Creating Customer Value

Prof. Kunal GauravDhruva College of Management

Hyderabad

Customer vs. Consumer

Customer: anyone who pays directly or indirectly for the company's goods or services.

Consumer: anyone who enjoys the benefits of the good or service.

Customer Satisfaction

Customer satisfaction or dissatisfaction is the feeling derived by the consumer when he compares the product’s actual performance with the performance that he expects of it.

Customers form their expectations on the basis of past buying experiences, advice of their reference group and the promises of the marketers and their competitors.

When the product performance matches the expected performance, the customer experiences satisfaction; when it falls short of the expectation, he experiences dissatisfaction. And when the performance exceeds expectations, the customer is highly satisfied or delighted.

What is Loyalty?

LoyaltyLoyalty is a deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior.Loyalty status.Loyalty status. Buyers can be divided into four groups according to brand loyalty status: (1)Hard-core loyals (who always buy one brand), (2)Split loyals (who are loyal to two or three brands), (3)Shifting loyals (who shift from one brand to another, and(4)Switchers (who show no loyalty to any brand).

Customer Perceived Value & Value Chain

Customer perceived value is the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives.

Every firm performs a set of activities that helps in designing, producing, marketing, delivering and supporting its products. These activities form a process.

At every stage of the process, the firm adds value. The chain of activities from raw material procurement to the after-sales service is called the value chain. It identifies nine strategic activities, i.e. five primary and four support activities, to create value.

Consumer Buying Process

Problem Recognition

Information Search

Evaluation

Purchase Decision

PostpurchaseBehavior

Problem Recognition

Sources of Information

Personal

ExperientialPublic

Commercial

Successive Sets Involved in Consumer Decision Making

Stages between Evaluation of Alternatives and Purchase

Perceived Risk

FunctionalFunctional

PhysicalPhysical

FinancialFinancial

SocialSocial

PsychologicalPsychological

TimeTime

How Customers Use and Dispose of Products?

What Influences Consumer Behavior?

Cultural FactorsCultural Factors

Social FactorsSocial Factors

Personal FactorsPersonal Factors

Cultural Factors

Culture Sub-culture Social Class

What is Culture?

Culture is the fundamental determinant of a person’s wants and behaviors acquired through socialization processes with family and other key institutions.

SubculturesNationalities Nationalities

ReligionsReligions

Racial groupsRacial groups

Geographic regionsGeographic regions

Social Classes

Upper uppersLower uppersUpper middlesMiddle class

Working classUpper lowersLower lowers

Characteristics of Social Classes

Within a class, people tend to behave alike

Social class conveys perceptions of inferior or superior position

Class may be indicated by a cluster of variables (occupation, income, wealth)

Class designation is mobile over time

Social Factors

Referencegroups

Social roles

Statuses

Family

Reference GroupsMembership groupsMembership groups

Primary groupsPrimary groups

Secondary groupsSecondary groups

Aspirational groupsAspirational groups

Dissociative groupsDissociative groups

Provogue uses teenage icons as brand ambassadors and a youth targeted website to connect to its customers

Roles and Status

What degree of status is associated with various occupational roles?

Personal Factors

Age

Values

Life cyclestage

Occupation

Personality

Self-concept

Wealth

Lifestyle

Customer Lifetime Value (CLV)

Also known as lifetime customer value (LCV), or lifetime value (LTV). is the Present Value of the future cash flows attributed to the customer

relationship. An estimate of customer lifetime value allows a business to determine

the amount of money that can be spent on acquiring and retaining a customer. For example, a high customer lifetime value may convince a credit card company to offer expensive incentives to attract new clients. Also called lifetime customer value.

Use of customer lifetime value as a marketing metric tends to place greater emphasis on customer service and long-term customer satisfaction, rather than on maximizing short-term sales.

Thank You!