rValueUnit3.Customerand Satisfaction
Unit 3. Customer Value and Satisfaction
1.DefiningCustomerValueandSatisfaction(SeeP37)Morethan40yearsago,thelatemanagementguru Peter Drunker insightfully observed that acompany's first task is "to create customers."However,creating customers can be a difficulttask.Today's customers face a vast array ofproduct and brandchoices,price,andsuppliersThecompany must answer a key question:How docustomers maketheir choices?The answer is that customers choose themarketing offer that givesthem the most valueCustomersarevalue-maximizers,within theboundsof search costsand limited knowledgemobility,and income
2 ◼ More than 40 years ago, the late management guru Peter Drunker insightfully observed that a company’s first task is “to create customers.” However, creating customers can be a difficult task. Today’s customers face a vast array of product and brand choices, price, and suppliers. The company must answer a key question: How do customers make their choices? ◼ The answer is that customers choose the marketing offer that gives them the most value. Customers are value-maximizers, within the bounds of search costs and limited knowledge, mobility, and income. 1. Defining Customer Value and Satisfaction (See P37)
Customers form expectations of value and actupon them.Then they compare the actual valuethey receive in consuming the product to thevalue expected,and this affects their satisfactionand repurchases behavior.We will now examinethe concepts of customer value and customersatisfactionmorecarefullyCustomerValueConsumers buy from the firm thatthey believeoffers the highest customer delivered value-thedifference between total customer value and totalcustomercost(seeFigurebelow)
Customers form expectations of value and act upon them. Then they compare the actual value they receive in consuming the product to the value expected, and this affects their satisfaction and repurchases behavior. We will now examine the concepts of customer value and customer satisfaction more carefully. ◼ Customer Value ◼ Consumers buy from the firm that they believe offers the highest customer delivered value—the difference between total customer value and total customer cost (see Figure below)
CustomerDeliveredValue(SeetextP37-38)ProductServicesPersonnelImagevaluevaluevaluevalueTotalcustomervalueCustomerdeliveredvalueTotalcustomercostMonetaryTimeEnergyPsychiccostcostcostcost
4 Customer Delivered Value (See text P37-38)
How Do ConsumersChooseAmong Products and Services?Value Gained From Owning a Product andCosts of Obtaining the ProductisCustomer ValueProduct's Perceived Performancein DeliveringValue Relative to Buyer's Expectations isCustomer SatisfactionTotal Quality Management InvolvesImproving theQualityof Products,Services,andMarketingProcesses
5 How Do Consumers Choose Among Products and Services? Total Quality Management Involves Improving the Quality of Products, Services, and Marketing Processes Product’s Perceived Performance in Delivering Value Relative to Buyer’s Expectations is Customer Satisfaction Value Gained From Owning a Product and Costs of Obtaining the Product is Customer Value