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Customer-centred company (Kotler 2005); A company that focuses on

customer developments in designing its marketing strategies and on delivering


superior value to its target customers. –

To win in today’s market place; companies must be customer-centred. They


must deliver superior value to their customers. They must become adept in
building customer relationships, not just building products. They must be skilful
in market engineering, not just product engineering (Kotler 2005).

A survey conducted by the Chartered institute of marketing found that only 20%
of companies in the FTSE 100 had someone with a marketing background on
their board of directors (www.cim.co.uk (2003) “Hard edged marketing”, agenda
paper on the chartered institute of marketing’s website.

The failure of companies to give customers what they want is creating new
opportunities for effective marketers. Recognising a widening gap between
customers’ expectations and service, NatWest Bank, a subsidiary of the Royal
bank of Scotland, has hired an extra 6000 staff so its customers will no longer
have to deal with answering machines(“Banking: love me”, The economist (23.
February 2002) p.34).

The marketing department can be effective only in companies in which all


departments and employees have teamed up to form a competitively superior
customer value-delivery system (Kotler 2005). View of sir john browne of BP
Amoco: “we have more than 10 million interactions with customers every day;
and more than 100,000 staff in 100 countries. Every action and every activity is
an act of marketing”.

Consumer-orientated marketing: a principle of enlightened marketing which


holds that a company should view and organise its marketing activities from the
consumers’ point of view (Kotler 2005).

Consumer relationship-building promotions: Sales promotions that promote


the product’s positioning and include a selling message along with the deal
(Kotler 2005).

Consumerism: An organised movement of citizens and government agencies to


improve the rights and power of buyers in relation to sellers.

Customer value delivery system: the system made up of the value chains of
the company and its suppliers, distributers and ultimately customers, who work
together to deliver value to customers (Kotler 2005).

The company must answer a key question: how do customers make their
choices? (Kotler 2005).

The customers choose the marketing offer that gives them the most value.
(Kotler 2005).
Customers form expectations of value and act upon them (Kotler 2005). They
compare the actual value receive in consuming the product to the value
expected, and this affects their satisfaction and repurchase behaviour.

Customers add value from; product, service, personnel and image = total
customer value (Kotler 2005). The total of these four value factors that a buyer
receives from a marketing offer.

Total customer cost- the total of the all the monetary, time, energy and psychic
costs associated with a marketing offer (Kotler 2005).

Customer delivered value- the difference between the total customer vale and
the total customer cost of a marketing offer- “Profit ” to the customer (Kotler
2005).

Appearance of customer’s non-value-maximising behaviour- due to long term


friend ship with salesperson, policy of buying at the lowest price or customer is
short of cash (Kotler 2005).

Expectations are based on the customer’s past buying experiences. The opinions
of friends and associates, and marketer and competitor information and
promises (Kotler 2005).

Tracking customer satisfaction;

Complaint and suggestion system;

A customer-centred organisation makes it easy for customers to make


suggestions or complaints, Virgin trains, immediately hand out customer
complaint forms as soon as there is any reason for passengers to complain, such
as train being delayed. Another example is that of Richer sounds, they give their
customers a card with the shops team, which is a free post letter addressed to
Julian richer (the chain owner) with a very humble message explaining the
owners personal interest in his customers suggestions and comments regarding
the customer service within the shop (Kotler 2005).

Customer satisfaction surveys;

Note: Rather than complain most customers switch suppliers (Kotler 2005).

One out of every four purchases results in consumer dissatisfaction, but fewer
than 5 % of dissatisfied customers complain (kotler 2005).

Responsive companies take direct measures of customer satisfaction by


conducting regular surveys. They send questionnaires or make telephone calls
to a sample of recent customers to find out how they feel about various aspects
of the company’s performance. (Kotler 2005).
Ghost shopping;

This involves researchers posing as buyers. These ghost shoppers can even
present specific problems in order to test whether the company’s personnel
handle difficult situations well. (Kotler 2005)

Lost customer analysis;

Companies should contact customers who have stopped buying or who have
switched to a competitor, to learn why this has happened. Conducting exit
interviews (Kotler 2005).

2000)- David walters, ‘Implementing value strategy through the value chain’,
Management Decision, 38,3 (2000), pp. 160-78

Value chain- A major tool for identifying ways to create more customer value
(Kotler 2005).

The value chain breaks the firm into nine value- creating activities in an effort to
understand the behaviour of costs in the specific business and the potential
sources of competitive differentiation. The nine value-creating activities include
5 primary activities and four support activities.

The primary activities involve

– Inbound logistics --the sequence of bringing materials into the business.


– Operations--operating on the materials.
– Outbound logistics--sending the, operated on materials, out.
– Marketing and sales—marketing the outbound materials.
– Service—servicing the materials that have been sold.

The support activities occur within each of these primary activities, whereby the
company pulls in its resources from all departments. (Kotler 2005).

