Chapter 2 -- Building Customer Satisfaction Through Quality, Service, & Value

Otterbein College Winter 2000

Chapter Content
Define value & satisfaction - understand how to deliver them The nature of high-performance businesses How to attract & retain customers Improving customer profitability Total quality management
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Determinants of Customer Delivered Value

Image value Image value Personnel value Personnel value Services value Services value Product value Product value Monetary cost Monetary cost Time cost Time cost
Energy cost Energy cost

Total Total customer customer value value Customer Customer delivered delivered value value Total Total customer customer cost cost
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Psychic cost Psychic cost

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Satisfaction is...

...a persons feelings of pleasure or disappointment resulting from comparing a products perceived performance (or outcome) in relation to his or her expectations.

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High Performance Business

Set strategies to satisfy key... By improving critical business... and aligning...

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Stakeholders Processes

Resources

Organization
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The Generic Value Chain

Firm infrastructure Human resource management Technology Development Procurement Inbound OperaLogistics tions Outbound Logistics Marketing and sales
Ma rg
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Support Activities

Service

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Primary Activities

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Levi Strauss Value-Delivery Network

Order Du Pont Du Pont (Fibers) (Fibers) Order Order Order Sears Sears (Retail) (Retail) Customer Customer

Milliken Milliken (Fabric) (Fabric)

Levis Levis (Apparel) (Apparel)

Delivery

Delivery

Delivery

Delivery

Competition is between networks, not companies. The winner is the company with the better network.
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Satisfied Customers:
Are loyal longer Buy more (new products & upgrades) Spread favorable word-of-mouth Are more brand loyal (less price sensitive) Offer feedback Reduce transaction costs
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Levels of Relationship Marketing

High margin Many customers/ distributors Medium number of customers/ distributors Accountable Medium margin Reactive Consumer Durables Accountable Low margin Basic or Reactive FMCG Reactive

Proactive

Few Partnership Proactive customers/ Corporate Loans LRD market distributors

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Accountable
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Customer Development
Suspects

Prospects

First-time Repeat customers customers

Clients

Advocates

Partners

Disqualified prospects

Inactive or ex-customers

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Customer/Product Profitability Analysis

Customers C1 P r o d u c t s
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C2

C3

P1 P2 P3 P4

+ + +
High profit customer

Highly profitable product Profitable product Losing product Mixed-bag product

Mixed-bag customer

Losing customer

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The Profit Triangle

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at

r pe lo

Va lu ec

Profit Profit

ns io at

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Competitive advantage

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Quality
Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.

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Next...

Chapter 3 Winning Markets: Market-Oriented Strategic Planning

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