Final Exam Flashcards
(49 cards)
What is CRM
Customer: focus on the customer as they are the source of revenue + profit = * Assists
Relationship: Approach/philosophy is explicitly dynamic and involves both the firm + customer
Managment: maintenance + improvement, this is ongoing activity (acquisition, retention, enhancement.)
What is the concept behind CRM
customer relationship management. refers to practices, strategies and technologies that companies use to manage and analyze customer interactions and data throughout the customer lifecycle, with the goal of improving business relationships with customers, assisting in customer retention and driving sales growth.
Approaching Value
2X2 Matrix- X&Y: value to customers. High x2 vulnerable customer, low- high is lost cause, low-low is a free rider and high-low is a star customer.
Why are customers an asset
investing process (advertising, introductory prices, direct solicitations). Yield streams of revenue over time. Retention maintenance (special offers, product development).
How are customers profitable over time
profit from… Price premium, referrals, base profits, reduced cost, increased purchase.
What is customer lifetime value
net present value of all future streams of profit a customer generates over the life of his/her business
relative CLV & absolute CLV equation
relative clv: clv= M(r/1+i-r)-AC
absolute clv: clv= M (r/1+i-r)
M= Margin (profit), i= discount rate, r= retention rate, AC= acquisition cost
What are the core strategies of CRM
Acquisition: consumers make initial purchase decision based on customer perceived value. Target new customers, trier-rejectors, former customers
Retention: product/service performance, strong customer loyalty, less expensive to maintain, long-term viability of firms. Customers make loyalty decisions based on customer satisfaction.
Expansion: (add-on selling) ex: at&t acquires you as a customer for their cellular telephone service, what else can they sell you (home securty, internet, etc).
what is customer perceived value
evaluation of the difference between benefits + all costs of market offering relative to competitors.
How do you know if you should acquire customers (equation)
[Clv= M(r/1+i-r)-AC] > 0
Relative clv > 0
what is customer satisfaction
depends on products performance relative to buyer expectations
How do you if you should continue to retain customers (equation)
[CLV=m(r/1+i-r)] > cost to retain
keep if absolute CLV is greater than cost of return
What are the components of the advertising funnel
top –> bottom:
- need recognition
- information search
- evaluation of alternatives
- purchase decision
what are the objectives of advertising
awareness: target market is aware of service/product
top of mind awareness: first brand that comes to mind in situations
informative: target market has info. on product/service
image: unique, strong, favorable brand associations
comparative: compare with other identified competing brands
retargeting/ remarketing: target customers very close to decision, ex: web search –> ad. follow-on other pages
how are advertisements executed
comparative, fear, emotional appeal, humor, celebrity endorsement
how is global advertising different
cultural differences (customize ads to their values and beliefs)
psychological + economics factors in pricing
economics: typically assume people to be smart and objective- no emotion
psychological: consumers evaluate goods–> do not necessarily follow economics assumptions
( relative judgment, reference prices, loss aversion, mental accounting, perception of price difference).
what is the reference dependence
people evaluate prices based on reference point
what is loss aversion
losses hurt more than gains make you happy
reference dependence and loss aversion is what theory
prospect theory
what is mental accounting in economics + psychology
economic: money is fungible
psychology: consumers spend money differently depending on specific purpose ( “naive accountants”, amounts assigned to mental account are fungible, amounts across mental accounts are NOT fungible )
What is the perception of price differences in economics and psychology
economics: price difference assessed in absolute terms
psychology: people perceive price differences in relative terms influenced by the price format ( consumers perceive price difference in “relative terms” and sensitive to format- discount, 9-didget ending).
what are relative judgment in economics and psychological terms
economics: people evaluate goods in absolute terms
psychology: people make judgments in relative terms, influenced by losses > gains
what is a reference price
the fair price, price often charged, last price you paid, placement, other items prices
