Discussion2
TWO topics are required for Week 2. Choose Topic 1 OR 2 AND Topic 3 OR 4. Include at least two (2) references from learning material or outside sources. Reply to least two (2) classmate posts.
Topic 1: Customer satisfaction, loyalty & empowerment
Visit and choose ONE of these corporate websites to assess:
Coca-Cola (https://us.coca-cola.com/).
Red Bull (https://www.redbull.com/us-en/)
Starbucks (https://www.starbucks.com/)
Note: You will have to go beyond the main landing page to obtain the data you need for your response.
Respond to the following questions for the company website you have chosen:
What does this company do to build customer loyalty? To buildcommunity?
Are customers are empowered to do anything here? Are there opportunities for customer feedback? Anything else?
Does the company partner with other organizations to leverage the loyalty those other companies enjoy with their customers? If so, what organizations? What partnering activities is the company doing with those organizations?
Are you a loyal customer of this company or might be consider becoming one? Why or why not?
TOPIC 4: CUSTOMER LIFETIME VALUE – Personal Application
The goal of any formal customer relationship management program is to attract and retain profitable customers with high customer lifetime value.
Identify a company for which you might be considered a most valuable customer, where you are in Level 1 of their customers (See Figure 2.5, Levels of Customers Based on Profitability).
Visit https://neilpatel.com/blog/how-to-calculate-lifetime-value/. This site will give you an example of lifetime value using Starbucks as an example. Note all the variables that go into lifetime value calculations.
Record your lifetime value calculation and discuss how the company tries to retain and grow your business as a most valuable customer.
How to calculate lifetime value [Infographic]. (n.d.). https://neilpatel.com/blog/how-to-calculate-lifetime-value/
PLEASE ENSURE YOU REVIEW ALL ATTACHED RESOURCES BELOW!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Week 2 Overview
Principles of Marketing
MRKT 310
Overview for Week 2.
Customer Satisfaction, Loyalty,
Empowerment, and Management
Marketing is all about the customer!
2.1 Customers and customer communities
2.2 Loyalty management
2.3 Customer satisfaction
2.4 Customer Relationship Management (CRM)
2.5 Ethics, laws, and customer empowerment
The customer is so very important to marketing we are putting our discussion of customers right up front in the course. Since we are all customers, you should find this material very relevant to some of your own experiences with companies and their products.
We slow down a little bit for Week 2 and we have only five sections to cover as outlined above.
2.1 Customer and customer communities
Are consumers and customers the same thing?
Consumers are anyone who has resources to buy anything
Customer is a person who has a need for the product or service offering, may not yet recognize the need (potential customers) or has recognized the need and actively pursuing the purchase decision process (current customers).
We may tend to use these two terms interchangeably during this course. The above points highlight the differences between them. Clearly, consumers is a much larger group than customers; but customers arent just those who buy a product, also everyone who might have a need for a product. Marketers need to consider them as well when developing marketing strategy.
Customers role in marketing
Spread word of mouth messages (positive and negative)
Influence other consumers buying decisions
Provide feedback to company (positive and negative) suggesting product changes
Tell companies what they need
Complain
Modern marketing thought acknowledges the role of the customer in the marketing process. You probably notice how influential you are in your friends or familys purchase decisions. You have probably filled out more than one customer satisfaction survey. You have probably checked out customer reviews on social media or the companys website before purchasing a product. These are all ways in which customers are a critical component in the marketing of a product or service.
How to customers insert themselves in the marketing process?
Talking
Influencer panels
Consumer communities
Social media
We can figure out how we insert ourselves via talking and social media as briefly mentioned in the previous slide, the influencer panels and consumer communities may not be as well known to us. Some of us may have had the experience of being asked to be part of an influencer panel where you periodically fill out a survey or perhaps even participate in a group discussion (focus group). Consumer communities are a by-product of social media, and are formal or informal sites for consumers to speak with one another about our experiences. Smart companies will be looking for consumer communities and participate in them to ensure the conversation provides accurate information about a product, or use the conversation as input for changing how the product is marketed.
