HANDOUT 2 FOR PRINCIPLES OF MARKETING

UNIT 2: Building Customer Loyalty through Customer Service

TYPES OF MARKETING

1. Relationship Marketing
- Process of building and maintaining profitable customer relationships by delivering superior
customer value and satisfaction, thus ensuring brand loyalty.
- When customers are satisfied, it is more likely that they will become loyal customers
because they will keep on patronizing the brand.

Levels of Relationship Marketing

- This serves as guide in improving customer satisfaction

1. Basic Marketing PM
2. Reactive Marketing
3. Accountable Marketing ProM
4. Proactive Marketing AM
5. Partnership Marketing RM
BM
Basic Marketing: This is also called as direct sales and is the most basic level of interaction between the
company and the customer. Example of this is if a salesperson takes charge of selling the products or
services to consumers.

Reactive Marketing: The 2nd lowest level of relationship marketing wherein the customers contacts the
company to ask for inquiry or queries about the product or service

Accountable Marketing: In this level, the salesperson voluntarily contacts the customer to ensure that
the product is in perfect condition and asks if it met the latter’s expectations.

Proactive Marketing: The company works closely with a group of regular and loyal customers who
provide constructive feedback for the improvement of the product or service.

Partnership Marketing: The highest level of the relationship marketing wherein they already built a
loyal group of customers who can help in improving its performance and offerings, In partnership
marketing, these loyal customers are part of the company and the first who can experience the new
product that they offer.

Building Customer Value

Customer Value – defined as the satisfaction derived from what a customer may experience

Or expect to experience by choosing a particular action relative to the cost of action.

LEVELS OF CUSTOMER VALUE

1. Basic & Expected Value/levels

2. Desired Customer Value
3. Unanticipated Customer Value

BASIC and/or EXPECTED VALUE or LEVELS

- These levels include the basic requirements of conducting a business meaning it is the
expected value that the customers will acquire once they buy the product or service.
- Example is that the restaurants are expected to have spacious dining area and clean tables
and utensils.

DESIRED CUSTOMER VALUE

- This involves what the customers want from the purchase or service experience they will
acquire.
- Example is when a person buys an apple IPhone, he wants the privacy the IOS has and its
other functions that helped them to get ahead in their competition.

UNANTICIPATED CUSTOMER VALUE

- It pertains to an unexpected purchase or service experience that may go beyond what the
customers’ desire. Example of it is the air pods that the apple users got when apple decided
to remove the earphone jack in all of its new releases of IPhone.

Types of Customers

There are 4 types of customers based on projected customer retention and loyalty to the brand.

STRANGERS – customers whose needs do not fit the company’s offering. They can be a potential buyer
when they either buy their product or not and company does not need to invest
and exert effort to win them.

BUTTERFLIES – As the name implies, are not loyal to a specific brand because they shift from company
to company to find the best deals for them.

TRUE FRIENDS – Have needs that match the company offerings. They make repeat purchases and
patronize the brand so long as satisfies their needs making them loyal and
profitable customers so the company must invest in these customers and
strengthen its relationship with them.

FREELOADERS – are loyal but not profitable because of the limited fit between their needs and the
company’s’ offerings.

RELATIONSHIP DEVELOPMENT STRATEGIES

- Communicate with customers frequently and effectively

- Offer customer rewards
- Conduct special events and provide sponsorships
- Enhance customer service
- Utilize language to reach a wider customer base
Types of Marketing

2. Service Marketing

Service – is an act that is provided by a party that creates value and provides benefits to the other party.
Organizations that offer services include restaurants, hotels, airlines, banks, schools, hospitals,
telecom companies, among others.

