Chapter 2 -- Building Customer

Satisfaction Through Quality,

Service, & Value

Otterbein College
Winter 2000

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 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

10/10/2005
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 Determinants of Customer Delivered
Value
Image
Image value
value
Personnel
Personnel value
value Total
Total
customer
customer
Services
Services value
value value
value
Product
Product value
value Customer
Customer
delivered
delivered
Monetary
Monetary cost
cost value
value
Time
Time cost
cost Total
Total
customer
customer
Energy
Energy cost
cost cost
cost
Psychic
Psychic cost
cost
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 Satisfaction is...

...a person’s feelings of pleasure or

disappointment resulting from
comparing a product’s perceived
performance (or outcome) in
relation to his or her expectations.

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 High Performance Business

Set strategies to satisfy

key... Stake-
holders

By improving Processes
critical business...

and
Resources Organization
aligning...

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 The Generic Value Chain

Firm infrastructure
Activities
Support

Human resource management

Mar
Technology Development

gin
Procurement

Market-

gin
Out- Serv-
Inbound Opera- ing

Mar
bound ice
Logistics tions and
Logistics
sales

10/10/2005 Primary Activities 2-6

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 Levi Strauss’
Value-Delivery Network

Order Order Order Order

Du
Du Pont
Pont Milliken
Milliken Levi’s
Levi’s Sears
Sears Customer
(Fibers)
(Fibers) (Fabric)
(Fabric) (Apparel)
(Apparel) (Retail)
(Retail) Customer

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 Medium Low

margin margin margin
Many Basic or
customers/ Accountable Reactive reactive
distributors

Medium
number of Proactive Accountable Reactive
customers/
distributors

Few
customers/ Partnership Proactive Accountable
distributors
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 Customer Development

Suspects

First-time Repeat
Prospects Clients Advocates Partners
customers customers

Disqualified
prospects Inactive or
ex-customers

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 Customer/Product Profitability
Analysis
Customers
C1 C2 C3

+ + +
Highly
P P1 profitable
r product

o
d
u
P2
+ Profitable
product

Losing
P3 product
c
t
s
P4
+ Mixed-bag
product

High profit Mixed-

Mixed-bag Losing
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customer customer customer
2-11

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 The Profit Triangle

Inte
n
atio

rna
cre

l op
ue

era
Profit
Val

Profit

tion
s
10/10/2005 Competitive advantage 2-12

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 Quality

• Quality is the totality

of features and
#1 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

10/10/2005
2-14

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