Customer Value & Satisfaction PDF

Customer value, customer satisfaction Brigitta Unger-Plasek, PhD Assistant professor How do customers decide which product to choose? The answer is not so simple… Customer value Buyers seek to maximise value Customer value is the value that a brand, p...

Customer value, customer satisfaction Brigitta Unger-Plasek, PhD Assistant professor How do customers decide which product to choose? The answer is not so simple… Customer value Buyers seek to maximise value Customer value is the value that a brand, product or service represents to the consumer. Customer value is the difference between the total customer value and its cost. Total customer value is the sum of the benefits that a customer expects from a product or service. The total cost to the buyer is the cost that the buyer expects to incur in evaluating, purchasing and using the product or service. financial cost, the time, energy and psychological cost to the buyer  The company can improve its offer in two ways: increase overall customer value (product, service, staff, image) reduce the total cost of the customer (lower price, time, energy, psychic cost) It is not the competitive advantage but the benefit to the customer that counts! Is the product feature really what the customer wants and needs or are we doing something that the competitor cannot? Customer value is the most important basis for market success! How do we choose the customer value that our company offers? Is it… …relevant? Heinz ketchup „The thickest ketchup in the West” …differentiating? Do our competitors offer the same? …defendable? small enterprises …credible? Do they believe we can make it happen? Case study The relevant value of baby food from Univer What is not yet taken... General babyfood values „Csupajó” values Organic or used trend  Philip Kotler - Marketing and Values https://www.youtube.com/watch?v=P-IXyLJ39eM Customer satisfaction Customer satisfaction is the delight or disappointment of a customer resulting from a comparison of the perceived (experienced) performance of a product against expectations. Benefits of customer satisfaction high repurchase rate, positive word of mouth, more intensive purchase and use, long customer lifetime, reduced price sensitivity Forms of satisfaction: dissatisfied, satisfied, very satisfied, delighted Many companies have a stated goal of achieving total customer satisfaction (TCS), which then leads to "irrational" consumer behavior, this is brand loyalty „We will not be 100% satisfied until you are” (Cigna) „The reason our customers are so satisfied is because we are not.”(Honda)  However, increasing customer satisfaction is not always the main goal! Not all customer satisfaction tools are worth using! Benchmarking To the extent that you outperform your competitors, you will gain a competitive advantage and your customers will be more satisfied. Customers who are easier and harder to satisfy Measuring customer satisfaction 1. Complaints can be made 2. Customer satisfaction analysis Measuring repurchase intentions Would you recommend this product or service 3. Test purchase 4. Analysis of lost customers High customer satisfaction is worth communicating! The ladder of loyalty  Customers should not only respect the product, they should love it! Love brands are those that have established strong emotional connections with their customers. These brands evoke feelings of loyalty, trust, and affection. Mass products are Fashion fads are consumer goods or short-lived services that are trends in widely available and clothing, affordable. They are accessories, or designed to cater to styles that gain a broad audience sudden and typically lack popularity and distinct emotional or then quickly fade ethical branding. away  What makes our customers particularly satisfied? What is quality? A customer-oriented definition of quality: the set of characteristics of a product or service that make it capable of satisfying existing or perceived needs. Total quality management (TQM) TQM: An organisation-wide approach to improve the quality of all processes, products and services in the organisation. „Quality is our best guarantee of customer loyalty, our strongest defense in the face of foreign competition, and the only path to lasting growth and income” (John F. Welch Jr., GE) Producer quality vs. consumer quality Producer quality: means compliance with requirements (hygiene, nutritional and organoleptic characteristics) Consumer quality: a relative concept, expressed in terms of quality level (sensory and functional characteristics) Marketing is not a battle of products, but of perceptions! Quality – an overused term… Quality must be perceived by the customer! Total food quality model A comprehensive framework for understanding and assessing the quality of food products from a consumer perspective. This model takes into account various dimensions of food quality that influence consumers' perceptions and choices. (Grunert, 2007)  Intrinsic cue: The physical characteristics of the product (size, colour, taste, flavour) that form the basis of the consumer's perception of the quality of the product. Before purchase: appearance, smell, After purchase: taste, texture Extrinsic cue: Signals external to the product (price, store image, brand image) that form the basis for consumer perception of product quality. Opportunities to improve consumer (perceived) quality Elements of the marketing mix (4P) The manufacturer image The country image Elements of the marketing mix Companies that produce expensive coats use expensive silk as a lining material, as women judge the quality of the coat partly on the quality of the lining material.  A mower manufacturer designs its products to be noisier than usual because customers perceive a "noisy" mower to be of better quality.  Many Mercedes products are chassis coated, as the coating gives the impression that the product is of high quality.  Champagne producers are corking their better quality champagnes, which guarantees better quality for customers.  Car manufacturers make doors to close tightly, as many customers test the quality of the product by smashing the car door. Opportunities to improve consumer (perceived) quality Elements of the marketing mix (4P) The manufacturer image The country image The most popular brands in Hungary. “A Superbrand offers consumers significant emotional and/or physical advantages over it’s competitors which (consciously or sub-consciously) consumers want, recognise, and are willing to pay a premium for.”  