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Developing Customer Loyalty. Relationship Marketing. What is the value of loyalty?. Long term relationships help both parties through mutually beneficial interactions

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Developing customer loyalty

Developing Customer Loyalty

Relationship Marketing

What is the value of loyalty
What is the value of loyalty?

  • Long term relationships help both parties through mutually beneficial interactions

    • Why would you solicit a “one time” walk-in to a clinic or hospital when you can become a “regular” health care provider for that patient

    • Similarly, why be a one time supplier based on a promotion when you can supply staples or components over time?

How to shift to relationships
How to shift to relationships

  • Episodic focus means initial care is followed by bills or complaints

  • Relationships means communication over time

    • Newsletters, calls, surveys, emails

    • Shift in focus from service delivery to customer value

  • Does Satisfaction yield loyalty?

Loyalty pyramid


Repeat Purchase






Loyalty Pyramid

What is loyalty
What is Loyalty?

  • Customer Retention

  • Share of Customer Purchases

  • Result from Meeting and EXCEEDING expectations

How do we create customer value
How do we create Customer Value?

  • Value = Clinical Quality + Process Quality – (Price + Service Acquisition Cost)

  • Clinical Quality

    • Technology and expertise provided

    • Ease with which the customer can access the clinical quality

    • Area of great concern to patients

      • Greatly impacts repeat purchases

  • Service Acquisition Cost

    • Set up costs, operating and maintenance costs

Service process quality
Service Process Quality

  • Dependability

    • Deliver what was promised?

  • Responsiveness

    • Timely manner of delivery?

  • Authority

    • Provider elicit confidence during delivery process

  • Empathy

    • Take customer point of view?

  • Tangible Evidence

    • Evidence of service being performed/

Gap analysis
Gap Analysis

  • Management Perceptions of Customer Expectations – Expected Service

  • Management Perceptions – Service Quality Specifications

  • Service Quality Specifications – Service Delivery

  • Service Delivery-External Communication to Consumers

  • Perceived Service – Expected Service


  • Gap 1

    • Privacy concerns of patient and exhibited charts in bins

  • Gap 2

    • Set standard for prompt appointments, call answering through standards developed by management

  • Gap 3

    • Primarily personnel issues

  • Gap 4

    • Promotional gap .. What do we promise to patients?

  • Gap 5

    • Directly flows from Gap 4 – what did you promise, what do I expect, what did I getdelivered?

Why do we lose customers
Why do we lose customers?

  • Don’t handle complaints

  • Competition

  • Relocation

  • No specific reason – benign neglect

Customer recovery
Customer Recovery

  • Tough to do if negative impressions formed

    • Recovery training must be provided

    • Frontline employees see their role as apart of the system

    • Employees buy into the “quality conscious” organization

    • Make complaining easy

    • Recovery standards must exist

What is a product
What is a Product?

  • a bundle of perceived tangible and intangible attributes that has the potential to satisfy present and potential customer wants and is received in exchange for money or other consideration

Three dimensions of product
Three Dimensions of Product

  • Core Product

    • the basic benefit

  • Tangible Product

    • product attributes

      • packaging, brand

  • Augmented Product

    • extra support system

      • warranties, installation, delivery

Tangibility continuum
Tangibility Continuum

  • Intangible ----------> Tangible

  • Services Only -----> Hands On Products

  • Satisfaction and Evaluation of the Product/Service tie to tangibility!

Classification of products
Classification of Products

  • Classified based on how long they last

    • Durable – benefits over long period

    • Nondurable – benefits for a short period

  • Consumer Goods – Classified by how bought

    • Convenience Goods – staples, impulse, emergency

    • Shopping Goods – attribute or price based

    • Specialty Goods – unique characteristics

    • Unsought Goods – little interest til need arises

Convenience goods
Convenience Goods

  • products purchased frequently, immediately and with minimum effort

  • low-priced, branded, widely distributed

  • low risk, low effort

Shopping goods
Shopping Goods

  • purchased after comparisons made of competing products and stores

  • compare on price, quality, style, color

  • also known as comparative goods

Specialty goods
Specialty Goods

  • unique characteristics cause the buyer to prize a particular brand

  • infrequently purchased

  • time and effort high

  • exclusive distributorship

Unsought goods
Unsought Goods

  • Products that the consumer:

  • does not know about

  • knows about but chooses not to seek them out!

