The High Price of Customer Satisfaction Marketing Strategy Analysis & Solution

Marketing & Sales Case Study Analysis and Solution

At Fern Fort University, we use Harvard Business Review (HBR) marketing principles and framework to analyze The High Price of Customer Satisfaction case study. The High Price of Customer Satisfaction is a Harvard Business Review case study written by Timothy Keiningham, Sunil Gupta, Lerzan Aksoy, Alexander Buoyefor the students of Sales & Marketing. The case study also include other relevant topics and learning material on – Marketing

Strategic Marketing Analysis of The High Price of Customer Satisfaction case study written by Timothy Keiningham, Sunil Gupta, Lerzan Aksoy, Alexander Buoye will comprise following sections –

  • The High Price of Customer Satisfaction Case Description
  • Marketing Definition
  • Market Potential Analysis of The High Price of Customer Satisfaction
  • Market Share Potential Analysis
  • Segmentation and Segment Attractiveness Analysis
  • Competition and Competitiveness Analysis of The High Price of Customer Satisfaction
  • Customer Value Analysis of The High Price of Customer Satisfaction case study

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The High Price of Customer Satisfaction Marketing Case Description

Sales & Marketing Case Study | Authors :: Timothy Keiningham, Sunil Gupta, Lerzan Aksoy, Alexander Buoye

This is an MIT Sloan Management Review article. "Satisfaction guaranteed or your money back"is a business promise made to consumers since 1875, when Montgomery Ward used it to differentiate his mail order catalog. It is now a vow many businesses make. However, the correlation between increasing customer satisfaction and increasing customer spending with your company is very weak, according to the authors. Their research finds that changes in customers'satisfaction levels explain less than 1% of variation in a company's share of category spending.Is customer satisfaction worth the cost? To find out, the authors investigated the relationship between customer satisfaction and business outcomes, gathering data from more than 100,000 consumers covering more than 300 brands. Although high customer satisfaction ratings are typically treated by managers as being universally good for business, the authors'findings indicate that the benefits are not nearly so clear-cut. There is a downside to continuously devoting resources to raise customer satisfaction levels. Managers are rarely able to accurately quantify the cost associated with increasing customer satisfaction scores (for example, from 8.7 to 9.1 on a 10-point scale), nor are they able to determine precisely what such an increase is actually worth. It turns out the return on these investments is often trivial or even negative. Knowing a customer's satisfaction level tells you little about how he or she will divide his or her spending among the different brands used. As a result, changes in customer satisfaction levels are unlikely to have a meaningful impact on the share of category spending customers allocate with your brand. Why? Single-brand loyalty, which was common in our parents'and grandparents'generations, has been replaced with loyalty to multiple brands in a category in many sectors. Because of this divided loyalty, more customers partially defect (in other words, they give more of their business to a competitor) than completely defect from a business or brand. As a result, improving customers'share of spending with your brand tends to represent a far greater opportunity than efforts to improve customer retention. kThe measure that really matters, according to the authors, isn't your percentage of delighted customers or promoters. What matters is the relative "rank"that your brand's satisfaction level represents vis-àvis your competitors.


Marketing Definition

According to American Marketing Association – Marketing is a set of activities that a firm undertakes for creating, communicating, delivering, & exchanging offerings that have value for customers, clients, partners, and society at large.

Kotler explains - Marketing is a process by which organizations can create value for its potential and current customers and build strong customer relationships in order to capture value in return.

Market Potential Analysis of The High Price of Customer Satisfaction

Market potential analysis comprises evaluating the overall market size of the related product that the firm is planning to launch. This will involve defining – Why the target market segment needs the product and how it will provide a solution to full its consumers’ needs. Market potential of The High Price of Customer Satisfaction products various on factors such as –

  • Maturity of the market. In mature markets the profitability is often stable but the market potential is less as most of the players have already taken market share based on the segment they are serving. New players have to go for market share strategies in marketing.
  • Technological competence of the existing players and culture of innovation and development in the industry.
  • Untapped market sizes and barriers to both enter the market and serving the customers. Often companies can easily see the unfulfilled needs in the markets but they are difficult to serve as there are costly barriers.
  • Define the core need that your product is serving and list out all the direct and indirect competitors in the market place. This will help not only in positioning of the product but also in defining or creating a segment better.
  • Uncovering the current and untapped market sizes and barriers to serving the larger market. Analyze the areas that you need to sort out while launching the products to wider market and what are the challenges the firm will face in market place.
  • Estimate the current stage in product life cycle and its implications for marketing decisions for the product.

Market Share Potential Analysis

  • Understanding the buyer behavior model for The High Price of Customer Satisfactionindustry.
  • Identifying the market share drivers relevant to The High Price of Customer Satisfaction market.
  • Segment Attractiveness Analysis – Our analysis will work out which are the most attractive segments and which are the one the firm should go ahead and target. We point out in great detail which segments will be most lucrative for the company to enter.
  • Understanding the different needs and relative value of your offering by segment.
  • Developing segment priorities and positioning the product based on the product need fit developed by the firm.

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Competition & Competitive Position Analysis

  • Uncovering customer-based competitive positions for key rivals and firm’s offering. This will not only help in assessing the strengths and weaknesses of the competitors but also help in defining and positioning of the product.
  • Developing a positioning and launching strategy. It will require not only distribution channel analysis but also promotion mix for the product.
  • Strategic Marketing Planning — the process of developing and maintaining a strategic fit between the organization’s objectives and capabilities and the ever evolving marketing opportunities for its products.

The High Price of Customer Satisfaction - Customer Value Analysis

Capturing customer value is essential to marketing efforts as it results in higher return in the form of both current & future sales, greater market share, and higher profits. By creating superior customer value, the organization can create highly satisfied customers who stay loyal and buy more. This, in turn, means greater long-run returns for the firm.

  • The crucial role of customer perceived value in acquiring and retaining profitable customers. Product differentiation is often based on building on a value niche that a firm believes that is very important to the customer. This niche contributes to perceived value. If the perceived value is high then customer stay loyal to the product if not then she can switch to the competitor’s product.
  • Graphically displaying value differences for deeper understanding and better internal communication. This helps is building a narrative that a customer can identify with. The better the insight more are the chances of connecting with the potential customers.
  • Identifying and selecting actionable value creation options. This can help in increasing the customer lifetime value. Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of patronage.

NOTE: Every marketing case study solution varies based on the details and data provided in the case. We write unique marketing strategy case solution for each HBR case study with no plagiarism. The specific case dictate the exact format for the case study analysis.

You can order The High Price of Customer Satisfaction Marketing Strategy Case Study Solution with us at Fern Fort University .