2.2 Loyalty Management
Not all customer loyalty is created equal
Attitudinal loyalty (good)
Behavioral loyalty (best)
Loyalty programs rewards for frequent purchases and consumption
A loyalty program may be part of a larger Customer Relationship Management (CRM) program
Its true, not all customers are created equal. We may like a product (good attitude), but the best customers are those who buy the product (behavior). Companies try hard to identify and communicate with those customers exhibiting behavior loyalty.
One of the most common ways this is accomplished is by a customer loyalty program. It should extend into a much broader program of Customer Relationship Management in which all touch points in a customer interaction are identified and managed and all data about customers is captured and analyzed.
Criteria for successful loyalty programs
Good performance by company
Responsiveness by a company
Shared identity among participants
Clear benefits
Community development
As you may have experienced, some customer loyalty programs dont provide much in the way of benefits that you find meaningful. Here are the five criteria that comprise a good loyalty program from the customers point of view.
2.3 Customer satisfaction
A satisfied customer is one whose expectations are met
A delighted customer is one whose expectations are exceeded
Customer satisfaction strategies
Establish and communicate the right expectations
Empower front line employees
Offer reassuring warranties and guarantees
Customer satisfaction surveys measure customer satisfaction
Dealing with complaining customers
While companies want satisfied customers, they covet delighted customers. At the heart of customer satisfaction is the relationship between what a customer expects and what the company delivers. If there is a difference, the result can be customer delight on the positive side; or customer dissatisfaction at the other end of the spectrum. You may have noticed a marked increase in the number of companies that have instituted customer satisfaction surveys, especially service businesses.
Companies should cherish complaining customers as it is one way customers give useful feedback. This feedback is part of the data used to modify a products marketing mix.
Sometimes the complaints are not really valid. Even this is important for the marketer because if the customer takes the time to complain, the company can take the opportunity to change the attitude to a more positive relationship with the company BEFORE the complaining customer can share his feelings with other customers.
2.4 Customer Relationship Management
Coordinated and integrated strategies for finding, retaining, and expanding profitable customers
More than just CRM software, although that is critical for capture and reporting of management information
Most valuable customers are the percent of customers who comprise the largest share of the companies profits
As mentioned earlier, a fully coordinated and integrated Customer Relationship Management program helps find, retain and expand the customer base of like minded customers. Constantly finding and filling the needs of your Most Valuable Customers can be much more cost effective than constantly replacing current customers with new customers.
2.5 Ethics, laws, and customer empowerment
Not all information is good information caveat emptor let the consumer beware
Sugging selling under the guise of research
Phishing masquerading as a legitimate company to get personal information.
Customers right to privacy of their data
Warranties and promises
expressed
implied
Copyrights to online material
While we are talking about the customers role in marketing, we take a little time to cover the topics of ethics, laws and customer empowerment. Social media and internet sites has drastically increase the amount of information available to consumers, yet not all information is good and consumers need to filter the information appropriately.
In addition, the growth of the internet has not allowed laws to keep up with it. Here we discuss some of the unethical practices that have arisen as a result. Data privacy will continue to be a constant battle for companies as hackers invent new and more creative ways to get our information. The implications of not protecting our data makes the news periodically with the Target breach one of the more serious in recent years.
Companies can create warranties and promises and deliver on those, both expressed and implied. That is within their control unlike data privacy.
Lastly, the internet has also created massive illegal use of information found online. For example, you will notice this course does not embed many of the learning activities mainly because those materials are copyrighted and we are limited to providing the URL.
Participation in Week 2 Discussion Forum
Submitting Writing Assignment 2
Completing Week 2 Quiz
All due Tuesday at 11:59 pm
Week 2
Assessments
The assessments for Week 2, as well as Weeks 3-8, will always be the same so that you can fall into a cadence with the course materials and adequately plan your time for completing the assessments.
Questions or concerns?
Be sure to take advantage of the General Discussion topic in the Week 2 Discussion Forum to ask any questions, get clarifications, or otherwise seek the advice and assistance of your faculty member.
