markman chapter 5

• Customer-perceived value is the difference between the prospective customer’s evaluation of all the benefits and costs of an offering and the perceived alternatives
• Total customer benefit is the perceived monetary value of the bundle of economic, functional, and psychological benefits customers expect from a given market offering
• Total customer cost is the perceived bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of the given market offering
• Managers conduct a customer value analysis to reveal the company’s strengths and weaknesses relative to those of various competitors
• Oliver defines loyalty as “a deeply held commitment to rebuy or repatronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior”
• Value proposition consists of the whole cluster of benefits the company promises to deliver; it is more than the core positioning of the offering
• Value delivery system includes all the experiences the customer will have on the way to obtaining and using the offering
• Satisfaction is a person’s feelings of pleasure or disappointment that result from comparing a product’s perceived performance to expectations
• Periodic surveys can track customer satisfaction directly and ask additional questions to measure repurchase intention and the respondent’s likelihood or willingness to recommend the company and brand to others
• Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs
• A quality company is a company that satisfies most of its customers’ needs most of the time
• A profitable customer is a person, household, or company that over time yields a revenue stream exceeding by an acceptable amount the company’s cost stream for attracting, selling, and serving that customer
• Customer profitability analysis is best conducted with the tools of an accounting technique called activity-based costing
• Activity-based costing tries to identify the real costs associated with serving each customer—the costs of products and services based on the resources they consume
• Customer lifetime value describes the net present value of the stream of future profits expected over the customer’s lifetime purchases
• Customer relationship management is the process of carefully managing detailed information about individual customers and all customer “touch points” to maximize loyalty
• Personalizing marketing is about making sure the brand and its marketing are as relevant as possible to as many customers as possible—a challenge, given that no two customers are identical
• Permission marketing, the practice of marketing to consumers only after gaining their expressed permission, is based on the premise that marketers can no longer use “interruption marketing” via mass media campaigns
• Customer churn is when too many companies suffer from high defection
• Marketing funnel identifies the percentage of the potential target market at each stage in the decision process, from merely aware to highly loyal
• By calculating conversion rates, the funnel allows marketers to identify any bottleneck stage or barrier to building a loyal customer franchise
• Satisfied customers are the company’s customer relationship capital
• Frequency programs are designed to reward customers who buy frequently and in substantial amounts
• Club membership programs can be open to everyone who purchases a product or service, or limited to an affinity group or those willing to pay a small fee
• Customer database is an organized collection of comprehensive information about individual customers or prospects that is current, accessible, and actionable for lead generation, lead qualification, sale of a product or service, or maintenance of customer relationships
• Database marketing is the process of building, maintaining, and using customer databases and other databases to contact, transact, and build customer relationships
• Customer mailing list is simply a set of names, addresses, and telephone numbers
• Business database contains business customers’ past purchases, past volumes, prices, and profits, buyer team member names, status of current contracts, an estimate of the supplier’s share of the customer’s business, competitive suppliers, assessment of competitive strengths and weaknesses in selling and servicing the account, and relevant customer buying practices, patterns, and policies
• Data warehouse is where data collected by the company’s contact center is organized for marketers to capture, query, and analyze them to draw inferences about an individual customer’s needs and responses
• Data mining marketing statisticians can extract from the mass of data useful information about individuals, trends, and segments
• Customers are value maximizers who form an expectation of value and act on it
• Buyer’s satisfaction is a function of the product’s perceived performance and the buyer’s expectations
• Marketers play a key role in achieving high levels of total quality so that firms remain solvent and profitable
• Marketing managers must calculate customer lifetime values of their customer base to understand their profit implications
• Customer relationship management focuses on developing programs to attract and retain the right customers and meeting the individual needs of those valued customers
• Customer relationship management often requires building a customer database and data mining to detect trends, segments, and individual needs