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Chapter 18

PRINCIPLES OF MARKETING Eighth Edition Philip Kotler and Gary Armstrong. Chapter 18. Competitive Strategies: Building Lasting Customer Relationships. Total Customer Value. (Product, Service, Personnel, & Image Values). Total Customer Cost. (Monetary, Time, Energy, & Psychic Costs).

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Chapter 18

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  1. PRINCIPLES OF MARKETING Eighth Edition Philip Kotler and Gary Armstrong Chapter 18 Competitive Strategies: Building Lasting Customer Relationships

  2. Total Customer Value (Product, Service, Personnel, & Image Values) Total Customer Cost (Monetary, Time, Energy, & Psychic Costs) Customer Delivered Value (Profit to the Consumer) - = Defining Customer Value

  3. Customer Satisfaction Customer Satisfaction Customer Satisfaction Results When a Company’s Performance Has Fulfilled a Buyer’s Expectations. Performance Exceeds Expectations- Customer is Delighted Buyer’s Expectations Are Based On: Customer’s Past Buying Experiences Opinions of Friends & Associates Marketer/ Competitor Information & Promises Product’s Actual Performance Performance Below Expectations - Customer is Dissatisfied

  4. Highly satisfied (delighted) customers produce benefits: They are less price sensitive, They remain customers longer, They talk favorably about the company and products to others. Delighted customers have emotional and rational preferences for products, and this creates high customer loyalty. Therefore, the purpose of Marketing is to generate customer value profitably. Total Customer Satisfaction

  5. New Customer Costs Lost Customer Costs Customer Lifetime Value The Need for Customer Retention The Key to Customer Retention is Superior Customer Value and Satisfaction. Companies Must Consider:

  6. Building Customer Satisfaction and Loyalty by Relationship Marketing Relationship Marketing Involves Creating, Maintaining, and Enhancing Strong, Long-Term Relationships with Customers and Other Stakeholders. Methods for Building Relationships Include Offering: Financial Benefits Social Benefits Structural Ties

  7. Firm Infrastructure Human Resource Management Technology Development Procurement Value Chain Support Activities Margin Outbound Logistics Marketing and Sales Operations Inbound Logistics Service Primary Activities

  8. Customer Customer Value-Delivery Network Retailer Delivery Order Producer Delivery Order Vendor Delivery Order Raw Material Supplier Delivery Order Order Delivery

  9. Total Quality Marketing Quality is in the Eyes of the Customer Necessary But May Not Be Sufficient Pursuing a Total Quality Marketing Strategy Does Not Cost More Every Company Activity Total Employee Commitment Quantum Leaps High Quality Partners Continuous Improvement Cannot Save Poor Product

  10. Identifying Competitors Competitor Analysis Assessing Competitors Determining Objectives Identifying Strategies Assessing Strengths and Weaknesses Estimating Reaction Patterns Selecting Competitors to Attack and to Avoid

  11. Basic Competitive Strategies Developing Competitive Marketing Strategies Overall Cost Leadership Focus Differentiation Middle of the Road

  12. Value Disciplines Developing Additional Competitive Marketing Strategies Operational Excellence Customer Intimacy Product Leadership

  13. Competitive Positions Market Leader Firm with the Largest Market Share Competitive Positions Competitive Strategies Expand Total Market Protect Market Share Expand Market Share Market Challenger Runner-Up Firms that Fight Hard to Increase Market Share Market Followers Runner-Up Firms that Want to Hold Their Share Without Rocking the Boat Full Frontal Attack Indirect Attack Follow Closely Follow at a Distance Market Nichers Firms that Serve Small Segments Not Being Pursued by Other Firms By Customer, Market, Quality-Price, Service Multiple Niching

  14. Balancing Customer and Competitor Orientations Product Orientation Customer Orientation Customer-Centered No Yes Competitor Orientation Market Orientation No Competition-Centered Yes

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