  • Examples: burial plots, insurance

Industrial products classification
Industrial Products Classification

  • Installations - specialty goods! major capital purchases (buildings, land)

    • impact future earnings of the business

    • long-lived, expensive

  • Accessories - capital items, less expensive, shorter life span

    • computers, word processors

    • supplement production operations

  • Maintenance, repair

Industrial products
Industrial Products

  • Component Parts - finished products incorporated into the final product

    • often manufactured by another division or company

    • may undergo additional processing

    • examples: tires, brakes, chips

  • Raw Materials - necessary for production but need further refinement

    • wood, steel

Industrial products classifications
Industrial Products Classifications

  • Supplies

    • regular expense items necessary for daily operation

    • not apart of the final product

  • examples: paper, oil

  • convenience goods to the industrial market

Product innovation
Product Innovation

  • essential for long-term survival

  • products become obsolete and replacements must be developed

  • for today’s more critical consumer - products need to be truly innovative vs. marginally different

  • environmental factors have an increasingly important role

What is a new product
What is a “new” product?

  • Breakthrough Innovations

    • computers, phone

  • Pioneering Innovations

    • PC, CD player

  • Adaptive Innovations

    • dryer sheets

  • Imitative New Products - clones

New product development process
New Product Development Process

  • Generation of New Product Ideas - consumer hotlines

  • Screening and Evaluation - separating ideas with potential from those incapable of meeting company objectives

  • Business Analysis - measure consumer attitudes/perceptions to new product idea

New product development process cont d
New Product Development Process (cont’d)

  • Product Development - process of converting a potentially profitable idea to a tangible product

  • Test Marketing - determine consumer reactions to the product under near normal circumstances

  • Commercialization - complete implementation of product introduction

Criteria for evaluation of new product ideas
Criteria for Evaluation of New Product Ideas

  • adequate market demand

  • fit financial criteria

  • fits current environmental and social standards

  • fit company’s present marketing structure

  • fit company’s image and objectives

Product adoption and diffusion process
Product Adoption and Diffusion Process

  • Adoption Process

    • decision making activity of an individual through which a new product is accepted

  • Diffusion of a New Product

    • process by which the innovation is spread through a social system over time

Adoption process
Adoption Process

  • Awareness

  • Interest

  • Evaluation

  • Trial

  • Adoption/Rejection

5 categories of adopters diffusion process
5 Categories of Adopters/Diffusion Process

  • Innovators – 2.5%

  • Early Adopters – 13.5%

  • Early Majority - 34%

  • Late Majority - 34%

  • Laggards - 16%

Five characteristics of innovation
Five Characteristics of Innovation

  • Relative Advantage - superior

  • Compatibility - consistent with experience and values

  • Complexity - difficulty in understanding

  • Communicability - observable use and communicability to others

  • Trial ability - accessible for trial use

The product life cycle
The Product Life Cycle

  • Introduction

    • primary demand stimulation

    • high percentage of product failures

    • operations costs are high

    • distribution limited

    • net losses expected

The plc growth
The PLC - Growth

  • sales volume rises rapidly

  • new consumers make initial purchases

  • early buyers repurchase

  • sales and profit begin to rapidly

  • competitors enter market

  • prices may fall

  • economies of scale begin to occur

  • begin to stimulate brand demand

Plc maturity
PLC - Maturity

  • Industry sales continue to grow in early part of stage

  • sales increase at a decreasing rate

  • price competition intensifies

  • profits decline

  • competitors dropout

Plc decline
PLC - Decline

  • innovation may bring about declining demand

  • consumers’ preferences shift away from the product offerings

  • cost control becomes critical

  • competitors withdraw

  • promotional efforts reduced or withdrawn

How do marketing strategies change across the plc
How Do Marketing Strategies Change Across the PLC?

  • expanding the product line

    • Campbell’s soups offering single serving sizes

  • find new uses for the product

    • baking soda

  • find new markets

    • tobacco companies going overseas

The product mix
The Product Mix

  • Width - number of product lines carried

  • Length - number of products carried

  • Depth - how many variations offered for each product in the line

Product mix strategies
Product Mix Strategies

  • Expansion Strategies -

    • add lines - related or unrelated

    • add depth

    • trading up - add a prestigious line

    • trading down - adding a lower priced line to a prestigious/high priced line

    • alteration of existing products - example redesign the package

Product mix strategies1
Product Mix Strategies

  • Contraction - thinning out the product line, weed out low profit products

  • Product Positioning - placing the product in the minds of the consumer relative to the competitors