Characteristics:

1. Intangible – A service does not have a physical manifestation that can be seen, touched and
described quantitatively. For a customer to remember and rate the quality of the service, they
must experience it.
2. Inseparable – A service involves simultaneous production and consumption, so there is outright
feedback.
3. Perishable – Because they are intangible, rendered services cannot be stored or returned.
4. Homogeneous – The service itself is the same but the way it is provided varies from time to time

Components of Service Marketing

1. PRODUCT and its Elements – There are services that only supplement the main product. The
goal of the marketer is to create a bundle of supplementary services that increases the value of
the main product. Example is free delivery and maintenance
2. Time and PLACE – The channel of distribution is crucial in service delivery. It needs that the
availability of the product should be rendered on time and in appropriate venue or location.
3. PROCESS – This is the method of the delivery. Marketers should be able to make the process of
availing and receiving the service convenient for the customers
4. Quality Service or PRODUCTIVITY – the kind and quality of service provided to a customer
cannot be separated from how the service is rendered. The quality of service is seen in how the
service satisfies and meets the need, wants, and expectations of the customer. Example of this
are the chairs barbers use in barbershops, if there are 2 or more of those chairs then they can
cater a lot of customers. The quality of service is not just in their haircut but the queue to wait
when getting haircut
5. PEOPLE or service providers – The ultimate proof of service quality manifests in the people who
provide the service to the customers. They must be skilled, knowledgeable, friendly,
accommodating, and customer-oriented. Like the importance of people for all of the companies,
in service, these people who did the service is vital for the service to be of high quality.
6. PROMOTION – companies must use various means to inform the public about the service and
reach a wider customer base.
7. PHYSICAL EVIDENCE – While a service is intangible, there should still be visible cues that will
indicate its quality.
8. PRICE – the monetary value of the good or service, the price of the service depend on its
perceived quality
TYPES OF MARKETING

3. STRATEGIC AND TACTICAL MARKETING

STRATEGIC MARKETING is a process of planning, developing and implementing maneuvers to obtain a

competitive edge in your chosen niche. This process is necessary to outline and simplify a direct map of
the company's objectives and how to achieve them

According to Lambin, the role of strategic marketing is “to lead the firm towards attractive economic
opportunities that are adapted to its resources and know-how and offer a potential for growth and
profitability.

Art of War - The Art of War is an ancient Chinese military treatise dating from the Late Spring and
Autumn Period. The work, which is attributed to the ancient Chinese military strategist Sun Tzu, is
composed of 13 chapters. Each one is devoted to an aspect of warfare and how it applies to military
strategy and tactics. It is use in business because it involves outsmarting one’s opponent to avoid
physical battle meaning it stresses the importance of understanding and adapting to the environment
where one operates, and asserts that the key to implementing strategies is through understanding the
relationship between oneself and one’s enemy, or in the case of marketing , between the company and
the customers, and its competitors.

TACTICAL MARKETING refers to the actions a company undertakes in order to execute an organization’s
strategy. It also refers to the detailed action program covering a shorter period.

Here are the following steps in describing tactics in the marketing plan:

1. Prepare an action plan – list down the steps in delivering each tactic and note important details
such as time frame, suppliers, requirements, issues, and persons in charge.
2. Name the necessary resources and monitor the allocated budget –Get quotations for all
elements of the proposed tactics and make a detailed budget plan
3. Identify how the success of the tactics will be measured – outline how to evaluate the
effectiveness of the tactics by setting goals and benchmarks.

Marketing Environment -the combination of external and internal factors and forces which affect the
company's ability to establish a relationship and serve its customers.

Macro Environment:

The company is not alone in its business environment. It is surrounded by and operates in a larger
context. This context is called the Macro Environment. It consists of all the forces that shape
opportunities, but also pose threats to the company.

The Macro Environment consists of 6 different forces. These

are: Demographic, Economic, Political, Ecological, Socio-Cultural, and Technological forces. This can
easily be remembered: the DESTEP model, also called DEPEST model, helps to consider the different
factors of the Macro Environment.
Demographics:

Demographic forces relate to people. The name refers to the term Demography. The latter refers to the
study of human populations. This includes size, density, age, gender, occupation and other statistics.
Why are people important? Because on the whole, their needs is the reason for businesses to exist or in
other words, people are the driving force for the development of markets. The large and diverse
demographics both offer opportunities but also challenges for businesses. Especially in times of rapid
world population growth, and overall demographic changes, the study of people is crucial for marketers.
The reason is that changing demographics mean changing markets. Further, changing markets mean a
need for adjusted marketing strategies.

Therefore, marketers should keep a close eye on demographics. This may include all kinds of
characteristics of the population, such as size, growth, density, age- and gender structure, and so on.