BrandZ – most valuable brands research In 2023: Apple remains the number one most valuable global brand, with a brand value of US$880bn, followed by Google (No.2; $578bn) and Microsoft (No.3; $502bn) Coca-Cola re-joins the Top 10, rising seven places to No.10 and increasing its brand value by 8% 16 brands grew in value with Indian telecom provider, Airtel (No.76; +24%) the fastest riser in the global ranking Two Chinese brands join the Global Top 100: Shein (No.70; $24bn) and Nongfu Spring (No.81; $22bn) Nine brands returned to the brand ranking, including Pepsi (No.91; $19bn) Colgate (No.95; $18bn) and Pampers (No.100; $17bn) Across 13 categories, brands from Food & Beverages, Fast Food and Luxury proved to be the most resilient as they retained the greatest share of 2022 values https://www.kantar.com/campaigns/brandz/global Opportunities to improve consumer (perceived) quality Elements of the marketing mix (4P) The manufacturer image The country image  Anholt-Ipsos Nation Brands Index (NBI) over 60,000 interviews online in 20 panel countries with adults aged 18 or over each year Data are weighted to reflect key demographic characteristics including age and gender https://www.ipsos.com/sites/default/files/ct/news/documents/2023-10/NBI-2023-Press-Release-Supplemental-Deck-December-23.pdf  NBI hexagon Exports: This aspect examines whether knowing where a product is made increases or decreases the likelihood of it being purchased (also known as the “country of origin effect”), whether a country has particular strengths in science and technology, and whether it is considered to be innovative in national and global pursuits Governance This aspect incorporates the perceived competency and honesty of government and its treatment of citizens and respect for their rights, as well as global behavior in the areas of international peace and security, environmental protection, and the reduction of world poverty. Culture Cultural aspects are measured by gathering perceptions of a country’s heritage and its contemporary cultural “vibes” accrued from music, films, art, and literature, as well as its perceived excellence in sports. People The general assessment of a nation’s friendliness is measured by whether respondents would feel welcome when visiting the country. Additionally, we measure the appeal of the people on a personal level – whether respondents would want to have a close friend from that country – as well as human resources on a professional level: That is, how willing respondents would be to hire a well-qualified person from that country. Tourism Respondents rate a country’s tourism appeal in three major areas: Natural beauty, historic buildings and monuments, and vibrancy of urban life and attractions. Tourism potential is also rated: How likely a respondent would be to visit a country if money were not an object. Immigration & Investment Lastly, a country’s power to attract talent and capital is measured not only by whether people would consider studying, working, or living in that country, but also by perceptions of the country’s economic prosperity, equality of opportunity, and ultimately whether it is perceived to be a place with a high quality of life. NBI Score The NBI score is an average of the scores from the six Indices mentioned above. There are between three and five rating questions for each of the Indices. Ratings are based on a scale from 1 to 7, with 7 being the highest or best, 1 being the lowest or worst, and 4 being the middle position which is neither positive nor negative. https://www.ipsos.com/sites/default/files/ct/news/documents/2023-10/NBI-2023-Press-Release-Supplemental-Deck-December-23.pdf  Top 10 ranked nations 2020-21: Overall NBI The NBI(SM) is an analytical tool which attempts to measure and rank the broad international reputation of 60 nations, across six dimensions of national competence: Exports; Governance; Culture; People; Tourism; and Immigration and Investment.  Top 10 ranked nations 2022-23: Overall NBI The NBI(SM) is an analytical tool which attempts to measure and rank the broad international reputation of 60 nations, across six dimensions of national competence: Exports; Governance; Culture; People; Tourism; and Immigration and Investment.  Nations as personalities https://www.ipsos.com/sites/default/files/ct/news/documents/2023-10/NBI-2023-Press-Release-Supplemental-Deck-December-23.pdf  Common Interest Attributes – Additional Topics https://www.ipsos.com/sites/default/files/ct/news/documents/2023-10/NBI-2023-Press-Release-Supplemental-Deck-December-23.pdf Country image stereotypes The pasta is good if it’s… Country image stereotypes The pasta is good if it’s Italian Country image stereotypes Vodka is the best when it’s… Country image stereotypes Vodka is the best when it’s Russian. Keeping a profitable customer A profitable customer is a person, household or business that generates revenue over an extended period of time that exceeds the cost to the business of acquiring, selling to and servicing the customer by an acceptable margin. The best customers spend more than others at a ratio of 16:1 in retail, 13:1 in hospitality, 12:1 in air travel and 5:1 in hotels. 80/20 rule: top 20% of customers provide 80% of company profits 80/20/30 rule: the top 20% of customers provide 80% of corporate profits, half of which is eaten up by the bottom 30% of unprofitable customers. It is not necessary that the company's biggest customers bring the biggest profits! Often it is the middle tier customers who make the most profit. The importance of customer retention 1. It is estimated that it costs five times more to acquire a new customer than to keep an existing one happy. Yet most companies are concerned with how to get new customers, not how to keep existing ones. 2. An average company loses around 10% of its customers every year 3. Reducing customer erosion by 5% can increase a company's profitability by 25-85%, depending on the sector. 4. As the lifetime of the retained customer increases, so does the profitability rate of the customer. Assets: Achieving higher levels of customer satisfaction (using relationship marketing) Reducing customer erosion 1. Identify and measure customer retention rates 2. Identify the causes of churn and determine which customers could be better managed. 3. Assess how much profit the company loses when it loses a customer. 4. The cost of reducing the proportion of customers who leave the company should be determined. 5. You have to pay attention to the customers. The aim: to increase customer lifetime. The lifetime value of a customer is equal to the net present value of the expected future profits from purchases over the lifetime of the customer.  Some organizations, wanting to avoid the myopic path to Internally- Driven, try to do anything and everything customers suggest, following the seductive path of the "Customer Compelled" organization. Just "be close to the customer, listen and do what they say," beckons this panacea. Yet, while customers often make many good suggestions, they also suggest many courses of action that are unactionable or unprofitable. And the diversity of requests is limited only by the diversity of customers a business serves. Randomly following some or all these suggestions is fundamentally different from Market-Focus - making a disciplined choice of which customers to serve and which specific combination of Benefits/Price to deliver to them (and which to deny them) Lanning, M., & Phillips, L. (1991). Building market-focused organizations. white paper, Gemini Consulting. Thank you for your attention!