Customer Value and Satisfaction Overview

Customer Value

• Customer value is the difference between the total customer value and its cost.
• Total customer value is the sum of the benefits a customer expects from a product or service.
• Total cost to the buyer is the cost the buyer expects to incur in evaluating, purchasing, and using the product or service.
• It includes financial cost, time, energy, and psychological cost.
• A company can improve its offer by:
  • Increasing overall customer value (product, service, staff, image)
  • Reducing the total cost of the customer (lower price, time, energy, psychic cost)
• Customer value is the most important basis for market success.
• To be successful, customer value must be:
  • Relevant: Heinz ketchup - "The thickest ketchup in the West"
  • Differentiating: Do competitors offer the same?
  • Defensible: Small enterprises can't easily replicate.
  • Credible: Do customers believe the company can deliver?

Customer Satisfaction

• Customer satisfaction is the delight or disappointment resulting from comparing the perceived performance of a product against expectations.
• Quality is a customer-oriented definition: a set of characteristics of a product or service that satisfy existing or perceived needs.
• Total quality management (TQM) aims to improve the quality of all processes, products, and services in an organization.
• Producer quality focuses on compliance with requirements (hygiene, nutritional, organoleptic), while consumer quality is a relative concept focused on sensory and functional characteristics.
• Marketing is not a battle of products, but of perceptions!
• Quality must be perceived by the customer.
• Total food quality considers various dimensions of food quality that influence consumers' perceptions and choices.
• Intrinsic cues are physical characteristics (size, color, taste, flavor) that form the basis of the consumer's perception of quality.
• Extrinsic cues are external signals (price, store image, brand image) that contribute to the perception of quality.

Opportunities to Improve Consumer Quality

• Elements of the marketing mix (4P) can impact perceived quality.
• Manufacturer image can enhance perceived quality:
  • Expensive coats use expensive silk lining to signal quality to customers.
  • Mower manufacturers design products to be noisier because customers perceive noise as a sign of higher quality.
  • Mercedes use chassis coating for a perceived quality enhancement.
  • Champagne producers use cork stoppers for premium brands.
  • Car manufacturers make doors to close tightly to test quality.
• Country image can influence consumer perception of quality.

Brand Value

• BrandZ ranks valuable brands globally.
• Apple, Google, and Microsoft are currently the top 3 most valuable brands.
• Coca-Cola, Airtel, Shein, Nongfu Spring, Pepsi, Colgate, and Pampers are among the top-ranked brands.

Country Image

• The Anholt-Ipsos Nation Brands Index (NBI) measures the international reputation of 60 nations across six dimensions: Exports, Governance, Culture, People, Tourism, and Immigration and Investment.
• The hexagon represents the NBI:
  • The "Exports" aspect examines the "country of origin effect."
  • The "Governance" aspect assesses the perceived competence and honesty of government.
• Country image stereotypes can impact consumer perception of quality:
  • Pasta is associated with Italy.
  • Vodka is associated with Russia.

Customer Retention

• A profitable customer generates revenue exceeding the business' cost of acquiring, selling to, and servicing the customer.
• The best customers spend more than others: 16:1 in retail, 13:1 in hospitality, 12:1 in air travel, and 5:1 in hotels.
• The 80/20 rule suggests that the top 20% of customers account for 80% of company profits.
• The 80/20/30 rule states that the top 20% of customers provide 80% of profits, but half is eaten up by the bottom 30% of unprofitable customers.
• The importance of customer retention:
  • Acquiring a new customer costs five times more than keeping an existing one.
  • Companies lose around 10% of customers each year.
  • Reducing customer erosion by 5% can increase profitability by 25-85%.
  • The lifetime value of a customer is the net present value of the expected future profits from purchases over their lifetime.
• Reducing customer erosion:
  • Identify and measure customer retention rates.
  • Identify causes of churn and determine which customers could be better managed.
  • Assess the profit loss when a customer leaves.
  • Determine the cost of reducing churn.
• The aim is to increase customer lifetime.
• Organizations should avoid being "Customer Compelled" and instead focus on a disciplined approach to serving specific customers with specific benefits and prices.

This quiz explores the concepts of customer value and satisfaction, highlighting their significance in market success. Delve into how businesses can enhance customer perception through value differentiation and cost management. Understanding these principles is crucial for developing effective marketing strategies.