As always, your faculty stand ready to help you with your study of marketing. Be sure to take advantage of their expertise by posting your questions or concerns in the Discussion Forum. Week 2, “Customer Satisfaction, Loyalty, Empowerment, and Management” was derived from Principles of
Marketing, which was adapted by the Saylor Foundation under a Creative Commons Attribution-
NonCommercial-ShareAlike 3.0 Unported license without attribution as requested by the work’s original
creator or licensee. 2015, The Saylor Foundation.
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Week 2
Customer Satisfaction, Loyalty,
Empowerment, and Management
The marketing concept, described in Week 1, “What Is Marketing?” reminds us that the customer
should be at the center of a firm’s activities and that the company that thrives is the one that
serves customers’ needs better than the competition. Yet, often it is the customer who is most
adept at serving the customer’s needs. Consumers being able to take control of the marketing
activities aimed at them is what customer empowerment is about.
Today, technology is making it more possible for the customer to do exactly that. In a survey, the
chief marketing officers of 250 top companies were asked about the key factors that influence the
performance of their companies. The officers’ response? A company’s ability to interact and
respond to its customers as well as empower them (Ramani & Kumar, 2008).
Research shows that customer empowerment is a function of three things: creating feedback
channels that are easy and widely available, asking for and encouraging feedback about products,
and enabling customers to participate in the design of products.
You might think that a company as large as JCPenney would be unable to give customers the
ability to create their own types of shopping experiencesthat standardizing the products and
services they receive would be necessary. But JCPenney is an excellent example of how a firm can
use the Internet and other technology to engage its customers and provide them with more
control over the products and marketing communications they receive.
This week, we focus on those ubiquitous feedback channels, as well as strategies to solicit and
encourage feedback. In Week 4, “Market Segmenting, Targeting, and Positioning,” we will discuss
how customers can participate in the design of products, or offerings. This week, we will also
tackle customer relationship management (CRM), as well as some of the ethical and legal issues
affecting customers.
http://www.saylor.org/site/textbooks/Principles%20of%20Marketing.pdf
http://www.saylor.org/site/textbooks/Principles%20of%20Marketing.pdf
http://creativecommons.org/licenses/by-nc-sa/3.0/
http://creativecommons.org/licenses/by-nc-sa/3.0/
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2.1 Customers and Customer Communities
L E A R N I N G O B J E C T I V E S
1. Define customer.
2. Understand strategies involving online and personal forms of influencer marketing.
3. Relate influencer marketing to other forms of social communities and marketing strategies.
The American Marketing Association defines customers as “the actual or prospective purchaser of
products or services” (AMA, 2015). This definition implies that a customer does not necessarily
have to have conducted an exchange with the company, but could be a person in a potential pool
of customers who may have a need or an interest in the product but have not yet acknowledged
that need and taken steps to fill it. This is a little more specific that the term consumer, which is
anyone who has the resources to buy anything. The terms are not interchangeable even though
they appear similar.
When do you go from consumer to customer? As soon as you acknowledge you have a need and
you want to fill that need, and you have the resources to fill the need. You may need a vacation,
but it doesn’t turn into a want until you decide to take a vacation and actively pursue steps to
make it happen. This begins the buying process, which we will discuss in greater detail in Week 3.
Part of that process is seeking information about the product or service you are considering.
If you decide you want a curved high definition television, where do you go to learn about which is
best? Like many buyers, you probably turn to the Internet and visit sites such as Epinions.com or
ConsumerSearch.com. You may visit the manufacturer’s website. Do you want to learn about the
products of a specific retailer? Do you check out the stores or remember that you had a good
experience with that store the last time you bought a television? Do you ask family and friends for
their opinions and share their experiences?
The point is that consumers talk. They talk to each other face to face, and they post their thoughts
and opinions online. Word of mouth, or the passing of information and opinions verbally, has a
powerful influence on purchasing decisions. You rely on word of mouth prior to registering for
classes. You want to know from other students which professors are best and how hard their
classes are. If you have no one to ask, you can look at online sites such as ratemyprofessors.com.
Buzz refers to the amount of word of mouth going on in a market. However, in addition to
traditional word of mouth, buzz includes blogs, articles, and other information about an offering.
