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1

ADVANCED MARETING

2.

SELECTION !Customer´s Role !Customer Pyramide

Euromarketing // ULB christian.bluemelhuber@ulb .ac.be

Advanced Marketing / Chapter 2: Selection

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CUSTOMER EQUITY BALANCE SHEET new customers

VS

existing customers current profit

NEW CUSTOMER CURRENT PROFITS

NEW CUSTOMER FUTURE PROFITS

RETAINED CUSTOMER CURRENT PROFITS

RETAINED CUSTOMER FUTURE PROFITS

VS

future profit

Measures: www.customerequity.com Chapter 8, Blattberg et al.

Euromarketing // ULB

Advanced Marketing / Chapter 2: Selection

christian.bluemelhuber@ulb .ac.be


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CUSTOMERS PLAY DIFFERENT ROLES: !Large volume customers vs. small volume customers !power

Purchase volumes:

!Function of prices paid by customer and vendor costs Vendor margins: Vendor learning in relationship:

!Source of product improvement, innovations, enhancements to vendor operations, etc.

Customer investment:

!Raise customers barriers to exit !Favorable impact on vendor costs (externalisation)

Transferability:

!Leverage focal relationship to servce other customers more efficiently !WOM

Euromarketing // ULB christian.bluemelhuber@ulb .ac.be

Advanced Marketing / Chapter 2: Selection

CHART

high

MANAGING DIFFERENT CUSTOMER TYPES PATTERN OF MIGRATION

2 THE GOOD TIMES

LIFE BEGINS HERE

PRICE

1

COMPETE ON PRICE low

3 low

COST-TO-SERVE

WILL DO ANYTHING TO KEEP BUSINESS

4

high Euromarketing // ULB

Advanced Marketing / Chapter 2: Selection

christian.bluemelhuber@ulb .ac.be

4


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!Ignorant c´ !Grateful c´ !Unconcerend c´ !Hostage c´

!Want full service !Seek value-added solutions !Willing to pay for total solution

PRICE

high

MANAGING DIFFERENT CUSTOMER TYPES

!Biggest c´ !Showcase accounts

!Lead users: users at forefront of trend, expect to benefit significantly from a solution to their needs !Advocates and reference accounts: loyal and willing to advertise through word of mouth

low

!Switchers !collaborators

Customer types that span the four quadrants:

low

COST-TO-SERVE

high Euromarketing // ULB

Advanced Marketing / Chapter 2: Selection

christian.bluemelhuber@ulb .ac.be

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CUSTOMER PYRAMIDE MOST PROFITABLE •most loyal, •least price sensitive

PLATINUM GOLD IRON

•Demand attention, •typically negative value

LEAD

LEAST PROFITABLE Euromarketing // ULB

Advanced Marketing / Chapter 2: Selection

christian.bluemelhuber@ulb .ac.be

6


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7

STRATEGIES RETAINING BEST CUSTOMERS Frequent Shopper Programs Special Services Personalization CONVERTING GOOD TO BEST CUSTOMERS Cross Selling Add-on Selling

GETTING RID OF UNPROFITABLE CUSTOMERS Offer less costly alternatives Charge for services… Euromarketing // ULB

Advanced Marketing / Chapter 2: Selection

christian.bluemelhuber@ulb .ac.be

CHART

A MANAGEMENT MODEL MANAGING CUSTOMER

MANAGING CUSTOMER

RETENTION

Lifetime Value

RETENTION RATE Satisfaction Referrals Repeat Orders

INC

RE

AS

EC

US TO

ME

RV

AL

UE

PROFITABLITY

VALUE

MANAGING CUSTOMER

SEGMENTATION

source: Martin Roll

Advanced Marketing / Chapter 2: Selection

BEHAVIOR INSTRUMENTS

Euromarketing // ULB christian.bluemelhuber@ulb .ac.be

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