Economic forces:

The Economic forces relate to factors that affect consumer purchasing power and spending patterns. For
instance, a company should never start exporting to a country before having examined how much
people will be able to spend. Important criteria are: GDP, GDP real growth rate, GNI, Import Duty rate
and sales tax/ VAT, Unemployment, Inflation, Disposable personal income, and Spending patterns.

Socio-Cultural forces:

The Socio-Cultural forces link to factors that affect society’s basic values, preferences and behavior. The
basis for these factors is formed by the fact that people are part of a society and cultural group that
shape their beliefs and values. Many cultural blunders occur due to the failure of businesses in
understanding foreign cultures. For instance, symbols may carry a negative meaning in another culture.

Technological Forces:

Technological forces form a crucial influence in the Macro Environment. They relate to factors that
create new technologies and thereby create new product and market opportunities.

A technological force everybody can think of nowadays is the development of wireless communication
techniques, smartphones, tablets and so further. This may mean the emerge of opportunities for a
business, but watch out: every new technology replaces an older one. Thus, marketers must watch the
technological environment closely and adapt in order to keep up. Otherwise, the products will soon be
outdated, and the company will miss new product and market opportunities.

Ecological forces:

Ecological, or natural forces in the Macro Environment are important since they are about the natural
resources which are needed as inputs by marketers or which are affected by their marketing activities.
Also, environmental concerns have grown strongly in recent years, which make the ecological force a
crucial factor to consider. For instance, world, air and water pollution are headlines every marketer
should be aware of. In other words, you should keep track of the trends in the ecological environment.
Important trends in the ecological environment are the growing shortage of raw materials and the care
for renewable resources. In addition, increased pollution, but also increased intervention of government
in natural resource management is an issue.

Political forces:

Every business is limited by the political environment. This involves laws, government agencies and
pressure groups. These influence and restrict organizations and individuals in a society. Therefore,
marketing decisions are strongly influenced and affected by developments in the political environment.

Before entering a new market in a foreign country, the company should know everything about the legal
and political environment. How will the legislation affect the business? What rules does it need to obey?
What laws may limit the company’s ability to be successful? For example, laws covering issues such as
environmental protection, product safety regulations, competition, pricing etc. might require the firm to
adapt certain aspects and strategies to the new market.

Source: https://marketing-insider.eu/macro-environment/

Microenvironment

Customers

A customer may be an individual or household, an organization that purchases a product for use in the
production of other products, or an organization that purchases a product for resale at a profit. This
customer factor of a marketing microenvironment can be further divided into business and institutional
customers and state, city and municipal government’s customers. Marketing specialists, or marketers,
develop and market messages to appeal to a company's individual customers' needs.

Suppliers

A company relies on other producers and vendors for supplies and other production factors, such as
labor, utilities and equipment required to produce and deliver a product to a customer. As a result,
events affecting a producer or vendor also have the potential to impact customer satisfaction, whether
those events impact the availability of materials, supply chain costs or product quality. A marketing
department formulates its marketing strategy in light of these risk factors.

Marketing Intermediaries

Organizations typically rely on banks, venture capitalists and other sources to finance operations;
wholesalers and retailers, warehouses and transportation companies to distribute goods; and
advertising, market research firms and public-relations firms to market their products. The marketing
strategy is defined in part on the degree to which each intermediary can potentially increase or decrease
customer satisfaction.
 Types of Marketing Intermediaries

Wholesalers – they buy goods by bulk

Retailers – they buy goods from wholesalers and retailers as they bought those for reselling.
Distributors – the company selected them to resale their goods
Agents – they made deals with customers and gain commission in every sale
Brokers – like agents but used mainly in selling house and lot as they are the one who talks with
the client and look for agents to sell them and find customers to buy that house and lot.

Organization

All departments within an organization have the potential to positively or negatively impact customer
satisfaction. As a result, a marketing department works closely with the finance, purchasing, research
and development, and manufacturing departments, among others, to identify ways that each
department can contribute to the provision of exceptional customer value, which leads to superior
customer satisfaction.

Competitors

Identify first who are your direct competitors and indirect competitors. Direct competitors are the type
of competitors who offers the same value and usage of that good while the indirect competitors are the
type that offer the same value but has difference between them. This will help the company to know
which company they need to compete with entirely and what are the possible threat and opportunity
they may gain knowing them.