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Companies try to create buzz about their products by sending press releases, holding events,
offering free samples, writing blogs, or releasing podcasts. Some marketing managers spend time
“trolling” the web looking for postings about their products. If a negative posting appears to be a
legitimate complaint, then the marketing manager can take action to fix the customer’s problem,
and future complaints can be avoided. The company can also assign someone to respond to
negative posts so that the opinions online become more balanced. Some companies,
unfortunately, practice the unethical strategy of planting their own favorable reviews of their
products to look like the opinions of real customers.
The point is that companies can adopt strategies to ethically participate in the customer
conversations to truly understand their customers, how their value proposition is being received,
what they can change, or what else they can offer to their customers. Some of these strategies are
discussed next.
Influencer Panels
A marketing strategy being used increasingly often is influencer marketing, or targeting
people known to influence others so that they will use their influence in the marketer’s favor.
These influencers are the lead users we will discuss in Week 5 on designing offerings. If you spend
some time on Procter & Gamble’s (P&G) Crest toothpaste website, you might be given a chance to
complete a survey. (Someone who is very interested in dental care is more likely to take the
survey.)
The survey asks if you talk about dental care products, if you research such products, and if you
influence others. These questions and questions like them are used to identify influencers. P&G
then provides influencers with product samples and opportunities to participate in market
research. The idea is that new offerings should be cocreated with influencers because they are
more likely to be both lead users, early adopters of new offerings, and influence other people’s
decisions to buy them.
That was the idea behind JCPenney’s Ambrielle lingerie community. JCPenney executive Laura
Carros and other JCPenney employees on the Ambrielle marketing team devised a strategy of
identifying women who would be willing to join a special community. A community, in the
marketing sense, is a social group that centers its attention on a particular brand or product
category. Another term for a community is a social network. The social network for Ambrielle
lingerie is illustrated in Figure 2.1, “A Social Network.”
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Figure 2.1 A Social Network
Each circle represents a person in the social network, and the arrows represent the ties between
them. You can see that some are JCPenney customers as represented by the arrows between the
company (the star) and the individuals. Others are not, but are in contact with JCPenney
customers.
Some communities are organized by companies. For example, the Harley Owners Group (HOG), a
club for Harley motorcycle owners, was organized by Harley-Davidson. But many communities
spring up naturally, without any help from a marketer. A local arts community is an example. In
the case of Ambrielle, JCPenney created and manages the group; in the case of HOG, Harley-
Davidson manages the group in conjunction with its members.
Another difference between the Ambrielle community and HOG is that the Ambrielle community
is only composed of influencers. By contrast, anyone who owns a Harley can be a member of
HOG. Ambrielle influencers provide feedback about products to JCPenney and take an active role
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in designing the company’s offerings. In other words, the influencers participate regularly in
marketing research activities. Another term for this type of community is an influencer panel.
Organizing and Managing Influencer Panels
Table 2.1, “Characteristics Used to Qualify the Members of Influencer Panels,” lists the
characteristics used to qualify members of an influencer panel. Note that there are multiple types
of influencers represented in the Ambrielle community. Because JCPenney has also gathered
lifestyle, demographic, and psychographic information about them, the firm has a fairly complete
picture of each member. This information is invaluable because JCPenney can use the knowledge
to segment the group more precisely. Thus, when the company test-markets communications or
offerings with the group, it can gain a better understanding of how well those efforts will work
with different types of consumers.
Table 2.1 Characteristics Used to Qualify the Members of Influencer Panels
Characteristic Definition
Active
Influencer
Willing to tell others, but more important, others listen and act on the
influencer’s opinion.
Interested Has a greater intrinsic interest in the product category than the average user.
Heavy User
Actually uses or consumes the offering regularly, preferably more than the
average user.
Loyal
Sticks to one brand when it works. Note, however, that this category could
include someone who isn’t loyal because the right offering meeting his or her
needs hasn’t yet been created.
Lead User
Willing to try new products and offer feedback. In some instances, it’s possible
to modify an offering to suit an individual consumer; when it is, you want lead
users to suggest the modifications so you can see how and why they do so.
An influencer panel does not necessarily become a community. If the communication that occurs
is only between the marketer and the individual members of the panel, no community forms. The
members must communicate with one another for a community to exist.
