant may take precedence over the choice of a specific product Understanding Customer Behavior

  3. The Consumer Buying Process Exhibit 5.1

  4. Need: 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. Need Recognition

  5. Marketing stimuli can stimulate a desire for information: Passive Information Search Active Information Search Sources of information: Internal Sources Personal Sources External Sources Information Search(1 of 2)

  6. Time, effort and expense dedicated to information search depends on: Degree of risk involved in the purchase Financial risk Social risk Emotional risk Personal risk Amount of expertise with the product category Actual cost of the search Evoked set: A narrowed down set of alternatives that the customer is considering Information Search(2 of 2)

  7. Evaluation of Alternatives • Customers evaluate products as bundles of attributes • Brand attributes • Product features • Aesthetic attributes • Price • Customers place different levels of importance on attributes • Important considerations in the evaluation stage: • Products must be in the evoked set • Consumers’ choice criteria must be understood • Marketing programs must be designed to influence consumers’ opinions about product or brand image

  8. Purchase Decision • Purchase intention and the act of buying are distinct concepts • Potential intervening factors between intention and buying (car example): • Unforeseen circumstances • Angered by the salesperson or sales manager • Unable to obtain financing • Customer changes mind • Key issues in the purchase decision stage: • Product availability • Possession utility

  9. Postpurchase Evaluation • Four possible outcomes in the postpurchase stage: • (1) Delight • (2) Satisfaction • (3) Dissatisfaction • (4) Cognitive Dissonance • Cognitive dissonance is more likely to occur when: • Dollar value of the purchase increases • Opportunity cost of rejected alternatives is high • Purchase decision is very involving or emotional • Firm’s ability to manage dissatisfaction and cognitive dissonance is: • A key to creating customer satisfaction • A major influence on word-of-mouth communication

  10. Factors Affecting theConsumer Buying Process • Decision-Making Complexity • High/Low Complexity • Individual Differences • Demographics, perceptions, motives, interests, attitudes, opinions, lifestyles, etc. • Social Influences • Culture, subculture, social class, reference groups, opinion leaders, etc. • Situational Influences

  11. Common Situational Influences Exhibit 5.2

  12. Understanding BusinessBuying Behavior • Four types of Business Markets: • Producer markets (a.k.a. commercial markets) • Reseller markets • Government markets • Institutional markets • Unique Characteristics of Business Markets • The Buying Center • Hard and Soft Costs • Reciprocity • Mutual Dependence

  13. 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

  14. Managing Customer Relationships • Customer Relationship Management (CRM): • “A holistic process of identifying, attracting, differentiating, and retaining customers.” • CRM Stakeholders: • Employees • Supply Chain Partners • Lateral Partners • Customers

  15. Strategic Shift from AcquiringCustomers to Maintaining Clients Exhibit 5.3

  16. Developing Relationshipsin Consumer Markets • Increase share of customer rather than market share • Serve current customers rather than focus on acquiring new customers • The 80/20 Rule: • 20% of the customers provide 80% of the profit

  17. Stages of CustomerRelationship Development Exhibit 5.4

  18. Developing Relationshipsin Business Markets • Relationships must be built on win-win strategies • Changes in business relationships: • A change in buyers’ and sellers’ roles • An increase in sole sourcing • An increase in global sourcing • An increase in team-based buying decisions • An increase in productivity through better integration

  19. Quality and Value:(1 of 2)The Keys to Developing Customer Relationships • Understanding the Role of Quality • The core product is not enough • Supplemental products are critical • Delivering Superior Quality (four issues) • Understand customers’ expectations, needs, and wants • Translate customer research into specifications for quality • Deliver on specifications • Promise only what can be delivered

  20. Components of theTotal Product Offering Exhibit 5.5

  21. Quality and Value:(2 of 2)The Keys to Developing Customer Relationships • Understanding the Role of Value • A simple formula for value: • A more useful formula for value: • Core Product, Supplemental Product, and Experiential Quality • Monetary and Nonmonetary Costs • Competing on Value

  22. Customer Satisfaction:Retaining Customers Over the Long Term • Satisfaction vs. Quality vs. Value • Expectations • Customer Satisfaction and Customer Retention • Understand what can go wrong • Focus on controllable issues • Manage customer expectations • Offer satisfaction guarantees • Make it easy for customers to complain • Create loyalty programs • Make customer satisfaction measurement an ongoing priority

  23. Examples of CustomerSatisfaction Guarantees Exhibit 5.7

  24. Customer Satisfaction Metrics • Lifetime Value of a Customer (LTV) • Average Order Value (AOV) • Customer Acquisition/Retention Costs • Customer Conversion Rate • Customer Retention Rate • Customer Attrition Rate • Customer Recovery Rate • Referrals • Viral Marketing

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