For a long time, firms have focussed on the product as the primary means of
adding value, but customer satisfaction also depends upon other stages of the
value chain (Jose M.M Bloemer 1992)- Jose M. M Bloemer and Jos G.A.M Lemmick,
‘the importance of customer satisfaction in explaining brand and dealer loyalty’,
Journal of marketing management, 8, 4 (1992), pp. 351-64

Under the value-chain strategy concept, the firm should examine its costs and
performance in each value-creating activity to look for improvements. It should
also estimate its competitors costs and performances as benchmarks. To the
extent that the firm can perform certain activities better than than its
competitors, it can achieve a competitive advantage. (Kotler 2005)
The firm’s success depends not only on how well a department does its work ,
but also on how well the activities of various departments are coordinated.
Too often individual departments maximise their own interests rather than
those of the whole company and the customer. Individual departments
have erected walls that impede the delivery of quality to the customer.
(Kotler 2005)

Companies used to view their suppliers and distributers as cost centres and, in
some cases, as adversaries. However now they are selecting partners
carefully and working out mutually profitable strategies. Increasingly in
today’s marketplace, competition no longer takes place between
individual competitors. Rather it takes place between the entire value
delivery systems created by these competitors. (Kotler 2005)

Marketing is responsible for designing and managing a superior value delivery


system to reach target customer segments. Today’s marketing managers
must think not only about selling today’s products , but also how to
simulate the development of improved products, how to

Work with other departments in managing core business processes and how to
build better external partnerships.(kotler 2005)

Quality- the totality of features and characteristics of a product or service that


bear on its ability to satisfy stated or implied needs. (Kotler)

Internet companies are willing to pay a high price for prospective customers
because they hope to turn them into profitable customers. (Kotler 2005)

Profitable customer- a person, household or company whose revenues over


time exceed, by an acceptable amount the company’s costs of attracting, selling
and servicing that customer. (Kotler 2005)

Customer lifetime value- the amount by which revenues from a given


customer over time will exceed the company’s costs of attracting, selling and
servicing the customer. (Kotler 2005).

High customer churn involves higher costs than if a company retained all its
customers and acquired no new ones. (Kotler 2005)

Relationship marketing—the process of creating, maintaining and enhancing


strong, value – laden relationships with customers and other stakeholdes.(Kotler
2005)

The goal of relationship marketing is to deliver long term value to customers and
the measure of success is long term customer satisfaction. It involves building
relationships at many levels, economic, social, technical, and legal- resulting in
high customer loyalty (Kotler 2005).

3 types of relationships (Kotler 2005);


Accountable- the salesperson calls the customer a short period after the sale
has been made to check whether the product is meeting the customers
expectations. The salesperson also solicits fromt he customer any product
improvement suggestions and any specific disappointments. This information
helps the company to continuously improve its offering.

Proactive- the salesperson or others in the company phone the customer from
time to time with suggestions about improved product use or helpful new
products.

Partnerships- the company works continuously with the customer and with other
customers to discover ways to deliver better value.

Another way in which to build strong customer relations is via the addition of
benefits (social or financial), via the use of air mile loyalty cards, where
customers may choose to pay more, in order to add miles together so as to
eventually receive a free ticket.

Smart companies capture information at every touch point (Kotler). Example


being tescos RFID and their ability to understand the customer, their weakness
lies within relationship management with their suppliers, etc.

CRM consists of sophisticated software and analytical tools that integrate


customer information from all sources, analyse it in depth, and apply the results
to build better customer relationships.

Through CRM companies such as MVC the music store are able to know what
they have, brought in and sold so as to target specific customers on promotions
as they know that they exist and how many there are, so via news were able to
attract customers who like country music over their promotions during the
Nashville country music festival. And Ping the golf equipment manufacturer have
customer specific data on products sold and brought in or manufactured in their
data-warehouse with specific details such as grip size and assembly instructions,
so all a customer has to do is call in and give then their serial number and ping
will ship the exact club to them within 2 days, when otherwise this process would
take a few weeks.(Kotler 2005)

Transaction marketing is good for customers with short time horizons where
they may switch suppliers due to the products in the market being more or less
undifferentiated...DELL (Kotler 2005)

Relationship marketing can be beneficial in the case of customers with long time
horizons, as the switching costs are quite high. (Kotler).

Any company with a website can market globally- (Business week


3/5/1999)-“intel is eyeing E-commerce” p.52Consumers can not only order books
or CDs, but virtually “try on” clothes at the Gap website and “sit” in the latest
model car from BMW, Ford, Mercedes-benz, at any of these auto makers sites.
(Fortune 7/12/1998)-“Commerce- No longer a Novelty, Internet Shopping Takes
Off”, Fortune, pp.245-46.
Toys R Us invested $80 million into its online retailing services in its quest to
become the number-one toy retailer on the internet. —(Kotabe 2001)—Global
marketing management, Masaaki Kotabe and Kritiaan helsen 2nd edition.

With the current recession prevailing market, there are three types of end consumers,
these are; “flight to thrifty”, “flight to quality”, “flight to provenance”. (Nikala Lane, lecture
5, 2009) Flight to thrifty is used to describe those customers, who have not been directly
affected by the recession. They develop the habit of resorting to cheaper forms of suppliers,
an example being; grocery shopping at Aldi. Flight to quality is used to describe those
customers who may have been affected by the recession but choose to treat themselves, and
so resort to Waitrose and Sainsbury. Finally flight to provenance describes those customers
who have weathered the recession and continue to shop at delicatessens.

A big company such as Tesco, which makes a strong effort in order to identify its
customer requirements via means such as their RFID, are seen to, in the near future, to be
stuck in the middle, when it comes to the post recession customer base. The consumers have
diversified on price, and quality, those choosing price shop at aldi, whilst those choosing
quality choose waitrose or their delicatessens.

Tesco markets themselves with

SCM, Nigel
F peircy and Nikala Lane, Strategising the sale organization, oxford university
press, 2009.
SCM- Nikala
Lane.

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