As a marketing professional, how do you find influencers? They have to be actively recruited. As
you learned earlier, P&G surveys people looking at its websites. If you answer the survey
questions in a way that shows you meet the criteria listed in Table 2.1, “Characteristics Used to
Qualify the Members of Influencer Panels,” you might be asked to join a P&G panel. Another
method is to ask a customer whose complaint you have just resolved to take a survey. After all,
someone who has taken the time to complain might also be motivated to participate on a panel.
Still another recruiting method is to send random surveys to households to identify people who
would be good panel participants.
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Once you create an influencer panel, you have to activate it. After all, influencers do not want to
be singled out only to be ignored. However, marketing professionals should be able to answer the
following three questions before they activate a panel:
1. What do we want from the influencer panel? Usually, companies want feedback on
new offerings and new marketing communications, as well as active word-of-mouth
promotions. Panelists need to know when you are merely testing a new offering vs.
introducing it to the marketplace. You don’t want word of mouth about a new product that
isn’t yet ready to be sold.
2. How much are the panel members willing to do? Companies want to keep their
panelists actively engaged, which requires asking how often they want to participate on the
panel, as well as giving them the right to “opt out” of a particular activity if they must. In
some instances, you may put out a general call for help, such as posting a notice on an
online bulletin board that you need volunteers to test a product. Or, you might just simply
send influencers product samples, ask them to try them, and respond to a questionnaire. In
addition, the processes by which they engage have to be easy to complete. For example,
asking a lot of information up front makes the sign-up process more difficult. If all you
need is an e-mail address, just ask for the e-mail address. Any additional information can
be gathered later.
3. What’s in it for the panel members? What do they get out of participating? They of
course get to try free, new products that might improve their livesor will one day improve
their lives if a company heeds their advice. For many influencers, the product category is
one that was already important to them. The chance to try a product before anyone else
does and provide feedback to a manufacturer who has singled them out for their opinion
might be all these people want.
Social Networking Sites and Other Social Media
As we have indicated, communities spring up naturally. Online, social networking sites such
as Facebook and MySpace are used to create communities. Everyone you are friends with on sites
such as these are people that you already know. The sites are simply the communication medium.
What is interesting is that Facebook and other social networking sites often can’t tell the
difference between close friends and acquaintances. From a marketing perspective, since each tie
or relationship is treated the same, social networking sites provide interesting ways to reach
people. One, perhaps not so interesting way, is as a broadcast medium for advertising. A company
targets consumers by placing ads on a person’s site based on what Facebook knows about the
personjust as ads are placed on a radio or television station and matched to certain audiences.
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The social network sites receive revenue from these ads, which allows them to provide the service
free to users.
The more interesting way is by consumers sending other consumers links and other information.
For example, when a marketer creates a Facebook page for an offering such as a movie, a
community can form around the movie. Then if you join the group that loves the movie, Facebook
notifies all of your friends that you are promoting the movie. A community such as this might not
be as enduring as the Ambrielle or HOG groups, but it serves its purposeat least until the movie
is old news and newer movies come out and get attention. When you become a “fan” of something
like a movie, you are part of the buzz.
Marketers are looking at many ways to use Facebook and other social networking sites to create
buzz. Facebook has a “gift-giving” application that allows people to give “gifts” to each other. The
gifts are really just icons (pictures) within Facebook. Enter GiveReal, an online service that allows
people to give one another real gifts online. GiveReal developed a promotion with Bombay
Sapphire, a leading premium gin, and Facebook. The promotion allows Facebook users to give
their friends electronic coupons (downloadable to a credit card) for mixed drinks that use Bombay
Sapphire. These coupons can then be redeemed at restaurants and bars that accept credit cards
(Marketing Weekly News, 2009).
One result of social networking is viral marketing, or the spread of the company’s message (like
a computer virus) through the community. Some companies have enhanced the viral marketing of
their offerings with interactive websites that might feature, say, a game built around an offering.
Consumers then e-mail their friends with links to the game or website. Examples include the viral
campaign by Nine Inch Nails for its concept album, Year Zero. An online alternate reality game
was created involving characters and situations drawn from the music on the album. The album
and game were so popular that HBO considered creating a series around the dark, futuristic tale
told on the album.
Blogs are one form of online communication that helps spread viral marketing messages. Some
blogs are written by corporate marketing officers who “spin” the information. But blogs can be
written by anyone. Blogs can serve as a “voice” for a community. For example, the chief executive
of the National Thoroughbred Horseracing Association (the NASCAR of horseracing) writes a
blog for the organization that is posted on its website. However, anyone can leave a comment on
the blog. Blogs have become much more like dialogue in a town hall meeting than a one-way
marketing message.
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Figure 2.2
Ashton Kutcher was the first person to
have over a million followers on Twitter.
Source: Photo by Andrew Mager. (2008). Wikimedia Commons. Used under
the terms of the Creative Commons Attribution-ShareAlike 2.0 Generic license.
Twitter is another application that facilitates viral marketing by enabling people to “follow”
someone. When an organization or a person posts something on Twitter, the postcalled a
“tweet”is sent as a text message to all followers of that organization or person. Ashton Kutcher
made headlines by being the first person to collect a million followers. However, the first
company to generate a million dollars in revenue through Twitter is probably Dell. Dell uses
Twitter to communicate special deals via its tweetsoffers that are extremely limited. Followers
can then contact the company to place their orders for the products. Dell estimated that in 2009,
it would earn more than $3 million through Twitter (Abell, 2009).
Social media is a catchall phrase for the online channels of communication that build
communities. Social media includes social networking sites, blogs, podcasts, wikis, vlogs (video
blogs), and other Internet-based applications that enable consumers to contribute content. Social
media spending for marketing purposes doubled in 2008 and continued to rise in 2009 despite
the poor economy. In fact, Forester, a respected research company, predicts spending to top over
$16.2 billion in 2019. This represents a 10-fold increase from 2009 levels when social media
spending was only $1.6 billion (Beal, 2009).
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2 . 1 K E Y T A K E A W A Y
Customer communities form around social networks, which marketers can use to both promote offerings
and gather market information. Companies create influencer panels that provide insight into effective
offerings and provide word of mouth. Customers can speak to one another and to companies through a
variety of communication channels known as social networking sites.
2.2 Loyalty Management
L E A R N I N G O B J E C T I V E S
1. Understand the value of customer loyalty.
2. Distinguish attitudinal loyalty from behavioral loyalty.
3. Describe the components of a successful loyalty program.
It’s 8 p.m. and you’re starving. You open the refrigerator and find a leftover chicken breast, half
an onion, and some ketchup. But what can you do with these ingredients? You could search online
for recipes that contain them, or post a question about what to do with them at a website such as
Kraft.com.
Companies like Kraft build websites in order to create the types of communities we discussed
earlier. If you posted your question at Kraft.com, you might have an experience like one woman
didin 24 hours, 853 people viewed the question, and she had 22 answers to choose from.
Another question had 3,341 viewers over 10 days. Why has Kraft’s web marketing team worked so
hard to create an environment in which people can do this?
One important reason is loyalty. Kraft wants loyal customerscustomers who buy Kraft products
instead of other brands, who recommend its products to their friends, and are willing to pay a
little more to get Kraft quality. Early research on loyalty showed that loyal customers were less
expensive to market to, more willing to pay a premium for a particular brand, more willing to try
new products under the brand name, more likely to recommend the brand to their friends, and
more willing to overlook a problem related to the brand (Reicheld & Teal, 2001). That said, more
research shows that the benefits that come from loyal customers are not automatic, and that it
takes careful management for those benefits to be sustained (Reinartz & Kumar, 2003).
Loyalty has two dimensions. One dimension of loyalty is behavioral loyalty, meaning that the
customer buys the product regularly and does not respond to competitors’ offerings. The second
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dimension is attitudinal loyalty, which is the degree to which the customer prefers or likes the
brand.
Behavioral Loyalty
Most marketers would be happy with behavioral loyalty because it does, after all, result in sales.
Yet behavioral loyalty doesn’t mean that the customer is immune to your competitors’ offerings.
Nor does it mean the customer is willing to pay more for your brand. For example, a
businessperson might regularly book trips on American Airlines becaus
